1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's the power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:27,400 Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,840 --> 00:00:31,520 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:31,560 --> 00:00:36,600 Speaker 1: insight from the best in economics, finance, investment and international relations. 7 00:00:37,000 --> 00:00:41,600 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 8 00:00:41,680 --> 00:00:49,280 Speaker 1: of course on the Bloomberg Right now is a clinic 9 00:00:49,320 --> 00:00:51,840 Speaker 1: and particularly for all of you on Global Wall Street. 10 00:00:52,120 --> 00:00:55,720 Speaker 1: Christopher Varone is a strategious with Jason Trends Shop and 11 00:00:55,760 --> 00:01:00,800 Speaker 1: he does exquisite trend based or Chris, good morning. You 12 00:01:00,880 --> 00:01:04,480 Speaker 1: and I are death on trying to catch the falling 13 00:01:04,760 --> 00:01:08,840 Speaker 1: knife in the dark. What is the falling knife in 14 00:01:08,920 --> 00:01:12,840 Speaker 1: the dark for the equity markets? Well, it's the loser's game. 15 00:01:13,120 --> 00:01:15,560 Speaker 1: It's difficult to do. You can't do it well. You 16 00:01:15,600 --> 00:01:17,880 Speaker 1: can't do it well often. And I think right now, 17 00:01:17,920 --> 00:01:20,880 Speaker 1: when you look at what is the falling knife and 18 00:01:21,000 --> 00:01:22,760 Speaker 1: equity markets, I think you have to talk about that 19 00:01:22,840 --> 00:01:25,760 Speaker 1: more from a relative perspective. What are the groups or 20 00:01:25,800 --> 00:01:29,120 Speaker 1: stocks that were leaders over the last several years that 21 00:01:29,160 --> 00:01:31,160 Speaker 1: are now deteriorating. And I think you look to the 22 00:01:31,160 --> 00:01:33,800 Speaker 1: bond proxies for evidence of that. You see it with staples, 23 00:01:33,800 --> 00:01:35,720 Speaker 1: you see it with utilities, you see it with reads. 24 00:01:35,920 --> 00:01:37,920 Speaker 1: They've actually bounced over the last few weeks, but they 25 00:01:37,920 --> 00:01:40,920 Speaker 1: haven't bounced as leadership stocks. That's a big change. Who 26 00:01:41,000 --> 00:01:46,120 Speaker 1: is relatively priced perfection? Is there value away from small caps, 27 00:01:46,560 --> 00:01:50,440 Speaker 1: value away from mid caps, or value away from the 28 00:01:50,520 --> 00:01:53,760 Speaker 1: forties stocks? I spend too much time talking about. I 29 00:01:53,800 --> 00:01:57,120 Speaker 1: think there's value in some of the smaller stocks right here. 30 00:01:57,160 --> 00:02:00,880 Speaker 1: When you look at credit spreads at multi year lows, 31 00:02:01,000 --> 00:02:04,360 Speaker 1: that's often environment that is beneficial to the smaller cap stocks. 32 00:02:04,800 --> 00:02:07,760 Speaker 1: I would also say, if you look at areas where 33 00:02:07,760 --> 00:02:10,119 Speaker 1: I think there's opportunity here, I would continue to put 34 00:02:10,120 --> 00:02:12,680 Speaker 1: banks in that camp as well. I do not think 35 00:02:12,680 --> 00:02:15,040 Speaker 1: those are priced at the right levels. I think we're 36 00:02:15,040 --> 00:02:17,600 Speaker 1: going to see the rally continue there. And I would 37 00:02:17,600 --> 00:02:20,480 Speaker 1: also say, even within consumer discretionary, you've actually seen some 38 00:02:20,480 --> 00:02:23,520 Speaker 1: pockets of improvement, perhaps even Nike being the latest stock 39 00:02:23,600 --> 00:02:26,720 Speaker 1: to show some signs of starting to turn. Chris, what 40 00:02:26,800 --> 00:02:28,519 Speaker 1: is the one thing that's being a you know, miss 41 00:02:28,560 --> 00:02:30,000 Speaker 1: priced if you look at some of the stocks. So 42 00:02:30,040 --> 00:02:32,280 Speaker 1: I like the fact that you're looking at Nike. Are 43 00:02:32,320 --> 00:02:36,280 Speaker 1: we miss pricing or ignoring a possible trade war? And 44 00:02:36,320 --> 00:02:38,680 Speaker 1: what does that mean for evaluations? Yeah? Well, I think 45 00:02:38,720 --> 00:02:42,480 Speaker 1: when you look within um discretionary in particular, or the 46 00:02:42,480 --> 00:02:44,400 Speaker 1: market at large, I think one of the great ironies 47 00:02:44,440 --> 00:02:47,320 Speaker 1: here is the pockets of the market that are most 48 00:02:47,400 --> 00:02:51,720 Speaker 1: outrageously priced are the more defensive corners of the market. 49 00:02:52,120 --> 00:02:54,639 Speaker 1: They're the areas that have really been your leadership over 50 00:02:54,680 --> 00:02:57,240 Speaker 1: the last number of years, whether it's utilities or reads. 51 00:02:57,520 --> 00:02:59,320 Speaker 1: I think that's the great irony of the tape. At 52 00:02:59,320 --> 00:03:02,720 Speaker 1: the moment, when here discussions about valuations getting too rich, 53 00:03:03,200 --> 00:03:06,040 Speaker 1: it is really not in the new leadership groups. It's 54 00:03:06,040 --> 00:03:08,880 Speaker 1: in the old leadership group. So I'm not as concerned 55 00:03:08,880 --> 00:03:13,160 Speaker 1: about valuation here as maybe some others are. Right now, 56 00:03:13,240 --> 00:03:16,400 Speaker 1: the forward p and the smp UH is about eighteen 57 00:03:16,480 --> 00:03:20,399 Speaker 1: or nineteen times. While that's high relative to history, UH, 58 00:03:20,440 --> 00:03:23,799 Speaker 1: these things rarely stop at average. They tend to stop 59 00:03:24,040 --> 00:03:26,480 Speaker 1: well above average. Where does it go from here? Are 60 00:03:26,480 --> 00:03:29,000 Speaker 1: we going to touch twenty one thousand? And what happens 61 00:03:29,000 --> 00:03:30,920 Speaker 1: after twenty one? Does it go onto twenty two and 62 00:03:30,919 --> 00:03:33,720 Speaker 1: even I think the trend is up. And you know, 63 00:03:33,760 --> 00:03:36,400 Speaker 1: just to put it in terms of SMP levels, the 64 00:03:36,400 --> 00:03:39,720 Speaker 1: big breakout from two thousand and thirteen, when we finally 65 00:03:39,720 --> 00:03:42,080 Speaker 1: got above the two thousand seven highs pointed to a 66 00:03:43,200 --> 00:03:47,080 Speaker 1: long term target. So I think ultimately that's the path 67 00:03:47,240 --> 00:03:50,520 Speaker 1: that we're headed. We care more about the trend than 68 00:03:50,560 --> 00:03:52,560 Speaker 1: the target. And I think the trend is still okay. 69 00:03:52,560 --> 00:03:55,920 Speaker 1: But I get it. But I'm and and and you 70 00:03:56,240 --> 00:03:58,560 Speaker 1: both Christopher On and Francie and like qua folks are 71 00:03:58,560 --> 00:04:02,400 Speaker 1: too young to remember member the glow of being up 72 00:04:02,680 --> 00:04:07,040 Speaker 1: SMP twenty two point six percent, and when you look 73 00:04:07,040 --> 00:04:10,560 Speaker 1: at some of the currency mixes, including if Francine put 74 00:04:10,560 --> 00:04:14,080 Speaker 1: her entire four oh n k in UM in the 75 00:04:14,200 --> 00:04:17,160 Speaker 1: US last year, she's up forty eight percent. Excuse me, 76 00:04:17,520 --> 00:04:21,440 Speaker 1: thirty nine point seven percent. Uh. If you're investing in 77 00:04:21,480 --> 00:04:25,440 Speaker 1: America from the United Kingdom, come on, these are massive 78 00:04:26,000 --> 00:04:30,840 Speaker 1: bull market numbers. How do you stay invested knowing there's 79 00:04:30,880 --> 00:04:35,480 Speaker 1: this strange thing called reversion to the meet straight that 80 00:04:35,560 --> 00:04:38,480 Speaker 1: gets strength in this business, and I think people misunderstand 81 00:04:38,520 --> 00:04:41,160 Speaker 1: that UM. I also think it's important to emphasize that 82 00:04:41,240 --> 00:04:43,839 Speaker 1: most of the world went through a fairly pervasive bear 83 00:04:43,920 --> 00:04:47,240 Speaker 1: market from mid two thousand fourteen through mid two thousand sixteen. 84 00:04:47,240 --> 00:04:49,599 Speaker 1: You had the European markets down about, you had the 85 00:04:49,600 --> 00:04:54,000 Speaker 1: emerging markets down for your se of all, US stocks 86 00:04:54,040 --> 00:04:57,279 Speaker 1: went down by or more so everywhere you look from 87 00:04:57,279 --> 00:05:00,280 Speaker 1: mid two thousand fourteen through mid two thousand and sixteen, Uh, 88 00:05:00,320 --> 00:05:02,880 Speaker 1: there were bear markets. So this last leg up I 89 00:05:02,880 --> 00:05:05,880 Speaker 1: think is the start of a new reacceleration phase, not 90 00:05:06,080 --> 00:05:08,800 Speaker 1: the end of an aging blow market. But Chris, is 91 00:05:08,839 --> 00:05:11,240 Speaker 1: it on fundamentals or is it purely central banks? When 92 00:05:11,279 --> 00:05:14,080 Speaker 1: you think about the amount of liquidity out there? What 93 00:05:14,200 --> 00:05:16,919 Speaker 1: happens when we start normalizing? I think, if anything, the 94 00:05:17,000 --> 00:05:20,200 Speaker 1: influence of central banks here maybe starting to wane. And 95 00:05:20,320 --> 00:05:23,680 Speaker 1: I think we saw that last summer when Japanese tenure 96 00:05:23,760 --> 00:05:27,840 Speaker 1: yields went from negative thirty basis points to zero almost overnight. 97 00:05:27,960 --> 00:05:32,120 Speaker 1: I think that may ultimately mark the high mark in 98 00:05:32,480 --> 00:05:35,200 Speaker 1: central banking going forward. And as a consequence of that, 99 00:05:35,279 --> 00:05:37,919 Speaker 1: what has happened since then, what we've seen correlations among 100 00:05:37,960 --> 00:05:41,400 Speaker 1: stocks globally move meaningfully lower. So I think, if anything, 101 00:05:41,400 --> 00:05:44,200 Speaker 1: this market is trading more on a fundamental basis today 102 00:05:44,480 --> 00:05:46,760 Speaker 1: than it has been over the last number of years. 103 00:05:46,760 --> 00:05:49,200 Speaker 1: I think ultimately that's a healthy change. I mean, and 104 00:05:49,200 --> 00:05:50,960 Speaker 1: and again, just to get this out of the way, 105 00:05:50,960 --> 00:05:52,719 Speaker 1: we're going to come back with you talk a little 106 00:05:52,760 --> 00:05:56,080 Speaker 1: bit of theory here coming up. I I look at 107 00:05:56,200 --> 00:06:01,600 Speaker 1: the flammas feel of underperformance of national stocks and emerging 108 00:06:01,680 --> 00:06:06,440 Speaker 1: market stocks though to tells the Semens of Europe et cetera. 109 00:06:06,720 --> 00:06:10,720 Speaker 1: Are they a value now or a value trap? Technically, 110 00:06:11,000 --> 00:06:13,480 Speaker 1: I think there are a value here and Tom, You're 111 00:06:13,480 --> 00:06:16,599 Speaker 1: absolutely right, these en pockets of the mark globally that 112 00:06:16,720 --> 00:06:18,919 Speaker 1: really have underperformed, not just for the last year or 113 00:06:18,920 --> 00:06:21,000 Speaker 1: two years, but for the last five, six or seven years. 114 00:06:21,360 --> 00:06:24,320 Speaker 1: I think particularly e M is starting to turn in 115 00:06:24,360 --> 00:06:26,920 Speaker 1: that fashion. Look at the strength we're seeing from Hong Kong, 116 00:06:27,320 --> 00:06:31,080 Speaker 1: from Brazil, from e M Financials, from e in Tech. 117 00:06:31,600 --> 00:06:34,440 Speaker 1: That is positive. Yeah, And do they need a bigger 118 00:06:34,520 --> 00:06:36,760 Speaker 1: divondend growth? I mean quickly here, I mean look to 119 00:06:36,960 --> 00:06:42,320 Speaker 1: Siemens two point nine divondend but just minuscule single digit growth. 120 00:06:42,600 --> 00:06:44,880 Speaker 1: This is not home deep, but well, I think what's 121 00:06:44,880 --> 00:06:47,120 Speaker 1: interesting about Siemens here, I mean, this is another example 122 00:06:47,120 --> 00:06:49,200 Speaker 1: of the stock that really hasn't worked, not just for 123 00:06:49,200 --> 00:06:51,120 Speaker 1: a couple of years, but for fifteen or twenty years. 124 00:06:51,120 --> 00:06:54,720 Speaker 1: If you look at a long from knows this coming 125 00:06:54,760 --> 00:06:58,320 Speaker 1: out of a very very big base after a fifteen 126 00:06:58,400 --> 00:07:01,720 Speaker 1: year period in purgatory, that interest us. Here there's some 127 00:07:01,920 --> 00:07:04,719 Speaker 1: big I mean, look at BMW that one has turned. 128 00:07:04,760 --> 00:07:07,320 Speaker 1: Look at s A P as well. I think there's 129 00:07:07,320 --> 00:07:09,479 Speaker 1: some compelling cases to be made that some big cap 130 00:07:09,520 --> 00:07:12,200 Speaker 1: German stocks have turned here. Did you did you go 131 00:07:12,360 --> 00:07:15,320 Speaker 1: long un leave or twelve hours before Craft put out 132 00:07:15,360 --> 00:07:18,480 Speaker 1: that announcement and then you covered your trip right before 133 00:07:18,480 --> 00:07:20,880 Speaker 1: the collapse. I you the one guy that did that. 134 00:07:21,000 --> 00:07:25,360 Speaker 1: I I sure wish listen. I think not dissimilar from 135 00:07:25,400 --> 00:07:29,000 Speaker 1: the US, what we've seen throughout Europe is some of 136 00:07:29,040 --> 00:07:32,240 Speaker 1: the bond proxies or some of the yield stocks on 137 00:07:32,280 --> 00:07:34,880 Speaker 1: a relative basis actually just are not that impressive anymore. 138 00:07:34,920 --> 00:07:38,080 Speaker 1: I think you want a favorite cicklicality both in Europe 139 00:07:38,120 --> 00:07:42,000 Speaker 1: as you do here domestically. Christopher Vone with us with 140 00:07:42,040 --> 00:07:45,160 Speaker 1: Francie Lakwan in London. Chris, let's talk a little geek 141 00:07:45,320 --> 00:07:49,200 Speaker 1: technical analysis. Let's start with moving averages. I'm death on 142 00:07:49,320 --> 00:07:52,960 Speaker 1: moving averages. It's a great way to lose money. I'm 143 00:07:53,000 --> 00:07:56,920 Speaker 1: death on the death cross full disclosure everybody, how do 144 00:07:57,040 --> 00:08:02,280 Speaker 1: you use moving averages to not lose money? The only 145 00:08:02,360 --> 00:08:05,600 Speaker 1: thing I care about with respect to moving averages is 146 00:08:05,640 --> 00:08:08,560 Speaker 1: the slope, because the slope tells us about trend. And 147 00:08:08,560 --> 00:08:12,080 Speaker 1: I would encourage every single one listening look at all 148 00:08:12,120 --> 00:08:15,320 Speaker 1: the stocks in your portfolio only look at their two 149 00:08:15,400 --> 00:08:18,360 Speaker 1: hun day moving averages. Are they upward sloping, are they 150 00:08:18,400 --> 00:08:21,480 Speaker 1: sideways or they downward sloping. You want to own stocks 151 00:08:21,480 --> 00:08:25,360 Speaker 1: with upward sloping two outer day moving averages. Statistically, those 152 00:08:25,400 --> 00:08:27,560 Speaker 1: are the type of stocks you're rewarded for owning. And 153 00:08:27,600 --> 00:08:30,440 Speaker 1: it's one of the reasons Francine to look at moving 154 00:08:30,560 --> 00:08:34,200 Speaker 1: averages in an equity study on a log axis, because 155 00:08:34,240 --> 00:08:37,800 Speaker 1: then you've got the normalized y axis and the slopes 156 00:08:38,080 --> 00:08:40,880 Speaker 1: line up where slope matters. Was that too much francing? 157 00:08:41,240 --> 00:08:43,400 Speaker 1: A little bit too much? But actually, Chris, the point 158 00:08:43,480 --> 00:08:45,760 Speaker 1: was you were sounding very much like Tom Kane. Now 159 00:08:45,760 --> 00:08:47,760 Speaker 1: I know where he gets its slope matters, and I 160 00:08:47,840 --> 00:08:49,960 Speaker 1: agree with that. Chris talked to me a little bit 161 00:08:49,960 --> 00:08:51,800 Speaker 1: about yen, because if you look at the moving averages 162 00:08:51,960 --> 00:08:56,120 Speaker 1: under day and fifty, there are definitely some technical barriers 163 00:08:56,200 --> 00:08:58,800 Speaker 1: or levels on YENNA. Yeah, I think when you look 164 00:08:58,800 --> 00:09:02,640 Speaker 1: at particularly the longer or term UH dollar yen shar 165 00:09:02,880 --> 00:09:06,120 Speaker 1: I do think we are still in a longer term phase. 166 00:09:06,120 --> 00:09:10,160 Speaker 1: We're going to see yen weaken tactically. I'm less convinced 167 00:09:10,240 --> 00:09:12,640 Speaker 1: of that call, um, but you know, you look at 168 00:09:12,679 --> 00:09:14,800 Speaker 1: some of these longer term levels. I don't know why 169 00:09:15,440 --> 00:09:18,840 Speaker 1: you're not going to revisit one twenty maybe ultimately on 170 00:09:18,880 --> 00:09:22,240 Speaker 1: your way to one one forty. As a consequence of this, 171 00:09:22,520 --> 00:09:25,719 Speaker 1: I think we ought to look at Japanese stocks as 172 00:09:25,720 --> 00:09:28,160 Speaker 1: a long term call here, and the nique looks really good, 173 00:09:28,200 --> 00:09:31,840 Speaker 1: both hedged and unhedged. UH That, in my impression, is 174 00:09:31,840 --> 00:09:35,360 Speaker 1: not getting enough attention. How well Japanese stocks have acted 175 00:09:35,600 --> 00:09:37,680 Speaker 1: the last six or seven months after what was a 176 00:09:37,720 --> 00:09:41,800 Speaker 1: pretty devastating bear market. You had the nique down from 177 00:09:41,800 --> 00:09:43,880 Speaker 1: mid fourteen through mid sixteen. I think we've seen a 178 00:09:43,880 --> 00:09:46,679 Speaker 1: big turn there, and I think ultimately weaker yen probably 179 00:09:46,720 --> 00:09:49,960 Speaker 1: contributes to that move. So, Chris, do you prefer equities 180 00:09:50,000 --> 00:09:52,719 Speaker 1: overall as opposed to currencies because we've seen too much 181 00:09:52,760 --> 00:09:56,720 Speaker 1: volatility on currencies. Yeah, I think um, right now, some 182 00:09:56,800 --> 00:10:00,839 Speaker 1: of the more uh some of the clear trends are 183 00:10:00,880 --> 00:10:04,560 Speaker 1: probably in the equity market. I think the FX market 184 00:10:04,640 --> 00:10:08,320 Speaker 1: is trying to get a handle on what direction the 185 00:10:08,360 --> 00:10:12,000 Speaker 1: macro story will go. So I'd say in terms of convictions, 186 00:10:12,120 --> 00:10:14,760 Speaker 1: I probably have some stronger convictions in equities. Here we 187 00:10:14,880 --> 00:10:16,679 Speaker 1: touched on this earlier, Let's do it again. I think 188 00:10:16,679 --> 00:10:21,320 Speaker 1: it's so important. Manus Cranny had a fantastic interview with 189 00:10:21,360 --> 00:10:25,000 Speaker 1: the head of OPEC, the Secretary General, and I was 190 00:10:25,160 --> 00:10:28,400 Speaker 1: thunderstruck by how he talked his book find We all 191 00:10:28,400 --> 00:10:31,600 Speaker 1: know they're going to do that against the one way 192 00:10:31,679 --> 00:10:36,040 Speaker 1: bet on long oil. How do you technically adapt to 193 00:10:36,160 --> 00:10:41,080 Speaker 1: the noise and the positioning out there on any given item. Well, 194 00:10:41,120 --> 00:10:43,760 Speaker 1: with respect to oil in particular, as you know, Tom, 195 00:10:43,840 --> 00:10:47,800 Speaker 1: it's a very crowded long I always think of things, well, 196 00:10:47,800 --> 00:10:51,120 Speaker 1: if everyone's long, shouldn't it be going up? And it 197 00:10:51,280 --> 00:10:53,960 Speaker 1: stands out to me that over the last four seven 198 00:10:53,960 --> 00:10:57,920 Speaker 1: eight weeks oil really hasn't made any progress. That not 199 00:10:58,920 --> 00:11:01,200 Speaker 1: the best signal in terms of what we can expect 200 00:11:01,200 --> 00:11:03,520 Speaker 1: from oil. I think here in the future, if everyone's 201 00:11:03,520 --> 00:11:06,559 Speaker 1: already there, who's left to buy? I think you could 202 00:11:06,600 --> 00:11:09,439 Speaker 1: probably see w T I creek towards sixty. But I 203 00:11:09,480 --> 00:11:12,680 Speaker 1: would temper my return expectations much above that. Does technical 204 00:11:12,720 --> 00:11:15,520 Speaker 1: analysis help you in the bondom market now or is 205 00:11:15,520 --> 00:11:19,920 Speaker 1: there such a distortion and financial repression that you can't 206 00:11:20,120 --> 00:11:23,280 Speaker 1: use your world. I think technicals is most helpful in 207 00:11:23,320 --> 00:11:26,200 Speaker 1: the bondo market right now because it reminds us how 208 00:11:26,240 --> 00:11:29,200 Speaker 1: important history here is. We have to go back to 209 00:11:29,240 --> 00:11:32,680 Speaker 1: the nineteen fifties for the last time interest rates started 210 00:11:32,720 --> 00:11:35,080 Speaker 1: to go up, and what we learned from the early 211 00:11:35,160 --> 00:11:38,600 Speaker 1: fifties is once they start to move, you set in 212 00:11:38,679 --> 00:11:41,480 Speaker 1: motion a ten or fifteen year trend change. And I think, 213 00:11:41,520 --> 00:11:43,720 Speaker 1: if you look at this, are we there? I mean, critically, 214 00:11:43,720 --> 00:11:46,400 Speaker 1: are coming out of Eisenhower? Are we to the point 215 00:11:46,520 --> 00:11:49,280 Speaker 1: we're out of the fifty three deflation? We're back to 216 00:11:49,320 --> 00:11:53,920 Speaker 1: the great reflation? To out to Alan Volker help me here, 217 00:11:53,960 --> 00:11:58,160 Speaker 1: Francine Paul Voker of the I think we just had 218 00:11:58,240 --> 00:12:02,000 Speaker 1: this nineteen fifty one moment where the regime change is 219 00:12:02,000 --> 00:12:04,640 Speaker 1: now in place. And with every regime change, the rules 220 00:12:04,679 --> 00:12:06,640 Speaker 1: of the game also have to change, and that's what 221 00:12:06,760 --> 00:12:09,440 Speaker 1: technical analysis is all about. We just spent the last 222 00:12:09,559 --> 00:12:12,800 Speaker 1: thirty years being a buyer of every single pullback in bonds. 223 00:12:13,200 --> 00:12:14,880 Speaker 1: I think we want to be a seller of every 224 00:12:14,880 --> 00:12:18,839 Speaker 1: single rally in bonds now stuck and fused there with 225 00:12:18,679 --> 00:12:22,000 Speaker 1: with with Gregory and Julius calendars. I don't Yeah, well 226 00:12:22,000 --> 00:12:23,960 Speaker 1: we'll talk about that when we got more time. Francy 227 00:12:24,040 --> 00:12:28,640 Speaker 1: Laqua absolutely brilliant today, folks, on the birthday of the 228 00:12:28,720 --> 00:12:33,000 Speaker 1: first President of the United States. We'll talk about that here. 229 00:12:33,559 --> 00:12:35,440 Speaker 1: You know, Christopher On thanks for the clinic. He is 230 00:12:35,440 --> 00:12:39,760 Speaker 1: with strategos at Research trend Based Technical Analysis. Love having 231 00:12:39,880 --> 00:12:43,200 Speaker 1: We got a huge responsor Mr Barrown Joints. Francy Laqua 232 00:12:43,360 --> 00:12:58,080 Speaker 1: in London. I'm Tom Keane in New York. This is 233 00:12:58,080 --> 00:13:01,680 Speaker 1: a pleasure. Craig Moffett with off At Nathanson has given 234 00:13:01,760 --> 00:13:05,840 Speaker 1: us terrific perspective on wireless cable and a course with 235 00:13:06,600 --> 00:13:10,840 Speaker 1: Mr Nathanson about what we do with our TV channel changer. Craig, 236 00:13:10,880 --> 00:13:12,800 Speaker 1: a big announcement from you today, I'm gonna call to 237 00:13:12,880 --> 00:13:18,120 Speaker 1: see change you go along on Verizon? Why well, hey, Tom, 238 00:13:18,360 --> 00:13:22,880 Speaker 1: you know it's it's really a value call um and 239 00:13:22,880 --> 00:13:25,959 Speaker 1: and look, let's be let's be entirely clear here, Verizon 240 00:13:26,720 --> 00:13:30,079 Speaker 1: is not a growth stock and uh and the wireless 241 00:13:30,080 --> 00:13:33,320 Speaker 1: sector is no longer a growth sector. Um. And so 242 00:13:33,360 --> 00:13:35,600 Speaker 1: if you go back a ways to the days when 243 00:13:35,640 --> 00:13:40,560 Speaker 1: expectations were very growthy UM, the stock really wasn't attractive 244 00:13:40,720 --> 00:13:44,640 Speaker 1: and and it has disappointed people who were looking for 245 00:13:44,679 --> 00:13:47,960 Speaker 1: exactly that. Now. I think the pendulum is overshot. The 246 00:13:48,000 --> 00:13:52,400 Speaker 1: stock is really cheap. Sentiment is absolutely awful. UM and 247 00:13:52,600 --> 00:13:55,400 Speaker 1: stocks trading at about two thirds the market multiple. You 248 00:13:55,440 --> 00:13:57,520 Speaker 1: have to go back fifteen years to find it this 249 00:13:57,679 --> 00:13:59,880 Speaker 1: cheap relative to the market. I don't know what the 250 00:14:00,040 --> 00:14:03,280 Speaker 1: free cash flow stories. Free cash flow five six years 251 00:14:03,280 --> 00:14:07,560 Speaker 1: ago was sixteen seventeen billion, They peeked out at twenty 252 00:14:07,559 --> 00:14:11,480 Speaker 1: two billion one billion, and then basically free cash flows 253 00:14:11,559 --> 00:14:16,400 Speaker 1: off a cliff. Can they sustain the dividend and critically, 254 00:14:16,480 --> 00:14:20,360 Speaker 1: can they actually become the utility you're talking about in 255 00:14:20,600 --> 00:14:24,720 Speaker 1: raise the dividend at a high single digit level. No, Now, 256 00:14:25,120 --> 00:14:28,040 Speaker 1: raise the dividend at a high single digit level. No. UM. 257 00:14:28,160 --> 00:14:30,960 Speaker 1: Then again, you're getting a five percent dividend yield, and 258 00:14:31,000 --> 00:14:35,640 Speaker 1: you should expect the dividend um. The dividend yield is 259 00:14:35,160 --> 00:14:39,680 Speaker 1: h is reasonably safe. UM safer for example, at Verizon 260 00:14:39,760 --> 00:14:41,360 Speaker 1: than it is at a T and T where the 261 00:14:41,400 --> 00:14:44,840 Speaker 1: dividend coverage or the dividend payout ratio, if you will, 262 00:14:44,840 --> 00:14:47,520 Speaker 1: as a percentage of free cash flow is actually higher 263 00:14:47,560 --> 00:14:51,680 Speaker 1: at A T and T than it is at Verizon UM. Uh, 264 00:14:51,880 --> 00:14:54,800 Speaker 1: but I don't think it's reasonable to expect high dividend growth. 265 00:14:54,880 --> 00:14:58,280 Speaker 1: I think this is a UM again, this is a 266 00:14:58,400 --> 00:15:02,280 Speaker 1: value stock now, and like any value stock, UM, you 267 00:15:02,320 --> 00:15:06,000 Speaker 1: tend to buy it UM when when people can't imagine 268 00:15:06,000 --> 00:15:09,280 Speaker 1: anything going right, UM right now, that's where sentiment is. 269 00:15:10,040 --> 00:15:12,240 Speaker 1: The wireless operators look like they're in the midst of 270 00:15:12,240 --> 00:15:15,040 Speaker 1: a price war. I would describe it a little differently. 271 00:15:15,080 --> 00:15:18,320 Speaker 1: A price war usually hits price right, it usually hits 272 00:15:18,360 --> 00:15:21,360 Speaker 1: the average revenue per user. That's not really what this is. 273 00:15:21,480 --> 00:15:24,080 Speaker 1: Verizon seems to be saying, we're going to start a 274 00:15:24,160 --> 00:15:28,080 Speaker 1: spending war. We're going to start a war where we 275 00:15:28,320 --> 00:15:32,400 Speaker 1: pit our network against everyone else's networks at a time 276 00:15:32,480 --> 00:15:36,040 Speaker 1: when A T and T is embroiled in it's in 277 00:15:36,120 --> 00:15:39,240 Speaker 1: trying to get its Time Warner deal closed, and UM 278 00:15:39,360 --> 00:15:42,560 Speaker 1: has less resources to spend on its network, where Sprint 279 00:15:42,600 --> 00:15:45,880 Speaker 1: has been underspending on its network for years. And Verizon 280 00:15:45,920 --> 00:15:48,080 Speaker 1: seems to be saying, we're going to double down on 281 00:15:48,200 --> 00:15:52,920 Speaker 1: our network advantage and we're going to to create an 282 00:15:53,000 --> 00:15:55,640 Speaker 1: unlimited war that if you want an unlimited war. You 283 00:15:55,640 --> 00:15:58,720 Speaker 1: will find that UM that that's a war we're going 284 00:15:58,760 --> 00:16:01,440 Speaker 1: to win. And I think they're probably right. Now that's 285 00:16:01,480 --> 00:16:04,960 Speaker 1: not fantastic for free cash flow. It's not fantastic for 286 00:16:05,720 --> 00:16:08,880 Speaker 1: but but again it's a cheap stock and and you 287 00:16:08,880 --> 00:16:10,720 Speaker 1: don't get to buy it this cheaply with that kind 288 00:16:10,720 --> 00:16:13,160 Speaker 1: of dividendial very often. But Craig if and this is 289 00:16:13,240 --> 00:16:15,880 Speaker 1: very similar. There are parallels right in between this industry 290 00:16:15,880 --> 00:16:17,920 Speaker 1: and the US and this industry in the UK. Once 291 00:16:17,960 --> 00:16:22,080 Speaker 1: they win the war, can they get margins back up? Well, 292 00:16:22,440 --> 00:16:24,880 Speaker 1: I think to some extent you have to to see 293 00:16:24,880 --> 00:16:29,320 Speaker 1: what happens with industry structure. UM. As recently as Friday, 294 00:16:29,640 --> 00:16:34,720 Speaker 1: UM your Own Service reported that UM that we are 295 00:16:34,760 --> 00:16:40,280 Speaker 1: getting closer to Sprint making a formal overture to buy 296 00:16:40,800 --> 00:16:43,120 Speaker 1: T Mobile or to sell to T Mobile, or find 297 00:16:43,160 --> 00:16:47,840 Speaker 1: some combination UM and restructuring the industry I think would 298 00:16:47,840 --> 00:16:50,960 Speaker 1: be good news for everyone. Verizon might might be the 299 00:16:50,960 --> 00:16:54,000 Speaker 1: biggest beneficiary. A T and T would obviously benefit as well, 300 00:16:54,080 --> 00:16:57,480 Speaker 1: but interestingly wireless is a relatively smaller part of their 301 00:16:57,480 --> 00:17:00,640 Speaker 1: portfolio at a T and T. Now, very generous of 302 00:17:00,680 --> 00:17:02,080 Speaker 1: you to be with us in the in the minute 303 00:17:02,080 --> 00:17:05,800 Speaker 1: that we've got left with you today. I underestimated John Lazier. 304 00:17:05,840 --> 00:17:08,959 Speaker 1: The guy comes out of Fitchburg, Massachusetts. He wears a 305 00:17:09,000 --> 00:17:12,040 Speaker 1: PIC shirt, he's got long hair. I see the Verizon 306 00:17:12,119 --> 00:17:15,560 Speaker 1: commercials this weekend. Is there any John Lajari in the 307 00:17:15,680 --> 00:17:19,399 Speaker 1: people at Verizon? Can they really keep with the game? 308 00:17:19,520 --> 00:17:23,840 Speaker 1: Change this guy that the creative destruction the team mobile 309 00:17:23,880 --> 00:17:27,560 Speaker 1: has done. Well, Look, they're they're they're never going to 310 00:17:27,640 --> 00:17:29,960 Speaker 1: play the game the way John plays it, with the 311 00:17:30,000 --> 00:17:35,320 Speaker 1: bombast and the name calling and twittering. Um. But but again, 312 00:17:35,400 --> 00:17:37,920 Speaker 1: if they want to start a network war, no one's 313 00:17:37,920 --> 00:17:41,280 Speaker 1: going to beat Verizon at the network. I think right 314 00:17:41,280 --> 00:17:45,240 Speaker 1: now investor sentiment is that there is no differentiation in 315 00:17:45,280 --> 00:17:47,359 Speaker 1: the network, and then a network based strategy is a 316 00:17:47,440 --> 00:17:50,320 Speaker 1: dead end street. Verizon, I think, would argue, no, that's 317 00:17:50,359 --> 00:17:54,160 Speaker 1: not the case. Um, that we are identifying our network, 318 00:17:54,240 --> 00:17:56,680 Speaker 1: that we're going to offer higher speeds and more capacity 319 00:17:56,720 --> 00:18:01,080 Speaker 1: than anybody else, not because we're massively wash in spectrum 320 00:18:01,160 --> 00:18:03,320 Speaker 1: or anything like that, but because we're simply going to 321 00:18:03,359 --> 00:18:06,760 Speaker 1: do the heavy lifting of of investing in the network 322 00:18:06,760 --> 00:18:09,320 Speaker 1: when no one else will or can. Craig, thank you 323 00:18:09,400 --> 00:18:12,639 Speaker 1: so much, Craig, love to get him on, particularly the 324 00:18:12,680 --> 00:18:16,840 Speaker 1: sea change, the announcement verizing Yahoo, but also MOFA. Nathan's 325 00:18:16,920 --> 00:18:19,359 Speaker 1: not a value basis. As you heard, they're going to 326 00:18:19,440 --> 00:18:22,960 Speaker 1: a buy Craig Mafat with Mafaa, Nathan said, And we'll 327 00:18:22,960 --> 00:18:34,639 Speaker 1: get him on for much longer discussions soon. Brought to 328 00:18:34,680 --> 00:18:38,320 Speaker 1: you by Bank of America Mary Lynch. Dedicated to bringing 329 00:18:38,320 --> 00:18:42,080 Speaker 1: our clients insights and solutions to meet the challenges of 330 00:18:42,080 --> 00:18:47,080 Speaker 1: a transforming world. That's the power of global connections. Mary Lynch, Pierce, 331 00:18:47,160 --> 00:18:55,200 Speaker 1: Feder and Smith Incorporated, Member s I p C. This 332 00:18:55,720 --> 00:18:59,720 Speaker 1: is well timed. Ambassador Burns Nicholas Burns is at the 333 00:18:59,760 --> 00:19:02,720 Speaker 1: Harvar Kennedy School. With his public service of decades, he's 334 00:19:02,760 --> 00:19:07,480 Speaker 1: been a frequent discusser of events with US. Ambassador. I 335 00:19:07,560 --> 00:19:12,639 Speaker 1: am so flummixed that I'm reading Jefferson. I'm promising to 336 00:19:12,680 --> 00:19:17,160 Speaker 1: read five books on Lincoln. I'm reading Lincoln's Virtues right now, 337 00:19:17,240 --> 00:19:20,639 Speaker 1: which Doris Karen's Goodwin raved about on the ethics and 338 00:19:20,720 --> 00:19:25,840 Speaker 1: morality of our sixteenth president. Um. I think of Secretary 339 00:19:25,920 --> 00:19:29,119 Speaker 1: of States along the way and the fractious discussion. I 340 00:19:29,160 --> 00:19:33,200 Speaker 1: think of John Hay in Lincoln's eighteen sixty White House 341 00:19:33,680 --> 00:19:39,240 Speaker 1: with Roosevelt, etcetera. What is Secretary Tillerson supposed to do? 342 00:19:39,480 --> 00:19:44,600 Speaker 1: What is your wish list for our new secretary of State? Well, 343 00:19:44,640 --> 00:19:46,960 Speaker 1: first of all time, I think he's a very good 344 00:19:47,000 --> 00:19:49,360 Speaker 1: man with a lot of great qualities for this job. 345 00:19:49,359 --> 00:19:52,280 Speaker 1: And I think he, in Secretary Jim Madison, defense have 346 00:19:52,400 --> 00:19:55,080 Speaker 1: a big challenge. The world wants to know that the 347 00:19:55,160 --> 00:19:57,760 Speaker 1: United States is going to leave the West, to be 348 00:19:57,880 --> 00:20:02,240 Speaker 1: friendly to the European Union, be faithful to NATO. President 349 00:20:02,240 --> 00:20:05,000 Speaker 1: Trump has questioned all of that, but this is seven 350 00:20:05,040 --> 00:20:08,040 Speaker 1: decades of American policy. So I think Tillison and Madis 351 00:20:08,280 --> 00:20:10,560 Speaker 1: they're they're saying the right things, they're going to the 352 00:20:10,640 --> 00:20:13,960 Speaker 1: right places, they stand for what's right, but they're often 353 00:20:13,960 --> 00:20:16,320 Speaker 1: contradicted by the President. This is a big challenge. I 354 00:20:16,359 --> 00:20:18,880 Speaker 1: can't remember an administration which it's been so much distance 355 00:20:18,920 --> 00:20:21,879 Speaker 1: between the President and the Captain. In my studying of 356 00:20:21,960 --> 00:20:25,960 Speaker 1: Jefferson's writings, and you know, reading the American Sphinx and 357 00:20:26,080 --> 00:20:29,639 Speaker 1: you Ellison, Mount Holyoke and all that, I didn't notice 358 00:20:29,680 --> 00:20:33,919 Speaker 1: the Swedish foreign policy response this weekend, which was Benny Anderson, 359 00:20:34,080 --> 00:20:38,840 Speaker 1: Anna frid Lynce, Dad Aretha Fox Cog and Bjorn Olvius. 360 00:20:38,880 --> 00:20:42,520 Speaker 1: I butchered those names, Francine, that's aba, I mean the 361 00:20:42,640 --> 00:20:48,040 Speaker 1: Auba response to our Swedish foreign policy. I mean Ambassador Burns. 362 00:20:48,600 --> 00:20:51,760 Speaker 1: What's the next country we're gonna insult? Well, I never 363 00:20:51,800 --> 00:20:54,880 Speaker 1: thought that an American president would get into public spats 364 00:20:55,000 --> 00:20:58,880 Speaker 1: with Australia, Mexico, and Sweden. I was with Carl Built, 365 00:20:58,920 --> 00:21:01,639 Speaker 1: the former prominences Sweden at the Munich conference over the weekend. 366 00:21:01,720 --> 00:21:05,240 Speaker 1: He was just dumb struck that President Trump would insinuate 367 00:21:05,280 --> 00:21:07,840 Speaker 1: there's been some kind of an attack or disaster in 368 00:21:07,880 --> 00:21:10,119 Speaker 1: Sweden when Sweden is a very peaceful country with a 369 00:21:10,119 --> 00:21:14,920 Speaker 1: low crime rate and has successfully introduced an assimilated refugees. 370 00:21:15,240 --> 00:21:17,399 Speaker 1: So the President needs to be very careful what he 371 00:21:17,400 --> 00:21:19,880 Speaker 1: says in those tweets and in his speeches. He needs 372 00:21:19,920 --> 00:21:23,040 Speaker 1: to be growded in what our best experts are telling them, 373 00:21:23,040 --> 00:21:26,480 Speaker 1: not what Fox News is telling him. Right, And actually, Professor, 374 00:21:26,520 --> 00:21:28,080 Speaker 1: this is exactly what I was going to ask. How 375 00:21:28,119 --> 00:21:32,800 Speaker 1: does he get briefed better or how should intelligence agencies 376 00:21:32,960 --> 00:21:35,320 Speaker 1: brief the president so that he gets the facts right. 377 00:21:35,720 --> 00:21:37,760 Speaker 1: I think he should listen to General McMaster, who he's 378 00:21:37,800 --> 00:21:41,480 Speaker 1: just appointed his National security advisor. Presidents plug into the government. 379 00:21:41,800 --> 00:21:44,240 Speaker 1: They have several million people working for them. We have 380 00:21:44,280 --> 00:21:47,600 Speaker 1: the best minds who can and a political people who 381 00:21:47,640 --> 00:21:50,399 Speaker 1: can give him analysis. But if you watch Fox News 382 00:21:50,920 --> 00:21:54,280 Speaker 1: and just base your analysis on or MSNBC for that matter, 383 00:21:54,600 --> 00:21:57,000 Speaker 1: you're not going to be getting the straight the straight news. 384 00:21:57,480 --> 00:21:59,720 Speaker 1: And so I hope that General McMaster is going to 385 00:21:59,760 --> 00:22:02,520 Speaker 1: be imposed some discipline. I hope the president will take 386 00:22:02,520 --> 00:22:05,840 Speaker 1: an intelligence briefing every morning, as all other presidents have done, 387 00:22:06,240 --> 00:22:09,159 Speaker 1: so that his decisions are granted in fact and not 388 00:22:09,280 --> 00:22:13,560 Speaker 1: on supposition or not on fake stories. Effuse, Does he 389 00:22:13,600 --> 00:22:16,639 Speaker 1: listened to and you were praising Rex Tillerson? Does he 390 00:22:16,720 --> 00:22:19,840 Speaker 1: listen to the Secretary of State. I hope he will. 391 00:22:20,280 --> 00:22:24,440 Speaker 1: Uh and and Secretary Maddis, and General McMaster and General Dunford, 392 00:22:24,440 --> 00:22:27,000 Speaker 1: the chairman of the Joint Chefs. These are professionals. These 393 00:22:27,040 --> 00:22:31,040 Speaker 1: are objective people who believe in rational discussion and data 394 00:22:31,080 --> 00:22:34,760 Speaker 1: analysis and won't just take news at face value. And 395 00:22:34,960 --> 00:22:36,920 Speaker 1: I hope the President can do this. We all want 396 00:22:36,960 --> 00:22:39,199 Speaker 1: them to succeed, we all want them to be successful 397 00:22:39,240 --> 00:22:42,200 Speaker 1: for our country, but it's a very rocky start. And 398 00:22:42,240 --> 00:22:46,040 Speaker 1: in Europe over the weekend at community conference, just palpable 399 00:22:46,080 --> 00:22:48,920 Speaker 1: concern on the part of many Europeans that the United 400 00:22:48,960 --> 00:22:52,000 Speaker 1: States is no longer leading the West when President Trump 401 00:22:52,040 --> 00:22:55,159 Speaker 1: is castigating NATO and questioning whether the EU should even exist. 402 00:22:55,480 --> 00:22:58,280 Speaker 1: These are existential issues for US and for the Europeans. 403 00:22:58,400 --> 00:23:01,679 Speaker 1: We need some confidence. But thought that's why Vice President 404 00:23:01,680 --> 00:23:04,359 Speaker 1: Pence was dispatched. He did Brussels, and he spoke to 405 00:23:04,440 --> 00:23:07,280 Speaker 1: Native and really try and reassure the Europeans that actually, 406 00:23:07,640 --> 00:23:11,120 Speaker 1: guys were America, We're still here, will stand beside you exactly. 407 00:23:11,119 --> 00:23:12,680 Speaker 1: And I was in the hall and Vice President was 408 00:23:12,760 --> 00:23:14,800 Speaker 1: Penn spoke in Munich. I applauded him. I thought he 409 00:23:14,840 --> 00:23:18,159 Speaker 1: did very well in both Brussels and Munich. The problem is, 410 00:23:18,240 --> 00:23:22,280 Speaker 1: you take that very good response by Vice President Pence, 411 00:23:22,320 --> 00:23:25,200 Speaker 1: you juxtaposed it to what the president is saying and 412 00:23:25,240 --> 00:23:29,880 Speaker 1: doing Melbourne, Florida tweets. It's jarring. And so you need 413 00:23:29,920 --> 00:23:32,800 Speaker 1: consistent leadership from the top. And the president needs to 414 00:23:32,840 --> 00:23:36,640 Speaker 1: plug into his vice president, his cabinet secretaries. Let them 415 00:23:36,640 --> 00:23:38,879 Speaker 1: carry a lout of the water for him. What should 416 00:23:39,000 --> 00:23:43,000 Speaker 1: let's be prescriptive here at optimistic, sir, what should Trump 417 00:23:43,240 --> 00:23:46,399 Speaker 1: order be? If we have world order, we have Zachar 418 00:23:46,720 --> 00:23:50,639 Speaker 1: free Zacari's Post American World. What is the Trump order 419 00:23:50,640 --> 00:23:54,040 Speaker 1: that you would think is the best outcome? I think 420 00:23:54,080 --> 00:23:55,919 Speaker 1: what we're what we need to see is what are 421 00:23:55,960 --> 00:23:57,920 Speaker 1: his thoughts on how to promote trade in the world, 422 00:23:57,920 --> 00:23:59,879 Speaker 1: because we know he's against but what is he for? 423 00:24:00,440 --> 00:24:03,840 Speaker 1: How will we protect the West against Russian aggression? Because 424 00:24:04,080 --> 00:24:06,240 Speaker 1: he's been very weak on that subject, and one would 425 00:24:06,240 --> 00:24:08,600 Speaker 1: hope that he would toughen up. And then will the 426 00:24:08,680 --> 00:24:11,760 Speaker 1: United States continue to think that it's alliances are vital 427 00:24:12,160 --> 00:24:14,600 Speaker 1: and that we shouldn't be rooting for them as the 428 00:24:14,600 --> 00:24:17,400 Speaker 1: President has done with Brexit for the EU to fall apart. 429 00:24:17,440 --> 00:24:20,920 Speaker 1: I think those are the fault lines, trade and defense 430 00:24:21,440 --> 00:24:25,440 Speaker 1: and our alliances. American power is built on those three pillars, 431 00:24:25,520 --> 00:24:27,399 Speaker 1: and the President has put them all into question, but 432 00:24:27,480 --> 00:24:30,760 Speaker 1: his cabinet hasn't. And I hope very much we'll see 433 00:24:30,760 --> 00:24:33,840 Speaker 1: an ascendency in the cabinet of power and influence against 434 00:24:33,880 --> 00:24:36,440 Speaker 1: some of the ideological people in the White House who 435 00:24:36,520 --> 00:24:40,480 Speaker 1: just believe in disruption. Has a relationship between the US 436 00:24:40,520 --> 00:24:44,760 Speaker 1: and Russia changed in the last seven days. I don't. 437 00:24:44,760 --> 00:24:47,160 Speaker 1: I think that. I don't. I'm not sure if changed. 438 00:24:47,560 --> 00:24:50,040 Speaker 1: You continue to hear from the President and others that 439 00:24:50,119 --> 00:24:52,520 Speaker 1: they want some kind of a reset or making up 440 00:24:52,520 --> 00:24:54,960 Speaker 1: with Russia at a time when Russia has been assaulting 441 00:24:55,280 --> 00:24:58,159 Speaker 1: Ukraine and Crimea and harassing the Baltic States. What I 442 00:24:58,200 --> 00:25:00,760 Speaker 1: heard in Europe over the weekend I saw Chancellor Markel 443 00:25:00,800 --> 00:25:03,680 Speaker 1: speak speak is that we need to hold the line 444 00:25:03,720 --> 00:25:07,560 Speaker 1: against the Russians. Sanctions should be maintained, the economic sanctions 445 00:25:07,600 --> 00:25:11,360 Speaker 1: before we begin to make fundamental compromises with them. When 446 00:25:11,359 --> 00:25:15,120 Speaker 1: I when I look finally, sir here and in Francy 447 00:25:15,280 --> 00:25:18,320 Speaker 1: mentioned the process of getting this president up to spe 448 00:25:18,320 --> 00:25:22,320 Speaker 1: with our foreign policy. Some would suggest and Richard hostas 449 00:25:22,359 --> 00:25:26,000 Speaker 1: as if foreign policy begins with a good domestic policy, 450 00:25:26,119 --> 00:25:29,720 Speaker 1: do you see a domestic policy that can support our 451 00:25:29,840 --> 00:25:32,720 Speaker 1: foreign efforts. Well, I think that's right and what I'm 452 00:25:32,760 --> 00:25:35,479 Speaker 1: looking for, and the strength of a Trump agenda might 453 00:25:35,520 --> 00:25:38,840 Speaker 1: be lowering the corporate tax rate, lowering personal income tax 454 00:25:38,920 --> 00:25:42,119 Speaker 1: levels for middle income Americans, and regulatory reform. I think 455 00:25:42,160 --> 00:25:45,240 Speaker 1: a lot of Democrats would support that agenda. I thought 456 00:25:45,320 --> 00:25:48,520 Speaker 1: that's what the Trump administration would lead with right after January. 457 00:25:48,960 --> 00:25:51,480 Speaker 1: They haven't. If you get back to that and stabilize 458 00:25:51,520 --> 00:25:54,520 Speaker 1: the economy and show a vision forward for how to 459 00:25:54,960 --> 00:25:58,879 Speaker 1: repatriate some of the capital that American corporations have overseas. 460 00:25:59,119 --> 00:26:01,320 Speaker 1: That's a winning and under But all we've seen our 461 00:26:01,400 --> 00:26:04,440 Speaker 1: spats with Mexico and Australia and Sweden. Are you set 462 00:26:04,480 --> 00:26:07,800 Speaker 1: to serve this administration? Have you been called or have 463 00:26:07,920 --> 00:26:10,159 Speaker 1: you just discribed any hope of so? I have not 464 00:26:10,280 --> 00:26:12,760 Speaker 1: been called. I you know, I worked for sector Hillary 465 00:26:12,800 --> 00:26:15,120 Speaker 1: Clinton on her campaign, and I doubt very much I'll 466 00:26:15,160 --> 00:26:17,240 Speaker 1: be called. But I wish them well and I want, 467 00:26:17,560 --> 00:26:21,040 Speaker 1: obviously this administration to succeed. You could root for the 468 00:26:21,040 --> 00:26:23,600 Speaker 1: Florida Marlin's I could. No, I can't. I'm a Red 469 00:26:23,600 --> 00:26:27,080 Speaker 1: Sox fan. Oh really, okay, that's sir. That's the only 470 00:26:27,119 --> 00:26:30,440 Speaker 1: reason you're on the program. Nicholas Burns, thank you so much, 471 00:26:30,440 --> 00:26:34,119 Speaker 1: Ambassador for Pictures and Catchers, franccene. Right now, Nick Burns 472 00:26:34,119 --> 00:26:38,280 Speaker 1: and I are the Red Sox. Franccene are so loaded, 473 00:26:38,680 --> 00:26:42,560 Speaker 1: you know they're gonna break our hearts. They took a picture, 474 00:26:42,640 --> 00:26:47,680 Speaker 1: Franccene from the Chicago White Socks over to the Boston 475 00:26:47,800 --> 00:26:51,520 Speaker 1: Red Sox, and that's supposed to solve all our problems. 476 00:26:51,560 --> 00:26:54,200 Speaker 1: Like the guy that we took from Florida a year 477 00:26:54,280 --> 00:26:56,520 Speaker 1: or two ago. Yeah, how much are they paid. I 478 00:26:56,560 --> 00:26:59,600 Speaker 1: don't know. You don't want to get upset they are 479 00:26:59,680 --> 00:27:02,680 Speaker 1: so are they make more than ab and that's a 480 00:27:03,040 --> 00:27:09,359 Speaker 1: lot anyway, that's our globe million a year easily. Anyways, 481 00:27:09,600 --> 00:27:12,840 Speaker 1: Francy like, well, we'll continue to briefer, and yes, we'll 482 00:27:12,880 --> 00:27:15,800 Speaker 1: be fair and balanced. We'll do some Yankees baseball as well. 483 00:27:15,920 --> 00:27:31,920 Speaker 1: This is Bloomberg. We just spoke with Nick Burns, which 484 00:27:31,960 --> 00:27:35,040 Speaker 1: is a great privilege, and we outdore ourselves. One of 485 00:27:35,080 --> 00:27:39,640 Speaker 1: the most interesting people in international relations, Dennis Ross has 486 00:27:39,680 --> 00:27:46,800 Speaker 1: a storied bipolar and bi political career in international relations. 487 00:27:46,840 --> 00:27:50,040 Speaker 1: The Ambassador has worked with George Herbert Walker Bush. He 488 00:27:50,040 --> 00:27:54,240 Speaker 1: has worked with President Clinton and has advised many others, 489 00:27:54,640 --> 00:27:58,359 Speaker 1: particularly on the Middle East. Ambassador Ross, wonderful to speak 490 00:27:58,400 --> 00:28:04,680 Speaker 1: to you. You have a paragraph which stopped me cold 491 00:28:04,720 --> 00:28:08,760 Speaker 1: in my tracks. At the end of eight thoughtful pages, 492 00:28:09,320 --> 00:28:16,639 Speaker 1: you go into avoiding transformational approaches. Fixing has proven counterproductive. 493 00:28:17,119 --> 00:28:23,160 Speaker 1: Does President Trump want to fix everything? Well, it's hard 494 00:28:23,200 --> 00:28:27,040 Speaker 1: to say. I mean, look, when you look at his approach, 495 00:28:27,119 --> 00:28:28,639 Speaker 1: I think you'd have to say that most of his 496 00:28:28,680 --> 00:28:31,919 Speaker 1: priorities are not in the foreign policy area. Most of 497 00:28:31,920 --> 00:28:34,400 Speaker 1: his priorities seem to be in the domestic policy area, 498 00:28:34,480 --> 00:28:38,000 Speaker 1: to the extent to which he has outline priorities and 499 00:28:38,040 --> 00:28:41,040 Speaker 1: foreign policies, they fall into two categories. One is trade 500 00:28:42,120 --> 00:28:48,440 Speaker 1: UH and the other is isis in dealing with dealing 501 00:28:48,440 --> 00:28:52,400 Speaker 1: with terror? You really haven't seen something beyond that is 502 00:28:53,080 --> 00:28:58,320 Speaker 1: you have an interesting kind of distinction between what he 503 00:28:58,440 --> 00:29:03,800 Speaker 1: has basically stated publicly and now you see his cabinet 504 00:29:03,840 --> 00:29:07,760 Speaker 1: officials saying and the vice presidents they have all gone 505 00:29:07,840 --> 00:29:12,320 Speaker 1: to you. You now have had vice the vice president, 506 00:29:12,400 --> 00:29:15,400 Speaker 1: the Secretary of Defense, Sectary of State, all in Europe, 507 00:29:15,600 --> 00:29:19,440 Speaker 1: all reaffirming the NATO Alliance, all reaffirming the European Union. 508 00:29:20,480 --> 00:29:23,920 Speaker 1: So the kind of commitments they're making as it relates 509 00:29:24,000 --> 00:29:26,560 Speaker 1: to the alliance, although to be fair, they're talking about 510 00:29:26,560 --> 00:29:28,800 Speaker 1: burden sharing. But that's not a new theme. If you 511 00:29:28,840 --> 00:29:35,440 Speaker 1: look at Robert Gates's valedictory speech to NATO, he emphasized 512 00:29:35,440 --> 00:29:37,920 Speaker 1: that we couldn't be two different kinds of alliances where 513 00:29:37,960 --> 00:29:40,240 Speaker 1: some contribute and play a certain kind of role on 514 00:29:40,240 --> 00:29:42,600 Speaker 1: others don't. So it's it's not as if that's a 515 00:29:43,120 --> 00:29:47,720 Speaker 1: new theme. But I think raising questions about NATO, which 516 00:29:47,720 --> 00:29:51,640 Speaker 1: seemed to come from the President as a candidate. Is 517 00:29:51,800 --> 00:29:55,080 Speaker 1: that that effort to sort of address the kind of 518 00:29:55,160 --> 00:29:57,120 Speaker 1: questions that were raised in light of what he was saying, 519 00:29:57,320 --> 00:30:01,760 Speaker 1: seems to be what we're seeing from uh, the people 520 00:30:01,800 --> 00:30:04,880 Speaker 1: he's now appointed to be a major countered officials. So 521 00:30:05,640 --> 00:30:08,160 Speaker 1: I along wanted to answer to your question. I think 522 00:30:08,200 --> 00:30:11,320 Speaker 1: at this point that his focus still remains much more 523 00:30:11,320 --> 00:30:15,440 Speaker 1: on the domestic side, on the policy side, Yeah, Abassador, 524 00:30:15,440 --> 00:30:18,000 Speaker 1: I just wanted to get back to, for example, the 525 00:30:18,040 --> 00:30:20,200 Speaker 1: travel bun. Right, what do we know about the travel bun? 526 00:30:20,280 --> 00:30:23,600 Speaker 1: Does does it help or hinder ISIS? And how does 527 00:30:23,600 --> 00:30:27,200 Speaker 1: the President view this? Well? I think the president viewses. 528 00:30:28,120 --> 00:30:32,360 Speaker 1: The President has been convinced, uh, from his public statements 529 00:30:32,360 --> 00:30:37,040 Speaker 1: at least that the the we are facing a real 530 00:30:37,480 --> 00:30:45,320 Speaker 1: threat of refugees and and UH and through immigration that 531 00:30:45,400 --> 00:30:51,480 Speaker 1: kind of infiltration that somehow ISIS sympathizers or ISIS activists 532 00:30:51,560 --> 00:30:56,920 Speaker 1: or ISIS agents will insinuate themselves in this flow people, 533 00:30:56,920 --> 00:30:59,640 Speaker 1: and therefore we have to have extreme vetting. UH. And 534 00:31:00,080 --> 00:31:02,800 Speaker 1: he was you know this the executive order that was 535 00:31:02,840 --> 00:31:05,600 Speaker 1: put out there was put out there was obviously rushed 536 00:31:05,600 --> 00:31:09,440 Speaker 1: out there in a way that cast a kind of 537 00:31:10,880 --> 00:31:16,320 Speaker 1: blanket exclusion from seven countries. Now, obviously it's had to 538 00:31:16,360 --> 00:31:20,240 Speaker 1: be revised since then, you know, it raised questions among 539 00:31:20,320 --> 00:31:22,880 Speaker 1: the Iraqis in particularly those who put their lives on 540 00:31:22,880 --> 00:31:25,200 Speaker 1: the line for us, were somehow excluded from being able 541 00:31:25,240 --> 00:31:30,560 Speaker 1: to come here. That's being corrected, green Heart Green card holders, UH, 542 00:31:30,760 --> 00:31:33,800 Speaker 1: that's being corrected. And obviously a more narrow kind of 543 00:31:33,800 --> 00:31:35,760 Speaker 1: executive order is going to be put out, But it's 544 00:31:35,760 --> 00:31:39,160 Speaker 1: still governed by a principle that we have to gain 545 00:31:39,240 --> 00:31:41,800 Speaker 1: greater control over those who are coming into the country. 546 00:31:41,920 --> 00:31:45,160 Speaker 1: That partly that relates internationally, partly that relates to our 547 00:31:45,840 --> 00:31:49,840 Speaker 1: are close in borders like Mexico. That clearly does reflect 548 00:31:49,880 --> 00:31:53,880 Speaker 1: a kind of preoccupation that we've heard from, uh, from 549 00:31:53,960 --> 00:31:58,280 Speaker 1: Candidate Trump and now President Trump. UH, in terms of 550 00:31:58,280 --> 00:32:01,000 Speaker 1: of fighting isis know when you say you're going to 551 00:32:01,080 --> 00:32:05,160 Speaker 1: destroy isis? It's not just a military phenomenon that you're 552 00:32:05,200 --> 00:32:09,160 Speaker 1: dealing with. You're dealing with an idea. So the challenge, 553 00:32:09,200 --> 00:32:12,400 Speaker 1: and this is where I think the executive Order, at 554 00:32:12,440 --> 00:32:14,160 Speaker 1: least the way it was rolled out in the in 555 00:32:14,280 --> 00:32:18,520 Speaker 1: the perception that was created about it, was not necessarily helpful. 556 00:32:19,360 --> 00:32:21,880 Speaker 1: Isis wants to create an image, and this is true 557 00:32:21,920 --> 00:32:26,040 Speaker 1: for all the radical Sunni Islamists as well. They want 558 00:32:26,080 --> 00:32:29,479 Speaker 1: to create an image that it's us versus them. Isis 559 00:32:29,520 --> 00:32:32,080 Speaker 1: itself has this concept of the of the gray zone, 560 00:32:32,080 --> 00:32:35,600 Speaker 1: where there are Muslims who live like in Europe, but 561 00:32:35,760 --> 00:32:37,840 Speaker 1: I don't identify with them, and they want to create 562 00:32:37,840 --> 00:32:41,320 Speaker 1: a sense of polarization so that it's it becomes us 563 00:32:41,400 --> 00:32:45,520 Speaker 1: or them. The more this becomes a clash of civilizations 564 00:32:45,560 --> 00:32:49,080 Speaker 1: as opposed to a clash within a civilization, as opposed 565 00:32:49,120 --> 00:32:52,280 Speaker 1: to a struggle within Islam, as opposed to in a 566 00:32:52,360 --> 00:32:57,120 Speaker 1: sense Muslims, you know, who can be ultimately the only 567 00:32:57,160 --> 00:32:59,800 Speaker 1: ones who can discreditize as we can't discreditize as it 568 00:33:00,040 --> 00:33:04,240 Speaker 1: us to come from within Muslim majority countries. To the 569 00:33:04,280 --> 00:33:07,120 Speaker 1: extent to which we're playing into the hands of an 570 00:33:07,120 --> 00:33:13,120 Speaker 1: Isis narrative. Obviously, the framing and the portrayal of the 571 00:33:13,120 --> 00:33:17,600 Speaker 1: executive order was not helpful in that regard. All, Ambassador, 572 00:33:17,720 --> 00:33:19,800 Speaker 1: thank you so much. Dennis Ross with us this morning. 573 00:33:19,800 --> 00:33:21,880 Speaker 1: We'll have to continue this discussion. We'd like to get 574 00:33:21,880 --> 00:33:26,120 Speaker 1: you on for a much longer period, Ambassador, as we can. 575 00:33:26,240 --> 00:33:36,760 Speaker 1: Dennis Ross is with the Washington Institute for Near East Policy. 576 00:33:38,640 --> 00:33:43,040 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 577 00:33:43,080 --> 00:33:48,160 Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform 578 00:33:48,280 --> 00:33:51,840 Speaker 1: you prefer. I'm out on Twitter at Tom Keene. David 579 00:33:51,880 --> 00:33:55,520 Speaker 1: Gura is at David Gura. Before the podcast, you can 580 00:33:55,680 --> 00:34:11,879 Speaker 1: always catch us worldwide. I'm Bloomberg Radio, brought you by 581 00:34:12,120 --> 00:34:15,880 Speaker 1: Bank of America Mary Lynch. Dedicated to bringing our clients 582 00:34:15,920 --> 00:34:20,120 Speaker 1: insights and solutions to meet the challenges of a transforming world. 583 00:34:20,560 --> 00:34:24,280 Speaker 1: That's the power of global connections. Mary Lynch, Pierce Feeder 584 00:34:24,400 --> 00:34:27,880 Speaker 1: and Smith Incorporated Member s I p C.