WEBVTT - Yale's Roach Sees a Dollar Decline of 35% Over Next 5 Years 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Along 0:00:04.120 --> 0:00:06.240 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.400 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Kind the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:22.160 and on Bloomberg dot com. Time checking out with Bloomberg 0:00:22.200 --> 0:00:25.400 Opinion or joined by opinion columnists. But oh so much 0:00:25.400 --> 0:00:28.560 more than that. His name is Stephen Roach and you 0:00:28.600 --> 0:00:30.880 will know him from his time as former chairman of 0:00:30.920 --> 0:00:34.160 Morgan Stanley Asia. Also, of course he's senior fellow at 0:00:34.280 --> 0:00:37.879 Yale University. Stephen want to talk to you about your 0:00:37.920 --> 0:00:39.640 call on the Dollar, but for us to have to 0:00:39.680 --> 0:00:42.680 ask you about this explosive book from John Bolton, all 0:00:42.720 --> 0:00:46.159 of the allegations that he didn't make when he had 0:00:46.159 --> 0:00:48.760 the chance to give testimony, but is now making in 0:00:48.800 --> 0:00:52.879 a book. You know the Chinese administration, possibly as well 0:00:52.920 --> 0:00:56.200 as anybody in the administration, probably much much more so. 0:00:56.800 --> 0:01:00.800 Do you believe the allegation that President and Tom pleaded 0:01:00.840 --> 0:01:03.280 with Mr she to help him win reelection by buying 0:01:03.480 --> 0:01:07.640 American agricultural products which would help President Trump in farm States. 0:01:09.680 --> 0:01:12.960 You know, Bunny, I I do not know you know 0:01:13.200 --> 0:01:17.640 the veracity of he said, she said, allegations, Um, in 0:01:17.720 --> 0:01:22.320 any of this political intrigue from you know, the Ukraine 0:01:22.400 --> 0:01:27.000 to UM Beijing. You you hear an awful lot. And 0:01:28.440 --> 0:01:31.480 you know it's it's clear that Um, you know, we 0:01:31.480 --> 0:01:35.880 we have a president who has pushed the envelope in 0:01:36.480 --> 0:01:42.440 his use of political leverage to achieve um, not just 0:01:42.560 --> 0:01:45.560 electoral results, but but economic results. And whether or not 0:01:45.600 --> 0:01:51.880 he did as um former National Scarity advisor of Bolton indicated, 0:01:52.800 --> 0:01:58.920 utilize that those tactics in addressing the China conflict for 0:01:59.080 --> 0:02:01.880 political purposes in the US, it remains to be seen. 0:02:01.920 --> 0:02:06.040 I mean, Trump will deny it, and Bolton has got 0:02:06.040 --> 0:02:08.560 another point of view. And UM, you know, I have 0:02:08.760 --> 0:02:13.160 no idea as to whether or not Bolton is right 0:02:13.919 --> 0:02:18.880 or as Trump's as he's lying. Um, the president has 0:02:18.919 --> 0:02:22.639 a inclination to stretch the truth a little bit as 0:02:22.639 --> 0:02:26.360 well as we have gathered from his eighteen thousand plus 0:02:26.440 --> 0:02:28.720 lies that have been fact chuffed by the Washington Post 0:02:28.760 --> 0:02:31.880 since he's been president. But you know, I I just 0:02:32.400 --> 0:02:36.880 I don't know. So Stephen, let's switch gears to your 0:02:37.080 --> 0:02:40.440 column here. Every time we have an f X strategist on, 0:02:41.400 --> 0:02:44.440 my first question is always give me the bear case 0:02:44.600 --> 0:02:47.320 for the U. S. Dollar. And I rarely get a 0:02:47.400 --> 0:02:49.560 good answer, or any answer at all, But I think 0:02:49.639 --> 0:02:55.160 you've got one force. What's your call on the U. S. Dollar. Well, unfortunately, 0:02:55.160 --> 0:02:57.640 I'm not an epic strategist, Paul, so I don't have 0:02:57.720 --> 0:03:01.120 to do this for a living, because you know, currency 0:03:01.200 --> 0:03:04.360 calls are some of the toughest calls to do. But look, 0:03:04.400 --> 0:03:11.520 I worry about an unsustainable dynamic that is now emerging 0:03:11.680 --> 0:03:14.040 between domestic saving, or the lack of they are of 0:03:14.080 --> 0:03:17.840 in the US and our chronic current account problem, which 0:03:17.840 --> 0:03:23.200 requires US to borrow surplus foreign savings from abroad. We 0:03:23.440 --> 0:03:28.520 entered COVID with a historically low domestic savings rate of 0:03:28.560 --> 0:03:32.280 only one point four percent of national income in early 0:03:34.320 --> 0:03:38.960 forty five year averages seven. So we're we we have 0:03:39.560 --> 0:03:46.000 very inadequate saving UH and reflecting these explosive budget deficit 0:03:46.120 --> 0:03:50.480 trajectory that we're on right now. Um, as you know 0:03:50.520 --> 0:03:56.840 the Congress and the Administration addresses precipitous decline in economic activity, 0:03:57.480 --> 0:03:59.960 our saving is going to go into negative territory. Did 0:04:00.000 --> 0:04:04.520 that once before? In the global financial crisis, the average 0:04:05.080 --> 0:04:10.320 was a negative one um uh, you know over the 0:04:12.040 --> 0:04:19.800 uh two thousand nine to two thousand eleven period. But 0:04:19.920 --> 0:04:24.479 it's gonna go sharply negative, I think into the minus 0:04:24.480 --> 0:04:29.080 five area. And that's going to blow our current account 0:04:30.000 --> 0:04:32.600 deficit to a new record in excess of six and 0:04:32.600 --> 0:04:36.200 a half percent of GDP. The dollar serves the purpose 0:04:36.279 --> 0:04:41.240 of setting the equilibrium between savings and and you know, 0:04:41.320 --> 0:04:44.000 the current account, and so I'm looking for at client 0:04:44.000 --> 0:04:48.680 in the dollar over the next five years to address that. Yeah, 0:04:48.680 --> 0:04:52.160 it's a stunning call thirty five decline in the value 0:04:52.160 --> 0:04:55.400 of the dollar. That would change the US economy irreptably, 0:04:56.000 --> 0:04:58.520 I imagine. Now you do say it's couched in terms 0:04:58.520 --> 0:05:00.920 of the comparison between the US the currencies of road 0:05:00.960 --> 0:05:04.359 basket of America's trading partners. Would that include the yuan? 0:05:04.600 --> 0:05:09.839 Will China be a trading partner in the future, Stephen, Yeah, Vonnie, 0:05:09.880 --> 0:05:13.120 I mean, first of all, I mean it's a big number, 0:05:13.560 --> 0:05:16.560 but you know, if you look at the dollar, you 0:05:16.600 --> 0:05:20.240 know it's moved over the you know, the last um 0:05:20.920 --> 0:05:23.520 forty five years, we we had to we had two 0:05:23.600 --> 0:05:27.040 drops of in the seventies and again in the mid eighties, 0:05:27.480 --> 0:05:33.080 we had a drop of UM in the early two thousands. UM. 0:05:33.240 --> 0:05:36.839 These are against you know, broad trade weighted baskets of 0:05:37.000 --> 0:05:41.000 all of our trading partners. So this is not outside 0:05:41.080 --> 0:05:44.760 the realm of the dollar declines we've seen in the past. 0:05:44.839 --> 0:05:48.279 And it would you know, the dollar would fall against 0:05:48.440 --> 0:05:53.880 UM I think the Chinese room and b. Yes, surprisingly 0:05:53.920 --> 0:05:57.599 against the euro, which is the most unloved major currency 0:05:57.600 --> 0:06:01.760 in the world, but also against you know, the the 0:06:01.760 --> 0:06:04.680 Canadian dollar in the Mexican pay so, and probably even 0:06:04.720 --> 0:06:09.000 against gold and cryptocurrencies like the bitcoin. So I mean, 0:06:09.080 --> 0:06:14.240 this is a broad based decline reflecting some serious macroeconomic 0:06:14.240 --> 0:06:17.839 and balances that we're have long been evident in the 0:06:17.880 --> 0:06:21.000 US that are going from bad to worse as we speak, Stephen, 0:06:21.160 --> 0:06:23.080 very briefly, we only have just a couple of seconds. 0:06:23.160 --> 0:06:26.320 But good China really give the US dollar a run 0:06:26.520 --> 0:06:30.320 for reserve currency, not on an air term basis. I 0:06:30.320 --> 0:06:33.200 think UM. China's got a long way to go to 0:06:33.279 --> 0:06:37.720 liberalize its financial system, to make its currency fully convertible, 0:06:37.760 --> 0:06:41.160 open up its capital account, and China's got issues of 0:06:41.240 --> 0:06:46.080 its own. But our reserve position has come down over 0:06:46.120 --> 0:06:48.359 the last twenty years, and it's likely to go further 0:06:48.480 --> 0:06:54.040 down with the dollar coming under the pressure that I envisioned. Stephen, 0:06:54.040 --> 0:06:55.800 it is always a pleasure to speak with you, never 0:06:55.880 --> 0:06:58.119 enough time, but we thank you for joining us. Steven 0:06:58.200 --> 0:07:00.720 Roach is Senior Fellow at Yale Universe City, former chairman 0:07:00.760 --> 0:07:04.120 of Morganstown, the Asia and Bloomberg opinion columnists. Did you 0:07:04.240 --> 0:07:06.600 check out his latest column, how the coming crash and 0:07:06.640 --> 0:07:10.200 the Dollar will Unfold for more details on our conversation. 0:07:10.440 --> 0:07:15.800 Just then, looking at the market here again, let's think 0:07:15.920 --> 0:07:17.680 to step back a little bit. You think back to 0:07:18.120 --> 0:07:21.400 mid March when this all began, the market sank about 0:07:21.440 --> 0:07:24.640 thirty four thirty five pc. It since retraced a lot 0:07:24.720 --> 0:07:28.160 of that move coming off the bottom, driven in large 0:07:28.240 --> 0:07:30.720 part by a federal reserve that has really been aggressive 0:07:30.760 --> 0:07:33.600 and in putting liquidity into the market. The question now 0:07:33.680 --> 0:07:35.720 for a lot of investors is what's the next step 0:07:36.200 --> 0:07:38.800 to help us answer that question. Lisa Schalett, chief investment 0:07:38.800 --> 0:07:41.960 Officer Wealth Management at Morgan Stanley. They have about almost 0:07:42.000 --> 0:07:44.880 two and a half a trillion dollars of client assets. 0:07:44.880 --> 0:07:47.160 She joins us on the phone. Lisa, thanks so much 0:07:47.160 --> 0:07:50.760 for joining us once again, What are you hearing from 0:07:50.800 --> 0:07:52.520 great to have you? What are you hearing from your 0:07:52.560 --> 0:07:55.240 clients right now? Are they do they feel like, oh 0:07:55.280 --> 0:07:59.320 g I missed out on this rally, or I don't 0:07:59.360 --> 0:08:01.600 believe it is rally. What are you hearing most office, 0:08:01.840 --> 0:08:05.320 most often from the Morgan Stanley clients. Yeah, I think 0:08:05.320 --> 0:08:08.400 from our clients, and I think it's quite typical of 0:08:08.440 --> 0:08:14.280 many private wealth clients. Is a continued level of skepticism, uh, 0:08:14.320 --> 0:08:17.720 skepticism that that the country is quote unquote in the 0:08:17.760 --> 0:08:23.320 clear with regard to the virus, skepticism that uh, you know, 0:08:23.360 --> 0:08:26.960 the market is reflecting the economic reality that they see 0:08:27.000 --> 0:08:30.640 on the ground. Uh. And and really skeptical about the 0:08:30.720 --> 0:08:35.520 longer uh term. I mean, don't forget our typical client 0:08:35.760 --> 0:08:40.720 is uh you know someone uh that that's probably over 0:08:40.800 --> 0:08:44.320 fifty five over sixty uh And they have, you know, 0:08:44.400 --> 0:08:47.160 some historic perspective, and so they're asking us a lot 0:08:47.200 --> 0:08:51.000 of questions about what are the implications longer term of 0:08:51.040 --> 0:08:54.480 this rapid money growth by the FED, of the exploding 0:08:54.600 --> 0:08:58.200 deficits and debt. Uh. And so I think that there 0:08:59.160 --> 0:09:01.520 is a large amount of cash on the sidelines, which 0:09:01.559 --> 0:09:05.760 is certainly a constructive element for this market. But our clients, 0:09:06.240 --> 0:09:09.679 for the most part, are are holding back, and I 0:09:09.679 --> 0:09:12.560 think that they're waiting for a little bit more evidence 0:09:12.880 --> 0:09:16.320 that things are truly improving, uh, and that you know, 0:09:16.360 --> 0:09:19.000 profits are catching up to the to this market which 0:09:19.000 --> 0:09:22.319 has anticipated a lot of recovery already, Lisa, are they 0:09:22.440 --> 0:09:26.400 not then embracing the V shaped recovery narrative? And in 0:09:26.440 --> 0:09:28.680 that situation, did the FED chair and give them all 0:09:28.720 --> 0:09:32.680 the more ammunition to not embrace that? Yeah? So you know, 0:09:32.800 --> 0:09:36.280 we definitely, you know, we're writing about this. So look, uh, 0:09:36.440 --> 0:09:39.040 you know, my my team and the folks on the 0:09:39.080 --> 0:09:43.400 Global Investment Committee at Morgan Stanley have been trying to 0:09:43.400 --> 0:09:47.080 to lay out that narrative and explain to folks and 0:09:47.120 --> 0:09:50.680 our clients that, you know, the way markets work is, uh, 0:09:50.760 --> 0:09:54.200 it's not about the level. It's all about rates of change, 0:09:54.280 --> 0:09:56.960 and it's all about upside surprises. And if you get 0:09:56.960 --> 0:10:00.680 positive rates of change and upside surprises, market tend to 0:10:00.679 --> 0:10:03.600 go up and climb the wall of worry. Um. That 0:10:03.760 --> 0:10:05.960 having been said, you know, when you have a FED 0:10:06.040 --> 0:10:08.880 that comes out and says, hey, you know, we don't 0:10:08.920 --> 0:10:11.840 think that, uh, that the economy is going to be 0:10:11.840 --> 0:10:15.320 back to where it was in January until the end 0:10:15.480 --> 0:10:18.000 of two I mean, my goodness, that's two and a 0:10:18.040 --> 0:10:21.640 half years from now. Uh. That's a pretty sobering statement, 0:10:22.160 --> 0:10:24.560 uh from the Fed. And I think, uh, you know, 0:10:25.400 --> 0:10:28.200 for folks who are more conservative who've sat in the 0:10:28.240 --> 0:10:32.200 bond market, uh, you know, trying to take shelter, probably 0:10:32.240 --> 0:10:35.800 heard those messages and said, you know, holy gosh, you know, 0:10:35.960 --> 0:10:38.559 he the FED doesn't think we're going to get out 0:10:38.559 --> 0:10:42.079 of this anytime soon. So where what are you suggesting 0:10:42.280 --> 0:10:44.839 to your clients that they as as they think about 0:10:45.160 --> 0:10:48.560 perhaps even allocating some new capital. Is it a typical 0:10:48.600 --> 0:10:51.640 sixty forty allocation or you perhaps be a little bit 0:10:51.679 --> 0:10:56.040 more cautious now. So we're on the other side of that. 0:10:56.160 --> 0:10:59.760 So again, you know, we're trying to encourage folks and 0:11:00.040 --> 0:11:04.080 race through the what we have learned through uh, you know, 0:11:04.200 --> 0:11:07.200 our history of of investing in markets, and that is 0:11:07.800 --> 0:11:11.760 uh that you know, uh bull markets, bear markets sent 0:11:11.840 --> 0:11:17.280 to end when recessions begin. The recession began uh in February. Uh, 0:11:17.280 --> 0:11:19.960 and we believe we're in the process of, you know, 0:11:20.040 --> 0:11:22.960 forming a bottom in this recession, and the market is 0:11:22.960 --> 0:11:26.760 setting up uh for a new bowl market. Uh. And 0:11:26.840 --> 0:11:29.760 that ball market UH is probably going to behave the 0:11:29.800 --> 0:11:32.640 way others have coming out of a recession, which is 0:11:33.120 --> 0:11:39.040 a preference for early cyclicals things like financial industrials, materials, 0:11:39.120 --> 0:11:42.400 transport to energy UH. And those are the types of 0:11:43.120 --> 0:11:48.800 areas that are not excessively overvalued today, but where we 0:11:48.840 --> 0:11:51.760 do think that there's upside surprise that could come. And 0:11:51.840 --> 0:11:55.040 so you know, we are encouraging folks UH to take 0:11:55.120 --> 0:11:59.360 some risk here and balance those conservative portfolios, many of 0:11:59.400 --> 0:12:01.560 which on the stock side have been loaded up with 0:12:01.600 --> 0:12:04.760 the usual names and you all know what they are, 0:12:05.080 --> 0:12:08.640 the right tech stocks. Very basicly though, Lisa, if it's 0:12:08.679 --> 0:12:12.840 not your typical recession, then will the market perform in 0:12:12.920 --> 0:12:16.920 the typical pollst recession away after this? Uh? So, I 0:12:16.920 --> 0:12:19.920 guess my response to that is there's never a typical recession. 0:12:20.559 --> 0:12:25.240 And so while the economic composition of every every single 0:12:25.280 --> 0:12:28.280 recession is different, and where the excess is and where 0:12:28.280 --> 0:12:32.640 the stress points are and where the victims are UH 0:12:32.920 --> 0:12:38.160 is always different, the market playbook UH tends to be 0:12:38.320 --> 0:12:41.440 very very very similar. UH. And that's what we're trying 0:12:41.480 --> 0:12:44.120 to tell clients is, yes, you know, maybe in the 0:12:44.200 --> 0:12:47.600 last recession we were worried about financials and housing. In 0:12:47.640 --> 0:12:51.280 the one before that, we were worried about the tech wreck. Uh, 0:12:51.320 --> 0:12:53.920 you know, perhaps this one we're worried about, you know, 0:12:54.000 --> 0:12:58.680 parts of consumer discretionary in retail that are structurally impaired. 0:12:59.240 --> 0:13:02.120 But never the last. We are going to have an 0:13:02.120 --> 0:13:08.160 economic recovery and the markets probably very similar way. Lisa, 0:13:08.240 --> 0:13:10.640 thanks for joining us this morning. That's Lisa's Challotte see 0:13:10.679 --> 0:13:14.080 io of Wealth Management at Morgan Stanley. Of course, client assets, 0:13:14.120 --> 0:13:16.760 they're totally nearly two and a half trillion dollars, so 0:13:17.160 --> 0:13:22.720 a lot of money to put to work. Now. I 0:13:22.720 --> 0:13:24.800 want to bring in our next guest for a fascinating 0:13:24.800 --> 0:13:29.080 discussion on a certain book that has come to the 0:13:29.120 --> 0:13:31.920 attention of publishers all over the world. It's it's coming out. 0:13:31.920 --> 0:13:35.160 Apparently pre orders are through the roof, and there's also 0:13:35.280 --> 0:13:38.720 a movement asking people not to buy the book. Of course, 0:13:38.760 --> 0:13:41.000 talking about the book that John Bolton has written about 0:13:41.000 --> 0:13:43.520 his time in the administration seventeen months as a National 0:13:43.600 --> 0:13:46.240 security adviser. Let's bring in somebody who can talk to 0:13:46.320 --> 0:13:51.319 this for us. Bloomberg New Economy Editorial Director Andy Brown. Andy, 0:13:51.400 --> 0:13:55.600 thanks for joining. Good be with you. How much heft 0:13:55.800 --> 0:13:58.680 does John Bolton have as a critic of President Trump. 0:13:58.720 --> 0:14:00.840 I mean, he's always been a man of a little 0:14:00.840 --> 0:14:02.800 bit of bluster from time to time, partial to some 0:14:03.040 --> 0:14:06.040 dramatic moments, you could say, will it have an impact 0:14:06.360 --> 0:14:11.840 on concrete things like pulling like voters? Um. I think 0:14:11.920 --> 0:14:16.640 this is why the book is so sensational, UM, and 0:14:16.640 --> 0:14:20.640 why people are taking these allegations so seriously that you know, 0:14:20.760 --> 0:14:26.040 Bolton um has enormous credibility as a hawk. Um. He 0:14:26.200 --> 0:14:31.440 is an uber hook on China, on North Korea, on Iran, UM. 0:14:31.480 --> 0:14:35.040 You know, when he has a record of administer of 0:14:35.400 --> 0:14:40.080 being in successive Republican administrations. I mean this, this is 0:14:40.120 --> 0:14:44.480 not some liberal tossing accusations that at Trump. This is 0:14:44.520 --> 0:14:46.920 somebody who was by his side as his National Security 0:14:46.960 --> 0:14:50.240 director for seventeen months, and he was privy to all 0:14:50.280 --> 0:14:52.840 of the conversations or many of the conversations that he 0:14:52.920 --> 0:14:56.400 had with heads of state all over the world, including 0:14:56.480 --> 0:14:59.960 China's Ji Jimping. Let's go there, Andy. You know, they're 0:15:00.320 --> 0:15:05.080 interesting excerpts I've read about President Trump, you know, effectively 0:15:05.160 --> 0:15:09.840 begging for China to buy farm products US farm products 0:15:09.840 --> 0:15:13.200 to improve Presidents Trump's chances with those farm states in 0:15:13.200 --> 0:15:15.720 the election. What are some of your takeaways on the 0:15:15.800 --> 0:15:17.920 aspects of the book that have been reported as it 0:15:17.960 --> 0:15:23.120 relates to China. It's it's it's absolutely devastating. I mean, 0:15:23.320 --> 0:15:26.080 if if what Bolton is saying is true, it is 0:15:26.200 --> 0:15:29.800 absolutely devastating for Donald Trump. I mean, a major plank 0:15:29.920 --> 0:15:32.840 in his re election campaign was supposed to be tough 0:15:33.000 --> 0:15:36.560 on China in contrast to Joe Biden, who is supposed 0:15:36.600 --> 0:15:40.160 to be feckless and weak. And in fact, the account 0:15:40.160 --> 0:15:42.640 of John Balton shows a US president who is a 0:15:42.720 --> 0:15:47.040 pushover in almost every on almost every issue, uh, in 0:15:47.080 --> 0:15:50.680 the U S. China relationship that matters, whether that national security, 0:15:50.760 --> 0:15:54.440 whether that's trade, whether that's human rights, whether that's Hong 0:15:54.520 --> 0:15:58.480 Kong Um. He comes across as as you say, is 0:15:58.480 --> 0:16:03.440 an absolute supplicant begging Jim paying to buy you as 0:16:03.440 --> 0:16:06.800 agricultural products so that he could win the next election. 0:16:07.320 --> 0:16:10.160 If John Bolden felt so strongly about this though, and 0:16:10.240 --> 0:16:13.960 felt that these revelations were so explosive as to really 0:16:14.040 --> 0:16:17.840 dent the president's credibility, why didn't he testify in the 0:16:17.840 --> 0:16:21.320 impeachment proceedings? Yeah, exactly, I mean that's a good point, 0:16:21.360 --> 0:16:24.280 and and and clearly that that that's that's where he's weak, 0:16:24.320 --> 0:16:27.200 and that's why the Democrats are hopping mad so, I mean, 0:16:27.280 --> 0:16:31.600 his his his accusation against the Democrats is that they 0:16:31.680 --> 0:16:35.520 focused their impeachment to narrowly on Ukraine. And if only 0:16:35.560 --> 0:16:39.480 they had known about the that the breadth of this, um, 0:16:39.520 --> 0:16:43.680 you know, effort to basically sell American interest in in 0:16:43.840 --> 0:16:47.720 return for private political favor that you know, this might 0:16:47.760 --> 0:16:51.640 have got the president impeached. Um so, I mean if 0:16:51.720 --> 0:16:54.520 he had all this, why didn't he dish earlier during 0:16:54.560 --> 0:16:58.000 the impeachment process and instead of waiting for his lucrative 0:16:58.120 --> 0:17:00.960 book contract two million bucks with Simon and Schusters. So 0:17:01.240 --> 0:17:04.600 it does, it does to an extent undermine the the 0:17:04.680 --> 0:17:09.080 his central accusations. So Andy, as it relates to China, here, 0:17:09.240 --> 0:17:12.720 what do you think the Chinese are rooting for in 0:17:12.760 --> 0:17:15.919 the November presidential election? Did they want former years of 0:17:16.040 --> 0:17:18.680 President Donald Trump? I think they'd be very happy to 0:17:18.800 --> 0:17:21.800 have another four years of Donald Trump. I mean, you 0:17:21.840 --> 0:17:25.320 know this is this is they had pegged him right 0:17:25.400 --> 0:17:27.720 from the start as as as a leader who would 0:17:27.720 --> 0:17:32.240 be susceptible to inducements, uh, to flattery. Um he was 0:17:32.280 --> 0:17:37.160 a businessman. He was transactional, and according to Bolton's account, 0:17:37.200 --> 0:17:40.480 that is precisely the way things have have turned out. 0:17:40.520 --> 0:17:42.520 And look, it's not just my opinion. We have some 0:17:42.640 --> 0:17:45.480 very good reporting out of out of our Beijing bureau 0:17:45.800 --> 0:17:49.879 um uh, you know. Um Pete Martin wrote a story 0:17:49.880 --> 0:17:53.919 he had interviewed a whole bunch of senior, current and 0:17:53.960 --> 0:17:56.760 retired Chinese government officials. They said, we want Trump uh. 0:17:56.840 --> 0:18:00.480 And the reason they cited is that Trump under minds 0:18:00.880 --> 0:18:05.520 US alliances and that is the one thing that the 0:18:05.640 --> 0:18:09.399 Chinese fear that is their biggest to them, their biggest threat. 0:18:09.480 --> 0:18:12.920 It is the US alliance instruction. And of course, I 0:18:12.960 --> 0:18:15.560 mean it is true what Bolton says, this sort of 0:18:15.600 --> 0:18:21.040 transactional nature. Putting everything on the table, including Huawei, including Zte, 0:18:21.080 --> 0:18:23.480 including the wig, is just tossing it all into the 0:18:23.920 --> 0:18:27.879 into the into into the part subsuming everything to getting 0:18:27.880 --> 0:18:31.240 a trade deal, in trading relations with um you know, 0:18:31.359 --> 0:18:34.639 with with with China. This is deeply corrosive of the 0:18:34.720 --> 0:18:38.879 trust that underpins US alliances all around the world, including 0:18:38.920 --> 0:18:41.840 in Asia. Maybe I'll be a little cynical, but it 0:18:41.880 --> 0:18:44.080 doesn't make it more likely that we will actually get 0:18:44.080 --> 0:18:46.280 a trade deal with China now, because both sides will 0:18:46.320 --> 0:18:50.000 be sort of falling over themselves to prove that there 0:18:50.080 --> 0:18:53.520 was there was no back room dealings and therefore you 0:18:53.560 --> 0:18:56.240 know that the two countries can get on well in public. Again, 0:18:57.720 --> 0:19:00.199 it's it's it's really hard to read. I mean, just 0:19:00.240 --> 0:19:03.760 had this meeting in Hawaii between um, you know, Segre 0:19:03.840 --> 0:19:09.199 State Pompeo and Young Jetro, China's top diplomat. UM. You know, 0:19:09.320 --> 0:19:12.159 trade would have trade, trade would have been on the table. 0:19:12.240 --> 0:19:14.879 We don't really know what the outcome of those talks was, 0:19:15.000 --> 0:19:18.840 although it doesn't appear to have to have it achieved 0:19:18.880 --> 0:19:21.360 anything that looks like a breakthrough, at least nothing that 0:19:21.359 --> 0:19:25.120 that that either side have announced. UM. It's also notable 0:19:25.160 --> 0:19:28.760 by the way that Robert Lightheiser, the chief US trade negotiator, 0:19:28.800 --> 0:19:34.040 has denied UM some of the more explosive claims that 0:19:34.200 --> 0:19:38.800 John Bolton made in his book. Yeah, and those China 0:19:38.840 --> 0:19:41.840 claims were just the beginning of it. And our thanks 0:19:42.000 --> 0:19:45.760 to you Andy Brown, editorial director for Bloomberg New Economy, 0:19:45.800 --> 0:19:48.359 for joining us there. Bolton saying Trump not fit for 0:19:48.440 --> 0:19:50.919 office and and lacks the competence to service president in 0:19:50.920 --> 0:19:54.440 part because he's solely focused on his political fortunes. I 0:19:54.520 --> 0:19:57.240 don't know many presidents for him, that's not a priority 0:19:57.320 --> 0:20:02.840 either though. Also, we've been reporting this morning a historic 0:20:02.920 --> 0:20:06.119 day from the Supreme Court on the immigration issue. A 0:20:06.200 --> 0:20:10.160 divided US Supreme Court stopped President Donald Trump from ending 0:20:10.560 --> 0:20:16.480 the Obama era program that shields young undocumented immigrants from 0:20:16.560 --> 0:20:19.960 deportation and lets them seek jobs. To take down deep 0:20:19.960 --> 0:20:22.000 into this, we're very fortunate to have our good friend 0:20:22.080 --> 0:20:24.720 June Grasso joined us June as a legal analyst and 0:20:24.760 --> 0:20:27.040 host of Bloomberg Law. You can hear that weekdays at 0:20:27.040 --> 0:20:29.600 ten pm Wall Street Time. June, thanks so much for 0:20:29.680 --> 0:20:33.160 joining us here. Give us your quick thoughts on this 0:20:33.440 --> 0:20:36.320 five four decision out of the Supreme Court. Well, this 0:20:36.520 --> 0:20:38.920 is the second time this week that the Court has 0:20:39.000 --> 0:20:42.159 ruled against the Trump administration. And this is a case 0:20:42.640 --> 0:20:47.119 where Justice Chief Justice John Roberts sided with the four 0:20:47.480 --> 0:20:50.120 liberals in the court. So it's a five to four decision, 0:20:50.640 --> 0:20:54.399 and he basically said that no one's arguing that the 0:20:54.400 --> 0:20:59.000 Trump administration could terminate the DOCTA program. Everyone agrees it can, 0:20:59.080 --> 0:21:01.840 but they went about it in the wrong way. They 0:21:01.920 --> 0:21:06.000 didn't provide a reasoned explanation for why they were doing this. 0:21:06.119 --> 0:21:09.679 The way they acted was arbitrary and capricious. This is 0:21:09.680 --> 0:21:11.440 a decision that we have been waiting for. It's the 0:21:11.680 --> 0:21:14.320 it's the decision that we've been waiting for the longest. 0:21:14.359 --> 0:21:17.359 It was argued early in the term, so you see, 0:21:17.359 --> 0:21:19.639 it took a long time because there are so many 0:21:19.920 --> 0:21:24.159 different opinions. There's not only the decent and the majority opinion. 0:21:24.200 --> 0:21:27.359 There are concurrences, concurrencies in part, the scents in part. 0:21:27.440 --> 0:21:31.040 It's really complicated. So the line that I took from 0:21:31.040 --> 0:21:34.320 a tune was the appropriate recourse is therefore to remand 0:21:34.320 --> 0:21:36.720 to DHS so that it may consider the problem and 0:21:36.880 --> 0:21:39.800 new Does this mean that the Department of Holman Security 0:21:39.840 --> 0:21:43.199 will actually consider it, make better arguments and the Supreme 0:21:43.240 --> 0:21:46.480 Warrant won't have any objection at that point. Well, they 0:21:46.520 --> 0:21:49.439 could do that. This is what the chief said. You 0:21:49.480 --> 0:21:52.560 can take it back again and you can redo it. 0:21:52.640 --> 0:21:54.440 But the thing is that would take a long time 0:21:54.480 --> 0:21:57.000 because they'd have to come up with some reasoned explanation. 0:21:57.119 --> 0:22:00.280 They have to follow the rules, so it's unlocked. They 0:22:00.280 --> 0:22:03.000 could do that within the end of the Trump term, 0:22:03.080 --> 0:22:05.760 if he's elected to a second term. They can try 0:22:05.760 --> 0:22:08.399 to do that and come up with better explanations that 0:22:08.480 --> 0:22:11.680 will satisfy the Court that they've really thought this through. 0:22:12.280 --> 0:22:14.480 But this sort of reminds you of the Census case 0:22:14.640 --> 0:22:17.679 where the Supreme Court's kicking it down the road, saying, okay, 0:22:17.720 --> 0:22:20.560 you guys, take it back. Now, we're done with this 0:22:21.000 --> 0:22:23.520 and we'll see what you do next. So cho and 0:22:23.640 --> 0:22:27.600 for legal analysts like yourself, a Supreme Court watchers, how surprising, 0:22:27.600 --> 0:22:32.560 if at all, is it that how Justice Robert's voted here? Well, 0:22:33.000 --> 0:22:35.640 I thought it was surprising. This was a case that 0:22:35.720 --> 0:22:38.480 we didn't really have an inkling of how it was 0:22:38.560 --> 0:22:41.120 going to go. In other words, the case earlier this 0:22:41.160 --> 0:22:46.000 week on LGBT rights, that was a case where during 0:22:46.040 --> 0:22:48.920 the oral arguments you could sort of tell that justice 0:22:48.960 --> 0:22:52.520 course which might be leaning in the direction of um 0:22:53.000 --> 0:22:55.960 gay rights. However, with this case, it was very hard 0:22:56.040 --> 0:22:59.119 to tell what was going on. So I was very surprised. 0:22:59.160 --> 0:23:00.879 I think a lot of people we're very surprised. And 0:23:01.000 --> 0:23:04.719 also it's always surprising when you see the Chief Justice 0:23:04.800 --> 0:23:08.720 John Roberts is now the swing vote that Anthony Kennedy was, 0:23:08.880 --> 0:23:11.320 and in the two cases this week he sided with 0:23:11.440 --> 0:23:16.600 the three liberals. Yeah, I mean, there's a whole range 0:23:16.600 --> 0:23:19.119 of things to be surprised at, not least that this 0:23:19.200 --> 0:23:23.560 was a five four decision as well. June remind us 0:23:23.600 --> 0:23:26.359 exactly how many people and who were talking about these 0:23:26.359 --> 0:23:29.200 are the Dreamers, almost seven thousand kids that were born 0:23:29.280 --> 0:23:32.720 here that would have had to leave if this wasn't upheld. Right, 0:23:32.840 --> 0:23:37.280 and President Barack Obama started this program that allows them 0:23:37.320 --> 0:23:40.280 to continue to work and find a way towards citizenship. 0:23:41.119 --> 0:23:44.800 President Trump said that it was not within his legal authority, 0:23:44.840 --> 0:23:47.719 president Obama's legal authority to have this program, so he 0:23:48.080 --> 0:23:50.600 ended it. So right now, the Dreamers have been in 0:23:50.680 --> 0:23:54.200 this sort of no man's land for so many months, 0:23:54.640 --> 0:23:57.240 and right now they can go on with the program, 0:23:57.280 --> 0:24:00.800 they can re up for more of the program. They 0:24:00.800 --> 0:24:02.919 can feel comfortable that they're not going to be deported, 0:24:02.920 --> 0:24:04.800 and that's the big thing. There was this question of 0:24:04.840 --> 0:24:08.679 whether if the Supreme Court had said that this DOCTA 0:24:08.760 --> 0:24:12.320 decision was absolutely right and the Trump could go ahead, 0:24:12.359 --> 0:24:16.080 then the question was would these six hundred and seventies 0:24:16.119 --> 0:24:21.760