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 a 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 --> 00:00:49,840 Speaker 1: of course on the Bloomberg How can Germany be an 9 00:00:49,960 --> 00:00:54,360 Speaker 1: exploiter of the Euro, Sir Howard, given the laws of 10 00:00:54,400 --> 00:00:58,480 Speaker 1: the European Union, I don't think it is in this 11 00:00:58,760 --> 00:01:02,320 Speaker 1: in that sense an exploiter of the Euro. What happened 12 00:01:02,400 --> 00:01:05,520 Speaker 1: was that the Germans joined the Euro at what many 13 00:01:05,520 --> 00:01:09,200 Speaker 1: of them perceived to be an uncompetitive rate, and they 14 00:01:09,240 --> 00:01:13,520 Speaker 1: thought that they had been manipulated by the French, if 15 00:01:13,520 --> 00:01:16,440 Speaker 1: you like, who agreed a rate that was too high 16 00:01:16,520 --> 00:01:19,840 Speaker 1: for the Deutsche mark. In the years following the introduction 17 00:01:19,880 --> 00:01:23,240 Speaker 1: of the Euro, the Germans then focused on productivity increases 18 00:01:23,319 --> 00:01:27,039 Speaker 1: and wage discipline. Unions in in Germany worried about the 19 00:01:27,040 --> 00:01:31,480 Speaker 1: impact of competitiveness agreed very very tight wage deals, and 20 00:01:31,560 --> 00:01:35,800 Speaker 1: German competitiveness improved dramatically. Many other countries in the euro 21 00:01:35,920 --> 00:01:38,440 Speaker 1: Zone seemed to take the view that having joined the 22 00:01:38,440 --> 00:01:40,960 Speaker 1: euro Zone, that couldn't have a balance of payments problem anymore, 23 00:01:41,240 --> 00:01:45,160 Speaker 1: and therefore competitiveness wasn't really problem, and wage rates rose 24 00:01:45,959 --> 00:01:49,400 Speaker 1: in Greece, in Spain, in Italy particularly, but also to 25 00:01:49,440 --> 00:01:52,800 Speaker 1: some extent in France, and they became less competitive. Now, 26 00:01:53,040 --> 00:01:55,960 Speaker 1: if you call that manipulation, well, I think that's a 27 00:01:56,000 --> 00:01:58,760 Speaker 1: rather difficult word to use about it. It does, however, 28 00:01:58,840 --> 00:02:01,560 Speaker 1: mean that the Germans are now operating with the currency 29 00:02:01,600 --> 00:02:06,080 Speaker 1: which is an average currency for Germany, Italy, Greece, Spain, etcetera, 30 00:02:06,320 --> 00:02:09,160 Speaker 1: which is certainly lower than it would be if it 31 00:02:09,280 --> 00:02:12,360 Speaker 1: was just the Austria and the Netherlands. That is certainly 32 00:02:12,400 --> 00:02:15,679 Speaker 1: true when you look back twenty and thirty years back 33 00:02:15,800 --> 00:02:19,359 Speaker 1: the time of Green Span Ruben in Summers. Is the 34 00:02:19,480 --> 00:02:26,440 Speaker 1: US the ultimate manipulator of their exorbitant privilege. I think 35 00:02:26,480 --> 00:02:31,880 Speaker 1: that these loaded words like manipulation and illegal, etcetera. Are 36 00:02:32,000 --> 00:02:35,280 Speaker 1: really not a helpful way of thinking about this. Barry 37 00:02:35,320 --> 00:02:37,560 Speaker 1: I can Green coined the phrase exhorbitant privilege of being 38 00:02:37,560 --> 00:02:39,840 Speaker 1: reserved currency, and that to some extent is true because 39 00:02:39,880 --> 00:02:42,720 Speaker 1: it does mean, you know, the traditional phrase, the dollar 40 00:02:42,880 --> 00:02:45,800 Speaker 1: is is our currency, but your problem is typically what 41 00:02:45,840 --> 00:02:49,200 Speaker 1: fread Treasury secretaries have said to people. But I think 42 00:02:49,240 --> 00:02:51,840 Speaker 1: that is just a fact that it is the global 43 00:02:51,880 --> 00:02:56,000 Speaker 1: reserve currency, and that gives you certain freedoms if you like, 44 00:02:56,120 --> 00:02:59,079 Speaker 1: in terms of the way you handle your own monetary policy. 45 00:02:59,080 --> 00:03:02,920 Speaker 1: People don't have a voice but to own dollar assets, 46 00:03:02,960 --> 00:03:05,840 Speaker 1: and that creates a kind of underpinning for you. But 47 00:03:05,919 --> 00:03:08,919 Speaker 1: then to turn that round and use words like manipulation 48 00:03:08,919 --> 00:03:11,440 Speaker 1: that people are doing this deliberately, I just don't think 49 00:03:11,480 --> 00:03:14,160 Speaker 1: that's the way policy makers think about it. How disruptive 50 00:03:14,160 --> 00:03:18,919 Speaker 1: will Donald Trump's presidency in b for European elections this year, Well, 51 00:03:19,680 --> 00:03:22,919 Speaker 1: it's I'm not sure how disruptive will be European elections. 52 00:03:23,040 --> 00:03:28,320 Speaker 1: It certainly is causing European leaders to think about how 53 00:03:28,360 --> 00:03:31,280 Speaker 1: they come together in response to what they do perceive 54 00:03:31,320 --> 00:03:34,239 Speaker 1: clearly more more so than here as a as a threat. 55 00:03:34,360 --> 00:03:37,160 Speaker 1: So I think you will see more pressure for common 56 00:03:37,200 --> 00:03:41,080 Speaker 1: European positions being taken. Whether that will really read across 57 00:03:41,080 --> 00:03:42,920 Speaker 1: into the individual elections, where I think there's a lot 58 00:03:42,960 --> 00:03:45,120 Speaker 1: more national things going on. So how do you worry 59 00:03:45,200 --> 00:03:48,280 Speaker 1: about Marine Lapin becoming president of France? There are fresh 60 00:03:48,320 --> 00:03:52,240 Speaker 1: allegations against possois Fillon. We now have the latest pulsing. 61 00:03:52,240 --> 00:03:54,440 Speaker 1: Actually Manuel and McCallon, the Independent who used to be 62 00:03:54,440 --> 00:03:59,400 Speaker 1: Finance minister under Mansieur Land, may actually win and go 63 00:03:59,480 --> 00:04:01,440 Speaker 1: to the second ound. What happens if we get an 64 00:04:01,440 --> 00:04:04,640 Speaker 1: e manun Malpin stand off? Yeah, I think this is 65 00:04:04,720 --> 00:04:09,120 Speaker 1: quite worrying. Until recently I thought that Fillon was likely 66 00:04:09,200 --> 00:04:12,440 Speaker 1: to win and that he would appeal to a lot 67 00:04:12,520 --> 00:04:15,480 Speaker 1: of the kind of traditional goal list and blue collar 68 00:04:15,880 --> 00:04:19,920 Speaker 1: people who are flirting with Marine le Pin. But we've 69 00:04:19,960 --> 00:04:22,880 Speaker 1: now come across what I think of as Welsh wife risk, 70 00:04:23,800 --> 00:04:26,720 Speaker 1: which has appeared in the case of Fion, and that 71 00:04:26,760 --> 00:04:31,960 Speaker 1: has unsettled things. Macron obviously very plausible sort of guy, 72 00:04:32,160 --> 00:04:35,599 Speaker 1: but with no political roots whatsoever, never been elected to anything. 73 00:04:36,040 --> 00:04:37,880 Speaker 1: So I think that the idea of him in the 74 00:04:37,920 --> 00:04:40,520 Speaker 1: second round versus Mary Lepin is a big throw of 75 00:04:40,520 --> 00:04:44,760 Speaker 1: the dice because he's got no party to back him 76 00:04:44,880 --> 00:04:48,360 Speaker 1: except his small organization called oh Marsh. He doesn't have 77 00:04:48,400 --> 00:04:50,560 Speaker 1: any kind of tradition. How would he behave in a 78 00:04:50,600 --> 00:04:52,640 Speaker 1: big campaign? I think this is a big throw of 79 00:04:52,640 --> 00:04:55,159 Speaker 1: the dice. I would be much more comfortable if it 80 00:04:55,200 --> 00:04:58,000 Speaker 1: were Lepine against either Fillon or if he has to 81 00:04:58,000 --> 00:05:01,320 Speaker 1: pull out back maybe to Juppe. Okay, what happens if 82 00:05:01,440 --> 00:05:03,880 Speaker 1: Marin Lepine gets elected president? And I don't know whether 83 00:05:03,920 --> 00:05:06,440 Speaker 1: that's at the moment a ten percent chance or a 84 00:05:06,480 --> 00:05:09,479 Speaker 1: fifty percent chance in your eyes. I think it is 85 00:05:09,680 --> 00:05:16,280 Speaker 1: very serious indeed for the euro project in total, because 86 00:05:16,720 --> 00:05:19,200 Speaker 1: although she has been a bit cautious about saying she 87 00:05:19,279 --> 00:05:22,640 Speaker 1: wants to come out of the European Union, she wants 88 00:05:22,680 --> 00:05:25,479 Speaker 1: to come out of the Euro and I think that 89 00:05:25,560 --> 00:05:28,960 Speaker 1: the European project would be in big trouble. I cannot 90 00:05:28,960 --> 00:05:31,640 Speaker 1: see Mrs Merkel wanting to stand there in a press 91 00:05:31,680 --> 00:05:35,920 Speaker 1: conference with Marin Lepine talking about how the Franco German 92 00:05:35,960 --> 00:05:38,200 Speaker 1: alliance is going to be re established. That just won't happen. 93 00:05:38,360 --> 00:05:42,799 Speaker 1: So I think that's an existential threat to the European 94 00:05:42,839 --> 00:05:45,000 Speaker 1: project in total, in the way that Brexit is not, 95 00:05:45,640 --> 00:05:48,560 Speaker 1: Sir Howard, when we look at all that we're talking 96 00:05:48,600 --> 00:05:53,560 Speaker 1: about a populism in a political turmoil. Our markets and 97 00:05:53,600 --> 00:05:55,680 Speaker 1: I go to John Plender in the f T today, 98 00:05:56,080 --> 00:06:00,120 Speaker 1: our markets just wildly betting on the advantages of a 99 00:06:00,160 --> 00:06:04,400 Speaker 1: Trump reflation, or is a Trump reflation literally to use 100 00:06:04,400 --> 00:06:10,839 Speaker 1: the British phrase on money illusion. Well, I think probably 101 00:06:11,160 --> 00:06:13,919 Speaker 1: there will be a Trump reflation in the form of 102 00:06:13,960 --> 00:06:17,520 Speaker 1: low corporate taxation and eventually some infrastructure spending. Though whether 103 00:06:17,520 --> 00:06:19,960 Speaker 1: there are enough shovel ready projects for that to be 104 00:06:20,680 --> 00:06:22,640 Speaker 1: a big factor in the short run, I don't know. 105 00:06:22,920 --> 00:06:26,359 Speaker 1: So I don't think it's a complete money illusion, but 106 00:06:26,760 --> 00:06:30,720 Speaker 1: maybe at the moment people are putting too much emphasis 107 00:06:30,800 --> 00:06:34,080 Speaker 1: on that side of the Trump presidency and perhaps too 108 00:06:34,080 --> 00:06:39,320 Speaker 1: little on the trade risk. You know, I look, sir Howard, 109 00:06:39,360 --> 00:06:41,440 Speaker 1: it at all that's going on and the idea of 110 00:06:41,440 --> 00:06:45,040 Speaker 1: a Trump reflation. Help me here with what Janet Yellen 111 00:06:45,080 --> 00:06:47,640 Speaker 1: should do. I mean, if we we forget almost fancy 112 00:06:47,680 --> 00:06:50,120 Speaker 1: and I've never seen this where we've in so much 113 00:06:50,160 --> 00:06:53,480 Speaker 1: way ignored a FED decision and do a two pm today, 114 00:06:53,520 --> 00:06:56,440 Speaker 1: all my radar is up on that, Sir Howard. Help 115 00:06:56,480 --> 00:06:59,920 Speaker 1: me here with the response of a leading economist in 116 00:07:00,120 --> 00:07:03,960 Speaker 1: Cherry yelling to all that's going on in Washington. Well, 117 00:07:04,000 --> 00:07:07,560 Speaker 1: I think the FED will be asking itself whether the 118 00:07:07,640 --> 00:07:11,240 Speaker 1: Trump reflection will really occur and whether there will be 119 00:07:11,600 --> 00:07:17,000 Speaker 1: a corresponding depressing offset on economic growth from worries about 120 00:07:17,400 --> 00:07:21,080 Speaker 1: trade policy. So that to me, if I were the Fed, 121 00:07:21,120 --> 00:07:23,840 Speaker 1: would cause me to wish to hold my fire for 122 00:07:23,880 --> 00:07:27,200 Speaker 1: the time being and not to take it as for 123 00:07:27,280 --> 00:07:30,400 Speaker 1: granted that we are going to see the economy growing 124 00:07:30,640 --> 00:07:33,360 Speaker 1: more rapidly and therefore that they can raise rates quickly. 125 00:07:33,520 --> 00:07:37,240 Speaker 1: So I would expect the Fed to adopt to wait 126 00:07:37,280 --> 00:07:39,600 Speaker 1: and see posture for the moment, and I think those 127 00:07:39,640 --> 00:07:42,080 Speaker 1: factors will be what's in their mind. Francy. Here's the 128 00:07:42,080 --> 00:07:45,240 Speaker 1: Trump reflation right now, very quickly the election. The day 129 00:07:45,280 --> 00:07:47,440 Speaker 1: after the election, up we go. We've shown this chart 130 00:07:47,680 --> 00:07:51,320 Speaker 1: too many times in Francy. And here's this indeterminate charn 131 00:07:52,280 --> 00:07:56,240 Speaker 1: right now, the chair yelling faces this afternoon. Yeah, and 132 00:07:56,280 --> 00:07:57,640 Speaker 1: so I was going back to what you were saying 133 00:07:57,640 --> 00:08:00,200 Speaker 1: looking at Tom's chart and actually bring the duck want 134 00:08:00,480 --> 00:08:04,520 Speaker 1: up on the Boomberg terminal. It would see outdoing once again. 135 00:08:04,640 --> 00:08:07,000 Speaker 1: You see that, Tom, You see that is that we 136 00:08:07,040 --> 00:08:09,480 Speaker 1: started the year where there was an alignment between what 137 00:08:09,520 --> 00:08:11,840 Speaker 1: the dots were telling us in the FED fund futures 138 00:08:12,040 --> 00:08:14,040 Speaker 1: put it no longer. The Feds are still saying three 139 00:08:14,040 --> 00:08:16,440 Speaker 1: to four and actually the Fed funds are saying two 140 00:08:16,480 --> 00:08:20,800 Speaker 1: interest rate hikes. Yeah, that that's that's not surprising because 141 00:08:20,840 --> 00:08:23,880 Speaker 1: I think what I've been saying risk repeating myself, is 142 00:08:23,920 --> 00:08:26,640 Speaker 1: that people are now starting to just try to weigh 143 00:08:26,720 --> 00:08:30,800 Speaker 1: up the totality of Trump presidency. I think in the 144 00:08:30,840 --> 00:08:33,319 Speaker 1: first week they were saying, well, it's all going to 145 00:08:33,400 --> 00:08:35,520 Speaker 1: be about reflation. We're going to see the dollar rising 146 00:08:35,520 --> 00:08:37,760 Speaker 1: and everything. And now people are sun say, well, maybe 147 00:08:37,960 --> 00:08:40,160 Speaker 1: there are some serious threats on the horizon on the 148 00:08:40,280 --> 00:08:42,360 Speaker 1: trade policy front, that that might create a bit of 149 00:08:42,360 --> 00:08:45,280 Speaker 1: grinding of gears, even if you know, eventually you get 150 00:08:45,360 --> 00:08:47,760 Speaker 1: to a more rational outcome, but in the short run, 151 00:08:47,800 --> 00:08:50,400 Speaker 1: that could be somewhat disruptive. Thank you so much, sir, 152 00:08:50,400 --> 00:08:53,920 Speaker 1: Howard Davis. What a great, great interview with the RBS 153 00:08:54,040 --> 00:09:09,280 Speaker 1: chairman there, Gene Munster. Where this Loup Ventures, of course 154 00:09:09,280 --> 00:09:13,000 Speaker 1: more than iconic, Piper Jaffrey. What is Loup Ventures? How's 155 00:09:13,000 --> 00:09:17,040 Speaker 1: it different than the day today? Grind it fortress, Piper. Uh, 156 00:09:17,280 --> 00:09:19,480 Speaker 1: From a day to day, I'm still doing research. I'm 157 00:09:19,520 --> 00:09:22,480 Speaker 1: head of research, so I still write three research. No, 158 00:09:22,679 --> 00:09:25,400 Speaker 1: you still stand out in front of Apple stores? Oh yeah, 159 00:09:25,800 --> 00:09:29,440 Speaker 1: we uh we do that. It's not every daytime. We 160 00:09:29,480 --> 00:09:31,199 Speaker 1: do that, but I would say maybe once a month. 161 00:09:31,440 --> 00:09:34,240 Speaker 1: Once a month, you're out there looking at what's uh 162 00:09:34,559 --> 00:09:37,320 Speaker 1: going on? Help me here with what I need to 163 00:09:37,400 --> 00:09:40,200 Speaker 1: know about Apple's balance sheet. I look at the lack 164 00:09:40,240 --> 00:09:44,400 Speaker 1: of goodwill, it's it's it's it's the most unique balance 165 00:09:44,480 --> 00:09:48,320 Speaker 1: sheet I've ever seen. Why is that? Well, because they 166 00:09:48,559 --> 00:09:51,320 Speaker 1: have a lot of cash, first of all, called billion. 167 00:09:51,760 --> 00:09:54,360 Speaker 1: They have a lot of debt to call its sixty 168 00:09:54,400 --> 00:09:59,040 Speaker 1: or seventy billion, you know that's correct, And they have 169 00:09:59,600 --> 00:10:03,000 Speaker 1: h a boatload of that debt is outside of the US. 170 00:10:03,120 --> 00:10:05,080 Speaker 1: And so if you look at the boatload of that 171 00:10:05,120 --> 00:10:06,840 Speaker 1: cash is so if you look at the total cash 172 00:10:07,200 --> 00:10:09,720 Speaker 1: outside the US, it's called probably a hundred a hundred 173 00:10:10,120 --> 00:10:13,440 Speaker 1: billion dollars, and so that's net of debt. So there's 174 00:10:13,640 --> 00:10:16,480 Speaker 1: there's a big chunk that's offshore. Still three and a 175 00:10:16,520 --> 00:10:19,160 Speaker 1: half million more iPhones to new customers. Who who are 176 00:10:19,200 --> 00:10:23,280 Speaker 1: these new customers buying these phones? And how is how 177 00:10:23,280 --> 00:10:26,360 Speaker 1: many more can they recruit to the Apple world. Well, 178 00:10:26,400 --> 00:10:28,760 Speaker 1: some of them came from Samsung. Samsung obviously had a 179 00:10:28,800 --> 00:10:32,000 Speaker 1: tough fall here, so they probably we picked up about 180 00:10:32,000 --> 00:10:34,720 Speaker 1: half of those from Samsung people, and they still are 181 00:10:34,760 --> 00:10:39,040 Speaker 1: getting growth in merging markets, and China mainland was flat 182 00:10:39,080 --> 00:10:42,480 Speaker 1: ear rear, uh, the Brazil was particularly strong. So they 183 00:10:42,480 --> 00:10:44,800 Speaker 1: pick up that. I think you're getting to a bigger 184 00:10:45,080 --> 00:10:47,640 Speaker 1: question around the story, which is is this really a 185 00:10:47,679 --> 00:10:50,520 Speaker 1: growing market? And the answer is that it's not. The 186 00:10:50,760 --> 00:10:54,240 Speaker 1: smartphone market doesn't grow um and Apple knows that, and 187 00:10:54,280 --> 00:10:57,360 Speaker 1: that's why they're talking about things like augmented reality and 188 00:10:57,360 --> 00:11:02,080 Speaker 1: and these shift towards wearable. Yeah, David, just so you know, 189 00:11:02,160 --> 00:11:04,880 Speaker 1: the augmented reality is we're trying to break a record 190 00:11:04,880 --> 00:11:07,439 Speaker 1: and get to twenty four Apple products in our house. 191 00:11:08,080 --> 00:11:11,080 Speaker 1: That's our augmented reality. What it defined it for us? 192 00:11:11,120 --> 00:11:14,280 Speaker 1: What is augmented real? We know virtual reality, what's augmented reality? 193 00:11:14,280 --> 00:11:16,800 Speaker 1: And what's Apple? What's Apple's game plan for it? So 194 00:11:16,840 --> 00:11:20,800 Speaker 1: it's super imposing um things onto the real world and 195 00:11:20,800 --> 00:11:24,800 Speaker 1: stuff Pokemon Pokemon goo exactly, but but something that would 196 00:11:24,880 --> 00:11:27,719 Speaker 1: be much more advanced and more usable than what I 197 00:11:27,800 --> 00:11:29,560 Speaker 1: think is a clumsy game. But that's a great example. 198 00:11:30,160 --> 00:11:32,559 Speaker 1: How is Apple's approach different from say Google's approach to 199 00:11:32,600 --> 00:11:35,400 Speaker 1: augmented reality. You have these big companies getting into this space. 200 00:11:35,440 --> 00:11:39,000 Speaker 1: What is each doing differently? Apple is gonna put position 201 00:11:39,040 --> 00:11:41,960 Speaker 1: as more as a hardware play. Google seems to be. 202 00:11:42,120 --> 00:11:46,000 Speaker 1: They had Google Glass that failed and their new efforts 203 00:11:46,040 --> 00:11:49,199 Speaker 1: they've restarted it. Now it's kind of under wraps. But 204 00:11:49,440 --> 00:11:52,400 Speaker 1: they also have a significant investment in this company, Magically, 205 00:11:52,440 --> 00:11:55,040 Speaker 1: which is a very controversial company but a lot of 206 00:11:55,120 --> 00:11:57,760 Speaker 1: high expectations. But Google is one of the majority investors 207 00:11:57,760 --> 00:12:01,040 Speaker 1: in that. And so Apple's approach is to the hardware themselves, 208 00:12:01,040 --> 00:12:03,360 Speaker 1: and they just filed a couple of patents last week 209 00:12:03,400 --> 00:12:07,480 Speaker 1: around augmented reality and wearables, and Google's approach appears to 210 00:12:07,520 --> 00:12:10,040 Speaker 1: be more partnering our college. Sheer Ova, who writes for 211 00:12:10,040 --> 00:12:13,319 Speaker 1: a Bloomberg Gadfly, had a column yesterday looking at the 212 00:12:13,360 --> 00:12:16,160 Speaker 1: Apple results saying that you can draw the comparison here 213 00:12:16,160 --> 00:12:18,480 Speaker 1: to Walmart, and she sort of wondered what Steve Jobs 214 00:12:18,480 --> 00:12:20,360 Speaker 1: would think about that comparison. When you look at growth, 215 00:12:20,400 --> 00:12:23,000 Speaker 1: when you look at the balance sheet, Uh, what is 216 00:12:23,040 --> 00:12:25,760 Speaker 1: it that's gonna kickstart growth for for applicant to get back? 217 00:12:25,800 --> 00:12:27,040 Speaker 1: Can I get back to where it was, to the 218 00:12:27,120 --> 00:12:30,199 Speaker 1: kind of growth that it saw before. There can be 219 00:12:30,320 --> 00:12:33,840 Speaker 1: some periods where growth is going to be much quicker, 220 00:12:33,880 --> 00:12:36,240 Speaker 1: and so for example, this fall, when we come into 221 00:12:36,240 --> 00:12:38,400 Speaker 1: the iPhone ten, there's going to be a large pool 222 00:12:38,559 --> 00:12:41,960 Speaker 1: of million plus people with really old phones and that's 223 00:12:41,960 --> 00:12:45,199 Speaker 1: gonna drive growth. Should step up at that point. Uh. 224 00:12:45,280 --> 00:12:47,440 Speaker 1: Then they'll come out with a foldable phone, probably the 225 00:12:47,480 --> 00:12:49,320 Speaker 1: next three to five years. And so think of it 226 00:12:49,360 --> 00:12:51,880 Speaker 1: as having a phone the same size that you have today, 227 00:12:51,920 --> 00:12:53,240 Speaker 1: but then you can fold it open. It could be 228 00:12:53,280 --> 00:12:56,000 Speaker 1: a small iPad that will be good for growth, but 229 00:12:56,040 --> 00:12:59,120 Speaker 1: it still doesn't change the long term trajectory. The car 230 00:12:59,240 --> 00:13:02,840 Speaker 1: is what's needed. Uh. And and the before or wearable, 231 00:13:03,040 --> 00:13:06,600 Speaker 1: whether it's yeah, something along those And David Sure's comment 232 00:13:06,920 --> 00:13:10,800 Speaker 1: is really important in terms of this desire for growth. 233 00:13:11,280 --> 00:13:15,680 Speaker 1: General Mills, which is the ultimate basic company his return 234 00:13:15,800 --> 00:13:18,800 Speaker 1: eleven points seven percent per year for the last ten years. 235 00:13:19,360 --> 00:13:21,520 Speaker 1: Apple can be am I right, Gene, Apple can be 236 00:13:21,640 --> 00:13:25,840 Speaker 1: a General Mills and still meant money for shareholders. Yes, 237 00:13:25,920 --> 00:13:29,520 Speaker 1: And I think you're gonna see that when and even 238 00:13:29,559 --> 00:13:32,520 Speaker 1: more when they report their March quarter and talk about 239 00:13:32,920 --> 00:13:37,280 Speaker 1: capital allocation and buy back and improve dividends. So I 240 00:13:37,320 --> 00:13:41,080 Speaker 1: remember reading, you know, Bloomberg reporting on Apple's return to 241 00:13:41,120 --> 00:13:43,319 Speaker 1: services hoping to improve the services they offer. It seems 242 00:13:43,360 --> 00:13:46,160 Speaker 1: like yesterday was a good moment. For the Apple portfolio 243 00:13:46,240 --> 00:13:49,040 Speaker 1: of services. Are you satisfied with how well they've done 244 00:13:49,040 --> 00:13:50,719 Speaker 1: turning that around? Is there still room for them to 245 00:13:50,840 --> 00:13:53,600 Speaker 1: make more improvements? Services a big deal. When we look 246 00:13:53,600 --> 00:13:56,720 Speaker 1: at kind of the Apple model for the next five years, 247 00:13:56,760 --> 00:13:59,040 Speaker 1: the growth is going to come from services. So the 248 00:13:59,040 --> 00:14:01,120 Speaker 1: iPhone is going to kind of EBB and flow, but 249 00:14:01,200 --> 00:14:04,040 Speaker 1: service is going to go from college twenty billion dollar 250 00:14:04,080 --> 00:14:08,520 Speaker 1: business this year to probably a forty five billion dollar business. 251 00:14:08,640 --> 00:14:11,320 Speaker 1: Right now, Apple services business is about the same size 252 00:14:11,320 --> 00:14:14,600 Speaker 1: as Facebook, not growing as fast. But so when you 253 00:14:14,640 --> 00:14:16,640 Speaker 1: put all of this together and look at the profitability, 254 00:14:16,640 --> 00:14:20,560 Speaker 1: which is much higher. Services is a critical part to 255 00:14:20,600 --> 00:14:23,680 Speaker 1: the Apple story longer term, and they need to embrace 256 00:14:23,760 --> 00:14:26,320 Speaker 1: it even more aggressively than they are today. It's a 257 00:14:26,360 --> 00:14:29,920 Speaker 1: quick question about Google and and UH and AI. How 258 00:14:29,960 --> 00:14:32,000 Speaker 1: far have they gone towards monetizing that. In other words, 259 00:14:32,160 --> 00:14:35,440 Speaker 1: you have the innovation part of things, is the monetari 260 00:14:36,000 --> 00:14:40,480 Speaker 1: monetization side of things close behind. It's it's slowly starting. 261 00:14:40,480 --> 00:14:43,680 Speaker 1: And think of AI. Google set on their last conference 262 00:14:43,680 --> 00:14:45,560 Speaker 1: call that they're going to be an AI first company, 263 00:14:45,600 --> 00:14:48,040 Speaker 1: their mobile first company. They they're gonna become AI first, 264 00:14:48,320 --> 00:14:51,480 Speaker 1: and they talked about three fifty AI innovations in the court. 265 00:14:52,120 --> 00:14:54,840 Speaker 1: And what this will be is in terms of monetizing it, 266 00:14:54,840 --> 00:14:57,080 Speaker 1: it's not going to be like an AI product that 267 00:14:57,080 --> 00:14:59,480 Speaker 1: you're going to download, and it's going to be the 268 00:14:59,520 --> 00:15:01,680 Speaker 1: existing products you have are just gonna get smarter in 269 00:15:01,720 --> 00:15:04,200 Speaker 1: yourknees the more. Okay, Jean, if you forget your Apple 270 00:15:04,360 --> 00:15:07,640 Speaker 1: I D. So if the kid wants to download apps 271 00:15:08,360 --> 00:15:11,400 Speaker 1: on their iPod but they can't do it because I 272 00:15:11,520 --> 00:15:15,520 Speaker 1: forgot my Apple I D, what do I do? Well, 273 00:15:15,600 --> 00:15:18,840 Speaker 1: you do uh A reset and I D reset and 274 00:15:18,880 --> 00:15:22,840 Speaker 1: eventually you're going to probably come up against some password problems. 275 00:15:22,840 --> 00:15:25,920 Speaker 1: So the good news with Apple is you can actually 276 00:15:25,920 --> 00:15:29,440 Speaker 1: have real uh support, real tech support around their services 277 00:15:29,520 --> 00:15:32,040 Speaker 1: and you can call somebody. You know, there's the question 278 00:15:32,160 --> 00:15:35,560 Speaker 1: you needed to get from gene Muster Hell Loop Ventures. Jean, 279 00:15:35,680 --> 00:15:48,160 Speaker 1: thank you so much. We continue. This is Bloomberg, brought 280 00:15:48,200 --> 00:15:51,840 Speaker 1: you by Bank of America Mary Lynch, dedicated to bringing 281 00:15:51,840 --> 00:15:55,600 Speaker 1: our clients insights and solutions to meet the challenges of 282 00:15:55,600 --> 00:15:59,880 Speaker 1: a transforming world. That's the power of global connections. Merrily 283 00:16:00,280 --> 00:16:08,080 Speaker 1: Pierce Veneran Smith Incorporated Member s I p C. We 284 00:16:08,120 --> 00:16:11,640 Speaker 1: are pleased to bring you worldwide very Ion Green Professor, 285 00:16:12,240 --> 00:16:16,120 Speaker 1: Good morning, Good morning Tom. How are you? I'm very good. 286 00:16:16,160 --> 00:16:19,680 Speaker 1: For President Trump has an exorbitant privilege, which is I 287 00:16:19,680 --> 00:16:25,920 Speaker 1: guess he can talk anytime seven on dollar strength, dollar policy, 288 00:16:25,960 --> 00:16:30,040 Speaker 1: dollar weakness. What is the icon green prescription for any 289 00:16:30,120 --> 00:16:35,960 Speaker 1: president to do when discussing the US dollar? To hold 290 00:16:35,960 --> 00:16:40,560 Speaker 1: his fire? Basically, Um, I think the term strong dollar 291 00:16:40,680 --> 00:16:46,080 Speaker 1: policy has been unfortunate. It's really code for uh, don't 292 00:16:46,120 --> 00:16:49,600 Speaker 1: comment on the dollar because the exchange rates at the 293 00:16:49,680 --> 00:16:54,600 Speaker 1: single most important price in the economy, and random tweet 294 00:16:54,760 --> 00:16:59,440 Speaker 1: can drive it up or down. Do you help us 295 00:16:59,480 --> 00:17:01,400 Speaker 1: with that? A term that is thrown around so much, 296 00:17:01,400 --> 00:17:04,520 Speaker 1: strong dollar policy goes back to Bob Rubin? Of course? 297 00:17:05,080 --> 00:17:07,120 Speaker 1: Are we are we seeing a change here in policy? 298 00:17:07,119 --> 00:17:10,080 Speaker 1: Do you think when it comes to the dollar? I 299 00:17:10,119 --> 00:17:14,640 Speaker 1: don't think policy has been defined yet, but we are 300 00:17:14,760 --> 00:17:19,119 Speaker 1: seeing much more uncertainty around policy. We don't know whether 301 00:17:20,400 --> 00:17:24,399 Speaker 1: Mr Trump will tell his Treasury Department to intervene in 302 00:17:24,440 --> 00:17:27,920 Speaker 1: the foreign exchange market. We don't know whether the administration 303 00:17:28,000 --> 00:17:32,439 Speaker 1: will job ow the FED to adjust policy in ways 304 00:17:32,600 --> 00:17:36,600 Speaker 1: with the with implications for the dollar or not. All 305 00:17:36,640 --> 00:17:39,840 Speaker 1: we know for sure is that everything is on the table, 306 00:17:39,960 --> 00:17:44,679 Speaker 1: conceivably at this point, everything's on the table. Mentioned there 307 00:17:44,720 --> 00:17:47,879 Speaker 1: that came came via Twitter. What have you learned here 308 00:17:47,880 --> 00:17:49,280 Speaker 1: over the last few days. It's hard to believe it's 309 00:17:49,280 --> 00:17:51,160 Speaker 1: just been about a week plus of this administration. What's 310 00:17:51,160 --> 00:17:55,800 Speaker 1: your takeaway from this this first week? The clear takeaway 311 00:17:55,880 --> 00:17:58,720 Speaker 1: is that something big is likely to happen on the 312 00:17:58,760 --> 00:18:02,560 Speaker 1: trade policy front um. Getting corporate tax reforman is going 313 00:18:02,600 --> 00:18:06,600 Speaker 1: to be hard. Getting individual and come tax reform is 314 00:18:06,640 --> 00:18:11,040 Speaker 1: going to be harder. Getting big infrastructure packages going to 315 00:18:11,119 --> 00:18:15,359 Speaker 1: be harder. Still, all of those things require cooperation with 316 00:18:15,440 --> 00:18:19,280 Speaker 1: the Congress, which is time consuming and can't be taken 317 00:18:19,320 --> 00:18:22,800 Speaker 1: for granted. Trade policy is the one place where the president, 318 00:18:23,080 --> 00:18:25,879 Speaker 1: if he grows in patient, can move in laterally. I 319 00:18:25,920 --> 00:18:29,080 Speaker 1: think that's what we've seen. Going back to your wonderful 320 00:18:29,240 --> 00:18:32,760 Speaker 1: in focus, this is a fabulous short read. Globalizing Capital 321 00:18:33,320 --> 00:18:36,440 Speaker 1: or very Ikey Green talks about the many shades of globalization, 322 00:18:36,560 --> 00:18:39,720 Speaker 1: starting with a gold standard and and moving forward from there. 323 00:18:39,720 --> 00:18:42,159 Speaker 1: I can't say enough about the effort. If you were 324 00:18:42,200 --> 00:18:45,320 Speaker 1: to write a chapter eight, you go chapter five, Breton Woods, 325 00:18:45,400 --> 00:18:48,399 Speaker 1: chapter six, A Brave New Monetary World. You end up 326 00:18:48,400 --> 00:18:50,399 Speaker 1: with a conclusion if you need you to write a 327 00:18:50,400 --> 00:18:53,440 Speaker 1: back chapter on the back end for Mr Trump to read. 328 00:18:53,720 --> 00:18:57,320 Speaker 1: What would your new chapter be? Look for the third 329 00:18:57,440 --> 00:19:04,360 Speaker 1: edition in Tom, Thank you. UM. I think, uh, we 330 00:19:04,400 --> 00:19:08,840 Speaker 1: have learned over and over again that flexible exchange rates 331 00:19:09,240 --> 00:19:13,400 Speaker 1: are the worst alternatives except for all the others. We 332 00:19:13,480 --> 00:19:17,879 Speaker 1: have to learn to live with this world. And what 333 00:19:18,000 --> 00:19:23,520 Speaker 1: it implies for Trump is that everything that he is contemplating, 334 00:19:23,680 --> 00:19:30,040 Speaker 1: from expansionary fiscal policy to create protectionism to destination based 335 00:19:30,160 --> 00:19:36,160 Speaker 1: corporate tax reform is apt to drive the dollar up, 336 00:19:36,560 --> 00:19:41,320 Speaker 1: uh serpificantly and frustrate his own intentions. I don't think 337 00:19:41,359 --> 00:19:43,560 Speaker 1: there is any way around that other than to try 338 00:19:43,600 --> 00:19:48,240 Speaker 1: to moderate a little bit those extreme policy initiatives. UM, 339 00:19:48,560 --> 00:19:51,320 Speaker 1: quickly question here just about about that trade policy are 340 00:19:51,359 --> 00:19:53,840 Speaker 1: we Are you any more confident what the shape of 341 00:19:53,840 --> 00:19:55,600 Speaker 1: that policy is going to be? As you said, it's 342 00:19:55,600 --> 00:19:57,000 Speaker 1: going to be a big event here, we're gonna see 343 00:19:57,040 --> 00:19:58,640 Speaker 1: something happened with it. Do you have a better sense 344 00:19:58,640 --> 00:20:02,640 Speaker 1: of what it's going to look like? No, I don't 345 00:20:02,640 --> 00:20:04,600 Speaker 1: think any of us do. But I think there's some 346 00:20:04,720 --> 00:20:10,480 Speaker 1: more obvious targets than others. Mexico is an obvious target, 347 00:20:10,720 --> 00:20:16,399 Speaker 1: China less so, because China is a very large economy 348 00:20:16,560 --> 00:20:21,400 Speaker 1: with geo political reach, and Germany even less. Though even 349 00:20:21,400 --> 00:20:25,399 Speaker 1: though Germany has a big external surplus, it does not 350 00:20:25,520 --> 00:20:29,800 Speaker 1: have its own currency, as Mrs Merkel reminded Mr Crump 351 00:20:29,800 --> 00:20:33,960 Speaker 1: in the world. Yet that makes UH Germany a more 352 00:20:34,119 --> 00:20:38,720 Speaker 1: difficult problematic target. Professor, I look at I think of 353 00:20:38,760 --> 00:20:43,760 Speaker 1: Douglas or when at dartmous work on mercantilism in zero sum, 354 00:20:43,960 --> 00:20:48,600 Speaker 1: in the phrases thrown around right now, are we working 355 00:20:48,720 --> 00:20:52,520 Speaker 1: our way back to a colonial world? Are we becoming 356 00:20:52,720 --> 00:20:57,719 Speaker 1: inward and a more closed economy like an autarchy? Again? 357 00:20:57,800 --> 00:21:02,159 Speaker 1: Are we doing that? I think what what's happening is 358 00:21:02,280 --> 00:21:07,359 Speaker 1: that the age of hyper globalization, when cross border creating 359 00:21:07,440 --> 00:21:12,680 Speaker 1: finance for growing faster than everything else, is over. If 360 00:21:12,760 --> 00:21:16,640 Speaker 1: we follow sensible policies, we don't have to have regress 361 00:21:16,680 --> 00:21:20,320 Speaker 1: from here. The word you use Tom Meth's on point 362 00:21:20,800 --> 00:21:24,159 Speaker 1: is mercantilism. If you look at the Peter Navarro Wilbur 363 00:21:24,280 --> 00:21:28,399 Speaker 1: Ross documents from the Fall or their Financial Times column, 364 00:21:28,440 --> 00:21:32,440 Speaker 1: it was all about imports bad, exports good. And that's 365 00:21:32,520 --> 00:21:36,000 Speaker 1: classic mercantilism, which we know can be good politics. That 366 00:21:36,240 --> 00:21:41,840 Speaker 1: is bad economics. It's not. However, zero sum. It's negative 367 00:21:41,880 --> 00:21:45,160 Speaker 1: sum once we get into trade warfare and retaliation and 368 00:21:45,240 --> 00:21:48,960 Speaker 1: breaking up global supply chains and so forth. When I 369 00:21:49,040 --> 00:21:52,760 Speaker 1: look at the games theory that will occur, you are 370 00:21:53,040 --> 00:21:56,600 Speaker 1: these students of the mistakes we made in the thirties, 371 00:21:56,640 --> 00:22:00,040 Speaker 1: beginning with golden fetters years ago and the works of 372 00:22:00,080 --> 00:22:04,440 Speaker 1: the International Monetary Fund. When someone says to you, does 373 00:22:04,520 --> 00:22:09,720 Speaker 1: this hearken back to nineteen thirties regionalism in block thinking? 374 00:22:10,240 --> 00:22:13,919 Speaker 1: Are they right? They are right, and they ought to 375 00:22:14,000 --> 00:22:18,400 Speaker 1: focus on two risks that developed in the nineties. Number One, 376 00:22:18,920 --> 00:22:21,880 Speaker 1: when the US lapped on the Smooth Holly tariff, we 377 00:22:22,280 --> 00:22:27,240 Speaker 1: destroyed the financial position of emerging markets. Basically, indebted countries 378 00:22:27,359 --> 00:22:30,920 Speaker 1: couldn't earn the dollars to pay back what they borrowed, 379 00:22:31,040 --> 00:22:35,560 Speaker 1: and that then collapse the global financial system. So if 380 00:22:36,440 --> 00:22:38,560 Speaker 1: we have a Trump tariff and a strong rise in 381 00:22:38,640 --> 00:22:43,880 Speaker 1: the dollar, that could happen again. Number Two, trade conflicts 382 00:22:43,960 --> 00:22:47,880 Speaker 1: billed over into other forms of geo political conflict. Imated 383 00:22:47,960 --> 00:22:52,399 Speaker 1: much harder for countries to cooperate in opposition to rising 384 00:22:52,440 --> 00:22:56,200 Speaker 1: threats like that from the Third Reich. So I I 385 00:22:56,840 --> 00:23:00,240 Speaker 1: worry as well about how trade tension could spill over 386 00:23:00,400 --> 00:23:03,679 Speaker 1: into other tension as it did in the nineteen You 387 00:23:03,720 --> 00:23:06,080 Speaker 1: mentioned that Navar piece and the Ft, and I wonder 388 00:23:06,119 --> 00:23:08,480 Speaker 1: sort of what the takeaway is from the commentary he 389 00:23:08,520 --> 00:23:10,400 Speaker 1: made there about the Euro. We saw the euro move 390 00:23:11,080 --> 00:23:13,240 Speaker 1: on the release of that that column in the Ft 391 00:23:13,359 --> 00:23:17,000 Speaker 1: he talked about the sort of the fact of dutsch Mark. 392 00:23:17,280 --> 00:23:19,720 Speaker 1: I'm misquoting it there, but you know that that there 393 00:23:19,800 --> 00:23:22,160 Speaker 1: is a larger German role in the Euro right now, 394 00:23:22,280 --> 00:23:24,359 Speaker 1: what's your takeaway from that? What was the importance of 395 00:23:24,359 --> 00:23:28,119 Speaker 1: that to you? Number one, It doesn't seem to me 396 00:23:28,160 --> 00:23:33,280 Speaker 1: that Mr Navarro really understands the Euro or how it's determined, 397 00:23:34,040 --> 00:23:37,920 Speaker 1: or appreciates the fact that Germany does not have a 398 00:23:37,960 --> 00:23:42,600 Speaker 1: central bank anymore. But it does reflect that same mercantilist 399 00:23:42,680 --> 00:23:46,080 Speaker 1: thinking that we were talking about a moment ago, that 400 00:23:46,280 --> 00:23:51,639 Speaker 1: Germany has an external surplus. Therefore, the inference follows erroneously 401 00:23:51,920 --> 00:23:54,520 Speaker 1: that it must be part of the problem, even if 402 00:23:54,560 --> 00:23:58,840 Speaker 1: there are other euro Zone countries who have external deficits 403 00:23:59,080 --> 00:24:01,960 Speaker 1: and off set the chairman position at least in Park. 404 00:24:02,800 --> 00:24:04,800 Speaker 1: What are you going to be watching. We've talked about 405 00:24:04,800 --> 00:24:07,880 Speaker 1: the upcoming elections in France and the Netherlands. You've spent 406 00:24:07,960 --> 00:24:09,560 Speaker 1: some time in Europe recently. I think we last spoke 407 00:24:09,600 --> 00:24:11,440 Speaker 1: to you were in Berlin. What are you gonna be 408 00:24:11,520 --> 00:24:14,920 Speaker 1: watching here in two thousand seventeen for indications or indicators 409 00:24:15,320 --> 00:24:21,520 Speaker 1: of the eurozones health well, first and foremost growth UH. 410 00:24:21,760 --> 00:24:26,040 Speaker 1: Europe has been dragged down economically and politically by a 411 00:24:26,040 --> 00:24:30,000 Speaker 1: decade of stagnation. The Eurozone economy is doing better now 412 00:24:30,040 --> 00:24:33,520 Speaker 1: in terms of growth. That's a big positive that not 413 00:24:33,640 --> 00:24:38,480 Speaker 1: everybody yet appreciates. But number two, the banking system UH 414 00:24:38,600 --> 00:24:42,879 Speaker 1: banks in Italy, in Portugal and elsewhere still a mess. 415 00:24:42,920 --> 00:24:46,600 Speaker 1: The head of the European Banking Authority yesterday came out 416 00:24:46,880 --> 00:24:49,840 Speaker 1: making the case for a europe wide bad bank to 417 00:24:49,920 --> 00:24:54,000 Speaker 1: clean up the nonperforming loans. That they actually make progress there, 418 00:24:54,080 --> 00:24:56,160 Speaker 1: that could be a positive first, so I could agree, 419 00:24:56,160 --> 00:24:57,840 Speaker 1: and I want you to launch into the debate that 420 00:24:58,000 --> 00:25:01,280 Speaker 1: your colleague in crime brand DeLong started, which is looking 421 00:25:01,280 --> 00:25:05,320 Speaker 1: at NAFTA, looking at trade, and Danny Roderick at Harvard 422 00:25:05,359 --> 00:25:09,320 Speaker 1: and Jared Bernstein a Wonderful Economists with Vice President Biden 423 00:25:09,320 --> 00:25:13,960 Speaker 1: and Washington saying that there was not enough emphasis on 424 00:25:14,000 --> 00:25:17,640 Speaker 1: what it did to a select group of low skill Americans. 425 00:25:17,680 --> 00:25:20,960 Speaker 1: In a hindsight, should we have had a much more 426 00:25:21,119 --> 00:25:28,400 Speaker 1: overt um solution or prescription or cash treatment to these 427 00:25:28,440 --> 00:25:32,320 Speaker 1: people that lost their jobs in NAFTA in w t O, 428 00:25:33,920 --> 00:25:37,479 Speaker 1: there's no question that the answer is yes. I do think, 429 00:25:38,320 --> 00:25:41,600 Speaker 1: as that's my colleague bread DeLong, that it's mainly been 430 00:25:41,800 --> 00:25:47,280 Speaker 1: technology and automation rather than NaSTA or China that has 431 00:25:47,400 --> 00:25:50,639 Speaker 1: led to the decline and manufacturing employment. But in the 432 00:25:50,720 --> 00:25:54,520 Speaker 1: United States, the two sets of factors trade and technology 433 00:25:54,600 --> 00:25:59,160 Speaker 1: have hit the same groups of people in the same communities, 434 00:25:59,720 --> 00:26:05,399 Speaker 1: uh in the same traditionally labor intensive manufacturing sectors. And 435 00:26:05,520 --> 00:26:08,440 Speaker 1: to neglect the fact that they had been hit by 436 00:26:08,560 --> 00:26:12,320 Speaker 1: both maralds I think has led to this political backlash 437 00:26:12,400 --> 00:26:15,840 Speaker 1: and we should have been quicker to anticipate that and 438 00:26:15,880 --> 00:26:18,560 Speaker 1: do something about it. What do we need to see 439 00:26:18,720 --> 00:26:21,800 Speaker 1: a G twenty and G seven meetings in the coming 440 00:26:21,840 --> 00:26:26,440 Speaker 1: months with the shock of populism in the developed economies? 441 00:26:27,840 --> 00:26:30,440 Speaker 1: Number one, we need the Trump administration to show up. 442 00:26:30,640 --> 00:26:36,080 Speaker 1: I think that would be helpful. And the United States 443 00:26:36,119 --> 00:26:39,399 Speaker 1: still needs to play a role if there's going to 444 00:26:39,440 --> 00:26:44,000 Speaker 1: be any kind of concerted response to this decline in 445 00:26:44,119 --> 00:26:51,320 Speaker 1: this rise in volatility and uncertainty, big exchange rate movements 446 00:26:51,400 --> 00:26:54,040 Speaker 1: are going to cause troubles for a variety of G 447 00:26:54,200 --> 00:26:59,040 Speaker 1: twenty countries. But I don't think intervention all of the Plasa, 448 00:26:59,119 --> 00:27:02,080 Speaker 1: Plaza and Louver accords from the eighties is going to work. 449 00:27:02,160 --> 00:27:06,560 Speaker 1: We need sensible policies in order to get sensible exchange rates. 450 00:27:06,600 --> 00:27:10,879 Speaker 1: And again G twenty is a good talking shop for 451 00:27:11,640 --> 00:27:14,440 Speaker 1: raising consciousness about that, But policies are made at home 452 00:27:14,440 --> 00:27:17,240 Speaker 1: in including in Washington, d C. Professor I could Green, 453 00:27:17,280 --> 00:27:19,360 Speaker 1: thank you so much. Good news. It will look for 454 00:27:19,400 --> 00:27:23,440 Speaker 1: another edition of Exhorbited Privilege in eighteen months or so. 455 00:27:23,480 --> 00:27:25,439 Speaker 1: I'll put that book out on social media. It was 456 00:27:25,480 --> 00:27:29,200 Speaker 1: one of my books of the summer a few years ago. 457 00:27:29,400 --> 00:27:42,840 Speaker 1: Barry Iken Green, with the University of California at Berkeley 458 00:27:45,240 --> 00:27:48,680 Speaker 1: joining us now, is truly one of the most interesting 459 00:27:48,760 --> 00:27:54,200 Speaker 1: people in twentieth century politics. His public service includes governor 460 00:27:54,200 --> 00:27:57,360 Speaker 1: of Missouri. I believe he was a Senator from Missouri. 461 00:27:58,080 --> 00:28:00,560 Speaker 1: He was us. None of this matters. He brought Tony 462 00:28:00,640 --> 00:28:03,439 Speaker 1: LaRussa to the St. Louis Cardinals, and that that's what 463 00:28:03,560 --> 00:28:09,240 Speaker 1: John Ashcroft U did, among other services. Attorney General. Wonderful 464 00:28:09,280 --> 00:28:13,240 Speaker 1: to speak to you this morning. I would respectfully suggest sir, 465 00:28:13,320 --> 00:28:17,280 Speaker 1: that you were not as polarizing as our attorney general 466 00:28:17,359 --> 00:28:22,439 Speaker 1: to be. Will Mr Sessions polarize the dialogue so much 467 00:28:22,880 --> 00:28:27,600 Speaker 1: that we will think of saying ed mess of another time? Well, First, 468 00:28:27,680 --> 00:28:31,480 Speaker 1: I have great respect for the Attorney General designate. I 469 00:28:31,520 --> 00:28:33,919 Speaker 1: think he's going to be a great attorney general because 470 00:28:33,920 --> 00:28:36,480 Speaker 1: he believes in the rule of law, and I don't 471 00:28:36,520 --> 00:28:38,960 Speaker 1: believe he'll be that polarizing if you look at his 472 00:28:39,040 --> 00:28:42,400 Speaker 1: record as a public servant. He last ran for public 473 00:28:42,440 --> 00:28:45,080 Speaker 1: office in Alabama, and I believe he was unopposed on 474 00:28:45,160 --> 00:28:49,040 Speaker 1: either the Democrat or the Republican ticket. It's hard to 475 00:28:49,600 --> 00:28:52,840 Speaker 1: say that a person is really polarizing if he's so 476 00:28:52,920 --> 00:28:55,920 Speaker 1: acceptable to people on the broad spectrum that he's unopposed 477 00:28:55,920 --> 00:28:58,400 Speaker 1: in a race for the United States Senate. So I 478 00:28:58,400 --> 00:29:01,520 Speaker 1: I believe his dedication to the rule of law, the 479 00:29:01,560 --> 00:29:05,720 Speaker 1: fact that he uh sees his responsibility to inform the 480 00:29:05,760 --> 00:29:08,959 Speaker 1: President exactly of what the law is on matters and 481 00:29:09,000 --> 00:29:12,120 Speaker 1: to counsel him effectively there, and to prosecute and administer 482 00:29:12,200 --> 00:29:14,840 Speaker 1: the justice to bartment based on the law and not 483 00:29:14,960 --> 00:29:18,440 Speaker 1: based on the character of people making inquiry or the 484 00:29:18,520 --> 00:29:21,240 Speaker 1: character of people who make offense. I think that will 485 00:29:21,280 --> 00:29:24,160 Speaker 1: serve America. Well, so I don't see him as that polarizing. 486 00:29:25,040 --> 00:29:27,880 Speaker 1: Help us understand the role of the Attorney general visae 487 00:29:27,880 --> 00:29:29,760 Speaker 1: what we saw over the weekend. We were speaking with 488 00:29:29,800 --> 00:29:32,960 Speaker 1: Noah Feldman, the constitutional law scholar at Harvard University, columnists 489 00:29:32,960 --> 00:29:35,080 Speaker 1: for Bloomberg View, and we were looking at Sally Ates 490 00:29:35,080 --> 00:29:37,480 Speaker 1: his statement at which she issued before the weekend, and 491 00:29:37,520 --> 00:29:39,560 Speaker 1: he he notes in his most recent columns she referred 492 00:29:39,600 --> 00:29:42,600 Speaker 1: to the Institution's solemn obligation to always seek justice and 493 00:29:42,680 --> 00:29:45,920 Speaker 1: stand for what is right. Help us understand what happened 494 00:29:45,920 --> 00:29:48,440 Speaker 1: here and whether or not you think she was right 495 00:29:48,480 --> 00:29:53,840 Speaker 1: in speaking out after that immigration executive alarity was signed. Well, 496 00:29:53,840 --> 00:29:56,600 Speaker 1: first of all, it's my understanding that the professionals at 497 00:29:56,600 --> 00:30:00,480 Speaker 1: the Department of Justice determined that the execut to order 498 00:30:00,560 --> 00:30:02,960 Speaker 1: was in accordance with the law. And given what I 499 00:30:03,000 --> 00:30:06,520 Speaker 1: know about the Immigration Act of nineteen sixty five and 500 00:30:06,600 --> 00:30:10,080 Speaker 1: its amendments and section to one two of that Act, 501 00:30:10,120 --> 00:30:13,280 Speaker 1: it looks like the President clearly has the authority. And 502 00:30:13,320 --> 00:30:15,680 Speaker 1: it appears to me that she had a sense of 503 00:30:15,840 --> 00:30:19,280 Speaker 1: justice that didn't make as its primary reference the rule 504 00:30:19,320 --> 00:30:23,680 Speaker 1: of law. But but concerns that she had personally and 505 00:30:24,520 --> 00:30:27,240 Speaker 1: very frankly, it is the job of the Attorney General 506 00:30:27,280 --> 00:30:30,000 Speaker 1: to defend the position of the United States and its 507 00:30:30,040 --> 00:30:34,120 Speaker 1: laws and the administration of the United States, unless there 508 00:30:34,200 --> 00:30:38,320 Speaker 1: isn't a legal argument in its favor. I remember on 509 00:30:38,360 --> 00:30:41,720 Speaker 1: several occasions I was asked to do things in defense 510 00:30:41,880 --> 00:30:46,400 Speaker 1: of policy which I disagreed with profoundly. McCain fine Gold 511 00:30:46,600 --> 00:30:50,320 Speaker 1: was a campaign finance measure which I thought offended the 512 00:30:50,360 --> 00:30:54,160 Speaker 1: First Amendment of the Constitution. But I defended it as 513 00:30:54,200 --> 00:30:57,400 Speaker 1: a matter of my duty because it was arguably defensible, 514 00:30:57,480 --> 00:30:59,840 Speaker 1: and frankly, we defended it so well that it was 515 00:31:00,000 --> 00:31:02,840 Speaker 1: sustained by the Supreme Court. This is not that happened 516 00:31:02,880 --> 00:31:04,840 Speaker 1: in a number of cases. David, I want you to 517 00:31:04,880 --> 00:31:06,600 Speaker 1: jump into you're smarter at this than I am. But 518 00:31:06,640 --> 00:31:09,680 Speaker 1: this is not a nineteenth century discussion, folks. The Attorney 519 00:31:09,720 --> 00:31:13,200 Speaker 1: General is flat on his back in the hospital with pancreaitis, 520 00:31:13,440 --> 00:31:16,720 Speaker 1: and you had two political guys for President Bush wanted 521 00:31:16,720 --> 00:31:18,760 Speaker 1: you to take out the quill, dip in the ink, 522 00:31:19,120 --> 00:31:24,000 Speaker 1: and sign the document. Right, Attorney General, Well, I really 523 00:31:24,040 --> 00:31:28,400 Speaker 1: don't comment on on on my council to clients, either 524 00:31:28,440 --> 00:31:31,680 Speaker 1: in private or in public, but that that that's that's 525 00:31:31,680 --> 00:31:34,840 Speaker 1: a report. If you're making reference to whether or not 526 00:31:34,880 --> 00:31:38,200 Speaker 1: the attorney general has a responsibility to counsel honestly the 527 00:31:38,360 --> 00:31:44,000 Speaker 1: administration he does, and uh, he would disserve an administration 528 00:31:44,040 --> 00:31:46,360 Speaker 1: if he would tell a president something is legal when 529 00:31:46,400 --> 00:31:50,920 Speaker 1: it's not. And the idea somehow that if it would 530 00:31:50,920 --> 00:31:55,080 Speaker 1: be uh uh, there's a danger in an an attorney 531 00:31:55,120 --> 00:31:59,080 Speaker 1: general who would collude with the president rather than tell 532 00:31:59,160 --> 00:32:02,360 Speaker 1: him what's right and what's wrong, would be to describe 533 00:32:02,400 --> 00:32:04,440 Speaker 1: an attorney general who would not only be trade the 534 00:32:04,520 --> 00:32:08,920 Speaker 1: American people, but would be trade the administration. No administration 535 00:32:09,000 --> 00:32:11,360 Speaker 1: should want to do that which it has no authority 536 00:32:11,440 --> 00:32:14,360 Speaker 1: to do. And an attorney general who has reference to 537 00:32:14,400 --> 00:32:17,640 Speaker 1: the rule of law, has a profound duty to say 538 00:32:17,680 --> 00:32:22,040 Speaker 1: to the president, this is outside the scope of your authority. 539 00:32:22,160 --> 00:32:24,200 Speaker 1: And and you know, there is a sense in which 540 00:32:24,280 --> 00:32:28,960 Speaker 1: people sometimes want to act to the limit of their 541 00:32:29,040 --> 00:32:33,240 Speaker 1: power without reference to their authority, and the law describes 542 00:32:33,320 --> 00:32:36,800 Speaker 1: their authority. And an attorney general should be very clear 543 00:32:37,400 --> 00:32:40,600 Speaker 1: to say to whomever asks his opinion in the in 544 00:32:40,640 --> 00:32:45,360 Speaker 1: the federal government, this is certainly the little level of 545 00:32:45,400 --> 00:32:48,440 Speaker 1: your authority, and you should not exceed your authority. Even 546 00:32:48,520 --> 00:32:50,320 Speaker 1: if some there is some way in which you have 547 00:32:50,440 --> 00:32:53,360 Speaker 1: the power to do so, help us with the historical 548 00:32:53,400 --> 00:32:55,440 Speaker 1: import of what happened over the weekend? And what do 549 00:32:55,480 --> 00:32:57,840 Speaker 1: you think the messages for civil servants, those who have 550 00:32:57,920 --> 00:33:00,280 Speaker 1: spent their careers at the Justice department, as they should 551 00:33:00,320 --> 00:33:03,720 Speaker 1: unfold it over the weekend. Well, they have a duty 552 00:33:03,880 --> 00:33:06,440 Speaker 1: like a lawyer has a duty to represent a client. 553 00:33:07,400 --> 00:33:11,360 Speaker 1: If a person in the private sector were to disagree 554 00:33:11,440 --> 00:33:13,720 Speaker 1: with what his client was doing in spite of the 555 00:33:13,720 --> 00:33:16,720 Speaker 1: fact that it was legal, and were to decide to 556 00:33:17,120 --> 00:33:19,880 Speaker 1: rather than defended in court, simply to walk away and 557 00:33:19,960 --> 00:33:24,080 Speaker 1: not defended, that lawyer would be subject to disciplinary action 558 00:33:24,200 --> 00:33:28,920 Speaker 1: by the Bar Association for failing to serve the client. Now, 559 00:33:28,920 --> 00:33:33,600 Speaker 1: a person who believes that his own sense of justice 560 00:33:33,640 --> 00:33:36,680 Speaker 1: is offended by doing something legal in behalf of his 561 00:33:36,800 --> 00:33:40,840 Speaker 1: client has a duty either to go forward to represent 562 00:33:40,920 --> 00:33:43,960 Speaker 1: the client, which lawyers do all the time, or else 563 00:33:44,080 --> 00:33:49,320 Speaker 1: to resign. But the idea that somehow, um you as 564 00:33:49,360 --> 00:33:52,920 Speaker 1: an attorney, have the right to make a judgment uh 565 00:33:52,960 --> 00:33:57,080 Speaker 1: in favor of your own personal preferences and against the 566 00:33:57,120 --> 00:34:00,280 Speaker 1: interests of your client is bankrupt And for a public 567 00:34:00,360 --> 00:34:02,000 Speaker 1: let me just make this one other point, I don't 568 00:34:02,000 --> 00:34:03,880 Speaker 1: know how much time you have. This is a nuance. 569 00:34:04,720 --> 00:34:07,760 Speaker 1: But when when you decide you're not going to represent 570 00:34:07,800 --> 00:34:11,520 Speaker 1: the United States and defend its positions in the court, 571 00:34:12,600 --> 00:34:15,120 Speaker 1: you're basically saying I don't trust the court to come 572 00:34:15,160 --> 00:34:20,440 Speaker 1: out of this case with something that is uh congrol 573 00:34:20,600 --> 00:34:23,440 Speaker 1: with my personal opinion, John Ashcroft, We're gonna to leave. 574 00:34:23,520 --> 00:34:26,160 Speaker 1: We have to leave it there. Unfortunately, we so much 575 00:34:26,200 --> 00:34:28,040 Speaker 1: want to get you back on again. There's too much 576 00:34:28,080 --> 00:34:33,000 Speaker 1: to talk about with the former Attorney General of the 577 00:34:33,080 --> 00:34:44,040 Speaker 1: United States, John Ashcroft, of course of Missouri. Thanks for 578 00:34:44,080 --> 00:34:48,560 Speaker 1: listening to the Bloomberg Surveillance Podcast. Subscribe and listen to 579 00:34:48,719 --> 00:34:53,800 Speaker 1: interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. 580 00:34:54,560 --> 00:34:57,480 Speaker 1: I'm out on Twitter at Tom Keene. David Gura is 581 00:34:57,520 --> 00:35:01,279 Speaker 1: at David Gura. Before the podcast, you can always catch 582 00:35:01,400 --> 00:35:17,960 Speaker 1: us worldwide on Bloomberg Radio. Brought you by Bank of America. 583 00:35:18,040 --> 00:35:22,279 Speaker 1: Mary Lynch. Dedicated to bringing our clients insights and solutions 584 00:35:22,560 --> 00:35:25,840 Speaker 1: to meet the challenges of a transforming world. That's the 585 00:35:25,920 --> 00:35:29,800 Speaker 1: power of global connections. Mary Lynch, Pierce, Fenner and Smith 586 00:35:30,200 --> 00:35:32,840 Speaker 1: Incorporated Member s I p C.