1 00:00:03,279 --> 00:00:07,600 Speaker 1: This is Bloomberg Surveillance. Volatility is going to be one 2 00:00:07,600 --> 00:00:10,000 Speaker 1: of the few constants in this environment, and that's because 3 00:00:10,000 --> 00:00:12,920 Speaker 1: there are all of these structural changes that are hard 4 00:00:12,960 --> 00:00:15,440 Speaker 1: to understand. All the signs are and all the trend 5 00:00:15,520 --> 00:00:19,360 Speaker 1: lines indicate that inflation is more likely to accelerate. We've 6 00:00:19,360 --> 00:00:22,720 Speaker 1: got to go back to to find capital levels in 7 00:00:22,760 --> 00:00:25,159 Speaker 1: the banking industry as high as they are today, and 8 00:00:25,200 --> 00:00:28,560 Speaker 1: that affects the r E. Bloomberg Surveillance your link to 9 00:00:28,640 --> 00:00:32,960 Speaker 1: the world of economics, finance, and investment on Bloomberg Radio. 10 00:00:33,080 --> 00:00:35,520 Speaker 1: Good morning everyone, Michael McKee and Tom King, we said 11 00:00:35,520 --> 00:00:39,400 Speaker 1: good morning worldwide. In this hour, George Friedman joins US 12 00:00:39,920 --> 00:00:44,640 Speaker 1: geopolitical futures on maybe the advice taken by Secretary Clinton 13 00:00:44,680 --> 00:00:47,760 Speaker 1: and Mr Trump is the United States looks at its 14 00:00:47,840 --> 00:00:52,360 Speaker 1: international projection. Also George Friedman on Germany as well. We 15 00:00:52,400 --> 00:00:56,040 Speaker 1: will look to that in this our right now. We 16 00:00:56,080 --> 00:00:59,240 Speaker 1: will look to futures a negative six down, futures negative 17 00:00:59,240 --> 00:01:04,160 Speaker 1: fifty four, a deterioration of modest deterioration but nevertheless persistent 18 00:01:04,800 --> 00:01:07,040 Speaker 1: in the equity markets. The fore x brief and for 19 00:01:07,120 --> 00:01:10,760 Speaker 1: an exchange stronger dollar brought you by Interactive Broker's winner 20 00:01:10,760 --> 00:01:13,720 Speaker 1: of f X Weeks two thousand fifteen award for the 21 00:01:13,760 --> 00:01:17,760 Speaker 1: best Retail for X training platform visit ib at I 22 00:01:17,920 --> 00:01:22,279 Speaker 1: b k R dot Com Slash four X Dollar Stronger 23 00:01:22,360 --> 00:01:24,440 Speaker 1: d X Y make a dash to nine five Not 24 00:01:24,640 --> 00:01:27,880 Speaker 1: there yen one oh ninety three Euro Weaker Weaker Weaker 25 00:01:28,240 --> 00:01:31,480 Speaker 1: one twelve seventy four Sterling makes a jump off a 26 00:01:31,600 --> 00:01:35,440 Speaker 1: pole in England, which suggested that they will remain in 27 00:01:35,480 --> 00:01:39,840 Speaker 1: the Euro one four out to a solid fifty three 28 00:01:40,680 --> 00:01:43,520 Speaker 1: right now. Um, I guess that's about it. R Mindby 29 00:01:43,560 --> 00:01:45,759 Speaker 1: has been grinding weaker over the last number of days. 30 00:01:46,000 --> 00:01:51,040 Speaker 1: Brazilian Real weaker this morning three point five five as well, Michael, 31 00:01:51,160 --> 00:01:55,560 Speaker 1: you wonder what would happen if our two presidential candidates 32 00:01:55,600 --> 00:02:00,000 Speaker 1: were locked in a room with George Friedman of Geopolitical Futures. 33 00:02:00,640 --> 00:02:03,040 Speaker 1: That would be interesting. At least one of them would 34 00:02:03,120 --> 00:02:10,720 Speaker 1: learn something we we would we would see from that 35 00:02:10,760 --> 00:02:13,880 Speaker 1: George Friedman with us, What would you do with Secretary 36 00:02:13,919 --> 00:02:19,600 Speaker 1: Clinton or Mr Trump? What advice would you give them? Um? 37 00:02:19,639 --> 00:02:22,440 Speaker 1: I've give him very little advice because in fact, what 38 00:02:22,480 --> 00:02:24,280 Speaker 1: they want to do is not what's going to happen. 39 00:02:25,160 --> 00:02:28,240 Speaker 1: Look at all our presidents. Uh, George W. Bush never 40 00:02:28,280 --> 00:02:30,160 Speaker 1: thought his presidency was with a bout a war in 41 00:02:30,360 --> 00:02:35,480 Speaker 1: Afghanistan and Iraq. Obama really thought he was going to 42 00:02:36,000 --> 00:02:40,200 Speaker 1: leave them at least. Um. Presidents don't make history. Uh. 43 00:02:40,440 --> 00:02:44,360 Speaker 1: History makes presidents, especially in the American system, with that 44 00:02:44,440 --> 00:02:48,000 Speaker 1: it is incredibly weak. Has to deal with Congress, has 45 00:02:48,000 --> 00:02:50,239 Speaker 1: to deal with Supreme Court, has to deal with face. 46 00:02:52,440 --> 00:02:55,040 Speaker 1: We would just make too much love the presidency? How 47 00:02:55,080 --> 00:02:59,480 Speaker 1: did that? Usually with a little technical difficult there will 48 00:02:59,520 --> 00:03:02,320 Speaker 1: keep going and see if we can fix it. George Friedman, 49 00:03:02,400 --> 00:03:06,760 Speaker 1: how does it change the budget forward? With the Pentagon? 50 00:03:06,960 --> 00:03:11,560 Speaker 1: I'm assuming Secretary Clinton has some experience there. Do you 51 00:03:11,919 --> 00:03:14,840 Speaker 1: do you say at night? Within geopolitical futures and worry 52 00:03:14,880 --> 00:03:17,760 Speaker 1: about the budgeting of our defense or for that matter, 53 00:03:17,800 --> 00:03:22,160 Speaker 1: our offense. We actually spend a lot of time worrying 54 00:03:22,320 --> 00:03:26,240 Speaker 1: not about the budget itself, but how it's spent. There 55 00:03:26,280 --> 00:03:31,600 Speaker 1: are a lot of very old weapons systems, aircraft carriers, tanks, uh, 56 00:03:31,680 --> 00:03:33,840 Speaker 1: that we spend a lot of money on and that 57 00:03:33,960 --> 00:03:37,600 Speaker 1: are highly vulnerable. There are new weapons coming out like 58 00:03:38,320 --> 00:03:43,160 Speaker 1: interconmental hypersonic missiles that can reach targets and fifteen minutes 59 00:03:43,520 --> 00:03:45,760 Speaker 1: that we should be spending money on. We are spending 60 00:03:45,800 --> 00:03:49,520 Speaker 1: with some money on, but there's a technological revolution taking 61 00:03:49,520 --> 00:03:53,440 Speaker 1: place in warfare, and to great extent the military is 62 00:03:53,440 --> 00:03:56,560 Speaker 1: staying with the old game. So I'm less concerned about 63 00:03:56,600 --> 00:04:01,280 Speaker 1: how much we spend than how we're spending it. Yeah, um, 64 00:04:01,360 --> 00:04:05,040 Speaker 1: let's go back to the missile gap. What is the 65 00:04:05,080 --> 00:04:07,360 Speaker 1: gap militarily between us and the rest of the world. 66 00:04:07,400 --> 00:04:11,720 Speaker 1: Aren't we so far ahead that you know we can 67 00:04:11,840 --> 00:04:16,000 Speaker 1: survive this? It's it's it's uh not going to cost 68 00:04:16,080 --> 00:04:20,279 Speaker 1: us so much to not spend for the newest, latest, 69 00:04:20,279 --> 00:04:24,919 Speaker 1: greatest toy. Well, the latest greatest toy usually is the 70 00:04:24,920 --> 00:04:27,599 Speaker 1: one that's going to save you. We didn't spend money 71 00:04:27,600 --> 00:04:30,919 Speaker 1: in aircraft carriers before World War Two, so they're not 72 00:04:31,040 --> 00:04:36,000 Speaker 1: toys there is. We have a huge lead on conventional forces, 73 00:04:36,000 --> 00:04:39,400 Speaker 1: so we certainly are very powerful in relationship to the Russians. 74 00:04:40,040 --> 00:04:44,280 Speaker 1: Our problems with logistics getting our forces there to fight 75 00:04:44,360 --> 00:04:48,400 Speaker 1: them if we ever have to. Uh. So we spend 76 00:04:48,440 --> 00:04:54,680 Speaker 1: a great deal of money one generation of aircraft not unimportant, 77 00:04:55,440 --> 00:04:57,000 Speaker 1: but when we look at the kind of wars we're 78 00:04:57,000 --> 00:04:59,559 Speaker 1: going to fight, we're not spending enough money on nuts 79 00:04:59,560 --> 00:05:02,800 Speaker 1: and bol non glamorous things that we have to spend 80 00:05:02,839 --> 00:05:06,240 Speaker 1: our money on, and we have never mastered uh what's 81 00:05:06,279 --> 00:05:09,440 Speaker 1: called asymmetric warfare. We know how to defeat an enemy's army, 82 00:05:10,000 --> 00:05:13,840 Speaker 1: we don't have the ability to occupy an enemy's country, 83 00:05:13,960 --> 00:05:18,160 Speaker 1: as we learned Afghanistan, Iraq, Olivia. So there are huge 84 00:05:18,200 --> 00:05:20,760 Speaker 1: gaps in what we do, and we keep doing what 85 00:05:20,800 --> 00:05:24,480 Speaker 1: we did before because it's easier to do that. So 86 00:05:24,760 --> 00:05:29,000 Speaker 1: the budget itself is a small fraction of the American GDP. 87 00:05:29,760 --> 00:05:31,560 Speaker 1: It can be reduced somewhat, but it's not going to 88 00:05:31,640 --> 00:05:34,840 Speaker 1: make any great difference to the United States. It's how 89 00:05:34,880 --> 00:05:36,960 Speaker 1: we spend it in what kind of wars we expect 90 00:05:37,000 --> 00:05:40,240 Speaker 1: that we really have to focus on, Well, what what 91 00:05:40,279 --> 00:05:44,200 Speaker 1: do we expect? And uh, what is being done to 92 00:05:44,279 --> 00:05:47,039 Speaker 1: address that? I mean, are we learning the lessons we 93 00:05:47,080 --> 00:05:50,760 Speaker 1: need to learn? No, we always assume that the weapon 94 00:05:50,880 --> 00:05:54,000 Speaker 1: system of the last war, in this case World War 95 00:05:54,040 --> 00:05:56,400 Speaker 1: to believe it or not, in the aircraft carrier, the 96 00:05:56,440 --> 00:05:58,839 Speaker 1: tank to the man bomber are going to be the 97 00:05:58,839 --> 00:06:02,440 Speaker 1: one in the future. Uh. It's very difficult to change 98 00:06:02,440 --> 00:06:05,880 Speaker 1: a culture of anything, but certainly a military culture is 99 00:06:05,920 --> 00:06:12,040 Speaker 1: difficult to change. We transformed ourselves after World War Two 100 00:06:12,720 --> 00:06:15,120 Speaker 1: and the advent of nuclear weapons. To be all about 101 00:06:15,200 --> 00:06:19,760 Speaker 1: nuclear weapons, well, that really isn't the key element today. 102 00:06:20,120 --> 00:06:25,040 Speaker 1: So I mean what really drives UH military change? Unfortunately 103 00:06:25,080 --> 00:06:30,480 Speaker 1: its defeat and Pearl Harbor transforms everything. But the thing 104 00:06:30,560 --> 00:06:34,800 Speaker 1: we have to remember is that every century has its 105 00:06:34,920 --> 00:06:38,440 Speaker 1: major period of peer war. The twentieth century had it, 106 00:06:38,560 --> 00:06:41,760 Speaker 1: the nineteen had it. Within the probiotic wars, it always happens. 107 00:06:42,080 --> 00:06:44,080 Speaker 1: The twenty one century is not going to be the 108 00:06:44,120 --> 00:06:50,120 Speaker 1: first century about it. Within that is the idea of Europe. 109 00:06:50,160 --> 00:06:53,719 Speaker 1: You've written recently on Germany's invisible crisis. Let me start 110 00:06:53,760 --> 00:06:56,839 Speaker 1: with what Mike of and I've noticed an interviewed the interview, 111 00:06:56,839 --> 00:06:59,919 Speaker 1: which is this new polarity and I'll call it populous 112 00:07:00,040 --> 00:07:03,040 Speaker 1: slash right wing success in Europe? Have you been writing 113 00:07:03,080 --> 00:07:05,920 Speaker 1: about her thinking about fascism at all? I mean, is 114 00:07:05,960 --> 00:07:10,520 Speaker 1: that a global risk, a certitude among a more right 115 00:07:10,600 --> 00:07:15,200 Speaker 1: wing a government nation to nation to nation in the 116 00:07:15,240 --> 00:07:18,640 Speaker 1: coming years. I'm not sure what right wing means. What 117 00:07:18,800 --> 00:07:22,400 Speaker 1: is happening, however, is the European Union is failing, and 118 00:07:22,520 --> 00:07:26,240 Speaker 1: that means the only effective institutions in Europe are the 119 00:07:26,360 --> 00:07:31,200 Speaker 1: nations and so you're getting in Poland and Hungary and 120 00:07:31,840 --> 00:07:35,560 Speaker 1: in other countries governments that are far less interested in 121 00:07:35,640 --> 00:07:38,440 Speaker 1: what Europe is going to do and far more interested 122 00:07:38,480 --> 00:07:41,920 Speaker 1: in what they're going to do. Uh. They're accused of 123 00:07:42,000 --> 00:07:45,600 Speaker 1: being fascist, that you McCarthyism. Everybody you didn't like was 124 00:07:45,640 --> 00:07:48,640 Speaker 1: a communist. Now they're a fascist. But what they really 125 00:07:48,680 --> 00:07:52,680 Speaker 1: are as nationalist or what SWEE mean the world, including 126 00:07:52,680 --> 00:07:56,840 Speaker 1: the United States, which is what Donald Trump ultimately represents, 127 00:07:57,840 --> 00:08:03,320 Speaker 1: is a belief that the national system, this idea of globalism, 128 00:08:03,360 --> 00:08:06,520 Speaker 1: of integration that are all in the same boat, just 129 00:08:06,600 --> 00:08:09,840 Speaker 1: isn't working. What is happening in Europe is happening around 130 00:08:09,840 --> 00:08:14,080 Speaker 1: the world. Uh, the idea that the nation state is 131 00:08:14,120 --> 00:08:17,080 Speaker 1: the only thing that really works. We're going to have 132 00:08:17,240 --> 00:08:22,440 Speaker 1: to uh have relations with other countries. Uh, we will 133 00:08:22,480 --> 00:08:27,320 Speaker 1: happen selectively. But the reflective idea that we must go 134 00:08:27,440 --> 00:08:31,360 Speaker 1: to an international institution to function, that's going by the 135 00:08:31,440 --> 00:08:34,800 Speaker 1: but by the boards, not only in Europe but really 136 00:08:34,840 --> 00:08:41,719 Speaker 1: around the world. Well, do you see anybody, and I'm 137 00:08:41,760 --> 00:08:45,000 Speaker 1: not talking political candidates, I'm talking think think kind of 138 00:08:45,000 --> 00:08:47,080 Speaker 1: people or anything like that, who's come up with a 139 00:08:47,120 --> 00:08:51,120 Speaker 1: new framework. Where's the George Kennon of two thousand and 140 00:08:51,120 --> 00:08:56,440 Speaker 1: six Week Questions. Well, and I'm not George Kennon by 141 00:08:56,440 --> 00:08:59,680 Speaker 1: any means, but my view is this, which is that 142 00:09:00,240 --> 00:09:03,199 Speaker 1: the NATO, the I m F, all of these emerged 143 00:09:03,240 --> 00:09:06,760 Speaker 1: from the Cold War. The Cold War ended twenty five 144 00:09:06,840 --> 00:09:11,320 Speaker 1: years ago. We're still using Cold War institutions to try 145 00:09:11,360 --> 00:09:16,240 Speaker 1: to drive the system. NATO, for example, simply doesn't work. Uh, 146 00:09:16,400 --> 00:09:20,240 Speaker 1: Europe has a population that's two million larger than ours 147 00:09:20,440 --> 00:09:24,800 Speaker 1: and a g d P that's larger. They taste small 148 00:09:24,920 --> 00:09:29,160 Speaker 1: fraction for defense. The idea to the United States is 149 00:09:29,240 --> 00:09:33,920 Speaker 1: going to continue to guarantee NATO twenty five years after 150 00:09:33,960 --> 00:09:37,280 Speaker 1: the Cold War while the Europeans spent very little. It 151 00:09:37,360 --> 00:09:41,319 Speaker 1: just doesn't work. Nevertheless, there's a kind of commitment to NATO. 152 00:09:42,240 --> 00:09:46,240 Speaker 1: The new policy has to be that we are prepared 153 00:09:46,320 --> 00:09:49,640 Speaker 1: to have bilateral relations with any number of countries that 154 00:09:49,679 --> 00:09:54,439 Speaker 1: are interest by. The automatic commitment to all of Europe 155 00:09:54,520 --> 00:09:59,079 Speaker 1: all the time is both beyond our capacity and really unfair. 156 00:09:59,160 --> 00:10:03,319 Speaker 1: The Europeans can send themselves I M S. What does 157 00:10:03,320 --> 00:10:08,200 Speaker 1: it do, really, what does it really solve problem? That's 158 00:10:08,200 --> 00:10:10,840 Speaker 1: the issue. Well, George, thank you so much. George Friedman, 159 00:10:10,880 --> 00:10:13,240 Speaker 1: as always geopolitical futures. We could go on and on 160 00:10:14,080 --> 00:10:17,199 Speaker 1: with some of his thoughts, always controversial thoughts about the 161 00:10:17,240 --> 00:10:23,040 Speaker 1: positioning of the United States within uh global geopolitics as well. 162 00:10:23,160 --> 00:10:27,559 Speaker 1: Futures deteriorate negative eight down futures negative seventy twenty minutes one, 163 00:10:27,920 --> 00:10:31,360 Speaker 1: or rather nineteen minutes to the market opening. The vixed 164 00:10:31,360 --> 00:10:34,400 Speaker 1: trades down before the market. A little bit of angst, 165 00:10:34,440 --> 00:10:36,600 Speaker 1: but nothing like what we're seeing on the actual tape. 166 00:10:36,600 --> 00:10:41,319 Speaker 1: Fifteen point six five on the Vicks, Brent Crude made 167 00:10:41,320 --> 00:10:43,439 Speaker 1: a dash for fifty, did not get there. Forty eight 168 00:10:44,679 --> 00:10:52,679 Speaker 1: thirty two cents West Texas eleven a barrel. Let's check 169 00:10:52,679 --> 00:10:54,199 Speaker 1: it with Mikael bar and get the latest world of 170 00:10:54,280 --> 00:10:57,320 Speaker 1: National head Mike Tom, Thank you very much. Bernie Sanders 171 00:10:57,360 --> 00:11:01,400 Speaker 1: won the Oregon Democratic primary. Unders told supporters he's going 172 00:11:01,440 --> 00:11:04,199 Speaker 1: to stay in the race until the end. Front Runner 173 00:11:04,240 --> 00:11:07,760 Speaker 1: Hillary Clinton claimed victory in Kentucky, where she leads Sanders 174 00:11:07,840 --> 00:11:11,400 Speaker 1: buy less than one half of one. Clinton is still 175 00:11:11,520 --> 00:11:14,480 Speaker 1: way ahead of Sanders in delegates. You know he needs 176 00:11:14,559 --> 00:11:17,680 Speaker 1: ninety two from the nomination. The Senate voted to advance 177 00:11:17,800 --> 00:11:21,000 Speaker 1: one point one billion dollars of emergency funding to fight 178 00:11:21,040 --> 00:11:23,400 Speaker 1: the Zeke of virus. It is less than the one 179 00:11:23,440 --> 00:11:26,920 Speaker 1: point nine billion dollars President Obama requested, but more than 180 00:11:26,960 --> 00:11:30,079 Speaker 1: the house version of six hundred twenty two million dollars. 181 00:11:30,280 --> 00:11:33,760 Speaker 1: Rescuers are looking for about two hundred families in central 182 00:11:33,840 --> 00:11:39,240 Speaker 1: Sri Lanka after a landslide engulfed three villages following heavy rains. 183 00:11:39,600 --> 00:11:42,560 Speaker 1: Global News twenty four hours a day, powered by our 184 00:11:42,679 --> 00:11:45,280 Speaker 1: twenty four hundred journalists and more than a hundred fifty 185 00:11:45,280 --> 00:11:48,040 Speaker 1: news bureaus around the world. Now Michael bar nighttime, and Michael, 186 00:11:48,080 --> 00:11:51,040 Speaker 1: thanks so much again. The futures negative seventh, futures negative 187 00:11:51,080 --> 00:11:54,080 Speaker 1: sixty eight. They're Greenham the screen two hours ago and 188 00:11:54,160 --> 00:11:58,000 Speaker 1: I've rolled over modestly. The euro one twelve eighty three 189 00:11:58,040 --> 00:12:03,200 Speaker 1: week or sterling advances at the two. This is Bloomberg's 190 00:12:03,200 --> 00:12:08,280 Speaker 1: surveillance Market Driver has brought to you by a Bank 191 00:12:08,320 --> 00:12:10,520 Speaker 1: of America. Merrill Lynn see what others have seen, but 192 00:12:10,600 --> 00:12:12,800 Speaker 1: uncovering what others may not. Global research that helps you 193 00:12:12,800 --> 00:12:16,240 Speaker 1: harness disruption. Vote a top global research from five years running. Merrill, Lynch, Chrierce, 194 00:12:16,280 --> 00:12:17,440 Speaker 1: Finner and Smith Incorporated