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 --> 00:00:08,000 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 --> 00:00:26,400 Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:26,440 --> 00:00:29,920 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:29,960 --> 00:00:34,800 Speaker 1: insight from the best of economics, finance, investment and international relations. 7 00:00:35,240 --> 00:00:40,760 Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com 8 00:00:40,800 --> 00:00:47,720 Speaker 1: and of course on the Bloomberg Let me go down 9 00:00:47,760 --> 00:00:49,680 Speaker 1: to Charles Powell. He's remember the House of Lords. Joins 10 00:00:49,720 --> 00:00:51,760 Speaker 1: us from our studios in London, where Tom Keen is 11 00:00:52,159 --> 00:00:54,840 Speaker 1: all week and Lord Power. Let me just get you 12 00:00:54,840 --> 00:00:56,520 Speaker 1: to react to to what we've seen today. Of course 13 00:00:56,520 --> 00:00:59,240 Speaker 1: we've got data on manufacturing, industrial production as well the 14 00:00:59,280 --> 00:01:01,760 Speaker 1: trade gap in the UK. Give me your reaction to 15 00:01:01,800 --> 00:01:04,880 Speaker 1: what we've heard from the BOE today. Well, mine is 16 00:01:04,880 --> 00:01:08,119 Speaker 1: not a particular skill. Three, I'm not. I'm unsurprised. As 17 00:01:08,160 --> 00:01:10,960 Speaker 1: the short answer, I didn't expect to see interest rates 18 00:01:11,000 --> 00:01:13,479 Speaker 1: go up. I think a month before an election would 19 00:01:13,520 --> 00:01:15,720 Speaker 1: be any way quite sporting to try and do something 20 00:01:15,760 --> 00:01:18,000 Speaker 1: like that, even though across the bank of being it 21 00:01:18,080 --> 00:01:21,759 Speaker 1: is independent. So no, it sounds to be thoroughly sensible 22 00:01:21,760 --> 00:01:24,600 Speaker 1: as any man. Let me let me get your your 23 00:01:24,680 --> 00:01:26,920 Speaker 1: your sense of word things stand with Brexit. At this 24 00:01:26,959 --> 00:01:30,680 Speaker 1: point we have a negotiations continuously press ahead of the 25 00:01:30,680 --> 00:01:32,840 Speaker 1: snap election on the eighth of June. Give us at 26 00:01:32,840 --> 00:01:34,959 Speaker 1: your perspective on what campaigning is like at this point. 27 00:01:34,959 --> 00:01:37,840 Speaker 1: The import of this election that we face here in 28 00:01:37,920 --> 00:01:41,160 Speaker 1: less than a month's time. Now, well, it's quite clear 29 00:01:41,200 --> 00:01:43,920 Speaker 1: the reason that Mrs May called an election was to 30 00:01:44,240 --> 00:01:48,560 Speaker 1: strengthen her hand in the negotiations over Brexit. She had 31 00:01:48,640 --> 00:01:50,800 Speaker 1: quite a narrow majority in the House of Commons and 32 00:01:50,880 --> 00:01:54,800 Speaker 1: merely sixteen votes, and not everyone in the party would 33 00:01:54,840 --> 00:01:57,040 Speaker 1: agree with everything she wants to do, so she needed 34 00:01:57,040 --> 00:02:00,440 Speaker 1: a bigger majority, and so she's staking all on getting 35 00:02:00,480 --> 00:02:04,320 Speaker 1: that bigger majority. We shall see four weeks today whether 36 00:02:04,400 --> 00:02:06,720 Speaker 1: she succeeds. But the opinion polls seem to be fairly 37 00:02:06,760 --> 00:02:09,440 Speaker 1: strongly in her favor. The b we here reducing its 38 00:02:09,440 --> 00:02:12,120 Speaker 1: growth forecast at to one point nine from two percent 39 00:02:12,720 --> 00:02:14,840 Speaker 1: for so long after the weight In the wake of 40 00:02:14,880 --> 00:02:18,280 Speaker 1: that Brexit vote, the first Brexit vote, uh, so, many 41 00:02:18,320 --> 00:02:20,320 Speaker 1: economists were telling us that the effects on the economy 42 00:02:20,360 --> 00:02:23,640 Speaker 1: were more muted than many expected. What's your sense of 43 00:02:23,639 --> 00:02:25,640 Speaker 1: growth right now in the UK? Are we seeing a 44 00:02:25,680 --> 00:02:27,440 Speaker 1: Brexit effect in a way that we didn't in the 45 00:02:27,480 --> 00:02:31,160 Speaker 1: immediate aftermath of that vote. I'm not sure how much 46 00:02:31,160 --> 00:02:33,280 Speaker 1: of it is really affected by Brexit. I think the 47 00:02:33,280 --> 00:02:37,040 Speaker 1: growth rate was bound to sort of wobbles a little bit, 48 00:02:37,240 --> 00:02:40,360 Speaker 1: but it hasn't wobbled greatly. I'd still be pretty optimistic 49 00:02:40,360 --> 00:02:42,840 Speaker 1: about Britain and the run up to Brexit, and I 50 00:02:42,840 --> 00:02:46,440 Speaker 1: think that also the European economies are doing better. Um 51 00:02:46,480 --> 00:02:50,600 Speaker 1: So I'm unexcited. Let's put it like that. I'm untroubled. 52 00:02:50,680 --> 00:02:54,400 Speaker 1: I'm unperturbed. I'm not flapping about Brexit. How about the 53 00:02:54,639 --> 00:02:57,280 Speaker 1: corporate migration we've heard so much about over these last 54 00:02:57,320 --> 00:03:00,560 Speaker 1: couple of weeks. We've had various banks outline plans to 55 00:03:00,600 --> 00:03:04,560 Speaker 1: send a few dozen, a few hundred employees elsewhere. How 56 00:03:04,560 --> 00:03:06,840 Speaker 1: worried are you about the prospects of that A flight 57 00:03:06,880 --> 00:03:10,600 Speaker 1: from the city of London. Well, I'm frankly not terribly worried. 58 00:03:11,040 --> 00:03:14,600 Speaker 1: I've never thought London was a great financial center because 59 00:03:14,639 --> 00:03:16,960 Speaker 1: we were in the European Union. I mean, we were 60 00:03:16,960 --> 00:03:19,880 Speaker 1: a great financial center like New York's a great financial 61 00:03:19,880 --> 00:03:23,320 Speaker 1: center because of what we are, because of the policy, 62 00:03:23,320 --> 00:03:27,000 Speaker 1: of the policies, the economic life of this country, the traditions, 63 00:03:27,440 --> 00:03:30,880 Speaker 1: great experience of the city Europe have very little to 64 00:03:30,880 --> 00:03:33,639 Speaker 1: do with it. I think banks are taking some sensible 65 00:03:33,680 --> 00:03:36,720 Speaker 1: precautionary measures, check a few guys over there in Europe 66 00:03:36,720 --> 00:03:39,240 Speaker 1: to get the necessary licenses and so on. But don't 67 00:03:39,720 --> 00:03:43,040 Speaker 1: don't talk now about really locating on a massive scale. 68 00:03:43,080 --> 00:03:45,800 Speaker 1: It would be pointless. I mean, Frankfurt and Paris are 69 00:03:45,840 --> 00:03:48,440 Speaker 1: not going to be world financial centers. They really are not. 70 00:03:48,920 --> 00:03:51,000 Speaker 1: I mean, more people work in the square miles of 71 00:03:51,040 --> 00:03:53,200 Speaker 1: the city of London live in the whole of Frankfort. 72 00:03:53,600 --> 00:03:56,720 Speaker 1: So it's it's all very relative. Lord power with us 73 00:03:56,960 --> 00:03:58,640 Speaker 1: Charles Powell, member of the House of Lords, from a 74 00:03:58,640 --> 00:04:01,240 Speaker 1: private secretary and advisor on Foreign Affairs and defense to 75 00:04:01,320 --> 00:04:03,920 Speaker 1: Lady Thatcher here on Bloomberg Surveillance, Tom Keen with us 76 00:04:03,920 --> 00:04:06,360 Speaker 1: now at from London, you're more approximate to threaten Neeedle Street, 77 00:04:06,360 --> 00:04:08,360 Speaker 1: of course than then. I watch your reaction to the 78 00:04:08,400 --> 00:04:11,240 Speaker 1: news that we got this boarding time taking British accent lesson. 79 00:04:11,280 --> 00:04:13,080 Speaker 1: So I'm gonna try to come back to New York 80 00:04:13,080 --> 00:04:16,880 Speaker 1: with an appropriate and proper British accent. We are honored 81 00:04:16,920 --> 00:04:18,920 Speaker 1: to have you with us, out Lord Power, with your 82 00:04:18,920 --> 00:04:21,640 Speaker 1: public service to the nation of long ago and far away. 83 00:04:22,160 --> 00:04:25,359 Speaker 1: Does the United Kingdom speak to the leadership of Europe 84 00:04:25,400 --> 00:04:29,320 Speaker 1: now as they spoke to the leadership twenty and thirty 85 00:04:29,440 --> 00:04:32,520 Speaker 1: years ago? Is the same dialogue and discourse or will 86 00:04:32,520 --> 00:04:35,680 Speaker 1: it be different? Well, many of the themes are the same, 87 00:04:35,880 --> 00:04:38,240 Speaker 1: and of course in some areas not covered by the 88 00:04:38,240 --> 00:04:41,560 Speaker 1: European Union, by which I mean particularly defense and security, 89 00:04:42,040 --> 00:04:46,720 Speaker 1: the dialogue will go on unchanged. Obviously, ever matters about 90 00:04:46,760 --> 00:04:49,080 Speaker 1: our membership of the EU, it's a different sort of 91 00:04:49,120 --> 00:04:52,400 Speaker 1: dialogue and it's in a difficult phase. You would have 92 00:04:52,440 --> 00:04:55,479 Speaker 1: read the reports of the famous dinner between Prime Minister 93 00:04:55,920 --> 00:04:59,240 Speaker 1: Theresa May and the President of the European Commissioner, Mr 94 00:04:59,360 --> 00:05:03,120 Speaker 1: Yunka talking about us from pretty much of a punch 95 00:05:03,200 --> 00:05:06,440 Speaker 1: up which went on that. I think that's because we're 96 00:05:06,440 --> 00:05:10,599 Speaker 1: in the phase before the real negotiation staff when both 97 00:05:10,640 --> 00:05:13,760 Speaker 1: sides are sort of squaring up. They're strutting around the ring, 98 00:05:13,920 --> 00:05:18,360 Speaker 1: beating their chests, flexing their muscles. The serious stuff hasn't 99 00:05:18,360 --> 00:05:21,719 Speaker 1: started yet. Did John money do that. I mean, I 100 00:05:21,800 --> 00:05:25,400 Speaker 1: just find the cadence today totally different than what I 101 00:05:25,480 --> 00:05:29,599 Speaker 1: studied of your well, John money is even before my time. 102 00:05:29,640 --> 00:05:32,800 Speaker 1: But of course I think the point I would make 103 00:05:32,839 --> 00:05:36,839 Speaker 1: on that, because there's an ideological belief in European Union 104 00:05:36,880 --> 00:05:41,920 Speaker 1: amongst the original countries of the European Community, they really 105 00:05:41,960 --> 00:05:44,960 Speaker 1: subscribe to a belief and a principle. Much of that 106 00:05:45,080 --> 00:05:47,680 Speaker 1: is evaporated over the years. You can't get twenty eight 107 00:05:47,680 --> 00:05:51,719 Speaker 1: countries thinking and feeding exactly the same as the original six. 108 00:05:52,200 --> 00:05:56,040 Speaker 1: The general aim of closer European Union is officially there, 109 00:05:56,120 --> 00:05:58,719 Speaker 1: it's written on all the documents, but I don't believe 110 00:05:58,760 --> 00:06:03,680 Speaker 1: anyone really believes in Sydney wore as a practical outcome. Cooperation, yes, 111 00:06:03,960 --> 00:06:07,479 Speaker 1: maybe tighter cooperation between smaller groups of countries within the 112 00:06:07,480 --> 00:06:11,160 Speaker 1: twenty seven or eight, but not the full the full work. 113 00:06:11,200 --> 00:06:13,800 Speaker 1: So that's just not going to happen. It's under estimation then, 114 00:06:13,839 --> 00:06:17,960 Speaker 1: has as the experiment itself failed. No, I certainly don't 115 00:06:17,960 --> 00:06:20,640 Speaker 1: think it's sailed. Obviously, one of the main principles, one 116 00:06:20,640 --> 00:06:22,680 Speaker 1: of the main hopes for it was it would prevent 117 00:06:22,760 --> 00:06:25,800 Speaker 1: any future war in the middle of Europe, and that 118 00:06:25,880 --> 00:06:29,440 Speaker 1: I think but further away from hoever, thank god, I 119 00:06:29,480 --> 00:06:31,240 Speaker 1: need to rip up the script. Am I allowed to 120 00:06:31,240 --> 00:06:33,760 Speaker 1: do that? I mean, you know, I'm watching Bank of 121 00:06:33,800 --> 00:06:37,200 Speaker 1: England here and I'm I'm trying to get it up 122 00:06:37,200 --> 00:06:40,760 Speaker 1: here on my Bloomberg terminal. There we go. It took 123 00:06:40,839 --> 00:06:43,520 Speaker 1: me a while to type in the keyboard. Is different. 124 00:06:44,600 --> 00:06:48,279 Speaker 1: Sterling is lower with a real drop and this of 125 00:06:48,320 --> 00:06:51,880 Speaker 1: course has to do with GDP forecast and higher inflation 126 00:06:51,960 --> 00:06:55,520 Speaker 1: as well. What's your first regulation of sterling two dollar? 127 00:06:55,920 --> 00:06:59,280 Speaker 1: Was it four to one? Yes? It was full to one. 128 00:06:59,360 --> 00:07:02,240 Speaker 1: I was in at the time because the US can 129 00:07:02,279 --> 00:07:04,040 Speaker 1: talk to hear about that. You were there for water 130 00:07:04,080 --> 00:07:06,880 Speaker 1: again And yes, at the time when when the US 131 00:07:06,960 --> 00:07:11,800 Speaker 1: came out of gold currency started seventy three, Yeah, I 132 00:07:11,880 --> 00:07:15,440 Speaker 1: was sitting there in Washington. This is your first radio announcement. 133 00:07:15,440 --> 00:07:17,800 Speaker 1: I know the BBC. You can be four ft back 134 00:07:17,840 --> 00:07:20,080 Speaker 1: from the mic there, You've got to be a little closer. 135 00:07:20,400 --> 00:07:23,280 Speaker 1: But but how do you how do you adjust to 136 00:07:23,400 --> 00:07:29,760 Speaker 1: the generational sterling devaluation We've seen I think people who 137 00:07:29,760 --> 00:07:32,280 Speaker 1: have become cylical about it over the years. We've had 138 00:07:32,280 --> 00:07:34,960 Speaker 1: so many fluctuations in the UK. When you think back 139 00:07:35,000 --> 00:07:37,920 Speaker 1: to the sort of inflation we experienced in the nineteen 140 00:07:38,000 --> 00:07:42,400 Speaker 1: seventies and early people see this by comparison as a 141 00:07:42,480 --> 00:07:46,880 Speaker 1: calm time, steady time. I think the initial drop of 142 00:07:46,920 --> 00:07:50,280 Speaker 1: sterling after after the vote on brixit was a bit 143 00:07:50,320 --> 00:07:53,040 Speaker 1: of a shock, but not an unexpected shock. Really people 144 00:07:53,360 --> 00:07:55,640 Speaker 1: would have thought that would happen, and it has advantages 145 00:07:55,680 --> 00:07:58,920 Speaker 1: to It's helped our export figures really quite considerably. So 146 00:07:59,120 --> 00:08:02,440 Speaker 1: there's no sense of PANDAE cattle the person is losing control. 147 00:08:02,560 --> 00:08:05,320 Speaker 1: Things are going pretty well. This has been wonderful. My 148 00:08:05,440 --> 00:08:08,000 Speaker 1: next trip back to London, I'll drag David Gurrow with 149 00:08:08,160 --> 00:08:10,520 Speaker 1: you and we would love to speak to you and 150 00:08:10,600 --> 00:08:13,800 Speaker 1: Daniel Jurgen together. I think that would be just a 151 00:08:13,880 --> 00:08:18,080 Speaker 1: really special Danielson would be great to be We can't 152 00:08:18,120 --> 00:08:22,360 Speaker 1: stand you or Lord Paul. Thank you so much, Charles 153 00:08:22,400 --> 00:08:26,280 Speaker 1: Paul with his public service during the major Thatcher administrations 154 00:08:26,280 --> 00:08:28,800 Speaker 1: and in Dr Jurgen, if you're listening, we would love 155 00:08:28,920 --> 00:08:31,800 Speaker 1: to make that happen right now. We can do that 156 00:08:31,920 --> 00:08:46,600 Speaker 1: right now. Joining us now, James Davids a Fletcher School, 157 00:08:47,080 --> 00:08:52,280 Speaker 1: Tough University. We speak to the Admiral about leadership differently 158 00:08:52,280 --> 00:08:55,080 Speaker 1: than we would have spoken to him two or three 159 00:08:55,320 --> 00:08:59,080 Speaker 1: or four days ago, Admirals Davids. I'm reading Eric Larabee's 160 00:08:59,240 --> 00:09:05,360 Speaker 1: incredible one volume on FDR and his Oval Office. Somehow 161 00:09:05,400 --> 00:09:09,040 Speaker 1: I can't fathom FDR keeping the American press out of 162 00:09:09,120 --> 00:09:12,600 Speaker 1: a photo op in the Oval Office. I mean, these 163 00:09:12,640 --> 00:09:16,520 Speaker 1: are unique times. Your interpretation of what you've observed from 164 00:09:16,559 --> 00:09:20,480 Speaker 1: the White House in the last two days, well, I'm worried. 165 00:09:20,600 --> 00:09:23,880 Speaker 1: I think everyone is. Um I'll sort of pin my 166 00:09:24,080 --> 00:09:28,559 Speaker 1: hopes on hr McMaster, who kind of General McMaster, who 167 00:09:28,600 --> 00:09:32,640 Speaker 1: wrote an extraordinary book, Dereliction of Duty, the subject of 168 00:09:32,679 --> 00:09:35,200 Speaker 1: which is the need to speak truth to power. It's 169 00:09:35,240 --> 00:09:38,400 Speaker 1: about the Joint chiefs during the Vietnam War and how 170 00:09:38,480 --> 00:09:42,040 Speaker 1: they failed in their duty dereliction of duty to the 171 00:09:42,120 --> 00:09:45,199 Speaker 1: President of the United States. Uh. It is important in 172 00:09:45,360 --> 00:09:47,959 Speaker 1: these times that people are unafraid to walk into the 173 00:09:48,040 --> 00:09:50,720 Speaker 1: Oval Office and tell the President when he is embarking 174 00:09:50,800 --> 00:09:53,040 Speaker 1: on a dangerous course. And I think we are in 175 00:09:53,160 --> 00:09:56,160 Speaker 1: those times. So I'm hopeful that Hr McMaster's voice will 176 00:09:56,200 --> 00:10:00,439 Speaker 1: be heard. Do those of a military tinge need to 177 00:10:00,679 --> 00:10:04,319 Speaker 1: speak up? I mean, I understand the discourse of voices 178 00:10:04,440 --> 00:10:07,839 Speaker 1: need to be heard. I mean the movies would tell 179 00:10:07,880 --> 00:10:10,959 Speaker 1: me that the Secretary Defense wanders into the office and says, 180 00:10:11,440 --> 00:10:17,640 Speaker 1: excuse me, sir. Does that happen? Absolutely? And that's okay. 181 00:10:18,280 --> 00:10:21,920 Speaker 1: We have to respect the institutions, but that respect has 182 00:10:22,000 --> 00:10:24,280 Speaker 1: to flow both ways. Tom. In other words, those who 183 00:10:24,400 --> 00:10:27,920 Speaker 1: hold positions of power must respect them, and those who 184 00:10:27,960 --> 00:10:32,640 Speaker 1: are subordinate must respect those in power. But there has 185 00:10:32,720 --> 00:10:36,840 Speaker 1: to be confrontation behind closed doors so that our leaders 186 00:10:36,960 --> 00:10:41,199 Speaker 1: do not take missteps. You mentioned hr McMaster, the head 187 00:10:41,200 --> 00:10:44,160 Speaker 1: of the NSC. There was more reporting this week from Eli, 188 00:10:44,280 --> 00:10:46,640 Speaker 1: like our colleague here at Bloomberg among others, talking about 189 00:10:46,960 --> 00:10:49,920 Speaker 1: a potential divide among the NSC again, maybe some tension 190 00:10:49,960 --> 00:10:53,240 Speaker 1: between the president and an hr McMaster. What's your reaction 191 00:10:53,320 --> 00:10:55,600 Speaker 1: to that? Do do you get the sense that that continues? 192 00:10:55,679 --> 00:10:59,480 Speaker 1: And how worrisome is that to you? Uh, It's worrisome, 193 00:10:59,640 --> 00:11:03,079 Speaker 1: but it is not in my view definitives. From what 194 00:11:03,280 --> 00:11:07,520 Speaker 1: I can source, hr McMaster continues to have the confidence 195 00:11:07,600 --> 00:11:11,079 Speaker 1: of the President. He has regular interaction with him. I 196 00:11:11,200 --> 00:11:14,240 Speaker 1: think his voice will be heard. Now, let's say said 197 00:11:14,400 --> 00:11:18,839 Speaker 1: hr McMaster is the National Security Advisor. He's opening most 198 00:11:19,080 --> 00:11:24,679 Speaker 1: emphatically on Russia, China, North Korea, these domestic issues. I 199 00:11:24,760 --> 00:11:26,600 Speaker 1: think we have to turn to the Chief of Staff 200 00:11:26,840 --> 00:11:30,199 Speaker 1: Rance previous and hope that he is speaking proof to power. 201 00:11:30,559 --> 00:11:32,720 Speaker 1: What's the message from what we've seen unfold here over 202 00:11:32,760 --> 00:11:35,640 Speaker 1: these last couple of days to other members of this 203 00:11:35,720 --> 00:11:38,120 Speaker 1: administration positions of power? Does that seem like those positions 204 00:11:38,160 --> 00:11:41,440 Speaker 1: are more tenuous somehow? Yes, you serve at the pleasure 205 00:11:41,440 --> 00:11:44,239 Speaker 1: of the president, But it seems like under this administration 206 00:11:44,280 --> 00:11:48,160 Speaker 1: that can change rather quickly. It's pretty remarkable to see 207 00:11:48,240 --> 00:11:52,520 Speaker 1: both the National Security Advisor fired as well as the 208 00:11:52,760 --> 00:11:55,839 Speaker 1: FBI director in the first hundred and twelve days of 209 00:11:55,880 --> 00:11:59,439 Speaker 1: an administration. So sure, any job that you're holding in 210 00:11:59,520 --> 00:12:02,360 Speaker 1: this admit stration must feel more tenuous today than it 211 00:12:02,480 --> 00:12:05,319 Speaker 1: did four days ago. On the other hand, that is 212 00:12:05,440 --> 00:12:07,240 Speaker 1: the nature of the system and the nature of the 213 00:12:07,320 --> 00:12:11,120 Speaker 1: executive branch. The president has power, and people serve at 214 00:12:11,160 --> 00:12:13,760 Speaker 1: the pleasure of the president. When you hit a policy 215 00:12:13,840 --> 00:12:17,080 Speaker 1: you cannot abide, you have the option to resign. Let's 216 00:12:17,080 --> 00:12:19,120 Speaker 1: hope we don't get to that point where people are 217 00:12:19,480 --> 00:12:22,480 Speaker 1: walking out the doors. Um At mustavidez. Can you bring 218 00:12:22,600 --> 00:12:25,960 Speaker 1: Doris Karren's Goodwin's team of rivals over to something as 219 00:12:26,040 --> 00:12:28,280 Speaker 1: fractious as the Senate? I mean they're above it all. 220 00:12:28,600 --> 00:12:31,280 Speaker 1: They don't need to read Doris Karen's Goodwin or the 221 00:12:31,360 --> 00:12:35,319 Speaker 1: Senator McConnell and the rest do They a team of rivals? 222 00:12:35,480 --> 00:12:37,880 Speaker 1: And uh, I think that we have not seen that 223 00:12:37,960 --> 00:12:40,560 Speaker 1: in quite a while. Frankly, you'd have to go back 224 00:12:40,600 --> 00:12:44,880 Speaker 1: in modern times perhaps to the Reagan tip O'Neill famous linkages. 225 00:12:45,800 --> 00:12:50,000 Speaker 1: But on the Senate side, Um, typically we've seen collegiality, 226 00:12:50,160 --> 00:12:53,880 Speaker 1: but over the decades. But now, Tom, you're absolutely right, 227 00:12:54,000 --> 00:12:57,360 Speaker 1: we see the horses pulling in distinctly different directions. That's 228 00:12:57,840 --> 00:13:01,240 Speaker 1: to me extremely worrisome because the founding fathers built the 229 00:13:01,320 --> 00:13:05,600 Speaker 1: Senate to provide stability, to pride, compromise, to rise above 230 00:13:05,679 --> 00:13:09,360 Speaker 1: the petty issues. It's not happening. What did you make 231 00:13:09,480 --> 00:13:12,920 Speaker 1: of that moment yesterday when the Oval Office tour swung open, 232 00:13:12,960 --> 00:13:15,079 Speaker 1: and sitting there in was Henry Kissinger, A middle of 233 00:13:15,120 --> 00:13:17,959 Speaker 1: the conversation we've had about the parallels right or wrong 234 00:13:18,040 --> 00:13:21,520 Speaker 1: to what happened in nineteen three, talking of the optics 235 00:13:21,559 --> 00:13:25,520 Speaker 1: that you're you're witnessing here from this administration, Well, uh, 236 00:13:26,000 --> 00:13:28,760 Speaker 1: really extraordinarily bad optics. I mean, you know, sort of 237 00:13:29,080 --> 00:13:33,360 Speaker 1: what's happening can run on a scale from UH Director Comb. 238 00:13:33,400 --> 00:13:35,559 Speaker 1: He did a bad job. The President was within his 239 00:13:35,720 --> 00:13:39,400 Speaker 1: rights to fire him over to hey, it's a conspiracy 240 00:13:39,559 --> 00:13:42,800 Speaker 1: because Comy was investigating the Russians. What we what we 241 00:13:42,920 --> 00:13:46,280 Speaker 1: know for sure is the optics of this are hideous. 242 00:13:46,480 --> 00:13:50,280 Speaker 1: And it's not just Kissinger in the link to water Gate. 243 00:13:50,480 --> 00:13:52,959 Speaker 1: Who was the previous visitor in the White House, Lavara, 244 00:13:53,200 --> 00:13:58,360 Speaker 1: the secret Foreign Minister of Russia. So just badly mishandled. 245 00:13:58,760 --> 00:14:00,719 Speaker 1: Just coincidentally, early or in the day, I had a 246 00:14:00,840 --> 00:14:04,360 Speaker 1: chance to be with former Secretary Kissinger, and I'll tell 247 00:14:04,400 --> 00:14:07,760 Speaker 1: you he is on his game, and he told me 248 00:14:08,000 --> 00:14:10,800 Speaker 1: he would be talking to the President about China, North 249 00:14:10,920 --> 00:14:14,800 Speaker 1: Korea and the European Union in Russia. The President could 250 00:14:14,840 --> 00:14:18,120 Speaker 1: not get better advice based on everything I know in 251 00:14:18,400 --> 00:14:22,000 Speaker 1: my interactions even earlier in the day with Dr Kissinger. 252 00:14:22,800 --> 00:14:24,560 Speaker 1: The President of Turkey is going to be watched in 253 00:14:24,680 --> 00:14:27,320 Speaker 1: next week. That's President air Duan. What do you make 254 00:14:27,400 --> 00:14:30,120 Speaker 1: of the the list of leaders with whom the President 255 00:14:30,160 --> 00:14:32,200 Speaker 1: has been engaged? Of course, he's invited President to Tarte 256 00:14:32,280 --> 00:14:34,680 Speaker 1: of the Philippines to come to the White House as well. 257 00:14:34,720 --> 00:14:37,080 Speaker 1: When you when you look at all the leaders around 258 00:14:37,080 --> 00:14:38,680 Speaker 1: the world, and then all the leaders that he's invited 259 00:14:38,680 --> 00:14:42,000 Speaker 1: to the White House. What do you make of that list? It's, uh, 260 00:14:42,200 --> 00:14:47,160 Speaker 1: it's kind of a mixed picture. I'm extremely concerned about 261 00:14:47,200 --> 00:14:51,200 Speaker 1: the idea that we would invite the Turte of the 262 00:14:51,280 --> 00:14:54,200 Speaker 1: Philippines to the White House. He is he's not the 263 00:14:54,320 --> 00:14:57,240 Speaker 1: kind of character that we want sitting with the President 264 00:14:57,320 --> 00:15:00,280 Speaker 1: of the United States. UM. I was also st that's 265 00:15:00,280 --> 00:15:03,720 Speaker 1: the awkwardness of the interaction. For example, is Angela Merkel 266 00:15:04,160 --> 00:15:07,840 Speaker 1: the Chancellor of Germany. UM So he's arranged the spectrum 267 00:15:07,880 --> 00:15:10,400 Speaker 1: in terms of who he's inviting who's actually bringing in. 268 00:15:11,200 --> 00:15:14,120 Speaker 1: The key is what are the personal relationships he's building, 269 00:15:14,400 --> 00:15:16,800 Speaker 1: the most important of which will be with President g 270 00:15:17,520 --> 00:15:19,320 Speaker 1: One more quick question you want to get you on 271 00:15:19,400 --> 00:15:21,800 Speaker 1: your day at Fletcher What are the what are the 272 00:15:21,880 --> 00:15:26,800 Speaker 1: personal relationships as president needs to uh develop with General Madison, 273 00:15:26,840 --> 00:15:31,119 Speaker 1: with Mr Tillerson. He's got to be in an absolute 274 00:15:31,200 --> 00:15:34,120 Speaker 1: mind milk with two of them. And here's some good news. 275 00:15:34,400 --> 00:15:37,640 Speaker 1: The two of them, Tillerson and Madis are working very 276 00:15:37,760 --> 00:15:41,120 Speaker 1: very closely together, meeting frequently and also with Secretary of 277 00:15:41,160 --> 00:15:44,680 Speaker 1: Homeland Security John Kelly. That's a powerful trio. If he 278 00:15:44,760 --> 00:15:47,040 Speaker 1: means on them for advice, and he continues to reach 279 00:15:47,120 --> 00:15:50,120 Speaker 1: outside to people like Dr Kissinger. I think he'll be 280 00:15:50,240 --> 00:15:52,840 Speaker 1: on a good course at least on the international side 281 00:15:52,880 --> 00:15:54,920 Speaker 1: of his portfolio. Alright, great to speak with you as 282 00:15:54,920 --> 00:15:56,640 Speaker 1: always there. Emirald James Tefrita is heading up to the 283 00:15:56,680 --> 00:15:58,880 Speaker 1: Dirks and Senate Office Building to testify before the Senate 284 00:15:59,000 --> 00:16:01,760 Speaker 1: Armed Services commit He joined us on our phone lines. 285 00:16:01,840 --> 00:16:04,120 Speaker 1: Tom always great to hear his perspective. The Dean of 286 00:16:04,160 --> 00:16:14,080 Speaker 1: the Fletchery School Slam Diplomacy at Tofts University. Brought you 287 00:16:14,200 --> 00:16:17,840 Speaker 1: by Bank of America. Mary Lynch. Dedicated to bringing our 288 00:16:17,920 --> 00:16:21,480 Speaker 1: clients insights and solutions to meet the challenges of a 289 00:16:21,560 --> 00:16:26,400 Speaker 1: transforming world. That's the power of global connections. Mary Lynch, Pierce, 290 00:16:26,520 --> 00:16:36,040 Speaker 1: Feeder and Smith Incorporated Member s I p C. There's 291 00:16:36,080 --> 00:16:39,560 Speaker 1: something new from Bloomberg. It's called Lens. Starting right now, 292 00:16:39,720 --> 00:16:42,560 Speaker 1: you can use the Bloomberg Io s app off your 293 00:16:42,600 --> 00:16:47,480 Speaker 1: iPhone or iPad, or our new Google Chrome extension to 294 00:16:47,600 --> 00:16:51,440 Speaker 1: read any news story on any website, scan it, and 295 00:16:51,520 --> 00:16:55,960 Speaker 1: then instantly see the news stories relevant market data from Bloomberg. 296 00:16:56,320 --> 00:16:59,360 Speaker 1: In addition, see all the bios of the key people 297 00:17:00,200 --> 00:17:03,440 Speaker 1: into the story. It's called lens, and it is just that, 298 00:17:03,760 --> 00:17:06,800 Speaker 1: a lens into the people and the data of any 299 00:17:06,920 --> 00:17:10,760 Speaker 1: story you may be reading. Again, Lens brings you the 300 00:17:10,840 --> 00:17:14,320 Speaker 1: power of Bloomberg's news and data. Download or io s 301 00:17:14,400 --> 00:17:17,680 Speaker 1: app or search for the Bloomberg extension at the Chrome 302 00:17:17,800 --> 00:17:21,240 Speaker 1: Store to try lens out. Learn more at Bloomberg dot 303 00:17:21,280 --> 00:17:29,040 Speaker 1: com slash lens. David Garray in New York, Tom Keene 304 00:17:29,080 --> 00:17:32,200 Speaker 1: in London. As I fumble here on the Bloomberg, typing 305 00:17:32,520 --> 00:17:36,960 Speaker 1: k W one commodity, trying hard to get my hard 306 00:17:37,000 --> 00:17:39,959 Speaker 1: red winter wheat up on the Bloomberg, a man who 307 00:17:40,000 --> 00:17:42,640 Speaker 1: can help me do that is one Dennis Gartman, of course, 308 00:17:42,760 --> 00:17:45,760 Speaker 1: of the Gartman lettered. Let's let's let's get this out 309 00:17:45,760 --> 00:17:49,240 Speaker 1: of the way first. How is hard red winter wheat doing, Dennis, 310 00:17:50,119 --> 00:17:54,680 Speaker 1: It's boring, Lee boring, It's doing very little. Actually the 311 00:17:54,760 --> 00:17:57,920 Speaker 1: crop is doing fine. There There were problems last week 312 00:17:58,240 --> 00:18:02,200 Speaker 1: with excess rain. But in people one might scoff about 313 00:18:02,240 --> 00:18:04,200 Speaker 1: software or hard read winter week. But it is the 314 00:18:04,280 --> 00:18:06,960 Speaker 1: stuff of which bread is made, and bread is still 315 00:18:07,000 --> 00:18:09,440 Speaker 1: the staff of life and dreams. Bread and dreams, yes, 316 00:18:09,800 --> 00:18:12,800 Speaker 1: and and the and of dreams. Absolutely so if the 317 00:18:12,880 --> 00:18:15,640 Speaker 1: crop is doing fine. Thanks very much, Dan, it's great 318 00:18:15,640 --> 00:18:17,320 Speaker 1: to talk with you. As always, will move move on 319 00:18:17,440 --> 00:18:19,680 Speaker 1: down out the matter. As we've been talking throughout the 320 00:18:19,720 --> 00:18:22,760 Speaker 1: morning all day yesterday about what we've seen in Washington, 321 00:18:23,119 --> 00:18:26,359 Speaker 1: the firing of James Comey, the now former director of 322 00:18:26,440 --> 00:18:28,800 Speaker 1: the FBI, and the fallout from that, and we've seen 323 00:18:29,080 --> 00:18:31,399 Speaker 1: precious little response here in the market. You note in 324 00:18:31,480 --> 00:18:33,640 Speaker 1: your in your letter yesterday that that might be news 325 00:18:33,680 --> 00:18:35,280 Speaker 1: in and of itself. Why is that the case? Do 326 00:18:35,359 --> 00:18:39,560 Speaker 1: you think? Well, it is astonishing how everybody's talking about it. 327 00:18:39,600 --> 00:18:42,600 Speaker 1: There are two things everybody's talking about. One, the Cobe incident, 328 00:18:42,680 --> 00:18:45,920 Speaker 1: and to the lack of volatility. Utterly everywhere in all 329 00:18:46,000 --> 00:18:49,200 Speaker 1: the markets, there is a total lack of volatility. And 330 00:18:49,280 --> 00:18:52,560 Speaker 1: perhaps until and you can write this down, volatility will 331 00:18:52,600 --> 00:18:55,080 Speaker 1: return when it returns, and it won't return until a 332 00:18:55,160 --> 00:18:58,240 Speaker 1: moment before then. It will return when nobody cares any 333 00:18:58,320 --> 00:19:00,479 Speaker 1: longer about it, when it has been when it has 334 00:19:00,560 --> 00:19:03,840 Speaker 1: ceased to be a topic of conversation. And probably the 335 00:19:04,200 --> 00:19:07,840 Speaker 1: the COMI incident, now that people understand that it was 336 00:19:07,960 --> 00:19:11,800 Speaker 1: probably an ungentlemanly manner in which it was done. One 337 00:19:11,880 --> 00:19:16,000 Speaker 1: doesn't fire people via node. One fires people across the desk, 338 00:19:16,119 --> 00:19:18,920 Speaker 1: But other than that it probably was understandable. So in 339 00:19:19,000 --> 00:19:21,760 Speaker 1: the long term of things, not not much effect, to 340 00:19:21,840 --> 00:19:25,359 Speaker 1: be honest. A book that you and I love Dennis Gartman, 341 00:19:25,440 --> 00:19:28,400 Speaker 1: Reminiscence of a stock Operator. You were around when Edward 342 00:19:28,480 --> 00:19:31,920 Speaker 1: le Favre wrote it, um Edwin LaFave wrote it. Here's 343 00:19:31,920 --> 00:19:37,240 Speaker 1: a quote. The desire for constant action, irrespective of underlying 344 00:19:37,359 --> 00:19:42,200 Speaker 1: conditions is responsible for many losses in Wall Street, even 345 00:19:42,280 --> 00:19:46,080 Speaker 1: among the professionals. That's a quote from another time. What 346 00:19:46,359 --> 00:19:50,200 Speaker 1: do you do to enjoy not losing money when it's 347 00:19:50,280 --> 00:19:54,200 Speaker 1: this boring? Trying to stay upon the sidelines to the 348 00:19:54,280 --> 00:19:58,000 Speaker 1: best of one's ability, trying trying to buy break ups 349 00:19:58,040 --> 00:20:00,800 Speaker 1: to the upside, trying to sell break up of the downside, 350 00:20:01,320 --> 00:20:04,280 Speaker 1: trying to find the charred patterns that one finds interesting 351 00:20:04,440 --> 00:20:07,720 Speaker 1: that where the fundamentals are are also moving in the 352 00:20:07,800 --> 00:20:11,720 Speaker 1: same direction, but on balance keeping one's powder dry. It is, 353 00:20:12,119 --> 00:20:15,840 Speaker 1: it really is astonishing, how boring is the movement from 354 00:20:15,880 --> 00:20:17,560 Speaker 1: the up from the lower left of the upper right. 355 00:20:17,600 --> 00:20:21,040 Speaker 1: And it shall continue tom It is always enjoying, enjoyable. 356 00:20:21,119 --> 00:20:23,399 Speaker 1: Dennis Gartment. To do a panel or speech with one 357 00:20:23,520 --> 00:20:26,200 Speaker 1: g Kamensky. Gary Kaminsky with all of his work over 358 00:20:26,280 --> 00:20:29,280 Speaker 1: the years on making a nut losing money, and he 359 00:20:29,400 --> 00:20:33,320 Speaker 1: brought up a Dennis Gartment concept. Explain to our audience 360 00:20:33,720 --> 00:20:38,640 Speaker 1: anti Martin gel theory, where you buy more of something 361 00:20:38,920 --> 00:20:42,440 Speaker 1: when it begins to go up, you don't buy more 362 00:20:42,760 --> 00:20:47,520 Speaker 1: something and double down, etcetera, etcetera. Explain that to our audience. 363 00:20:48,119 --> 00:20:51,520 Speaker 1: It's it's a very simple concept in life. If you 364 00:20:51,640 --> 00:20:53,760 Speaker 1: do more of the things that are working and less 365 00:20:53,800 --> 00:20:56,080 Speaker 1: of the things that are not. As I say in 366 00:20:56,119 --> 00:20:59,080 Speaker 1: speech after speech, gentleman, if you take flowers to your 367 00:20:59,080 --> 00:21:01,080 Speaker 1: girlfriend or your wife more often and you get lucky 368 00:21:01,160 --> 00:21:03,919 Speaker 1: more often, take her flowers on a more consistent basis, 369 00:21:04,000 --> 00:21:07,200 Speaker 1: and be nicer. Do the things that are working. Yes, 370 00:21:07,320 --> 00:21:09,800 Speaker 1: it's true. Do the things that are working, and try 371 00:21:09,920 --> 00:21:11,600 Speaker 1: your best to do less of the things that are not. 372 00:21:12,000 --> 00:21:13,920 Speaker 1: If you buy a stock at fifteen and it goes 373 00:21:13,960 --> 00:21:17,000 Speaker 1: to twenty, the market's telling you that you're right, do 374 00:21:17,160 --> 00:21:19,159 Speaker 1: more of it. If you buy a stock at fifteen 375 00:21:19,200 --> 00:21:22,080 Speaker 1: and it goes to ten, the market, the collective wisdom 376 00:21:22,200 --> 00:21:24,960 Speaker 1: and the stupidity of everyone trading, it's telling you that 377 00:21:25,040 --> 00:21:27,480 Speaker 1: you're wrong. Why would you do more of something that 378 00:21:27,600 --> 00:21:30,560 Speaker 1: has been going wrong. So it's a very simple notion. 379 00:21:30,640 --> 00:21:34,040 Speaker 1: The difference I think between pros and amateurs is that 380 00:21:34,160 --> 00:21:38,040 Speaker 1: pros will buy new highs. Amateurs are always trying to 381 00:21:38,160 --> 00:21:41,600 Speaker 1: buy new lows. This is not a business. I've said 382 00:21:41,640 --> 00:21:44,359 Speaker 1: this time and time again, and when I deviate from 383 00:21:44,400 --> 00:21:46,720 Speaker 1: an eye er. This is not a business of buying 384 00:21:46,800 --> 00:21:49,359 Speaker 1: low and selling higher. This is a business of buying 385 00:21:49,520 --> 00:21:52,000 Speaker 1: high and selling higher. This is a business of being 386 00:21:52,440 --> 00:21:55,320 Speaker 1: of shorting something that's already made a new low, because 387 00:21:55,359 --> 00:21:58,479 Speaker 1: in all likelihood it shall go even lower. Ask Mr 388 00:21:58,600 --> 00:22:02,040 Speaker 1: Ackman about the the What what happened as he continued 389 00:22:02,080 --> 00:22:04,679 Speaker 1: to buy Valiant all the way down from what three 390 00:22:05,080 --> 00:22:07,880 Speaker 1: dollars to share and he finally sold out at ten. 391 00:22:08,520 --> 00:22:10,920 Speaker 1: Do more of that which is working, less of that 392 00:22:11,040 --> 00:22:13,399 Speaker 1: which is not, and it will serve you very well. 393 00:22:13,520 --> 00:22:15,800 Speaker 1: Dennis will come back with you. But I'm running down here. 394 00:22:15,840 --> 00:22:18,000 Speaker 1: I have to buy buy flowers. What else should I 395 00:22:18,000 --> 00:22:20,240 Speaker 1: be buying at this point? What's another? One's another opportunity 396 00:22:20,240 --> 00:22:24,119 Speaker 1: to work work argue at this point by by aluminum 397 00:22:25,600 --> 00:22:28,240 Speaker 1: by ball bearings. Everybody laughs at me for the for 398 00:22:28,320 --> 00:22:31,560 Speaker 1: the concept of buying America's largest ball bearing manufacturer. But 399 00:22:31,920 --> 00:22:35,240 Speaker 1: what's more incumbent in economic growth than than the things 400 00:22:35,320 --> 00:22:39,400 Speaker 1: that are absolutely important to machinery. Machines can't run without 401 00:22:39,440 --> 00:22:42,680 Speaker 1: ball bearings, and nobody's paying attention to it except American's 402 00:22:42,760 --> 00:22:45,280 Speaker 1: large at a ball bearing manufacturer keeps going to new highs. 403 00:22:45,560 --> 00:22:49,399 Speaker 1: Let's get some economic analysis in real time here, Dennis PPI, 404 00:22:49,480 --> 00:22:51,920 Speaker 1: there up point three more than than was surveyed. What's 405 00:22:51,920 --> 00:22:54,400 Speaker 1: your read on the numbers we just got today? Those 406 00:22:54,440 --> 00:22:57,000 Speaker 1: are rather impressive numbers. Clearly the set wants to see 407 00:22:57,119 --> 00:23:00,920 Speaker 1: higher inflation and it's finally getting it. I think what's 408 00:23:00,920 --> 00:23:02,800 Speaker 1: even more important than the p p I number, which 409 00:23:02,880 --> 00:23:05,680 Speaker 1: was was well above expectations, and the two point five 410 00:23:06,480 --> 00:23:08,320 Speaker 1: x food and energy for the year over year is 411 00:23:08,720 --> 00:23:12,119 Speaker 1: very is well above expectations. But what's interesting is the 412 00:23:12,600 --> 00:23:17,159 Speaker 1: jobless claims number keeps plunging. To use a uh Tom's term, 413 00:23:17,520 --> 00:23:20,679 Speaker 1: making newer and lower low is a two thirty six thousand. 414 00:23:21,280 --> 00:23:23,600 Speaker 1: The jobs market is getting very tight out there. We 415 00:23:23,720 --> 00:23:26,560 Speaker 1: simply don't have we we we are running out of 416 00:23:26,680 --> 00:23:28,760 Speaker 1: laborers on a very quick basis, and you're going to 417 00:23:28,840 --> 00:23:32,119 Speaker 1: start to see labor rates begin to tip up, I 418 00:23:32,359 --> 00:23:35,440 Speaker 1: think rather quickly. So in the inflation numbers is really 419 00:23:35,520 --> 00:23:38,880 Speaker 1: quite surprising. Uh. The the the claims number is even 420 00:23:38,920 --> 00:23:41,080 Speaker 1: more surprising. And I think inflation is now on the 421 00:23:41,400 --> 00:23:43,440 Speaker 1: on the horizon. Let's pivot back to London here. We 422 00:23:43,480 --> 00:23:46,040 Speaker 1: also got inflation data quarterly inflation data from the BOE 423 00:23:46,560 --> 00:23:48,879 Speaker 1: this morning. Is Tom mentioned we've seen diminution in in 424 00:23:49,040 --> 00:23:53,200 Speaker 1: sterling this morning. Uh, Tom, Joey the long and getting 425 00:23:53,280 --> 00:23:57,159 Speaker 1: killed on it. What's your outlook for sterling? Dennis? You know, 426 00:23:57,520 --> 00:24:01,240 Speaker 1: at it's very hard for me to be barish of 427 00:24:01,320 --> 00:24:05,560 Speaker 1: sterling relative to the US dollar. If if, if the 428 00:24:05,760 --> 00:24:08,040 Speaker 1: the the euro continues to weekend, and I think that 429 00:24:08,240 --> 00:24:12,399 Speaker 1: Euro probably shall it may drag Sterling down. But quite honestly, 430 00:24:12,440 --> 00:24:14,840 Speaker 1: I think that we've seen the worst as far as 431 00:24:14,920 --> 00:24:18,000 Speaker 1: the cable is concerned. So if you made me do something, 432 00:24:18,040 --> 00:24:19,720 Speaker 1: if I have had a gun held in my head 433 00:24:20,000 --> 00:24:22,119 Speaker 1: and I had to buy or sell cable right here, 434 00:24:22,200 --> 00:24:24,280 Speaker 1: the sterling right here, I'd rather be a buyer than 435 00:24:24,320 --> 00:24:25,760 Speaker 1: a seller. But you'd have to hold a gun to 436 00:24:25,800 --> 00:24:28,000 Speaker 1: my head to make me do it. We've gotten quiet, 437 00:24:28,080 --> 00:24:31,040 Speaker 1: Dennis Gartman on dollar. We had a big leap couple 438 00:24:31,080 --> 00:24:34,200 Speaker 1: of years ago, and yeah, it's been just sort of 439 00:24:34,280 --> 00:24:36,640 Speaker 1: training range, but maybe not as range about as oil. 440 00:24:36,720 --> 00:24:39,240 Speaker 1: But there it is, is is that the big surprise 441 00:24:39,359 --> 00:24:43,879 Speaker 1: to come where the optimism gartment has on the US economy. 442 00:24:44,200 --> 00:24:47,560 Speaker 1: By definition, you get a stronger dollar. I think that 443 00:24:47,960 --> 00:24:50,880 Speaker 1: the propensity shall be for the dollar to get, if 444 00:24:50,920 --> 00:24:54,080 Speaker 1: not dramatically stronger, at least the reasonably stronger over the 445 00:24:54,119 --> 00:24:56,440 Speaker 1: course of the next several years. There we we will 446 00:24:56,520 --> 00:24:59,840 Speaker 1: tighten monetary policy long before anybody else shall. Our economy 447 00:24:59,920 --> 00:25:02,760 Speaker 1: is doing reasonably well, thank you, compared to most any 448 00:25:02,800 --> 00:25:05,719 Speaker 1: other economy anywhere around the world. So on balance, all 449 00:25:05,800 --> 00:25:08,520 Speaker 1: things being otherwise equal, calm, the dollar has to go higher, 450 00:25:08,640 --> 00:25:11,560 Speaker 1: not lower. Bringing your most recent note here, Dennis, say 451 00:25:11,640 --> 00:25:14,480 Speaker 1: you highlight euro Swissy in light of the election in France. 452 00:25:14,520 --> 00:25:17,240 Speaker 1: What are you looking for there in that cross? You 453 00:25:17,320 --> 00:25:20,359 Speaker 1: know what has been happening that it's very fascinating that 454 00:25:20,440 --> 00:25:23,000 Speaker 1: the Swiss National Bank is really almost the world's largest 455 00:25:23,200 --> 00:25:26,080 Speaker 1: macro hedge fund. The Swiss National Bank has been trying 456 00:25:26,160 --> 00:25:29,320 Speaker 1: its best and had not been succeeding until the election 457 00:25:29,400 --> 00:25:32,639 Speaker 1: results of last week in trying to keep the Swiss 458 00:25:32,720 --> 00:25:36,680 Speaker 1: Franc weak. Suddenly since the election, which puts to bed 459 00:25:37,160 --> 00:25:40,720 Speaker 1: the risks of the Euro collapsing and falling apart. Uh. 460 00:25:40,880 --> 00:25:44,680 Speaker 1: Suddenly the Swiss franc has has weakened rather dramatically relative 461 00:25:44,760 --> 00:25:48,639 Speaker 1: to to the Euro. The Swiss have been selling Swiss francs, 462 00:25:48,720 --> 00:25:52,920 Speaker 1: creating Swiss francs, buying euros, buying dollars, buying in and 463 00:25:53,080 --> 00:25:55,919 Speaker 1: taking those currencies and buying stocks. They are now one 464 00:25:55,960 --> 00:26:01,639 Speaker 1: of the world's largest shareholders, rivaling rivalry, rivaling the the 465 00:26:01,840 --> 00:26:08,239 Speaker 1: Norwegian UH government fund. And it's astonishing. Nobody's paying much 466 00:26:08,280 --> 00:26:11,760 Speaker 1: attention to you back. Do you assume, Mr Gartman? Do 467 00:26:11,840 --> 00:26:16,520 Speaker 1: you assume that ends ugly? All these these things, things 468 00:26:16,560 --> 00:26:19,239 Speaker 1: such as that almost always end ugly. But for right 469 00:26:19,280 --> 00:26:21,240 Speaker 1: now they've got the wind at their back, at least 470 00:26:21,280 --> 00:26:22,840 Speaker 1: for the last week. Let's give them credit for that. 471 00:26:22,960 --> 00:26:25,400 Speaker 1: But Tom, you and I have been around a long time. 472 00:26:25,520 --> 00:26:27,920 Speaker 1: Things like that usually end in a in a very 473 00:26:28,040 --> 00:26:30,600 Speaker 1: ugly fashion. When shall that happen? Your guess is as 474 00:26:30,640 --> 00:26:33,119 Speaker 1: good as mine, but it probably shall. Let's been here 475 00:26:33,119 --> 00:26:34,720 Speaker 1: to the equities markets in the time we have left 476 00:26:34,760 --> 00:26:37,439 Speaker 1: with you, just about a minute left with you, Dennis Gartman, 477 00:26:37,600 --> 00:26:40,480 Speaker 1: how are you feeling about US equities right now? Still 478 00:26:40,480 --> 00:26:43,440 Speaker 1: a bullmarket, isn't it? As I've said for months and months, 479 00:26:43,760 --> 00:26:46,440 Speaker 1: in a bullmarket, and only prepositions you can have really 480 00:26:46,560 --> 00:26:50,080 Speaker 1: aggressively long, pleasantly long, or neutral. At this point, you're 481 00:26:50,080 --> 00:26:52,840 Speaker 1: supposed to be pleasantly long. It is a bull market, 482 00:26:53,160 --> 00:26:54,800 Speaker 1: and every time I hear on call on the side 483 00:26:54,840 --> 00:26:57,200 Speaker 1: of selling it, I regret it. Let's get out in 484 00:26:57,240 --> 00:26:59,480 Speaker 1: front of the Garment Letter tomorrow. We're going to have 485 00:26:59,720 --> 00:27:02,320 Speaker 1: our David Abits join us here. Howard. It is an 486 00:27:02,400 --> 00:27:06,720 Speaker 1: extraordinary morning for all of retail as they witness the 487 00:27:06,800 --> 00:27:11,040 Speaker 1: further collapse of Macy's. It is a down six ball 488 00:27:11,080 --> 00:27:14,760 Speaker 1: market from the seventies, it's down some twelve percent today. 489 00:27:14,800 --> 00:27:16,240 Speaker 1: I don't have the chart right in front of me 490 00:27:17,040 --> 00:27:20,280 Speaker 1: right now, Dennis, retail, do you just get out of 491 00:27:20,320 --> 00:27:23,520 Speaker 1: the way? Is that the Gartment advice? You have no choice, 492 00:27:23,600 --> 00:27:27,879 Speaker 1: do you? It's retail has been has been distraught and destroyed. 493 00:27:28,320 --> 00:27:31,920 Speaker 1: Amazon has changed the environment completely. It is even putting 494 00:27:31,960 --> 00:27:35,600 Speaker 1: pressure upon of all places, Walmart. So mom and Pop 495 00:27:35,720 --> 00:27:39,119 Speaker 1: may survive, but the middle side stores it is. It 496 00:27:39,280 --> 00:27:41,639 Speaker 1: is a terrible and dangerous place. So if you have 497 00:27:41,760 --> 00:27:44,680 Speaker 1: no choice, get out, Dennis. Thank you so much, Dennis Gartment. 498 00:27:44,760 --> 00:27:46,960 Speaker 1: The Gartment Letter, we do not have the gartment letter 499 00:27:47,040 --> 00:27:49,960 Speaker 1: to ship to you by carrier pigeon. We protect the 500 00:27:50,040 --> 00:28:06,400 Speaker 1: copyright of all of our guests today. David Kerry, New York, 501 00:28:06,440 --> 00:28:09,879 Speaker 1: I'm talking Keenan, London, England and now joining us is 502 00:28:09,960 --> 00:28:15,520 Speaker 1: someone who understands retail and understands real estate. Whether it's 503 00:28:15,640 --> 00:28:21,280 Speaker 1: River Ridge in Lynchburg, Virginia, landmarkt and Alexandria, Virginia, Good 504 00:28:21,320 --> 00:28:26,399 Speaker 1: Morning FM in Washington, maybe it's out at Northgate Durham, 505 00:28:26,480 --> 00:28:30,760 Speaker 1: North Carolina, or maybe it's you know, thank you, Silver 506 00:28:30,840 --> 00:28:35,440 Speaker 1: City Galeria taught in Massachusetts, Howard. Davidovitz has been to 507 00:28:35,680 --> 00:28:39,520 Speaker 1: them all. Howard, a workout like Macy's is about real estate, 508 00:28:39,640 --> 00:28:42,280 Speaker 1: isn't it. Well, it's certainly a big part of it 509 00:28:42,440 --> 00:28:45,080 Speaker 1: because the stores are too big. You also have to 510 00:28:45,240 --> 00:28:49,480 Speaker 1: use the real estate to generate new capital to reinvigorate 511 00:28:49,600 --> 00:28:52,760 Speaker 1: the business. They're doing that. Uh, there're in the process 512 00:28:52,800 --> 00:28:56,280 Speaker 1: of monetizing a lot of it. Stores have to be downside, 513 00:28:56,320 --> 00:29:00,120 Speaker 1: stores have to be closed. The core problem is that 514 00:29:00,240 --> 00:29:02,880 Speaker 1: a number of years ago Macy's doubled their size and 515 00:29:03,040 --> 00:29:06,200 Speaker 1: what the main company they both did about sixteen billion 516 00:29:06,280 --> 00:29:09,840 Speaker 1: at the time. It was a disastrous decision because they 517 00:29:09,920 --> 00:29:13,800 Speaker 1: got second rate stores in second rate malls. Macy's at 518 00:29:13,880 --> 00:29:16,520 Speaker 1: the time was number one and number two in every city, 519 00:29:17,000 --> 00:29:19,520 Speaker 1: and they raced out and what the main company to 520 00:29:19,640 --> 00:29:22,240 Speaker 1: double their size. When you look back on it, and 521 00:29:22,320 --> 00:29:25,080 Speaker 1: of course I said it at the time everywhere. Uh, 522 00:29:25,200 --> 00:29:29,880 Speaker 1: it was a disastrous decision and they did it, and 523 00:29:30,000 --> 00:29:33,240 Speaker 1: now they're paying a price, you know, I I we 524 00:29:33,360 --> 00:29:35,240 Speaker 1: were talking about the Harold Squares store just a few 525 00:29:35,280 --> 00:29:37,960 Speaker 1: moments ago. How much longer this company can hold on 526 00:29:38,080 --> 00:29:40,600 Speaker 1: to that? What would it mean to Macy's for Macy's 527 00:29:40,600 --> 00:29:42,240 Speaker 1: to have to get rid of that piece of real state. Well, 528 00:29:42,280 --> 00:29:44,320 Speaker 1: they're never going to get rid of that. That's what 529 00:29:44,520 --> 00:29:47,360 Speaker 1: you just said is impossible. It won't happen. Here's what 530 00:29:47,440 --> 00:29:49,720 Speaker 1: will happen in Harold Square is the same thing they're 531 00:29:49,720 --> 00:29:53,200 Speaker 1: doing in Chicago. It's the same thing they're doing in Minneapolis. 532 00:29:54,000 --> 00:29:57,520 Speaker 1: The store is way too big. What they can do 533 00:29:57,840 --> 00:30:01,400 Speaker 1: is monetize it by finding a way to have multi 534 00:30:01,520 --> 00:30:06,800 Speaker 1: use development, office, hotel, and that's exactly what they will 535 00:30:06,920 --> 00:30:09,640 Speaker 1: do and it's exactly what it so they'll end up. 536 00:30:10,080 --> 00:30:12,320 Speaker 1: You can't. I mean, a million square foot store is 537 00:30:12,440 --> 00:30:15,200 Speaker 1: nush and that's what they got, so they'll end up 538 00:30:15,240 --> 00:30:18,000 Speaker 1: with a half a million square footstore or four dred 539 00:30:18,080 --> 00:30:21,680 Speaker 1: thousand square footstore, which is plenty big. It's enormous, and 540 00:30:21,880 --> 00:30:24,320 Speaker 1: that's what that's what they'll do it Harold Square. I'll 541 00:30:24,440 --> 00:30:28,120 Speaker 1: raise a mountain of money and they'll downsize the store. 542 00:30:28,680 --> 00:30:31,920 Speaker 1: They will never get at Herald Square. Are we still 543 00:30:32,000 --> 00:30:34,040 Speaker 1: building malls anywhere in this country? Are there any malls 544 00:30:34,120 --> 00:30:36,400 Speaker 1: under construction? What is the mall of two thousand seventeen? 545 00:30:36,480 --> 00:30:39,600 Speaker 1: The mall of two thousand seventeen doesn't exist because we're 546 00:30:39,640 --> 00:30:43,440 Speaker 1: not building any enclosed mall zero. We're at level zero. 547 00:30:44,040 --> 00:30:46,680 Speaker 1: We have to close malls. We have to change malls 548 00:30:46,760 --> 00:30:51,960 Speaker 1: that there aren't any malls were dramatically overstored with dramatically overmalled. 549 00:30:51,960 --> 00:30:54,520 Speaker 1: The whole thing doesn't make sense. There has to be 550 00:30:54,600 --> 00:30:57,320 Speaker 1: a huge adjustment take place. How do we get here? 551 00:30:57,320 --> 00:30:58,840 Speaker 1: How how did it make sense or how did it 552 00:30:58,920 --> 00:31:01,040 Speaker 1: make sense on paper? For a time? Well, it made 553 00:31:01,120 --> 00:31:05,120 Speaker 1: sense because number one, cheap money, that's what drives real estate. 554 00:31:05,800 --> 00:31:09,480 Speaker 1: Number two, the crazy lunatic analysts who come on radio 555 00:31:09,600 --> 00:31:13,920 Speaker 1: and televisions, who come on and immediately and ask, well, 556 00:31:14,160 --> 00:31:16,920 Speaker 1: you gotta grow at this rate? You gotta do this, 557 00:31:17,040 --> 00:31:19,720 Speaker 1: and that we can't give you this multiple So of 558 00:31:19,840 --> 00:31:24,720 Speaker 1: course every retailer went completely bananas, dancing to the tune 559 00:31:25,480 --> 00:31:28,680 Speaker 1: of growth, tremendous growth, because that's what you have to have. 560 00:31:29,000 --> 00:31:32,680 Speaker 1: Blah blah, blah blah. That's how we ended up the 561 00:31:32,840 --> 00:31:36,840 Speaker 1: most overstought country in the world by a factor of fool, 562 00:31:37,400 --> 00:31:43,640 Speaker 1: which is absolutely astounding, dancing to wolf streets, looney tunes 563 00:31:43,880 --> 00:31:48,280 Speaker 1: and private equities, crazy attitudes, and that's how we got here. 564 00:31:48,800 --> 00:31:53,800 Speaker 1: Within this our is merchandizing. I'm looking at the Macy's website. 565 00:31:54,280 --> 00:31:59,520 Speaker 1: It says trend shop are curated boutique of the latest arrivals, 566 00:31:59,600 --> 00:32:04,320 Speaker 1: fresh off the runway. Are they cool? The big note 567 00:32:04,360 --> 00:32:06,800 Speaker 1: they're not cool, and no department store is cool. They're 568 00:32:06,800 --> 00:32:09,320 Speaker 1: too big to be cool. If you want to be cool, 569 00:32:09,880 --> 00:32:13,640 Speaker 1: you've got to have a focused presentation in a specialty store. 570 00:32:14,080 --> 00:32:18,400 Speaker 1: That's what's cool. So you can't have this gigantic edifice 571 00:32:18,480 --> 00:32:20,960 Speaker 1: and be cool because young people are not going to 572 00:32:21,040 --> 00:32:23,000 Speaker 1: go there. So cool is out. But here's what's in 573 00:32:24,240 --> 00:32:29,040 Speaker 1: the biggest merchandizing change. Macy's is facing and and and 574 00:32:29,160 --> 00:32:32,000 Speaker 1: they they've been in a statement in a massive sleep 575 00:32:32,200 --> 00:32:35,880 Speaker 1: for a ten years behind is off price. For ten years, 576 00:32:35,960 --> 00:32:38,240 Speaker 1: off price has been the most powerful for US and 577 00:32:38,280 --> 00:32:42,800 Speaker 1: apparel in America. Norts From has double double the number 578 00:32:42,920 --> 00:32:45,720 Speaker 1: of off price nords from rackings that I have nords 579 00:32:45,760 --> 00:32:49,360 Speaker 1: from sacks of fit. Macy's has been asleep and they've 580 00:32:49,440 --> 00:32:56,560 Speaker 1: done nothing. Nothing woke up, Get Howard. I'm looking at 581 00:32:56,600 --> 00:32:59,400 Speaker 1: the Zaro website granteds in the United Kingdom, folks from 582 00:32:59,440 --> 00:33:03,680 Speaker 1: London and York. Today Azara doesn't sell price, They're selling 583 00:33:03,720 --> 00:33:07,400 Speaker 1: the image, the trendy, the cool. Does price work anymore? 584 00:33:07,600 --> 00:33:11,880 Speaker 1: Are we exhausted by ten percent off? I don't think 585 00:33:11,920 --> 00:33:15,320 Speaker 1: we're exhausted, because if we were, t J Max wouldn't 586 00:33:15,360 --> 00:33:18,200 Speaker 1: be the leading apparel chain in the world. So I 587 00:33:18,280 --> 00:33:21,000 Speaker 1: don't think we're exhausted by a good deal. I do 588 00:33:21,280 --> 00:33:26,520 Speaker 1: think we're exhausted by over promotion that are not real promotions, 589 00:33:27,040 --> 00:33:33,320 Speaker 1: which traditional department stores like Macy's specialize in, because after 590 00:33:33,400 --> 00:33:35,600 Speaker 1: they give you the deal, t J Max is still 591 00:33:36,720 --> 00:33:41,200 Speaker 1: less and all the shoppers know it. So I think 592 00:33:41,280 --> 00:33:45,520 Speaker 1: people like promotions that are real, not fake promotions. And 593 00:33:45,680 --> 00:33:48,840 Speaker 1: Macy's and older department says, I'm not naming me mean 594 00:33:48,920 --> 00:33:54,000 Speaker 1: all of them specialize in fake promotions and those don't work. Uh. 595 00:33:54,120 --> 00:33:57,360 Speaker 1: And Amazon is certainly gonna shake and is shaking it 596 00:33:57,480 --> 00:34:00,280 Speaker 1: all up. They'll do more apparel business than May sees 597 00:34:00,360 --> 00:34:05,440 Speaker 1: this year. So there's more apparel business than Macy's. Amazon, 598 00:34:05,640 --> 00:34:08,919 Speaker 1: and they just started David asked a question, so hard 599 00:34:08,920 --> 00:34:11,480 Speaker 1: I will say, it's in the crapper. Yeah, And Howard 600 00:34:11,800 --> 00:34:13,719 Speaker 1: we started off asking about all the walking that you 601 00:34:13,800 --> 00:34:15,319 Speaker 1: have to do, all the geography that you have to cover. 602 00:34:15,400 --> 00:34:17,920 Speaker 1: How about virtual geography. When you look at the online 603 00:34:17,960 --> 00:34:22,279 Speaker 1: stories aside from Amazon, who's doing online retailing? Well, well 604 00:34:23,640 --> 00:34:26,040 Speaker 1: you want to know who's doing it, Well, the brick 605 00:34:26,080 --> 00:34:29,919 Speaker 1: and water stores. If you look at Macy's penetration, they're 606 00:34:30,000 --> 00:34:34,520 Speaker 1: doing business online. That's pretty damn good. Let's take the 607 00:34:34,719 --> 00:34:37,440 Speaker 1: best brick and water store in the world and online, 608 00:34:38,280 --> 00:34:44,120 Speaker 1: the best staples of business online eleven point two billion online. 609 00:34:44,120 --> 00:34:47,320 Speaker 1: How would they do it? They're in the crapper. In 610 00:34:47,440 --> 00:34:50,440 Speaker 1: other words, it didn't help them because they still have 611 00:34:50,600 --> 00:34:53,399 Speaker 1: are this real estate to deal with. So no matter 612 00:34:53,600 --> 00:34:57,319 Speaker 1: how johnline business you have, if you've still got all 613 00:34:57,360 --> 00:34:59,759 Speaker 1: these courts and all this real estate, you're in that 614 00:35:00,080 --> 00:35:03,680 Speaker 1: bank to brick and water Source eight out of the dead. 615 00:35:03,840 --> 00:35:08,200 Speaker 1: Largest online companies in America are brick and Yeah, and 616 00:35:08,320 --> 00:35:10,600 Speaker 1: they'll still in the tank. And they will remain in 617 00:35:10,680 --> 00:35:13,640 Speaker 1: the tank. Our dividivets thank you so much and Carol 618 00:35:13,719 --> 00:35:18,600 Speaker 1: master sends your kindness regards to you as uh well. 619 00:35:27,520 --> 00:35:31,560 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 620 00:35:31,719 --> 00:35:37,080 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 621 00:35:37,160 --> 00:35:40,680 Speaker 1: platform you prefer. I'm on Twitter at Tom Keene David 622 00:35:40,719 --> 00:35:44,880 Speaker 1: Gura Is that David Gura? Before the podcast? You can 623 00:35:44,960 --> 00:35:59,399 Speaker 1: always catch us worldwide. I'm Bloomberg Radio, brought you by 624 00:35:59,680 --> 00:36:03,360 Speaker 1: Bank of America Mary Lynch. Dedicated to bringing our clients 625 00:36:03,480 --> 00:36:07,600 Speaker 1: insights and solutions to meet the challenges of a transforming world. 626 00:36:08,120 --> 00:36:11,840 Speaker 1: That's the power of global connections. Mary Lynch, Pierce, Fenner 627 00:36:11,920 --> 00:36:15,400 Speaker 1: and Smith Incorporated Member s I p C.