Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jai Ley.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. It
Speaker 1: is Wednesday, so we have trade talks and then we'll
Speaker 1: we have trade talks tomorrow at a higher level partial
Speaker 1: true talk. We've had low level trade talks through the week.
Speaker 1: Why don't you bring in our partial guest, Drew Matis,
Speaker 1: MetLife Investment Management, Chief Market Strategies. Good morning to Drew.
Speaker 1: Good morning. We're back to square one, aren't we. It
Speaker 1: seems to be the United States takes a deal like that,
Speaker 1: like the one that's been reported in the Financial Times,
Speaker 1: an extra ten million tons of US soybeans and call
Speaker 1: it a truce. What would your take be that we
Speaker 1: just lost? Uh? You know, I think you know. The
Speaker 1: alca with this trade story is going to be, do
Speaker 1: we have a long term sustainable solution for the US
Speaker 1: and for China in terms of our ability to trade
Speaker 1: with each other, and if we don't end up at
Speaker 1: a place where we think it's fair trade between both
Speaker 1: countries in perpetuity. Then this whole thing has been wasted,
Speaker 1: um and we should have just never done it in
Speaker 1: the first place. So I think, you know, I can't
Speaker 1: imagine that this is this is something that's going to
Speaker 1: play well. And but you know, obviously though, markets are
Speaker 1: taking it positively, and you know, you kind of look
Speaker 1: at that and you think to yourself, you know, should
Speaker 1: you be taking this positively or should you be thinking,
Speaker 1: as you just said, we're back to square one. Well,
Speaker 1: they're taking it positively. People want to hear from dramatic
Speaker 1: is because you have a taking positive view of the economy.
Speaker 1: Can you model a sub two percent GDP growth? Are
Speaker 1: you still nicely above two percent at some former run rate?
Speaker 1: We're still above two percent for this year and for
Speaker 1: next year. You know where where it gets tricky is
Speaker 1: you're beginning to see economy wide profit margins begin to
Speaker 1: dip a little bit. That could eventually lead to firms
Speaker 1: looking to cut back on things like investment and and
Speaker 1: and labor um. But we haven't seen the cut off
Speaker 1: on the labor side yet. Uh And claims. You know,
Speaker 1: for me, claims is the most important data point around.
Speaker 1: It's not payrolls. I don't care how many jobs are created.
Speaker 1: I just need to know whether the consumer has to
Speaker 1: worry about being fired. And right now the answers no,
Speaker 1: claims are inching up just a little bit, just a
Speaker 1: little bit, Drew, Why is that data point so important?
Speaker 1: And why for you is that not a lagging indicator?
Speaker 1: For many people, they might look at that situation and say,
Speaker 1: you know what, if we wait for hours work to
Speaker 1: drop away for claims to pick up, we're too late
Speaker 1: to the party. In fact, the party's over well because
Speaker 1: I think we've gone through such a tight labor market
Speaker 1: for such a long period of time that I think
Speaker 1: if you asked CEOs and hiring managers if things slow
Speaker 1: down or you're gonna pull job openings, are you not
Speaker 1: going to hire um? They might say, well, we're going
Speaker 1: to be more cautious in our hiring. None of them, though,
Speaker 1: are at the point where they feel that things are
Speaker 1: weak enough where they think they can let someone go
Speaker 1: because they know someone else is waiting to hire that person.
Speaker 1: So once that person walks out the door, they are gone.
Speaker 1: And you've got to start this process of sifting through
Speaker 1: the labor market. What's left of the labor market or
Speaker 1: the part of the labor markets looking for work to
Speaker 1: try and replace that position. So, from a market perspective,
Speaker 1: where is the opportunity right now? Last week we get
Speaker 1: punched in the face by a growth scare. The SMP
Speaker 1: five only drops a third of one percent. This week
Speaker 1: whip sword by trade headlines, we drop a couple of
Speaker 1: percentage points. What do you do in this environment right now?
Speaker 1: What are you suggesting people do to? Uh? You know,
Speaker 1: we've been looking for ways to take smart risk, UM
Speaker 1: know what risk you're taking first of all, because they're there.
Speaker 1: You know, you can take credit risk, you can take
Speaker 1: duration risk so that you can lengthen your investments. UM,
Speaker 1: you can take liquidity risk UM and and so if
Speaker 1: you're worried about what things might do going forward. You know,
Speaker 1: one of the things that we've been looking at, you know,
Speaker 1: because of our our you know, what we're able to
Speaker 1: invest in, is we look a lot at private assets
Speaker 1: right now. And the reason we do that is because, UM,
Speaker 1: we're willing to give up some of the liquidity to
Speaker 1: get the higher yield UM. And of course some of
Speaker 1: those some of those purchases also come with better protection.
Speaker 1: So you're taking potentially potentially less credit risk. Uh. And
Speaker 1: you're getting some liquidity risk, assuming that when you go
Speaker 1: to sell your public assets that those are actually as
Speaker 1: liquid as you thought they were in the first place
Speaker 1: the stock market. Can you go international in emerging markets?
Speaker 1: Are you all domestic all the time? With the two
Speaker 1: relative that's like a relative ginormous economy, isn't it. Well,
Speaker 1: our investment management arm is really focused on fixed in coming.
Speaker 1: But give me an equity. Uh yeah, I mean you can,
Speaker 1: You certainly can. And and then the question is, well,
Speaker 1: you know where do you want to expose yourself too?
Speaker 1: And I tend to think of the world in as
Speaker 1: divided into two ways. You have the U S supply
Speaker 1: chain um, and then you have the China supply chain um.
Speaker 1: And although the two are linked in many ways there
Speaker 1: are they are pretty distin to if you kind of
Speaker 1: dig down into the details. Yes, we all sourced from
Speaker 1: each other, but those two supply chains, you can usually
Speaker 1: see who's doing better by what the how those emerging
Speaker 1: market countries are affairing. I got to go back to
Speaker 1: your original work of more hears fed, one and done.
Speaker 1: We are one and done. Uh for this year? Um,
Speaker 1: we don't expect rate cuts next year. We don't think
Speaker 1: they're going to be necessary. Um. And we think if
Speaker 1: you if you go more than one this year, then
Speaker 1: you're then you're really calling into question this whole idea
Speaker 1: that this is a mid cycle slowdown or that these
Speaker 1: are insurance cuts pre a miserable with us. And the
Speaker 1: reason you need to listen to this is John knows
Speaker 1: she adds value not only across all that John Frew
Speaker 1: and time can do, but really adds value on the
Speaker 1: real yield. You'll see it Friday here one p m.
Speaker 1: Jean Bloomberg TV. And it really has come down John
Speaker 1: to the real and the nominal yield, a permanence there.
Speaker 1: She's fantastic and we're lucky to get some of her
Speaker 1: time this morning. Pree of these securities, think glob will
Speaker 1: Head of Right Strategy Pray. Let's start with the debate
Speaker 1: of the last twenty four hours. It's q A, it's
Speaker 1: not QA. Chairman Power says it isn't q A. Does
Speaker 1: it matter whether it is or isn't. Prayer, what's the difference? Yes, So, hello,
Speaker 1: thanks for having me on, thank you for the kind words.
Speaker 1: So it does matter because you know, I think, um,
Speaker 1: what they're actually doing helps repo marketed. It brings reserves
Speaker 1: into the system. But a lot of the impact of
Speaker 1: QI was through the signaling channel. If you remember from
Speaker 1: oh nine to two fourteen, when they did QUEI, they
Speaker 1: were actually trying to push out the start of the
Speaker 1: first higher of the first high. I thought that that
Speaker 1: signal through forward guidance was probably more powerful than the
Speaker 1: actual stock of buying. So I think what the FED
Speaker 1: is trying very hard to say is that this is
Speaker 1: not monetary policy. If they're buying treasuries and they're likely
Speaker 1: to buy bills, that this is not that we should
Speaker 1: not be taking any signal from monetary policy. So therefore
Speaker 1: it should not mean higher stocks. It shouldn't mean lower rates.
Speaker 1: I think that signal value. It's it's important to distinguish.
Speaker 1: They really need another name for it. I don't love
Speaker 1: the organic QUI name. It makes it sound like what
Speaker 1: was the earlier QUEI, like toxic or you know, conventional queie.
Speaker 1: So I think we need a name like reserve management
Speaker 1: buying or liability driven buying. Sort of boring names, but
Speaker 1: liability liability driven buying just rolls right off the top.
Speaker 1: The great unspoken yesterday at the International Monetary Fund as
Speaker 1: a percent of full faith and credit debt worldwide with
Speaker 1: a negative yield. This morning Greece, where their three month
Speaker 1: T bill a negative yield, grease is well. Is that
Speaker 1: a linear function or is there a kink or a
Speaker 1: tip point where there's too much negative debt? Yeah? So
Speaker 1: I think BUG and easy B are realizing this. I mean,
Speaker 1: I think at some point negative rates become counterproductive. I
Speaker 1: would actually argue in the US, any negative rates is
Speaker 1: extremely counterproductive. It can potentially break the financial system because
Speaker 1: we've got you know, money market funds with fixed navs,
Speaker 1: we've got a fact reserve system. I actually think the
Speaker 1: US negative won't work. But even in Europe and Japan
Speaker 1: now they're trying theory, you know, they're trying other things
Speaker 1: to try and reduce the counterproductiveness. I think essentially, you know,
Speaker 1: it's hard for a central banker to say this, but
Speaker 1: they have to say that at some point we're done.
Speaker 1: We really need the structural side, We need the fiscal
Speaker 1: side to come on, because at some point you can't
Speaker 1: keep lowering rates. I don't think, you know, even the
Speaker 1: other central banks will probably lower much more into negative territory.
Speaker 1: But for the US I think actually Chapo has already
Speaker 1: said it's not on his list of things, but certainly
Speaker 1: among investors, I'm getting a lot of questions that is
Speaker 1: the US next for negative And you know that just
Speaker 1: creates more of the stitch field and people take risks
Speaker 1: that they're not they should not be takeing this confidence
Speaker 1: issue again, John, Yeah, Look, I think we all think
Speaker 1: the European fixed income market is totally nuts because it
Speaker 1: is there any surprise that the three months bill that
Speaker 1: yield on it in grace is negative when you have
Speaker 1: a negative fifty basis point policy, right a CP I mean,
Speaker 1: that's what you've got a price off. Do you think
Speaker 1: Greece is money good for three months? Most people would
Speaker 1: assume they probably are for three months. Therefore, why shouldn't
Speaker 1: you would be down there and there's a currency calculation. Look,
Speaker 1: you'll get a ton of push back against that call.
Speaker 1: I have no doubt pre that's where we're at. It's
Speaker 1: crazy talk in the bond market, and as you points out,
Speaker 1: given where Europe is priced right now, whether you're to
Speaker 1: go in the United States. One of the really interesting
Speaker 1: developments I think of the last couple of weeks was
Speaker 1: Japan and the b o J really really focusing on
Speaker 1: the front end and a focus that may drift towards
Speaker 1: the Federal Reserve. Chairman Powell talked about that yesterday, Prayer,
Speaker 1: what are your thoughts about it? So, I think again,
Speaker 1: in the attempt to communicate that this ACCID buying is
Speaker 1: not jewey, I think they're going to try and focus
Speaker 1: on the front end. I'm actually not a big fan
Speaker 1: of that because we've seen massive influence into the front end.
Speaker 1: So the fan and it all depends on how they're
Speaker 1: going to do this. I hope it's over time, and
Speaker 1: I hope they actually had the report market through report
Speaker 1: operations until they bid that buffer. But they really should
Speaker 1: not be eating a scarcity in the front end. So
Speaker 1: I was kind of hoping that they'll buy across the curve.
Speaker 1: But I think because of the communication challenge they have
Speaker 1: talked about the front end. I don't think it's an
Speaker 1: attempt to steepen the curve. I think it's just an
Speaker 1: attempt to say, look, we're not taking any duration risk
Speaker 1: out of the market, so don't go and take on,
Speaker 1: you know, credit risk. Correctly, that's not the intent of
Speaker 1: this asset buying. Will there be a wave of new
Speaker 1: government paper and a wave of new issued corporate paper
Speaker 1: given permanence of low rates. So I think government paper absolutely.
Speaker 1: I mean I think depending on the election next day,
Speaker 1: I actually think this customerlus happens either way, it's the
Speaker 1: respective of the outcome. So I do think the deficit
Speaker 1: is going to keep rising. You know, corporate is interesting.
Speaker 1: Financial conditions are extremely easy, you know, credit spreads are tight,
Speaker 1: and yet COPID supply seems to be declining, which I
Speaker 1: think reflects the dropping capex. So I actually would love
Speaker 1: from a macro standpoint if there is a pickup in corporations.
Speaker 1: But I think if capex is week, then the demand
Speaker 1: side for corporates to issue all these people, you know,
Speaker 1: do they have productive um you know avenues to it?
Speaker 1: No they don't, But that's yeah. I I totally take
Speaker 1: your point out, An John. I think this is a
Speaker 1: huge deal. Is there a demand for all this money
Speaker 1: that's out there to go somewhere? And I'm not sure
Speaker 1: there is about access to capital across the capital the
Speaker 1: prayer right, um, you know, and if it's just financial engineering,
Speaker 1: you know, there's a there's some some limit to that,
Speaker 1: so I think this is the program if the FED
Speaker 1: is trying to resolve this uncertainty, you know, business investment,
Speaker 1: and all they do is cut treats. I'm not sure
Speaker 1: the seventified base points of insurance cuts say enough, do
Speaker 1: we do? We need a government investment. This is an
Speaker 1: enduring theme yesterday with a managing director. You know, you're
Speaker 1: in Davos and there's a big ad on the side
Speaker 1: of a bush. Plus you need to have infrastructure and
Speaker 1: name your central Asian country. Are we at a point
Speaker 1: here where we've finally got to do infrastructure coast to
Speaker 1: coast and worldwide. Yes, I think politically that might be
Speaker 1: harder in certain parts of the world. I think in
Speaker 1: the US, once we get the election out of the way,
Speaker 1: I think when policymakers are sort of looking at how
Speaker 1: do you stimulate, I think infrastructures the way out. It's
Speaker 1: just going to be up to details. Is it all
Speaker 1: fully government funded? I think all of that we have
Speaker 1: to figure out. But I'm kind of hoping that as
Speaker 1: we get into full on campaign season that both parties
Speaker 1: will sort of bring up this infrastructure idea as a
Speaker 1: boost to aggregate demand. That's a bit far off. Thank
Speaker 1: you so much the security. John, A lot going on
Speaker 1: right now. I see Brazil. It's it's a piece of
Speaker 1: data here on an emerging market with some inflation there.
Speaker 1: But we knew that global growth are really ebbing in
Speaker 1: here in a lot of talk yesterday, John on food
Speaker 1: prices in China is a real domestic constraint within their debate.
Speaker 1: It's out well in access of two standard deviation on
Speaker 1: pork prices as well with j O. H. C. I'm
Speaker 1: Funds the head of their credit there. Don't butcher this, okay,
Speaker 1: then you please go on. You've got to have a
Speaker 1: gun lyle Cho, did I do? Okay? Charlie to there
Speaker 1: we go. You set me up for this. You're in
Speaker 1: on this too, I'm not. Do you know the great
Speaker 1: Mark Crumpton. Mark Crumpton's in the News Hall of Fame
Speaker 1: in Washington. He keeps a list in his desk of
Speaker 1: all the names I miss pronounced. So you're on an
Speaker 1: August list right now. Trying to bring in our Stinard
Speaker 1: guests this morning. To Lalie, to Charlie, He's going to
Speaker 1: get it right at some point, Larlie, I've promised you.
Speaker 1: It's great to see you, Thank you. Let's talk about
Speaker 1: this market. Last week it was recession on, recession off.
Speaker 1: This week's trade deal on, trade deal off. He must
Speaker 1: be really really frustrated at the moment as someone staring
Speaker 1: at this market, looking at how it's whip sword by
Speaker 1: one headlight to the next. What are your thoughts at
Speaker 1: the moment? You know, I wouldn't say it frustrated. Um,
Speaker 1: I think I sometimes just put the blinders on. It's
Speaker 1: the same story that just repeats and repeats and repeats
Speaker 1: and repeats, and there's no need to do knee jerk reactions.
Speaker 1: If you sort of scratch the surface in the market,
Speaker 1: it's the same story. Defensives are expensive, both on the
Speaker 1: equity and the credit side. Um. And the credit overall
Speaker 1: just seems really expensive. It's actually one time and you
Speaker 1: know how opinionated I am, and pretty much everything, I
Speaker 1: really just lack conviction. I don't know where we're gonna
Speaker 1: go from here. We haven't broken out of some key
Speaker 1: ranges in credit and high yield. For instance, for how
Speaker 1: you've spread really the range of twenty nineteen, the tights
Speaker 1: in and around through inchin a fifty basis points the
Speaker 1: wide through much of the year in and around four
Speaker 1: and fifty basis points. And right now where are we
Speaker 1: somewhere slap bang in the middle thirty five forties something
Speaker 1: around that the upper end. But here's the thing though,
Speaker 1: So this is where the top down in the bottoms
Speaker 1: of really differs. If you look at it from top down,
Speaker 1: you will see moth to date, we're about color it,
Speaker 1: let's say forty BIPs wider. What's really fascinating is you know,
Speaker 1: if you look at the sector's energy, do you know
Speaker 1: year to date energy returns are actually negative one percent?
Speaker 1: High yield is up where people are hiding out, like
Speaker 1: in defenses. The cable sector is up sixteen and a
Speaker 1: half percent. So and here's the other stat which I
Speaker 1: think people forget. Two thirds of the high yield index
Speaker 1: trades inside the index and the rest third is like
Speaker 1: cat and cats and dogs. It's really hard to find value.
Speaker 1: And I think this is where you know, I always
Speaker 1: do the advertisement for active management. You you need somebody
Speaker 1: to dig through the rubble to find you the value
Speaker 1: and where do you go because top down numbers can
Speaker 1: be misleading? But what kind of signal do you take
Speaker 1: away from something like triple base, which is the bottom
Speaker 1: of the stack in investment grade and triple sees bottom
Speaker 1: of the stack in high yield. That spread thinks the
Speaker 1: widest in several years. What kind of signal do you
Speaker 1: take away from that, Lilly, The outperformance that you're getting
Speaker 1: in and around the border of investment grit in high
Speaker 1: yield and the underperformance that you're getting right at the bottom. Well, look,
Speaker 1: the triple cs, majority of them struggle. They're either secular
Speaker 1: pressures or cyclical pressures. And some of them just as
Speaker 1: the restructor triple bees. You know, it's it's simple supply
Speaker 1: and demand. Look at the flows and are coming into credit.
Speaker 1: You just you just gotta buy. It's phenomenal flow. There's
Speaker 1: nothing you can do. I want to congratulate you and
Speaker 1: arguely the essay of the month on accounting it is
Speaker 1: a fabulous workout of what's called adjusted eb down. Now
Speaker 1: we're not gonna on a Wednesday. We're not going to
Speaker 1: do this on a Friday. We go into this in detail,
Speaker 1: but the bottom line is something down the income statement
Speaker 1: that has taken as gospel by the street is is suspect.
Speaker 1: Why should I not be addicted to adjusted? But uh,
Speaker 1: like I'm addicted to the VIX because it's nonsense. It's
Speaker 1: made up. It is a calculation of the income statement
Speaker 1: pulling in depreciation from the balance sheet. Right, that is
Speaker 1: made up, no question about that. It is. And I
Speaker 1: think ibida to a degree in certain industries can give
Speaker 1: you a clue. I'm not against ibada. What I'm against
Speaker 1: is adjusted ibada, where we start adding back things which
Speaker 1: internally we call them, you know, managements past, since like
Speaker 1: you open up more stores that you needed a retail um,
Speaker 1: those those should not be given the benefit you you
Speaker 1: messed up. You have we this is critical and I
Speaker 1: don't want to get you in trouble with your general counsel.
Speaker 1: But with we work, we company and community adjusted ib
Speaker 1: are we finally at a point, not that we wander
Speaker 1: back to the romance of Graham, Dad and Coddle, but
Speaker 1: we finally at a point where we get away from
Speaker 1: some of this adjusted foolishness. No, because she answers single
Speaker 1: word questions. She's very very straight about how she answers questions. Um. No,
Speaker 1: because I mean I was glad that there was some
Speaker 1: rationality perhaps was coming back into the market as people
Speaker 1: actually read through the prospectives. Perhaps in the first time,
Speaker 1: which which is a good start. Um, But look at
Speaker 1: you know, I'm looking at some of the high yield
Speaker 1: deals that really remind me of my leverage loan days
Speaker 1: back in two thousands six, two thousand six, two thousand seven,
Speaker 1: where we would start with like negative twenty nine a vibida,
Speaker 1: we would add back and it'll be two hundred million
Speaker 1: dollar vibida and that's what the deal is sold. And
Speaker 1: here is the catch. This is where people forget. That's
Speaker 1: what runs That's where your covenants run off from. That's
Speaker 1: what determines how much leverage you put on on business.
Speaker 1: I want to make covenance is that Raiders have lost
Speaker 1: ARC in two thousand six. It's what got us into trouble.
Speaker 1: What do you think the consequences if this will be
Speaker 1: You've written extensively about it, and now you have I've
Speaker 1: read about it. But for the benefit of our listeners,
Speaker 1: like this covenant light era of the last especially the
Speaker 1: last few years, what do you think the consequence of
Speaker 1: that will be? Well, it's gonna be a prolonged default cycle.
Speaker 1: It's going to be substantial lover recoveries. And I think
Speaker 1: you know, I joke and I said, the world is
Speaker 1: upside down, and you're actually seeing it more in the
Speaker 1: leverage lawan market now, where people are supposed to be
Speaker 1: secure and feeling good about it. It is estimated that
Speaker 1: the leverage lawan recovery this cycle is going to be
Speaker 1: around fifty five cents as opposed to seventy five historically,
Speaker 1: and technically you're secured. I think people forget again. This
Speaker 1: is just the top down investing and running with our
Speaker 1: historical knowledge. The world is really upside down. Like you
Speaker 1: don't just talk the talk, you walk the walk. To
Speaker 1: a should congratulate you on the year so far, your
Speaker 1: j O h C M income funders up. I believe
Speaker 1: you at about through so far. So let's talk about
Speaker 1: security selection. What are you doing at the moment? What
Speaker 1: are you focused on? Well, simplistically, trying to avoid the
Speaker 1: losers and and just focus on the winners, which is
Speaker 1: really hard to do. On credit. I mean, I don't
Speaker 1: think we've actually bought a single bond in the last
Speaker 1: three months. Really, there's nothing because of issuance. It's just
Speaker 1: a frenzy now where you just have to step aside.
Speaker 1: It's it's just the pricing does not price for what
Speaker 1: I would consider to be the risk premium. You don't
Speaker 1: get compensated for taking on what I would consider to
Speaker 1: be a less liquid piece of paper. That's just a
Speaker 1: nature of the high yield market. And I think the
Speaker 1: covenants are poor and the leverage is misrepresented. Christ can't
Speaker 1: shup with you. Gotta let you go. We wish we
Speaker 1: had more time with Lano. We should have we account
Speaker 1: to do that tell Childhood J H. C. M. Johnny
Speaker 1: gets right here on bloom Black Surveillance. I want to
Speaker 1: stay in geopolitics right now because the news is literally breaking.
Speaker 1: I'll read you the Chinese press release here. Just it's
Speaker 1: one of them with a couple of paragraphs to it.
Speaker 1: We bring in a link mark with us for the
Speaker 1: Brookings Institute. She has written wonderful books on the presidential history,
Speaker 1: presidential messaging, presidential structure and governance. And Elaine. I need
Speaker 1: to rip up the script and go right to Turkey.
Speaker 1: This is the Chinese treatment from Genoa of Mr Aritawan
Speaker 1: announcing on Wednesday the Turkey launched operations Spring of Peace
Speaker 1: in the Northern Syria quote together with a Syrian National
Speaker 1: Army are Turkish armed forces launched the operations spring of
Speaker 1: peace towards a p P, kk YPG and DAISH, the
Speaker 1: Islamic state terrorist organizations, and and this goes folks. This
Speaker 1: is seven eight hours away from US four thirty in
Speaker 1: the afternoon, Elaine. This takes in all history and apparatus
Speaker 1: of the United States of America to treat to divide
Speaker 1: intelligence to consider a set of responses. Is that apparatus
Speaker 1: remotely in place? Right now, the apparatus is fully in place.
Speaker 1: The commander in chief, however, operates without consultation of the
Speaker 1: people on the ground. The military is curious at this.
Speaker 1: The general who was in charge of this until he
Speaker 1: retired in March has written in Defense One and It's
Speaker 1: an online military blog about how appalled he is at
Speaker 1: Trump's action. By pulling out American forces from the Kurdish
Speaker 1: um occupied territory, President Trump has put at risk ten
Speaker 1: thousand Isis fighters who have been guarded by the Kurds.
Speaker 1: So if chaos erupts and the Kurdish guards are fighting
Speaker 1: the Turk as they appear to be doing at any moment,
Speaker 1: then ten thousand Isis fighters, most to whom are more
Speaker 1: than happy to build map is going the flight against
Speaker 1: the United States will be roaming around actually rearming, and
Speaker 1: want to try to paint the map here of quickly,
Speaker 1: Paul Sweeney, UH, and and that we know where Syria
Speaker 1: is on the eastern Mediterranean, call it north and northeast
Speaker 1: of Israel. And then you go up to that border
Speaker 1: with Turkey four or five miles long. You're eight hundred
Speaker 1: miles away from Istanbul. You're four hundred miles UH northeast northeast,
Speaker 1: I should say, from Damascus. In all the maps show
Speaker 1: a presumed safe zone or border. Paul, I don't know
Speaker 1: how many miles that is. Is it a gaza strip
Speaker 1: with I don't know, but it seems the messaging is
Speaker 1: a safe zone exactly. So, Elena, I think a lot
Speaker 1: of people are trying to, you know, get their hands
Speaker 1: around the news over the last couple of days of
Speaker 1: President Trump's UH policy shift as it relates to the Kurds.
Speaker 1: What do you think are the short term and long
Speaker 1: term implications of what the president just didn't well? This
Speaker 1: short term implications are clearly that the Republican senators whom
Speaker 1: he needs to defend him against impeachment are now criticizing him,
Speaker 1: including two of the most powerful and strongest Allies. Majority
Speaker 1: Leader Mitch McConnell and Senator Lindsey Graham are appalled at
Speaker 1: this action, and I don't know if they can take
Speaker 1: any action to stop it or reverse it, but it
Speaker 1: may be too lated. So in the short term, this
Speaker 1: seems to be very tone deaf politics. In the long term,
Speaker 1: it clearly means that no one's going to trust the
Speaker 1: United States of America in international affairs. No one has
Speaker 1: been a better ally to us in that region than
Speaker 1: the Curred and the Curds are also very good fighters,
Speaker 1: and they have fought with us and died with us.
Speaker 1: You can find a clip of Trump even commending the
Speaker 1: Curds for fighting with us in the fight against ISIS,
Speaker 1: and now he has advandoned them to SMA. Just for
Speaker 1: the second discussion, I'm going to take the tact of
Speaker 1: the president tweeting. I'm not going to go over the
Speaker 1: tweets this morning. There's there's over a dozen of them.
Speaker 1: But bottom line, he says, the emotion of America is
Speaker 1: why are we in those distant wars? I mean it
Speaker 1: sounds like Jefferson and the you know, the Barbary pirates
Speaker 1: of another time. Tell me, Elaine, the history which you
Speaker 1: are expert on of our emotion of our men and
Speaker 1: women in distant wars. Um. We have had men and
Speaker 1: women in distant wars since the end of the Second
Speaker 1: World War when we became a world our and we
Speaker 1: have intervened in very many places where we shouldn't have been.
Speaker 1: And then we have intervened in places where it made
Speaker 1: sense for our national security when you had an enemy
Speaker 1: like ISIS that was chopping off people's heads and taking
Speaker 1: kidnapping victims, been causing um havocs throughout the region. Um. Yeah,
Speaker 1: it made sense for the United States to come to
Speaker 1: the aid of people who are trying to defeat ISIS. Um.
Speaker 1: Does this mean that every intervention has been correct, No,
Speaker 1: of course not. But sometimes the United States does the
Speaker 1: right thing in the world, and in this instance we did.
Speaker 1: And therefore a blanket foreign policy of withdrawing from the
Speaker 1: world is apt to cause more harm than good. So Lane,
Speaker 1: you mentioned you know the impact on the Republicans. How
Speaker 1: do you think this is going to go to impeachment?
Speaker 1: And that's kind of where the president has been tweeting
Speaker 1: very aggressively. That's certainly top of mind. Not surprisingly, how
Speaker 1: do you think the impeachment thing is just going to
Speaker 1: play out. UM. I think what's going to happen is
Speaker 1: that we will see the House right articles of impeachment.
Speaker 1: And one of the first decisions they have to make
Speaker 1: are they will have to make, is what do they
Speaker 1: write articles on. For instance, it's clear that they can
Speaker 1: write an abuse of power article based on the conversation
Speaker 1: with the Ukrainian president. It's clear that they can write
Speaker 1: an obstruction of justice UH articles based on actions during
Speaker 1: the Russian investigation, and based on yesterday's decision not to
Speaker 1: um not to respond to any of the House's inquiries
Speaker 1: for and request for information. So the question is what else?
Speaker 1: And I think that one of the things that is
Speaker 1: throwing a sort of wrench into this is is this
Speaker 1: action he took with regard to the Kurds, is this
Speaker 1: in fact something that should be included in an article
Speaker 1: as impeachment because it is in fact dangerous to US
Speaker 1: national security. And I think that they're gonna have to
Speaker 1: They're gonna have to a noodle that one. And I
Speaker 1: don't have a sense of that. This has been a
Speaker 1: great for Thank you so much. A linkome our with
Speaker 1: us with breaking news and you're on Turkey a lot
Speaker 1: of other news as well to look at. Thanks for
Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to
Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm on Twitter at Tom Keene before the podcast. You
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio