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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jai Ley.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. It

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Speaker 1: is Wednesday, so we have trade talks and then we'll

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Speaker 1: we have trade talks tomorrow at a higher level partial

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Speaker 1: true talk. We've had low level trade talks through the week.

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Speaker 1: Why don't you bring in our partial guest, Drew Matis,

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Speaker 1: MetLife Investment Management, Chief Market Strategies. Good morning to Drew.

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Speaker 1: Good morning. We're back to square one, aren't we. It

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Speaker 1: seems to be the United States takes a deal like that,

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Speaker 1: like the one that's been reported in the Financial Times,

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Speaker 1: an extra ten million tons of US soybeans and call

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Speaker 1: it a truce. What would your take be that we

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Speaker 1: just lost? Uh? You know, I think you know. The

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Speaker 1: alca with this trade story is going to be, do

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Speaker 1: we have a long term sustainable solution for the US

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Speaker 1: and for China in terms of our ability to trade

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Speaker 1: with each other, and if we don't end up at

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Speaker 1: a place where we think it's fair trade between both

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Speaker 1: countries in perpetuity. Then this whole thing has been wasted,

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Speaker 1: um and we should have just never done it in

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Speaker 1: the first place. So I think, you know, I can't

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Speaker 1: imagine that this is this is something that's going to

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Speaker 1: play well. And but you know, obviously though, markets are

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Speaker 1: taking it positively, and you know, you kind of look

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Speaker 1: at that and you think to yourself, you know, should

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Speaker 1: you be taking this positively or should you be thinking,

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Speaker 1: as you just said, we're back to square one. Well,

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Speaker 1: they're taking it positively. People want to hear from dramatic

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Speaker 1: is because you have a taking positive view of the economy.

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Speaker 1: Can you model a sub two percent GDP growth? Are

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Speaker 1: you still nicely above two percent at some former run rate?

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Speaker 1: We're still above two percent for this year and for

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Speaker 1: next year. You know where where it gets tricky is

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Speaker 1: you're beginning to see economy wide profit margins begin to

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Speaker 1: dip a little bit. That could eventually lead to firms

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Speaker 1: looking to cut back on things like investment and and

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Speaker 1: and labor um. But we haven't seen the cut off

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Speaker 1: on the labor side yet. Uh And claims. You know,

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Speaker 1: for me, claims is the most important data point around.

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Speaker 1: It's not payrolls. I don't care how many jobs are created.

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Speaker 1: I just need to know whether the consumer has to

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Speaker 1: worry about being fired. And right now the answers no,

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Speaker 1: claims are inching up just a little bit, just a

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Speaker 1: little bit, Drew, Why is that data point so important?

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Speaker 1: And why for you is that not a lagging indicator?

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Speaker 1: For many people, they might look at that situation and say,

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Speaker 1: you know what, if we wait for hours work to

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Speaker 1: drop away for claims to pick up, we're too late

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Speaker 1: to the party. In fact, the party's over well because

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Speaker 1: I think we've gone through such a tight labor market

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Speaker 1: for such a long period of time that I think

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Speaker 1: if you asked CEOs and hiring managers if things slow

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Speaker 1: down or you're gonna pull job openings, are you not

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Speaker 1: going to hire um? They might say, well, we're going

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Speaker 1: to be more cautious in our hiring. None of them, though,

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Speaker 1: are at the point where they feel that things are

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Speaker 1: weak enough where they think they can let someone go

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Speaker 1: because they know someone else is waiting to hire that person.

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Speaker 1: So once that person walks out the door, they are gone.

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Speaker 1: And you've got to start this process of sifting through

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Speaker 1: the labor market. What's left of the labor market or

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Speaker 1: the part of the labor markets looking for work to

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Speaker 1: try and replace that position. So, from a market perspective,

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Speaker 1: where is the opportunity right now? Last week we get

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Speaker 1: punched in the face by a growth scare. The SMP

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Speaker 1: five only drops a third of one percent. This week

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Speaker 1: whip sword by trade headlines, we drop a couple of

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Speaker 1: percentage points. What do you do in this environment right now?

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Speaker 1: What are you suggesting people do to? Uh? You know,

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Speaker 1: we've been looking for ways to take smart risk, UM

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Speaker 1: know what risk you're taking first of all, because they're there.

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Speaker 1: You know, you can take credit risk, you can take

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Speaker 1: duration risk so that you can lengthen your investments. UM,

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Speaker 1: you can take liquidity risk UM and and so if

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Speaker 1: you're worried about what things might do going forward. You know,

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Speaker 1: one of the things that we've been looking at, you know,

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Speaker 1: because of our our you know, what we're able to

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Speaker 1: invest in, is we look a lot at private assets

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Speaker 1: right now. And the reason we do that is because, UM,

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Speaker 1: we're willing to give up some of the liquidity to

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Speaker 1: get the higher yield UM. And of course some of

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Speaker 1: those some of those purchases also come with better protection.

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Speaker 1: So you're taking potentially potentially less credit risk. Uh. And

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Speaker 1: you're getting some liquidity risk, assuming that when you go

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Speaker 1: to sell your public assets that those are actually as

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Speaker 1: liquid as you thought they were in the first place

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Speaker 1: the stock market. Can you go international in emerging markets?

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Speaker 1: Are you all domestic all the time? With the two

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Speaker 1: relative that's like a relative ginormous economy, isn't it. Well,

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Speaker 1: our investment management arm is really focused on fixed in coming.

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Speaker 1: But give me an equity. Uh yeah, I mean you can,

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Speaker 1: You certainly can. And and then the question is, well,

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Speaker 1: you know where do you want to expose yourself too?

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Speaker 1: And I tend to think of the world in as

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Speaker 1: divided into two ways. You have the U S supply

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Speaker 1: chain um, and then you have the China supply chain um.

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Speaker 1: And although the two are linked in many ways there

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Speaker 1: are they are pretty distin to if you kind of

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Speaker 1: dig down into the details. Yes, we all sourced from

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Speaker 1: each other, but those two supply chains, you can usually

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Speaker 1: see who's doing better by what the how those emerging

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Speaker 1: market countries are affairing. I got to go back to

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Speaker 1: your original work of more hears fed, one and done.

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Speaker 1: We are one and done. Uh for this year? Um,

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Speaker 1: we don't expect rate cuts next year. We don't think

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Speaker 1: they're going to be necessary. Um. And we think if

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Speaker 1: you if you go more than one this year, then

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Speaker 1: you're then you're really calling into question this whole idea

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Speaker 1: that this is a mid cycle slowdown or that these

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Speaker 1: are insurance cuts pre a miserable with us. And the

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Speaker 1: reason you need to listen to this is John knows

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Speaker 1: she adds value not only across all that John Frew

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Speaker 1: and time can do, but really adds value on the

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Speaker 1: real yield. You'll see it Friday here one p m.

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Speaker 1: Jean Bloomberg TV. And it really has come down John

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Speaker 1: to the real and the nominal yield, a permanence there.

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Speaker 1: She's fantastic and we're lucky to get some of her

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Speaker 1: time this morning. Pree of these securities, think glob will

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Speaker 1: Head of Right Strategy Pray. Let's start with the debate

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Speaker 1: of the last twenty four hours. It's q A, it's

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Speaker 1: not QA. Chairman Power says it isn't q A. Does

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Speaker 1: it matter whether it is or isn't. Prayer, what's the difference? Yes, So, hello,

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Speaker 1: thanks for having me on, thank you for the kind words.

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Speaker 1: So it does matter because you know, I think, um,

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Speaker 1: what they're actually doing helps repo marketed. It brings reserves

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Speaker 1: into the system. But a lot of the impact of

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Speaker 1: QI was through the signaling channel. If you remember from

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Speaker 1: oh nine to two fourteen, when they did QUEI, they

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Speaker 1: were actually trying to push out the start of the

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Speaker 1: first higher of the first high. I thought that that

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Speaker 1: signal through forward guidance was probably more powerful than the

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Speaker 1: actual stock of buying. So I think what the FED

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Speaker 1: is trying very hard to say is that this is

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Speaker 1: not monetary policy. If they're buying treasuries and they're likely

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Speaker 1: to buy bills, that this is not that we should

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Speaker 1: not be taking any signal from monetary policy. So therefore

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Speaker 1: it should not mean higher stocks. It shouldn't mean lower rates.

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Speaker 1: I think that signal value. It's it's important to distinguish.

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Speaker 1: They really need another name for it. I don't love

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Speaker 1: the organic QUI name. It makes it sound like what

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Speaker 1: was the earlier QUEI, like toxic or you know, conventional queie.

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Speaker 1: So I think we need a name like reserve management

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Speaker 1: buying or liability driven buying. Sort of boring names, but

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Speaker 1: liability liability driven buying just rolls right off the top.

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Speaker 1: The great unspoken yesterday at the International Monetary Fund as

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Speaker 1: a percent of full faith and credit debt worldwide with

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Speaker 1: a negative yield. This morning Greece, where their three month

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Speaker 1: T bill a negative yield, grease is well. Is that

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Speaker 1: a linear function or is there a kink or a

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Speaker 1: tip point where there's too much negative debt? Yeah? So

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Speaker 1: I think BUG and easy B are realizing this. I mean,

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Speaker 1: I think at some point negative rates become counterproductive. I

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Speaker 1: would actually argue in the US, any negative rates is

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Speaker 1: extremely counterproductive. It can potentially break the financial system because

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Speaker 1: we've got you know, money market funds with fixed navs,

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Speaker 1: we've got a fact reserve system. I actually think the

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Speaker 1: US negative won't work. But even in Europe and Japan

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Speaker 1: now they're trying theory, you know, they're trying other things

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Speaker 1: to try and reduce the counterproductiveness. I think essentially, you know,

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Speaker 1: it's hard for a central banker to say this, but

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Speaker 1: they have to say that at some point we're done.

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Speaker 1: We really need the structural side, We need the fiscal

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Speaker 1: side to come on, because at some point you can't

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Speaker 1: keep lowering rates. I don't think, you know, even the

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Speaker 1: other central banks will probably lower much more into negative territory.

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Speaker 1: But for the US I think actually Chapo has already

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Speaker 1: said it's not on his list of things, but certainly

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Speaker 1: among investors, I'm getting a lot of questions that is

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Speaker 1: the US next for negative And you know that just

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Speaker 1: creates more of the stitch field and people take risks

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Speaker 1: that they're not they should not be takeing this confidence

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Speaker 1: issue again, John, Yeah, Look, I think we all think

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Speaker 1: the European fixed income market is totally nuts because it

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Speaker 1: is there any surprise that the three months bill that

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Speaker 1: yield on it in grace is negative when you have

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Speaker 1: a negative fifty basis point policy, right a CP I mean,

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Speaker 1: that's what you've got a price off. Do you think

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Speaker 1: Greece is money good for three months? Most people would

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Speaker 1: assume they probably are for three months. Therefore, why shouldn't

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Speaker 1: you would be down there and there's a currency calculation. Look,

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Speaker 1: you'll get a ton of push back against that call.

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Speaker 1: I have no doubt pre that's where we're at. It's

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Speaker 1: crazy talk in the bond market, and as you points out,

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Speaker 1: given where Europe is priced right now, whether you're to

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Speaker 1: go in the United States. One of the really interesting

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Speaker 1: developments I think of the last couple of weeks was

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Speaker 1: Japan and the b o J really really focusing on

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Speaker 1: the front end and a focus that may drift towards

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Speaker 1: the Federal Reserve. Chairman Powell talked about that yesterday, Prayer,

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Speaker 1: what are your thoughts about it? So, I think again,

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Speaker 1: in the attempt to communicate that this ACCID buying is

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Speaker 1: not jewey, I think they're going to try and focus

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Speaker 1: on the front end. I'm actually not a big fan

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Speaker 1: of that because we've seen massive influence into the front end.

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Speaker 1: So the fan and it all depends on how they're

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Speaker 1: going to do this. I hope it's over time, and

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Speaker 1: I hope they actually had the report market through report

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Speaker 1: operations until they bid that buffer. But they really should

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Speaker 1: not be eating a scarcity in the front end. So

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Speaker 1: I was kind of hoping that they'll buy across the curve.

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Speaker 1: But I think because of the communication challenge they have

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Speaker 1: talked about the front end. I don't think it's an

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Speaker 1: attempt to steepen the curve. I think it's just an

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Speaker 1: attempt to say, look, we're not taking any duration risk

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Speaker 1: out of the market, so don't go and take on,

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Speaker 1: you know, credit risk. Correctly, that's not the intent of

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Speaker 1: this asset buying. Will there be a wave of new

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Speaker 1: government paper and a wave of new issued corporate paper

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Speaker 1: given permanence of low rates. So I think government paper absolutely.

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Speaker 1: I mean I think depending on the election next day,

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Speaker 1: I actually think this customerlus happens either way, it's the

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Speaker 1: respective of the outcome. So I do think the deficit

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Speaker 1: is going to keep rising. You know, corporate is interesting.

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Speaker 1: Financial conditions are extremely easy, you know, credit spreads are tight,

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Speaker 1: and yet COPID supply seems to be declining, which I

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Speaker 1: think reflects the dropping capex. So I actually would love

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Speaker 1: from a macro standpoint if there is a pickup in corporations.

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Speaker 1: But I think if capex is week, then the demand

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Speaker 1: side for corporates to issue all these people, you know,

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Speaker 1: do they have productive um you know avenues to it?

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Speaker 1: No they don't, But that's yeah. I I totally take

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Speaker 1: your point out, An John. I think this is a

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Speaker 1: huge deal. Is there a demand for all this money

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Speaker 1: that's out there to go somewhere? And I'm not sure

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Speaker 1: there is about access to capital across the capital the

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Speaker 1: prayer right, um, you know, and if it's just financial engineering,

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Speaker 1: you know, there's a there's some some limit to that,

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Speaker 1: so I think this is the program if the FED

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Speaker 1: is trying to resolve this uncertainty, you know, business investment,

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Speaker 1: and all they do is cut treats. I'm not sure

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Speaker 1: the seventified base points of insurance cuts say enough, do

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Speaker 1: we do? We need a government investment. This is an

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Speaker 1: enduring theme yesterday with a managing director. You know, you're

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Speaker 1: in Davos and there's a big ad on the side

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Speaker 1: of a bush. Plus you need to have infrastructure and

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Speaker 1: name your central Asian country. Are we at a point

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Speaker 1: here where we've finally got to do infrastructure coast to

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Speaker 1: coast and worldwide. Yes, I think politically that might be

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Speaker 1: harder in certain parts of the world. I think in

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Speaker 1: the US, once we get the election out of the way,

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Speaker 1: I think when policymakers are sort of looking at how

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Speaker 1: do you stimulate, I think infrastructures the way out. It's

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Speaker 1: just going to be up to details. Is it all

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Speaker 1: fully government funded? I think all of that we have

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Speaker 1: to figure out. But I'm kind of hoping that as

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Speaker 1: we get into full on campaign season that both parties

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Speaker 1: will sort of bring up this infrastructure idea as a

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Speaker 1: boost to aggregate demand. That's a bit far off. Thank

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Speaker 1: you so much the security. John, A lot going on

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Speaker 1: right now. I see Brazil. It's it's a piece of

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Speaker 1: data here on an emerging market with some inflation there.

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Speaker 1: But we knew that global growth are really ebbing in

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Speaker 1: here in a lot of talk yesterday, John on food

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Speaker 1: prices in China is a real domestic constraint within their debate.

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Speaker 1: It's out well in access of two standard deviation on

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Speaker 1: pork prices as well with j O. H. C. I'm

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Speaker 1: Funds the head of their credit there. Don't butcher this, okay,

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Speaker 1: then you please go on. You've got to have a

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Speaker 1: gun lyle Cho, did I do? Okay? Charlie to there

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Speaker 1: we go. You set me up for this. You're in

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Speaker 1: on this too, I'm not. Do you know the great

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Speaker 1: Mark Crumpton. Mark Crumpton's in the News Hall of Fame

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Speaker 1: in Washington. He keeps a list in his desk of

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Speaker 1: all the names I miss pronounced. So you're on an

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Speaker 1: August list right now. Trying to bring in our Stinard

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Speaker 1: guests this morning. To Lalie, to Charlie, He's going to

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Speaker 1: get it right at some point, Larlie, I've promised you.

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Speaker 1: It's great to see you, Thank you. Let's talk about

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Speaker 1: this market. Last week it was recession on, recession off.

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Speaker 1: This week's trade deal on, trade deal off. He must

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Speaker 1: be really really frustrated at the moment as someone staring

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Speaker 1: at this market, looking at how it's whip sword by

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Speaker 1: one headlight to the next. What are your thoughts at

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Speaker 1: the moment? You know, I wouldn't say it frustrated. Um,

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Speaker 1: I think I sometimes just put the blinders on. It's

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Speaker 1: the same story that just repeats and repeats and repeats

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Speaker 1: and repeats, and there's no need to do knee jerk reactions.

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Speaker 1: If you sort of scratch the surface in the market,

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Speaker 1: it's the same story. Defensives are expensive, both on the

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Speaker 1: equity and the credit side. Um. And the credit overall

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Speaker 1: just seems really expensive. It's actually one time and you

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Speaker 1: know how opinionated I am, and pretty much everything, I

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Speaker 1: really just lack conviction. I don't know where we're gonna

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Speaker 1: go from here. We haven't broken out of some key

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Speaker 1: ranges in credit and high yield. For instance, for how

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Speaker 1: you've spread really the range of twenty nineteen, the tights

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Speaker 1: in and around through inchin a fifty basis points the

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Speaker 1: wide through much of the year in and around four

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Speaker 1: and fifty basis points. And right now where are we

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Speaker 1: somewhere slap bang in the middle thirty five forties something

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Speaker 1: around that the upper end. But here's the thing though,

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Speaker 1: So this is where the top down in the bottoms

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Speaker 1: of really differs. If you look at it from top down,

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Speaker 1: you will see moth to date, we're about color it,

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Speaker 1: let's say forty BIPs wider. What's really fascinating is you know,

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Speaker 1: if you look at the sector's energy, do you know

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Speaker 1: year to date energy returns are actually negative one percent?

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Speaker 1: High yield is up where people are hiding out, like

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Speaker 1: in defenses. The cable sector is up sixteen and a

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Speaker 1: half percent. So and here's the other stat which I

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Speaker 1: think people forget. Two thirds of the high yield index

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Speaker 1: trades inside the index and the rest third is like

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Speaker 1: cat and cats and dogs. It's really hard to find value.

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Speaker 1: And I think this is where you know, I always

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Speaker 1: do the advertisement for active management. You you need somebody

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Speaker 1: to dig through the rubble to find you the value

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Speaker 1: and where do you go because top down numbers can

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Speaker 1: be misleading? But what kind of signal do you take

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Speaker 1: away from something like triple base, which is the bottom

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Speaker 1: of the stack in investment grade and triple sees bottom

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Speaker 1: of the stack in high yield. That spread thinks the

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Speaker 1: widest in several years. What kind of signal do you

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Speaker 1: take away from that, Lilly, The outperformance that you're getting

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Speaker 1: in and around the border of investment grit in high

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Speaker 1: yield and the underperformance that you're getting right at the bottom. Well, look,

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Speaker 1: the triple cs, majority of them struggle. They're either secular

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Speaker 1: pressures or cyclical pressures. And some of them just as

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Speaker 1: the restructor triple bees. You know, it's it's simple supply

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Speaker 1: and demand. Look at the flows and are coming into credit.

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Speaker 1: You just you just gotta buy. It's phenomenal flow. There's

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Speaker 1: nothing you can do. I want to congratulate you and

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Speaker 1: arguely the essay of the month on accounting it is

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Speaker 1: a fabulous workout of what's called adjusted eb down. Now

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Speaker 1: we're not gonna on a Wednesday. We're not going to

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Speaker 1: do this on a Friday. We go into this in detail,

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Speaker 1: but the bottom line is something down the income statement

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Speaker 1: that has taken as gospel by the street is is suspect.

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Speaker 1: Why should I not be addicted to adjusted? But uh,

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Speaker 1: like I'm addicted to the VIX because it's nonsense. It's

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Speaker 1: made up. It is a calculation of the income statement

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Speaker 1: pulling in depreciation from the balance sheet. Right, that is

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Speaker 1: made up, no question about that. It is. And I

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Speaker 1: think ibida to a degree in certain industries can give

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Speaker 1: you a clue. I'm not against ibada. What I'm against

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Speaker 1: is adjusted ibada, where we start adding back things which

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Speaker 1: internally we call them, you know, managements past, since like

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Speaker 1: you open up more stores that you needed a retail um,

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Speaker 1: those those should not be given the benefit you you

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Speaker 1: messed up. You have we this is critical and I

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Speaker 1: don't want to get you in trouble with your general counsel.

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Speaker 1: But with we work, we company and community adjusted ib

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Speaker 1: are we finally at a point, not that we wander

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Speaker 1: back to the romance of Graham, Dad and Coddle, but

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Speaker 1: we finally at a point where we get away from

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Speaker 1: some of this adjusted foolishness. No, because she answers single

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Speaker 1: word questions. She's very very straight about how she answers questions. Um. No,

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Speaker 1: because I mean I was glad that there was some

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Speaker 1: rationality perhaps was coming back into the market as people

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Speaker 1: actually read through the prospectives. Perhaps in the first time,

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Speaker 1: which which is a good start. Um, But look at

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Speaker 1: you know, I'm looking at some of the high yield

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Speaker 1: deals that really remind me of my leverage loan days

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Speaker 1: back in two thousands six, two thousand six, two thousand seven,

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Speaker 1: where we would start with like negative twenty nine a vibida,

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Speaker 1: we would add back and it'll be two hundred million

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Speaker 1: dollar vibida and that's what the deal is sold. And

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Speaker 1: here is the catch. This is where people forget. That's

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Speaker 1: what runs That's where your covenants run off from. That's

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Speaker 1: what determines how much leverage you put on on business.

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Speaker 1: I want to make covenance is that Raiders have lost

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Speaker 1: ARC in two thousand six. It's what got us into trouble.

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Speaker 1: What do you think the consequences if this will be

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Speaker 1: You've written extensively about it, and now you have I've

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Speaker 1: read about it. But for the benefit of our listeners,

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Speaker 1: like this covenant light era of the last especially the

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Speaker 1: last few years, what do you think the consequence of

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Speaker 1: that will be? Well, it's gonna be a prolonged default cycle.

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Speaker 1: It's going to be substantial lover recoveries. And I think

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Speaker 1: you know, I joke and I said, the world is

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Speaker 1: upside down, and you're actually seeing it more in the

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Speaker 1: leverage lawan market now, where people are supposed to be

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Speaker 1: secure and feeling good about it. It is estimated that

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Speaker 1: the leverage lawan recovery this cycle is going to be

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Speaker 1: around fifty five cents as opposed to seventy five historically,

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Speaker 1: and technically you're secured. I think people forget again. This

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Speaker 1: is just the top down investing and running with our

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Speaker 1: historical knowledge. The world is really upside down. Like you

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Speaker 1: don't just talk the talk, you walk the walk. To

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Speaker 1: a should congratulate you on the year so far, your

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Speaker 1: j O h C M income funders up. I believe

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Speaker 1: you at about through so far. So let's talk about

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Speaker 1: security selection. What are you doing at the moment? What

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Speaker 1: are you focused on? Well, simplistically, trying to avoid the

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Speaker 1: losers and and just focus on the winners, which is

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Speaker 1: really hard to do. On credit. I mean, I don't

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Speaker 1: think we've actually bought a single bond in the last

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Speaker 1: three months. Really, there's nothing because of issuance. It's just

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Speaker 1: a frenzy now where you just have to step aside.

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Speaker 1: It's it's just the pricing does not price for what

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Speaker 1: I would consider to be the risk premium. You don't

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Speaker 1: get compensated for taking on what I would consider to

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Speaker 1: be a less liquid piece of paper. That's just a

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Speaker 1: nature of the high yield market. And I think the

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Speaker 1: covenants are poor and the leverage is misrepresented. Christ can't

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Speaker 1: shup with you. Gotta let you go. We wish we

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Speaker 1: had more time with Lano. We should have we account

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Speaker 1: to do that tell Childhood J H. C. M. Johnny

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Speaker 1: gets right here on bloom Black Surveillance. I want to

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Speaker 1: stay in geopolitics right now because the news is literally breaking.

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Speaker 1: I'll read you the Chinese press release here. Just it's

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Speaker 1: one of them with a couple of paragraphs to it.

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Speaker 1: We bring in a link mark with us for the

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Speaker 1: Brookings Institute. She has written wonderful books on the presidential history,

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Speaker 1: presidential messaging, presidential structure and governance. And Elaine. I need

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Speaker 1: to rip up the script and go right to Turkey.

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Speaker 1: This is the Chinese treatment from Genoa of Mr Aritawan

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Speaker 1: announcing on Wednesday the Turkey launched operations Spring of Peace

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Speaker 1: in the Northern Syria quote together with a Syrian National

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Speaker 1: Army are Turkish armed forces launched the operations spring of

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Speaker 1: peace towards a p P, kk YPG and DAISH, the

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Speaker 1: Islamic state terrorist organizations, and and this goes folks. This

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Speaker 1: is seven eight hours away from US four thirty in

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Speaker 1: the afternoon, Elaine. This takes in all history and apparatus

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Speaker 1: of the United States of America to treat to divide

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Speaker 1: intelligence to consider a set of responses. Is that apparatus

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Speaker 1: remotely in place? Right now, the apparatus is fully in place.

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Speaker 1: The commander in chief, however, operates without consultation of the

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Speaker 1: people on the ground. The military is curious at this.

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Speaker 1: The general who was in charge of this until he

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Speaker 1: retired in March has written in Defense One and It's

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Speaker 1: an online military blog about how appalled he is at

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Speaker 1: Trump's action. By pulling out American forces from the Kurdish

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Speaker 1: um occupied territory, President Trump has put at risk ten

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Speaker 1: thousand Isis fighters who have been guarded by the Kurds.

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Speaker 1: So if chaos erupts and the Kurdish guards are fighting

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Speaker 1: the Turk as they appear to be doing at any moment,

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Speaker 1: then ten thousand Isis fighters, most to whom are more

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Speaker 1: than happy to build map is going the flight against

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Speaker 1: the United States will be roaming around actually rearming, and

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Speaker 1: want to try to paint the map here of quickly,

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Speaker 1: Paul Sweeney, UH, and and that we know where Syria

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Speaker 1: is on the eastern Mediterranean, call it north and northeast

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Speaker 1: of Israel. And then you go up to that border

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Speaker 1: with Turkey four or five miles long. You're eight hundred

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Speaker 1: miles away from Istanbul. You're four hundred miles UH northeast northeast,

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Speaker 1: I should say, from Damascus. In all the maps show

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Speaker 1: a presumed safe zone or border. Paul, I don't know

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Speaker 1: how many miles that is. Is it a gaza strip

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Speaker 1: with I don't know, but it seems the messaging is

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Speaker 1: a safe zone exactly. So, Elena, I think a lot

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Speaker 1: of people are trying to, you know, get their hands

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Speaker 1: around the news over the last couple of days of

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Speaker 1: President Trump's UH policy shift as it relates to the Kurds.

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Speaker 1: What do you think are the short term and long

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Speaker 1: term implications of what the president just didn't well? This

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Speaker 1: short term implications are clearly that the Republican senators whom

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Speaker 1: he needs to defend him against impeachment are now criticizing him,

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Speaker 1: including two of the most powerful and strongest Allies. Majority

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Speaker 1: Leader Mitch McConnell and Senator Lindsey Graham are appalled at

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Speaker 1: this action, and I don't know if they can take

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Speaker 1: any action to stop it or reverse it, but it

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Speaker 1: may be too lated. So in the short term, this

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Speaker 1: seems to be very tone deaf politics. In the long term,

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Speaker 1: it clearly means that no one's going to trust the

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Speaker 1: United States of America in international affairs. No one has

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Speaker 1: been a better ally to us in that region than

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Speaker 1: the Curred and the Curds are also very good fighters,

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Speaker 1: and they have fought with us and died with us.

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Speaker 1: You can find a clip of Trump even commending the

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Speaker 1: Curds for fighting with us in the fight against ISIS,

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Speaker 1: and now he has advandoned them to SMA. Just for

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Speaker 1: the second discussion, I'm going to take the tact of

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Speaker 1: the president tweeting. I'm not going to go over the

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Speaker 1: tweets this morning. There's there's over a dozen of them.

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Speaker 1: But bottom line, he says, the emotion of America is

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Speaker 1: why are we in those distant wars? I mean it

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Speaker 1: sounds like Jefferson and the you know, the Barbary pirates

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Speaker 1: of another time. Tell me, Elaine, the history which you

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Speaker 1: are expert on of our emotion of our men and

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Speaker 1: women in distant wars. Um. We have had men and

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Speaker 1: women in distant wars since the end of the Second

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Speaker 1: World War when we became a world our and we

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Speaker 1: have intervened in very many places where we shouldn't have been.

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Speaker 1: And then we have intervened in places where it made

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Speaker 1: sense for our national security when you had an enemy

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Speaker 1: like ISIS that was chopping off people's heads and taking

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Speaker 1: kidnapping victims, been causing um havocs throughout the region. Um. Yeah,

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Speaker 1: it made sense for the United States to come to

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Speaker 1: the aid of people who are trying to defeat ISIS. Um.

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Speaker 1: Does this mean that every intervention has been correct, No,

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Speaker 1: of course not. But sometimes the United States does the

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Speaker 1: right thing in the world, and in this instance we did.

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Speaker 1: And therefore a blanket foreign policy of withdrawing from the

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Speaker 1: world is apt to cause more harm than good. So Lane,

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Speaker 1: you mentioned you know the impact on the Republicans. How

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Speaker 1: do you think this is going to go to impeachment?

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Speaker 1: And that's kind of where the president has been tweeting

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Speaker 1: very aggressively. That's certainly top of mind. Not surprisingly, how

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Speaker 1: do you think the impeachment thing is just going to

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Speaker 1: play out. UM. I think what's going to happen is

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Speaker 1: that we will see the House right articles of impeachment.

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Speaker 1: And one of the first decisions they have to make

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Speaker 1: are they will have to make, is what do they

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Speaker 1: write articles on. For instance, it's clear that they can

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Speaker 1: write an abuse of power article based on the conversation

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Speaker 1: with the Ukrainian president. It's clear that they can write

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Speaker 1: an obstruction of justice UH articles based on actions during

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Speaker 1: the Russian investigation, and based on yesterday's decision not to

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Speaker 1: um not to respond to any of the House's inquiries

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Speaker 1: for and request for information. So the question is what else?

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Speaker 1: And I think that one of the things that is

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Speaker 1: throwing a sort of wrench into this is is this

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Speaker 1: action he took with regard to the Kurds, is this

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Speaker 1: in fact something that should be included in an article

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Speaker 1: as impeachment because it is in fact dangerous to US

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Speaker 1: national security. And I think that they're gonna have to

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Speaker 1: They're gonna have to a noodle that one. And I

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Speaker 1: don't have a sense of that. This has been a

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Speaker 1: great for Thank you so much. A linkome our with

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Speaker 1: us with breaking news and you're on Turkey a lot

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00:28:04,359 --> 00:28:07,159
Speaker 1: of other news as well to look at. Thanks for

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Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to

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00:28:11,800 --> 00:28:17,560
Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

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Speaker 1: I'm on Twitter at Tom Keene before the podcast. You

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Speaker 1: can always catch us worldwide. I'm Bloomberg Radio