Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you
Speaker 1: along with my co host Lisa Brahma Waits. Each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money, whether at the grocery store or
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
Speaker 1: podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. The big deal of the day
Speaker 1: AVY agreeing to buy Allergan for sixty three billion dollars.
Speaker 1: ADVY shares down fourteen point six percent, Algan shares surging.
Speaker 1: Joining us here in our bloombergant to Active broker Studios
Speaker 1: Max Neeson. As always, we love having you and biotech,
Speaker 1: pharma and healthcare calumnists with Bloomberg opinion. Is this a
Speaker 1: bad deal for AV I? I think so. I see
Speaker 1: why investors are reacting the way that they are. So
Speaker 1: the kind of motivation of the steel is that A
Speaker 1: V's biggest product a Humira. It's a blockbusters for inflammatories
Speaker 1: these like arthritis. It's already starting to face buy a
Speaker 1: similar competition in Europe and that's coming in America in
Speaker 1: three So that's gonna blow just a giant hole in
Speaker 1: its revenue and you know there there's just not enough
Speaker 1: and its pipeline to deal with that. So this is
Speaker 1: a way of kind of getting some replacement for that.
Speaker 1: The question is whether this is actually going to help
Speaker 1: in the long term. You have Alegan with the lead
Speaker 1: product in Botox, where where you know sales are likely
Speaker 1: to be pretty durable but are starting to level off
Speaker 1: and there's some competitive threats. So while you get kind
Speaker 1: of this big you know, cost cutting opportunity and a
Speaker 1: big EPs boost upfront, the question is what this does
Speaker 1: for the company in the long run. Yeah, it's interesting.
Speaker 1: I'm just looking at the five year charge for Elegant.
Speaker 1: It's not pretty. It's been a kind of a steady
Speaker 1: decline down from you three change down to where we
Speaker 1: were today. Um, So obviously the market pricing in the
Speaker 1: slower growth as you mentioned for the both TX business. Dude,
Speaker 1: does this combined company are they having any discussions about, Gee,
Speaker 1: now we're bigger, we've got more resources, we can invest
Speaker 1: more are in R and D and try to drive
Speaker 1: our growth that way. Yes, So that this sort of
Speaker 1: contradictory messaging on this On one hand, you know, in
Speaker 1: order for this deal to pay off, you're gonna need
Speaker 1: to have big cost energies, You're gonna have to cut
Speaker 1: back on R and D. But then at the same time,
Speaker 1: you know more cash is going to be flowing into
Speaker 1: R and D. So so the net of that is
Speaker 1: is a little bit confusing. And you're not buying Allergan
Speaker 1: for its R and D capability. This is a company
Speaker 1: that really deliberately had a different model. We go out
Speaker 1: and we look for the best science out there, and
Speaker 1: then we we bring it in. They aren't developing drugs
Speaker 1: on their own, so kind of the fit and the
Speaker 1: added capability doesn't really come from that. It just theoretically
Speaker 1: comes from having more cash to spend on everything apart
Speaker 1: from what they're you know, they spent on the deal
Speaker 1: and they're gonna be spending on surfacing their debt. Now.
Speaker 1: So let's zoom out a little bit because this deal
Speaker 1: comes at a sort of interesting time in the political cycle.
Speaker 1: President Trump coming out with an executive order this week
Speaker 1: talking about trying to make medical pricing more trade it's
Speaker 1: parent and thus lowering it. I have to wonder whether
Speaker 1: a deal like this between two big pharmaceutical companies would
Speaker 1: be viewed pretty negatively by any Trust officials given where
Speaker 1: we are in the election cycle. So I think that
Speaker 1: this one is is actually going to be all right,
Speaker 1: even though, as we saw just yesterday, cell Gene is
Speaker 1: gonna have to sell off a drug in order to
Speaker 1: get its deal with with our cyper Stal Myers is
Speaker 1: selling a cell Gene drug to get that deal to
Speaker 1: go through this one, there's not a tremendous amount of
Speaker 1: overlap in the things that the two companies work on
Speaker 1: in the areas that they focus on. On one hand
Speaker 1: that that kind of brings the strategic fit into question.
Speaker 1: It probably does give them an easier time with any
Speaker 1: Trust officials. And one of the reasons that this does
Speaker 1: sort of appeal at least a little bit is that
Speaker 1: Allergan is focused on medical aesthetics, on you know, botox
Speaker 1: for the face, cool sculpting. Those are things that are
Speaker 1: are often not really pressured by by you know, drug
Speaker 1: costs scrutiny in the same way. I just I'm struggling
Speaker 1: to understand if this doesn't necessarily lead higher costs and
Speaker 1: better negotiating power for these two big pharmaceutical companies other
Speaker 1: than just job efficiency. In otherwords, job cuts, what are
Speaker 1: what's what's the value proposition here? Then, so the this
Speaker 1: is pretty clearly a financially driven transaction. They just think
Speaker 1: that they can um you know, benefits from the cash
Speaker 1: flow and and you know, by cutting eventually drive some
Speaker 1: kind of return and diversify away from from Humira. But
Speaker 1: the big question is, you know, by the time that
Speaker 1: they're really going to need that diversification, how much is
Speaker 1: gonna be there from from Allergan. You know, Botox has
Speaker 1: to keep delivering and stay durable, as do a number
Speaker 1: of other products, and uh, you know, there there there
Speaker 1: has to be maybe something from the pipeline, and it's
Speaker 1: a pretty weak roster of drugs for the future that
Speaker 1: they're getting here. I'm just not sure that you know
Speaker 1: that the sixteen or so billion in revenue that Allergan
Speaker 1: has now is going to be there when when Abby
Speaker 1: really needs it. Yeah, I'm looking at Allergan stock right now,
Speaker 1: it's about the you thirteen or fourteen percent below the
Speaker 1: deal price, suggesting that I guess investors don't think, at
Speaker 1: least in the near term, anybody's going to come in
Speaker 1: and try to top the bid or anything like that.
Speaker 1: So it kind of goes to the issue of maybe
Speaker 1: not a lot of interest in this company, and I
Speaker 1: think Max's, as you stated, it kind of looks just
Speaker 1: you know, there aren't a lot of synergy. So maybe
Speaker 1: this is, as you mentioned, just a diversification move on
Speaker 1: on the part of Abby. And if the question is
Speaker 1: is it worth sixty billion dollars to diversify your redness stream?
Speaker 1: I mean, the size of the revenue hole is just
Speaker 1: so enormous, it's it's impressment. You know, Humira did nearly
Speaker 1: twenty billion dollars in sales last year. It's the best
Speaker 1: selling drug in the world. Replacing that takes a big deal. Uh.
Speaker 1: The question I think was was this the right one
Speaker 1: or the right use of that that big pilot capital. Yeah, exactly,
Speaker 1: Max Neson, thanks so much for joining us. Max's Biotech,
Speaker 1: Pharma and healthcare calmness for Bloomberg Opinion. Facebook jolted the
Speaker 1: crypto asset world earlier this month, saying that they were
Speaker 1: planning to unrule Libra. This was going to be a
Speaker 1: way to serve underbanked or non banked customers and create
Speaker 1: some sort of alternative method of payment on its platform.
Speaker 1: The question is how much is this a game changer
Speaker 1: for the cryptocurrency world. How much is this giving a
Speaker 1: boost to bitcoin valuations? Here to answer all of those questions,
Speaker 1: I'm so pleased to say, Danny Masters joining us in
Speaker 1: our Bluebrigoda Active Brokers Studios. Danny Masters is chairman of
Speaker 1: coin Shares Group, which overseas about fifty million dollars in
Speaker 1: the platform and is based in London. He also you
Speaker 1: may know him as the former global head of Energy
Speaker 1: and Trading at Morgan Guarantee Trust now JP Morgan. Danny,
Speaker 1: thank you so much for being here. So let's start there.
Speaker 1: Do people understand what libra is if they look at
Speaker 1: it as a cryptocurrency? I think cryptocurrency comes with certain
Speaker 1: mystique around it, but I don't think Libra and the
Speaker 1: calibra will it associated with it really represents a cryptocurrency.
Speaker 1: I believe it is a representation of fiat value, primarily dollars,
Speaker 1: but probably also currencies were not quite sure yet but
Speaker 1: transported on cryptocurrency rails. What do you think Facebook strategy
Speaker 1: is for getting into the crypto business that kind of
Speaker 1: came out of no words but an advertising platform effectively, Well,
Speaker 1: I think if you look at Facebook as a company
Speaker 1: most of its revenue comes from US advertising, but most
Speaker 1: of its active users live overseas, and Facebook hasn't come
Speaker 1: up to date with an effective way monetizing those overseas users.
Speaker 1: So having what the French would describe as a shadow
Speaker 1: banking system with with Libra not not a compliment, by
Speaker 1: the way, is a way to start to monetize their
Speaker 1: overseas and users. So you said that it was another
Speaker 1: form of payment using the cryptocurrency rails, in other words,
Speaker 1: the infrastructure the technology behind cryptocurrencies. Is this why bitcoin
Speaker 1: has rallied that basically Facebook would be paving the way
Speaker 1: for people to easily make payments using bitcoin. Well, I
Speaker 1: think the bitcoin rally itself is rooted in a perception
Speaker 1: of a week of dollar environment, which is also the
Speaker 1: catalyst for gold. Currently, it has been rooted in some
Speaker 1: green shoots post the cryptowinter from early in some coins
Speaker 1: which represent equity and some crypt winter come into a
Speaker 1: theater near you, dot um. But but now I think
Speaker 1: I think as far as bitcoin itself is concerned, our
Speaker 1: conclusion is that if Libra and it's two and a
Speaker 1: half billion users can easily switch from fiat money into
Speaker 1: bitcoin and actually represents the biggest onboard ramp to bit
Speaker 1: coin as as yet come into existence. So give us
Speaker 1: a sense of what the regulatory environment has been historically
Speaker 1: over cryptocurrencies. I don't think it's much, but I may
Speaker 1: be mistaken, but my senses if an entity like a
Speaker 1: Facebook gets involved, that could change things very quickly. Yes. Well,
Speaker 1: Bitcoin as a very new kind of asset has really
Speaker 1: stretched regulators in terms of their treatment. And the regulatory
Speaker 1: perimeter as it's called, which by the way, is usually
Speaker 1: a national perimeter, is challenged by a global currency like bitcoin,
Speaker 1: and the reaction from regulators around the world has been
Speaker 1: very mixed, some very positive, some very negative, some somewhat confused. Um,
Speaker 1: the libra concept, because it is so closely tied to
Speaker 1: the legacy banking system, is almost a combination of difficult
Speaker 1: crypto legislation and regulation with difficult banking regulation. So I think,
Speaker 1: and we have some experience in this. We know ourselves
Speaker 1: produce some asset backs coins that rail on cryptocuncy infrastructure.
Speaker 1: We've spent many years trying to solve that regulatory puzzle,
Speaker 1: and Facebook have that ahead of them. So you also
Speaker 1: lead the launch of the world's first regulated bitcoin and fund.
Speaker 1: I believe I'm wondering, as you look at this incredible
Speaker 1: rally that we've seen in a bitcoin, just absolutely surging,
Speaker 1: I have to wonder whether there's still is value here
Speaker 1: or if this is just sort of a knee jerk
Speaker 1: reaction to the end of the crypto winter that will
Speaker 1: be reversed. Yeah. I think in the very short term
Speaker 1: here we have to recognize that it's been a spectacular rally,
Speaker 1: you know, off of a low, low, low level in
Speaker 1: terms of the historical range um. And going forward, you know,
Speaker 1: I think one has to keep in mind the scale
Speaker 1: of bitcoin, and indeed this has brought into light. When
Speaker 1: you look at the scale of Facebook, there may be
Speaker 1: a hundred and fifty million wall it's for bitcoin in
Speaker 1: existence in the world today, there are two and a
Speaker 1: half billion Facebook uses. It took Facebook ten years to
Speaker 1: get from a million users to a billion users. And
Speaker 1: when you look at those numbers and that timescale, I
Speaker 1: think you can clearly see there's a long run way
Speaker 1: at a bitcoin. I have to look at Bitcoin prices
Speaker 1: have risen from more a little bit more than four
Speaker 1: thousand dollars April one to eleven thousand, three hundred and
Speaker 1: sixty three dollars today exactly. It's an interesting chart. You
Speaker 1: put that chart up there for the last several years,
Speaker 1: and that's a picture of violatility. So Danny, I know
Speaker 1: that coin Shares is the largest crypto asset manager in Europe.
Speaker 1: So I want to ask you, given your perspective, step
Speaker 1: back a little bit just for our listeners to get
Speaker 1: a sense of how do you think crypto coins are,
Speaker 1: cryptocurrencies will develop and what some of the applications might
Speaker 1: be over the next several years. I think there's you know,
Speaker 1: one of the one of the really fascinating things about
Speaker 1: bitcoin is it can be viewed in so many different lights,
Speaker 1: um and and it is so international. Some people consider
Speaker 1: it to be a proxy for early state technology, some
Speaker 1: people consider it to be a currency summer commodity, and
Speaker 1: and that's what you know. People can find reasons to
Speaker 1: get to have appeal from bitcoin in many, many different ways. Um.
Speaker 1: I think underlying that is the concept of some sort
Speaker 1: of a little bit of financial freedom and this concept
Speaker 1: of appeer to peer transactions of originally Bitcoin, now Libra
Speaker 1: and potentially other assets in the future. And I think
Speaker 1: that's in response to a banking system which is and
Speaker 1: an asset transfer system which is actually quite dated. Now.
Speaker 1: So where are we just quickly, Danny, in the evolution
Speaker 1: of institutions adapting or adapting cryptocurrencies. Well, again, it's a
Speaker 1: slow it's a slow development. Um. It was interesting to
Speaker 1: see Fidelity actually did get over the line here in
Speaker 1: the United States and produced their institutional custody solution which
Speaker 1: is slowly growing out coin based. Also who in the
Speaker 1: US are making a big push on the institutional custody
Speaker 1: side as well. And so, you know, I think we
Speaker 1: can say that this whole episode with Bitcoin to date
Speaker 1: has happened in isolation of institutions, and institutions will not
Speaker 1: arrive until we can say with certainty your assets are
Speaker 1: not going to disappear or be hacked. That doesn't happen
Speaker 1: in any other institutional asset class. But that seems to
Speaker 1: be you know, in the in the immediate future, and
Speaker 1: I think that's going to be a positive Danny Masters,
Speaker 1: thank you so much for joining us. Well. The U
Speaker 1: S consumer confidence fell in June to the lowest level
Speaker 1: since twenty September. The indext came in at one pot
Speaker 1: five That was lower than any of the estimates in
Speaker 1: the Blueberg survey consensus was one, so a big miss there.
Speaker 1: Help us dig into the numbers a little bit. We
Speaker 1: welcome back Lynn Franco, Lynna's director of Economic Indicators at
Speaker 1: the Conference Board. She joins us here in our Bloomberg
Speaker 1: eleven three oh studios. Lynn, thanks so much for joining us.
Speaker 1: Surprising miss here for the June period. What was driving it? Well,
Speaker 1: I think the number one concern was the trade and
Speaker 1: tariff discussions, and I think heated up quite a bit
Speaker 1: in early June, both with Mexico and China. Seems to
Speaker 1: have rattled consumers confidence both in the present term and
Speaker 1: and the outlook. So it remains to be seen. I
Speaker 1: mean a little bit of it dissipated in regards with Mexico.
Speaker 1: We have to see what happens at the G twenty
Speaker 1: summit um. But hopefully we can recoup some of this
Speaker 1: lost next month and it doesn't derail spending. So at
Speaker 1: what point do we care about this? Because basically consumer
Speaker 1: more than two thirds of the economy in the United States,
Speaker 1: has been the driver of the recovery. This is the
Speaker 1: area that Michael McKie of Bloomberg News in television radio
Speaker 1: has said this morning is what to watch to determine
Speaker 1: when the cycle will turn. What is it concerning to you.
Speaker 1: I think if we get you know, sort of back
Speaker 1: to back declines going forward. Now, if we have another
Speaker 1: decline in July, another decline in August, um, i'd be
Speaker 1: I think I'd take volatility as positive news that we
Speaker 1: can say, well, you know, it was a few events
Speaker 1: that sort of rattled them for one particular month, and
Speaker 1: we're back on track. It's still a strong reading. But
Speaker 1: if we continue on a downward trend, then I would
Speaker 1: become a little bit concerned. So this index has historically
Speaker 1: been highly correlated with payrolls and with employment, and still
Speaker 1: the pictures still generally good. There there any cracks in
Speaker 1: the employment from from your data. Well, we did see
Speaker 1: the number of consumers who said jobs are hard to
Speaker 1: get shot up um and that's at the highest level
Speaker 1: now since you know, November of and I think that
Speaker 1: could be related to the employment data that we saw
Speaker 1: in May, where there seemed to be you know, we're
Speaker 1: not hiring, but we're not firing either, and there was
Speaker 1: a pause there. So I think we need to keep
Speaker 1: an eye on what happens in terms of jobs in
Speaker 1: the months to come as well, And can you just
Speaker 1: give us a sense of the read through of the
Speaker 1: consumer confidence data with potential increase or slow down in
Speaker 1: the U S economy in other words, with the lag
Speaker 1: effect here well, generally the we we take a look
Speaker 1: at the expectations index, so that can have like a
Speaker 1: six month lead, but again we need to see sort
Speaker 1: of a persistent downturn that then manifests itself in the
Speaker 1: present situation as well. So it's it's interesting to, you know,
Speaker 1: take a look at the two components and see if
Speaker 1: they're moving in sync, and if they're both heading south,
Speaker 1: then we could begin to see a weakening and consumer
Speaker 1: confidence and spending and the economy as a whole. One
Speaker 1: of the things at least, and I've been hearing more
Speaker 1: and more over the less several weeks when we talk
Speaker 1: to economists and fund managers, is that the potential and
Speaker 1: maybe even likelihood for some type of for a recession,
Speaker 1: and maybe MIDI or anything in your data suggesting that
Speaker 1: that is reasonable expectation. As of right now, we're not
Speaker 1: expecting a recession at least this year. Obviously, you know,
Speaker 1: the probability could increase if we begin to face you know,
Speaker 1: encounter more tail winds, so to speak. But for right now,
Speaker 1: you know, we're more a little bit concerned. I think
Speaker 1: with a divergence between you know, business confidence and consumer
Speaker 1: confidence and to see whether or not those two then
Speaker 1: sort of we can close the gap there, um, because
Speaker 1: we've got business leaders who are significantly less confident than consumers.
Speaker 1: I'm just wondering if there is something in particular that
Speaker 1: we can pinpoint as an issue that's the key one
Speaker 1: that consumers are watching to get resolved to feel more
Speaker 1: confident again. Well, we did see a tremendous spike in
Speaker 1: the mentions of trade and tariff discussions this month. Um,
Speaker 1: you know, it's maybe three, four or five times the
Speaker 1: number of mentions that we've seen over the last month.
Speaker 1: So whatever happened in early June obviously resonated very negatively
Speaker 1: with consumers. Now, you know, things have dissipated a little bit.
Speaker 1: I think the situation is probably a little bit more
Speaker 1: favorable than it was at the beginning of the month.
Speaker 1: So we'll see if we get a bounce back in
Speaker 1: early July or not, or if we continue sort of
Speaker 1: in this you know push and pull with trades and tariffs.
Speaker 1: It could have a lasting impact on confidence. I don't
Speaker 1: think that issue is likely going away. We'll see what
Speaker 1: happens in the G twenty this weekend, but I mean,
Speaker 1: I think we certainly China. It seems like it might
Speaker 1: be at best case what we've been here from people's
Speaker 1: kick the can down the road a little bit. Yeah,
Speaker 1: but this to me is a fascinating point. And Lynn Franco,
Speaker 1: this is such a great day for you to be
Speaker 1: here because the idea that the uncertainty around trade is
Speaker 1: bleeding into the real economy and consumers willingness to spend,
Speaker 1: not just big corporation saying oh, it's going to cost
Speaker 1: us more. This is a very interesting fact and it
Speaker 1: raises some serious questions. If we don't get some sort
Speaker 1: of resolution, how regardless of the stock market and their response,
Speaker 1: the actual economic impact could be significant. That, to me,
Speaker 1: is is a fascinating point looking at the consumer confidence data.
Speaker 1: Linn Franco, thank you so much for being with us.
Speaker 1: As geopolitical risk abounds in a number of corners around
Speaker 1: the world, this being reported overnight by Bloomberg News that
Speaker 1: President Trump evidently mused to confidence about withdrawing from a
Speaker 1: longstanding defense treaty with Japan. This according to people who
Speaker 1: spoke with Bloomberg who didn't want to be identified. Joining
Speaker 1: us now to discuss how brands. Henry A. Kissinger, Distinguished
Speaker 1: Professor at Johns Hopkins University's School of Advanced International Studies,
Speaker 1: also a Bloomberg opinion. Calumness joining us from Baltimore, Maryland, How,
Speaker 1: thank you so much for being with us. So let's
Speaker 1: just start there with this concept of upending this defense
Speaker 1: treaty with Japan. What would this mean for the U.
Speaker 1: S And its relationship with that nation. It would mean
Speaker 1: a pretty significant alteration of U. S relations, not just
Speaker 1: with Japan, but with the entire Asia Pacific in the
Speaker 1: sense that the US alliance with Japan has been the
Speaker 1: cornerstone of America's strategic posture in that part of the
Speaker 1: world UH for over sixty years at this point. It's
Speaker 1: been the cornerstone of peace and security in an incredibly
Speaker 1: dynamic region. And so if the United States were to
Speaker 1: pull back, if they were to withdraw from that alliance UH,
Speaker 1: it would fundamentally up end both geopolitical and geoeconomic arrangements
Speaker 1: of the region. So, professor, would you if if the
Speaker 1: US were to pull out of this long standing arrangement
Speaker 1: would have materially weakened the US in that region of
Speaker 1: the world in your opinion. Certainly, you know, the United
Speaker 1: States derives an enormous amount of influence because it has
Speaker 1: security alliances with key countries throughout the region, Japan being
Speaker 1: the most important, and so if the United States were
Speaker 1: no longer so closely allied to Japan, or if it
Speaker 1: went so far as to terminate the alliance, there would
Speaker 1: be far less reason for Japanese leaders to listen to
Speaker 1: American leaders on a whole variety of issues. So I
Speaker 1: guess there's a question of how much President Trump was
Speaker 1: taking this seriously, how much this was just musing on
Speaker 1: the heels of some report by President Trump, And we
Speaker 1: don't have the details on that point. But there is
Speaker 1: a question how much com President from do unilaterally, both
Speaker 1: with this as well as some of his other threats
Speaker 1: with Iran. How much can he do without congressional approval.
Speaker 1: You would probably get differing opinions on that, in the
Speaker 1: sense that I would imagine the President would argue that
Speaker 1: he has the authority to withdraw unilaterally from various treaties
Speaker 1: that the United States has signed, but I imagine the
Speaker 1: Congress would have a different opinion, and so that there
Speaker 1: would be a degree of conflict within the U S
Speaker 1: system over that question. But but pivoting to the point
Speaker 1: you raised about whether the president is serious, I think
Speaker 1: there are a couple of things to keep in mind. One,
Speaker 1: this is a recurring theme with this president. He's openly
Speaker 1: or privately mused about withdrawing from a number of American alliances,
Speaker 1: including NATO and the U S to Panelliance, since becoming
Speaker 1: president and even before. And I think that the general
Speaker 1: perception is that this is probably more blowing off steam
Speaker 1: than anything else. But these reports still have a oncrete
Speaker 1: effects because they certainly can't do much for the self
Speaker 1: confidence of US allies in tense parts of the world. So, Professor,
Speaker 1: one of the backbones of some of these discussions from
Speaker 1: President Trump about pulling out of some of these alliances
Speaker 1: is that other countries don't shoulder their fair share economically.
Speaker 1: So I'm presumably here as it relates to Japan, it's
Speaker 1: costs the US a lot of money to have our
Speaker 1: presence in Japan? Is that type of thinking, I e.
Speaker 1: That we shoulder too much of the economic burden of
Speaker 1: patrolling the world, is that shared widely within d C.
Speaker 1: Within d C, I think the answer is probably no,
Speaker 1: for a variety of reasons. And one reason is that
Speaker 1: the costs of stationing American forces in Japan and other
Speaker 1: countries are often exaggerated because Japan, like South Korea, like Germany,
Speaker 1: provides significant amounts of what's called host nation support for
Speaker 1: American troops. In other words, of the Japanese government de
Speaker 1: phrase a significant portion of what it cost the United
Speaker 1: States to station forces in Japan. The other thing that's
Speaker 1: worth remembering is that we don't pledge to defend countries
Speaker 1: like Japan because we think it's in their interest to
Speaker 1: do so. We do that because we think it's an
Speaker 1: our interest to do so. We think that it will
Speaker 1: make for more peaceful and stable Northeast Asia, and that
Speaker 1: in turn will benefit the United States geopolitically and economically.
Speaker 1: Now that said, there has been a degree of discomfort
Speaker 1: stretching back over a number of administrations about whether Japan
Speaker 1: is bearing as much of the burden as it ought
Speaker 1: to in terms of providing stability in that region and beyond.
Speaker 1: And I think that's a fair debate to have. But
Speaker 1: going a step further and thinking about withdrawing from the
Speaker 1: alliance would be going too far. Meanwhile, President Trump tweeting
Speaker 1: this morning about Iran, saying that Iran only understands strength
Speaker 1: and power, h that Iran put out a quote very
Speaker 1: ignorant and insulting statement, and talking about how overwhelming force,
Speaker 1: which would be his response to any attack by Iran,
Speaker 1: will be meant with obliteration potentially. I'm just wondering, how
Speaker 1: seriously do people take this. I'm looking again, We've been
Speaker 1: looking at the price of oil. It's not responding that much.
Speaker 1: I think people are starting to perceive that there are
Speaker 1: contradictory tendencies in the President's policy toward Irans. On the
Speaker 1: one hand, he's very serious about getting tough with Iran
Speaker 1: and trying to put additional pressure on the regime and
Speaker 1: forcing the regime to accept some deal that would be
Speaker 1: more stringent than the one that the Obama administration negotiated.
Speaker 1: On the other hand, the President made quite clear last
Speaker 1: week that he really has no interest in taking on
Speaker 1: another military conflict, particularly in the Middle East. This has
Speaker 1: been a theme of his campaign rater going back to
Speaker 1: and there's no reason to think that he has changed
Speaker 1: his mind, and so I think what what people may
Speaker 1: be doing is assuming that while the President will talk tough,
Speaker 1: he will ultimately decide not to pull the trigger on
Speaker 1: a major military operation visa Iran unless the United States
Speaker 1: is significantly provoked. Haw Brands, thank you so much. Haw
Speaker 1: Brands is the Henry A. Kissinger Distinguished Professor, JOHNS. Hopkins
Speaker 1: University's School of Advanced International Studies. It's also Bloomberg Opinion
Speaker 1: columnists Sharlenn sharing his views on the US UH Japan
Speaker 1: Defense pack. Thanks for listening to the Bloomberg P and
Speaker 1: L podcast. You can subscribe and listen to interviews at
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney,
Speaker 1: I'm on Twitter at pt Sweeney. I'm Lisa abram Woits.
Speaker 1: I'm on Twitter at Lisa A. Bram Woits. One. Before
Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg
Speaker 1: Radio