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Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in

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Speaker 1: local communities, economies and a sustainable future. That's the power

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Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated

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Speaker 1: member s I p C. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keene with David Gura. Daily we bring you

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Speaker 1: insight from the best in economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and

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Speaker 1: of course on the Bloomberg Sebastian Galley, senior currency strategist

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Speaker 1: at Deutsche Bank, who joins us now here at the

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Speaker 1: Pierre Hotel, Thank you very much for being here, and

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Speaker 1: let's start with what we're seeing in the currency market

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Speaker 1: in light of that attack yesterday. Not a whole lot

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Speaker 1: of movement in the power. Let me just expand from

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Speaker 1: that to say, uh, we're dealing with a lot of

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Speaker 1: political risk, and when you look at the four X space,

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Speaker 1: it seems like politics has been continues to be a

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Speaker 1: huge driver here. Indeed it's a big driver. I think

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Speaker 1: the market got used to terror attacks and would like

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Speaker 1: to express my condolences to the people of England and

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Speaker 1: the United Kingdom, but they have basically learned to deal

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Speaker 1: with terrorism in in uh in Europe, and basic it

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Speaker 1: means that it has very little impact. For example, what

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Speaker 1: you could see is you could see a terror attack

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Speaker 1: ahead of the French election, whether it be the first round,

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Speaker 1: more probably the second round, and what we know from experiences,

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Speaker 1: it will have very little impact on the actual outcome

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Speaker 1: because fears does not actually lead to changes in the

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Speaker 1: in voting patterns, which is somewhat reassuring. It is more

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Speaker 1: anger that drives a change in voting patterns, and that

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Speaker 1: may be triggered by a different events. For example, in

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Speaker 1: the case of the Netherlands, we saw an incidents with

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Speaker 1: Turkey which had changed the tone for a few days

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Speaker 1: and then the vote for the populist group of Foil

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Speaker 1: Papy essentially disappeared very quickly, and so that kind of

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Speaker 1: incident could be repeated the drive and by an external

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Speaker 1: factor in the French election. And it's a risk which

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Speaker 1: is very hard to measure. But as we've seen in

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Speaker 1: the past few elections in the West, they seem to

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Speaker 1: be coming in and coming in repeatedly. The highest impact

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Speaker 1: would be one to three days before the French election.

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Speaker 1: That is basically anger would not have enough time to recede,

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Speaker 1: and so they vote, which in this case, if it

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Speaker 1: is one which is driven by anger, would then help

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Speaker 1: the populist vote. After the Brexit referretum. After the US election,

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Speaker 1: there was a lot of concern about polling. Let's look

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Speaker 1: at the Dutch election in particular, didn't turn out the

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Speaker 1: way uh many people thought it would. Perhaps polling wasn't

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Speaker 1: as disadvantaged as with those other cases. But how do

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Speaker 1: you rely on polling now looking ahead to the French election.

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Speaker 1: In the case of polling, it depends on the country.

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Speaker 1: They don't all have the same methodologies. But the French

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Speaker 1: were absolutely scared by what happened both in the UK

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Speaker 1: and the US. The difference in the in France is

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Speaker 1: the populist party or what you could consider to be

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Speaker 1: a populous party because it is a definition of the

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Speaker 1: from Madame Marine. It has not historically been different in

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Speaker 1: terms of outcomes in the vote versus the polls, so

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Speaker 1: there's not this bias vote that people would would actually expect.

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Speaker 1: What they've done is they try to improve the poly

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Speaker 1: mythology as much as they could reduce this, and they

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Speaker 1: use what they call rolling polls, so every day you

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Speaker 1: have at least two polls coming out of France and

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Speaker 1: they're very very stable. They have also what they call

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Speaker 1: stratified pollings, which means it goes into the different groups

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Speaker 1: such as workers, um, you know, employees, staff, CEOs, and

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Speaker 1: to try to see the evolution of each single group,

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Speaker 1: whether it's older or younger voters, to see if the

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Speaker 1: change there is a change in the patterns. Yet journalists

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Speaker 1: in France do not trust the system and then so

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Speaker 1: what they've decided is in many cases to send out

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Speaker 1: reporters all across France to check directly with the population,

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Speaker 1: asked them questions to see if there was a change

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Speaker 1: in the evolution a pattern that wouldn't maybe be mist

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Speaker 1: and that would have an important impact in on the

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Speaker 1: on the actual vote at the end of the day.

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Speaker 1: So there's a lot of work made to try to

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Speaker 1: make sure that it isn't a risk. For now, the

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Speaker 1: market has decided, for many reasons, including the stratified polling,

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Speaker 1: that the odds of Martin le Ben winning are extremely small.

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Speaker 1: Then mccona was a very high probability of winning, and

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Speaker 1: at this point that seems to be a reasonable event. Yeah,

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Speaker 1: we talked about risk events, and I was listening to

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Speaker 1: the hearing on Capitol Hill earlier this week with the

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Speaker 1: FBI director and the n s A director and both

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Speaker 1: basically said Russia had some involvement here or eagerness to

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Speaker 1: be involved in the US election, and other countries having

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Speaker 1: elections should stand on guard when you think of risk events,

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Speaker 1: how how how big a risk event is the potential

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Speaker 1: for intervention by another country like Russia. Well, I should

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Speaker 1: take a neutral sensor should I should point out that

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Speaker 1: Immanue mccona was actually coached by a mayor ex Mayor Bloomberg,

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Speaker 1: so he received his own training. Mr Almona received the

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Speaker 1: training from the ex training Treasury Secretary, And so these

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Speaker 1: are already existing interventions. From my personal point of view,

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Speaker 1: find it very positive. They have been uh interventions which

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Speaker 1: some may have considered to be less positive. And they

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Speaker 1: were the case in the Netherlands coming from Turkey at

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Speaker 1: a critical time but too early to make a difference,

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Speaker 1: anger in the pulse to decrease at the very fast

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Speaker 1: rate um so they didn't have the the outcome that

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Speaker 1: one would have expected, and therefore there would be a

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Speaker 1: change if if a nondesirable intervention should happen. What are

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Speaker 1: the odds of interventions in France? If you look at

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Speaker 1: the different articles or ways that information is transmitted by

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Speaker 1: foreign agents into the French press, there are several of them.

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Speaker 1: They have been very critical of Monsieur Emmanuel Macon. They

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Speaker 1: have been generally very supportive of Marie Lepine as well

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Speaker 1: as a general called Melach. The reason why they would

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Speaker 1: support Mila Schon, who's a far right supporter who's doing

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Speaker 1: quite well, is because a percentage of the vote of

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Speaker 1: Mr Mino Chan would have a certain probability of actually

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Speaker 1: voting for Marie Lepin in the second round. These are

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Speaker 1: worker type um the odds and the polls suggests this

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Speaker 1: is far less than and then these people seem to think,

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Speaker 1: but they are basically been pushing for for these two candidates.

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Speaker 1: At this point in time, it looks like they've abandoned Filon,

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Speaker 1: who's too low in the polling. So and Fillon also

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Speaker 1: has changed his stands relative to Russia and has become

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Speaker 1: much less per Russian than he once was. He was

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Speaker 1: accused once by Mr of drinking excessive amounts of vodka,

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Speaker 1: which was a reference to his very close ties to

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Speaker 1: Russia at the time, and since then he has a

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Speaker 1: distance himself considerably, a process which may continual for other candidates.

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Speaker 1: Let me pivot a little bit here to talk about

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Speaker 1: the Chinese currency you mentioned before we got started here.

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Speaker 1: A pivotal moment coming up here for the I m F,

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Speaker 1: which is placed the REAMINNB in the special drawing basket

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Speaker 1: that the IMF has. What are we gonna learn over

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Speaker 1: these next coming days. Indeed, they has been added to

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Speaker 1: the SCR, which is the official currency used by the IMF,

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Speaker 1: by the b I S, by the World Bank, and

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Speaker 1: also Jordan and to some extent to Libya. So it

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Speaker 1: is actually a relevant currency, it's a non a negigible one.

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Speaker 1: But what we will learn at the end of the

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Speaker 1: months it's not about the SDR, but about the amount

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Speaker 1: of reserves in the m m B, c n Y

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Speaker 1: or CNH that is being held by foreign reserves as

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Speaker 1: part of what we call the I m F coffer.

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Speaker 1: And this is a great mystery because nobody knows how

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Speaker 1: much the money has been invested by foreign reserves into

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Speaker 1: the HIMMB. It might be in the order of two percent.

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Speaker 1: We will know exactly how much it is but I

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Speaker 1: think it's people. It is something that a lot of

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Speaker 1: people are starting to pay a strong amount of attention to.

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Speaker 1: It tells you how much of a competitor to the

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Speaker 1: dollar it is. The answer is is very much not one.

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Speaker 1: But the the Chinese have been preparing the way for

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Speaker 1: the in the next decades to be a serious competitor

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Speaker 1: both to the yuro and the dollar. That process will

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Speaker 1: take many years. For now that amm B is overvalued

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Speaker 1: and should actually devalue, but they count afford this process

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Speaker 1: right now. But in a horizon of ten, fifteen to

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Speaker 1: twenty years, you'll see that the REMAINB becomes a much

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Speaker 1: more used as a currency. There are f X swaps

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Speaker 1: lines between the p bo s and many different central banks,

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Speaker 1: and as they go through that process, Uh, the chinesely

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Speaker 1: maybe should be a much more ordinary currency used internationally,

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Speaker 1: including as part of foreign reserves. So they do not

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Speaker 1: really fit the criteria whatever the I m F said

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Speaker 1: to be a foreign reserves at this point in time.

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Speaker 1: They will eventually, and they will do very well. We

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Speaker 1: saw this infusion of capital by the PBOs yesterday and

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Speaker 1: indeed in the two days before that as well. Uh,

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Speaker 1: And there wasn't a whole lot of transparency from the

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Speaker 1: PBOC about what it was doing when it comes to

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Speaker 1: currency generally, is the Chinese government talking more about it?

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Speaker 1: We just had the National People's Congress in Beijing. Uh.

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Speaker 1: Is currency something they're keen or to talk about now

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Speaker 1: than they used to be. From all the information that

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Speaker 1: we have is they are very keen not to talk

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Speaker 1: about the currency. Of The key problem that they have

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Speaker 1: is one is a link to financial stability. If they

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Speaker 1: let the currency go, it might be unhelpful for financial stability.

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Speaker 1: On one side. Number two, there is a big negotiation

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Speaker 1: process happening right now between many countries in the world

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Speaker 1: and the United States. The United States is complaining, in

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Speaker 1: part quite correctly so, that it's currency is overvalue, and

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Speaker 1: it's overvalued because on the cyclical side, the US is

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Speaker 1: doing well, but also for because many central banks around

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Speaker 1: the world have taken excessive measures to weaken their currencies.

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Speaker 1: That includes the PDOC, but it also includes the ECB

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Speaker 1: and the b o J. And as these negotiations happen

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Speaker 1: in the background, and you should forget a lot of

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Speaker 1: the noise, which sometimes can be quite disturbing. But there

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Speaker 1: are professionals in the background doing their work. It seems

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Speaker 1: that there's a play at work in which the center

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Speaker 1: banks are going to tighten at the measure which fits

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Speaker 1: basically their mandates, which will help their currencies. To appreciate

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Speaker 1: that maybe that I maybe used to some extent, but

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Speaker 1: it also means that the euro would go higher. The

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Speaker 1: coffee is hot, the weather is called tom Keane. It's

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Speaker 1: it's like Rochester, New York. You know, there's winter, more winter.

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Speaker 1: In the fourth of July, were inshing ahead, pushing ahead

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Speaker 1: of the weekend. Saturday is supposed to be a little

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Speaker 1: nicer here in New York. Remarkable, folks. I was just

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Speaker 1: over at our world headquarters of course, doing our television

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Speaker 1: show and David for a radio audience. Just remarkable, uh,

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Speaker 1: this morning to see Prime Minister May speak and then

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Speaker 1: a very somber Mr Corbyn in black black tie and

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Speaker 1: a white shirt, and of course a packed house of

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Speaker 1: Commons in the moment where the speaker turned to the

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Speaker 1: French Foreign Minister in the upper gallery at the House

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Speaker 1: of Commons was really quite really, quite something to observe.

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Speaker 1: Truly a terrible event yesterday, and as you pointed out

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Speaker 1: on the TV program, the nationalities of those who were

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Speaker 1: killed yesterday varied incredibly very including three French students and

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Speaker 1: in one American. We should point out there's a lot

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Speaker 1: we don't know right now. We're learning a little more,

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Speaker 1: but of course we'll have coverage on that through the day.

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Speaker 1: We're here with Sebastian Galley. He's a senior currency strategy

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Speaker 1: a Deutsche Bank, kind of enough to to be with

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Speaker 1: us here at the Pier Hotel. We were talking about Europe,

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Speaker 1: talking about the French elections. Let's talk about North America

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Speaker 1: for a little while here. I'm sure that you're watching

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Speaker 1: what's playing out in Washington, and I wonder the degree

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Speaker 1: which you think that's going to portend something for tax reform. Uh,

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Speaker 1: you're looking at the dollar, Luna, say, how do you

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Speaker 1: factor all of that in for some French So the

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Speaker 1: families in Concano, which must be hurting at this point

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Speaker 1: in time, But looking forward at the taxes, there's been

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Speaker 1: some difficulties basically and the aministration to to pass the law.

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Speaker 1: So we expect that this night there actually will be

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Speaker 1: a vote, so a little continued Senate so it continues

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Speaker 1: its normal process. I think the market was very frightened

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Speaker 1: that this administration was relatively weak and that it could

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Speaker 1: really not when it rarely mattered, put some political way

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Speaker 1: and actually achieve a breakthrough, and seems said it is

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Speaker 1: achieving it. That means the second stage, which is the taxes,

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Speaker 1: which is a much harder fight in some ways, is

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Speaker 1: going to go through. That includes potentially the border tax adjustment,

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Speaker 1: which has huge implications for the dollar for taxation in

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Speaker 1: general and for the size of the tax cuts that

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Speaker 1: will affect us all on on our salaries. If it

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Speaker 1: isn't there, that it will be much more difficult. Um

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Speaker 1: but that is a more positive if really that would

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Speaker 1: go through. The US administration has shown flexive ability. It

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Speaker 1: has basically a flummox center and threatened, but ultimately it

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Speaker 1: actually has proven a well oiled political operator able to

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Speaker 1: actually pass through some some difficult to measures that will

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Speaker 1: see that confirmation probably tonight. So taxes will then be

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Speaker 1: the next step. There are very difficult particularly at the

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Speaker 1: Senate stage, particularly in the case of the B A T.

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Speaker 1: The infrastructure project is mostly dead on arrival, but there

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Speaker 1: probably will be a fig leaf. That's probably something for

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Speaker 1: the next year. The economy is running well at a

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Speaker 1: at a high pase with probably a Q one, which

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Speaker 1: is relatively low, but it is running in the in

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Speaker 1: the right direction, so it doesn't need that much of

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Speaker 1: an impulse. Nonetheless, the market is betting on that impulse,

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Speaker 1: as betting through equities on that impulse, and if we

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Speaker 1: fail to get a move in that direction, then of

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Speaker 1: course we could see a significant correction. When you talk

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Speaker 1: about the border adjustment tax, it's it's something that the

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Speaker 1: President didn't bring up in his speech before joined session

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Speaker 1: of Congress. We don't have a clear sense of whether

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Speaker 1: or not the White House is back at Steven manoge In,

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Speaker 1: the Treasury Secretary, WHI was in Berlin before heading on

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Speaker 1: to Boton Botton and was asked about it, and he

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Speaker 1: said that they're weighing a lot of things they haven't

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Speaker 1: yet committed to backing. And how integral is it to

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Speaker 1: tax reform? Do you think if there isn't that component

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Speaker 1: to a tax reform package, do you think it stands

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Speaker 1: a chance of getting through. It's huge. It's huge in

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Speaker 1: the sense that the amount that one is there's a

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Speaker 1: tremendous amount of resistance coming from the retail, from refiners,

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Speaker 1: from other industries that are heavily opposed to it. But

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Speaker 1: if you can imagine this is a carrot and stick,

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Speaker 1: and there's a big stick of the stick is the

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Speaker 1: B A T. Whether they're using the B A T

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Speaker 1: is to achieve political gains abroad, and these means of

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Speaker 1: changes in monetary policy, mostly for example, the ECB turning

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Speaker 1: less dovish and mentioning the fact that they could move

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Speaker 1: away from negative interest right before they do QUI, some

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Speaker 1: signs that the p B U C might be marginally

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Speaker 1: tightening policy. And generally speaking, the center max are on

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Speaker 1: the whole less do wish than they once were. They're

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Speaker 1: trying to weaken their currency less than they used to,

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Speaker 1: and so it is part of a very complex set

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Speaker 1: of policies. You have people who come in on it

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Speaker 1: who are irrelevant, people who come in on it who

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Speaker 1: actually are relevant, and the ones who are commenting the

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Speaker 1: most may or may not be the most relevant. One.

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Speaker 1: Help me your sub galy with with the dynamics of

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Speaker 1: the dollar. The surprise ending the first quarter hard to

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Speaker 1: believe with the frigid fifth avenue today, but ending the

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Speaker 1: first quarter. Uh, the surprise is the idea of the

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Speaker 1: dollar not in Nancy, it's been I think all in

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Speaker 1: all that consensu surprise, what's the catalyst to get the

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Speaker 1: dollar to lift? You would need to get better data,

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Speaker 1: and unfortunately Q one is is probably going to be

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Speaker 1: relatively weak. So you need to get a sense that

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Speaker 1: the economic data. It is continuing that labor market has

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Speaker 1: continued to toighten and salaries are continuing to improve, and

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Speaker 1: for now the salary side remains relatively weak. Productivity in

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Speaker 1: the US is relatively weak, and so the catalysts on

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Speaker 1: the pure dollar side, the GDP is not out there. Qen.

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Speaker 1: We expect for seasonal reasons to be a week we

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Speaker 1: go get in some cases what about the second quarter

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Speaker 1: quickly probably around two, so where you basically average out

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Speaker 1: a wait wait wait, if you get your fiscal package

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Speaker 1: and the likes, then what you can imagine is that

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Speaker 1: trend growth would actually increase quite significantly. That's what part

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Speaker 1: in the market is betting on. Semest Gilly, thank you

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Speaker 1: so much. The wheels A power records so Pierre Hotels

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Speaker 1: stay with us. Anthony Dwyer with his kindicort jenuity, Tony

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Speaker 1: Dwyer has been a massive bull on the markets. Tony

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Speaker 1: were clumsy on television this morning with all the u

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Speaker 1: reporting from London, and of course with a Prime minister

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Speaker 1: speech a little more quiet now with you, are you

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Speaker 1: still a bull on a bull market? You should never, ever, ever, ever,

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Speaker 1: ever ever sell and get negative unless you can identify

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Speaker 1: a close proximity to a recession. That doesn't mean the

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Speaker 1: market can't pull back. We're actually kind of calling for

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Speaker 1: one now. But ultimately it's too hard to call the

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Speaker 1: pull back and then get back in if you get

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Speaker 1: really negative and back in is what the amateurs don't understand.

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Speaker 1: That's what the professionals don't understand either. By the way,

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Speaker 1: it's we're getting back. You can get defensive and you

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Speaker 1: call it right, and all of a sudden the market

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Speaker 1: turns really quickly. It's up four from the loan. You said, wait,

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Speaker 1: hold on, I can't buy it because it's up too much.

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Speaker 1: Turn back. This is different. The two gentlemen over here

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Speaker 1: at table fourteen at the Pier Hotel, they're taking notes,

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Speaker 1: So be careful, be careful. You don't need one of

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Speaker 1: those regulatory disclaimers. Burn the sausage. It's good. Correction underway,

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Speaker 1: opportunity ahead. In your most recent no talk to us

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Speaker 1: a bit about finding that opportunity. Well, that opportunity is

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Speaker 1: extraordinary because you have a global synchronized economic recovery. When

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Speaker 1: we had upgraded the tape, we had been neutral last

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Speaker 1: summer and upgraded to our opinion of the market and

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Speaker 1: the offensive sectors meaning financials, tech, um in industrials ahead

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Speaker 1: of the election. Not because we thought Donald Trump would win.

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Speaker 1: I wish I was that smart. I had no idea. Um,

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Speaker 1: what we did it because you had economic improvement in

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Speaker 1: the Eurozone, economic improvement in Asia coming off of last

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Speaker 1: year's January and February low David, it was an extraordinary

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Speaker 1: positive trajectory that nobody was talking about because of the election.

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Speaker 1: That's why you you should be That's why I am positive,

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Speaker 1: is because you're having a recovery and earnings. You're having

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Speaker 1: a recovery and economic activity this morning and while we're

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Speaker 1: on the show that I didn't feel it was so clumsy. Um,

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Speaker 1: the UK reported retail sales that were better than expected.

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Speaker 1: But wait, say it isn't Britain supposed to fall into

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Speaker 1: the ocean because of Brexit. No, it accelerated, their currency declined,

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Speaker 1: credit opened up. Same thing happened in the Eurozone. The

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Speaker 1: same thing happened in Asia, so you're seeing this better

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Speaker 1: economic activity globally, and for the investors uh that are listening,

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Speaker 1: the market is most closely correlated to the direction of earnings.

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Speaker 1: That's driven by economic activity. That's driven by the money

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Speaker 1: availability via the slope of the yield curve, and that's

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Speaker 1: driven by Fed policy. So as long as the Fed

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Speaker 1: stays somewhat accommodative, even on more hikes, are going to

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Speaker 1: be accommodative. You have you have probably years before you

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Speaker 1: picked this thing out. This guy is always as tough

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Speaker 1: as critic, by the way, in terms of the clumbliness,

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Speaker 1: clumsiness of the TV. That's think that's why he's so good.

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Speaker 1: You know. I just think that a lot of people

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Speaker 1: have missed this bullmarket. Let me ask you the question

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Speaker 1: I ask everyone, and Tony has said, with great respect

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Speaker 1: for your intellectual courage, how do you catch up? You

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Speaker 1: have to in a world where all the money is going.

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Speaker 1: Don't love passive? Well, you can at certain times time

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Speaker 1: you don't think about this analogy. It's very hard to

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Speaker 1: stretch a rubber band that has already been fully stretched.

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Speaker 1: It's a lot easier to stretch a rubber band once

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Speaker 1: it's been neutral and gone back to its normal state.

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Speaker 1: There's periods of time where you have these multi month

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Speaker 1: runs like we recently have, where you just kind of

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Speaker 1: pulling the horns a little bit and you just say, Okay,

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Speaker 1: let's wait for a little bit of a pull at

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Speaker 1: a better opportunity for that rubber band to contract. Once

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Speaker 1: it does, then you get offensive. Then you buy the financials. Well,

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Speaker 1: most people don't realize is yes, the SMP Dow when

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Speaker 1: all the industries are right up against an all time high,

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Speaker 1: but on a relative performance basis, the banks have underperformed

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Speaker 1: since early last December, the SMP financial sector. So you're

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Speaker 1: hard pressed to say that you're reversing the Trump trade.

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Speaker 1: You've already have Energy has been terrible, Materials meaning you know,

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Speaker 1: commodity stocks have been terrible. Financials have been up but

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Speaker 1: underperforming the overall market. So the Trump trade has already

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Speaker 1: been reversed. You mentioned, you mentioned the earnings, You mentioned

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Speaker 1: fed policy. You have a lot of people who are

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Speaker 1: watching what's happening or not happening in Washington with with

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Speaker 1: some concern. How are you regarding all of that as

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Speaker 1: a as a strategist, What are you making of what's

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Speaker 1: happening in Washington. You look for excuses versus reasons. The

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Speaker 1: market is has an excuse to sell off. If the

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Speaker 1: Healthcare Act doesn't to vote tonight, you could have a

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Speaker 1: sell off. But the reason, the only reason you really

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Speaker 1: go defensive sustainably. I mean, I wish I were a

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Speaker 1: good trader. I'm a terrible trader. The reason that you

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Speaker 1: go defensive or negative sustainably is when you when bank

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Speaker 1: lending shuts down, and you can measure that, as Tom

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Speaker 1: mentioned earlier, um from the three month and five year

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Speaker 1: yield curve war the two tenants is a measured but

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Speaker 1: that's how you measure how close you are to a recession.

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Speaker 1: If you take the current Fed dot plot and you

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Speaker 1: look at where the tenure note is right now and

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Speaker 1: keep it there, you're not going to even invert the

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Speaker 1: curve until mid two thousand eighteen. Your median inversion is

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Speaker 1: fifteen months, so you're talking about close to two thousand

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Speaker 1: and twenty before you have a prospect for a recession.

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Speaker 1: One of the high points of the week, folks, and

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Speaker 1: and I mean this seriously because David and I are

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Speaker 1: Gerbils with what we do. Your television coverage yesterday the

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Speaker 1: breaking news out of London was really extraordinary. David with

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Speaker 1: Francie Laquais there at Parliament, but um Tony, one of

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Speaker 1: the highlights is to walk over here to the PR Hotel.

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Speaker 1: It's about a three block big New York City blocks

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Speaker 1: walk and we can collect your thoughts and you and

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Speaker 1: I on the walk over, we're talking about cash flow

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Speaker 1: and the big to me underestimation fundamentally is we take

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Speaker 1: low single digit revenue growth and it materializes in the

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Speaker 1: high single digit UH growth of IBADA operating income whatever.

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Speaker 1: How do companies do that? Review for us again, how

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Speaker 1: I go from three percent growth to a solid nine

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Speaker 1: or eleven growth down the income statement. I really think

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Speaker 1: time it comes to technological improvement that allows for productivity gains.

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Speaker 1: We're at full employment, Isn't it kind of strange that

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Speaker 1: you're seeing this load single digit revenue growth and high

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Speaker 1: single digit profit growth with full employment. So I think

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Speaker 1: it really has to come down with capital spending and

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Speaker 1: investment that creates better productivity. And we've had this a

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Speaker 1: little bit on the show, folks, but it's just as

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Speaker 1: much the conversations we have on our in our commercial

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Speaker 1: breaks and what we're hearing, David, from anybody traveling, is

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Speaker 1: there help The new thing in America is help warming sides.

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Speaker 1: I mean there's help wanted signs everywhere. That's that's the

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Speaker 1: anecdotal from our stand really is the opposite of what

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Speaker 1: you had UM at the at the financial market low

431
00:22:09,320 --> 00:22:11,879
Speaker 1: you had every house for sale and you could have

432
00:22:11,960 --> 00:22:14,840
Speaker 1: gotten any price you wanted, and you had no hiring

433
00:22:14,920 --> 00:22:17,919
Speaker 1: going on. Now you have bidding wars everywhere around the

434
00:22:17,920 --> 00:22:22,480
Speaker 1: country for homes and you can't find proper employees, how married,

435
00:22:22,560 --> 00:22:24,800
Speaker 1: or how intertwined, or the soft and hard data. At

436
00:22:24,840 --> 00:22:27,280
Speaker 1: this point we've been so focused on sentiment and the

437
00:22:27,280 --> 00:22:29,919
Speaker 1: optimism there in UH is it starting to match the

438
00:22:30,080 --> 00:22:32,000
Speaker 1: is the hard data is starting to match that. It's

439
00:22:32,040 --> 00:22:34,879
Speaker 1: it's trending that way, David, I I think um And

440
00:22:34,920 --> 00:22:36,560
Speaker 1: for the listeners, this is like if you look at

441
00:22:36,600 --> 00:22:41,600
Speaker 1: small Business Optimism Index had a record surge and in December,

442
00:22:42,240 --> 00:22:45,600
Speaker 1: what you look for is if that fades, so you

443
00:22:45,640 --> 00:22:47,560
Speaker 1: look for the next month Stata. It's not the big

444
00:22:47,560 --> 00:22:50,680
Speaker 1: surge that's important as if it holds and it's held

445
00:22:50,720 --> 00:22:55,200
Speaker 1: for the next two different reports. So in our view,

446
00:22:55,359 --> 00:22:58,120
Speaker 1: that's a good leading indicate. Here here's a great statistical

447
00:22:58,160 --> 00:23:01,840
Speaker 1: example global purchasing manager indices which have been very very

448
00:23:01,880 --> 00:23:04,040
Speaker 1: strong over the course at the last six months, trending

449
00:23:04,080 --> 00:23:08,960
Speaker 1: that way leads industrial production by two months. Tony Dwyer,

450
00:23:09,040 --> 00:23:11,320
Speaker 1: thank you so much, greatly appreciate it. This morning with

451
00:23:11,400 --> 00:23:15,119
Speaker 1: kennichord uh Jenoity, we will continue with Mr Dwyer to

452
00:23:15,160 --> 00:23:17,200
Speaker 1: talk I think we should talk more sectors here, which

453
00:23:17,920 --> 00:23:20,399
Speaker 1: the broader market, maybe because you know, we saw the

454
00:23:20,440 --> 00:23:24,080
Speaker 1: industrials I saw ge yesterday restructure their industrial and sentence

455
00:23:24,520 --> 00:23:29,840
Speaker 1: off the incentives from Nelson Pelts. Here is an announcement

456
00:23:30,160 --> 00:23:32,719
Speaker 1: of one of our wonderful guests. He is truly one

457
00:23:32,760 --> 00:23:37,240
Speaker 1: of the best cross rates strategists in the world. We've

458
00:23:37,320 --> 00:23:39,719
Speaker 1: talked to him for well in excess of a decade.

459
00:23:39,760 --> 00:23:42,520
Speaker 1: When Stephen England are working with Villain Powder and the

460
00:23:42,560 --> 00:23:45,359
Speaker 1: team at City Group, he will leave City Group and

461
00:23:45,560 --> 00:23:48,760
Speaker 1: he will join Raffiki the Hedge Fund, the acclaimed hedge

462
00:23:48,760 --> 00:23:52,119
Speaker 1: Fund out of Hong Kong. Mr Englander is reported to

463
00:23:52,160 --> 00:23:55,200
Speaker 1: be based in New York. Looks for a June start there,

464
00:23:55,280 --> 00:23:58,240
Speaker 1: but it is um you know, the bodies moving around

465
00:23:58,280 --> 00:24:01,719
Speaker 1: on Wall Street seeing a lot of it. Drew Maddis

466
00:24:01,800 --> 00:24:04,480
Speaker 1: will be with us soon. It met life now from

467
00:24:04,600 --> 00:24:07,560
Speaker 1: ubs and against Steve Anglinger, we can report to you,

468
00:24:07,680 --> 00:24:11,639
Speaker 1: thank you, Susie Waite, for this will be leaving City

469
00:24:11,680 --> 00:24:14,120
Speaker 1: Group a real loss for anyone to see Mr Angliner

470
00:24:14,160 --> 00:24:18,040
Speaker 1: with his competencies on foreign exchange. When you mentioned fun,

471
00:24:18,200 --> 00:24:19,879
Speaker 1: you mentioned Nelson Peltz as well. He'll be sitting down

472
00:24:19,920 --> 00:24:21,800
Speaker 1: with the President and the treachery Secretary today. For I

473
00:24:21,840 --> 00:24:23,440
Speaker 1: didn't know the White House. It'll be a lunch with

474
00:24:23,480 --> 00:24:26,080
Speaker 1: Stephen and Nelson Pells. That would be would fly on

475
00:24:26,119 --> 00:24:29,560
Speaker 1: the wall for that to be there. Maybe Mr Pelts

476
00:24:29,600 --> 00:24:32,480
Speaker 1: could help with healthcare. I got bad news, guys. It's

477
00:24:32,480 --> 00:24:34,720
Speaker 1: twenty eight degrees here or whatever it is. We're not

478
00:24:34,880 --> 00:24:38,600
Speaker 1: at spring training. Douglas Cass of Semior's partners listening in

479
00:24:38,680 --> 00:24:42,080
Speaker 1: this morning is from the stands. From the stands, I

480
00:24:42,119 --> 00:24:45,439
Speaker 1: don't know, Marlon. Somebody today maybe is who's looking at

481
00:24:45,720 --> 00:24:49,200
Speaker 1: and he has an important question for our guest, Anthony

482
00:24:49,280 --> 00:24:52,760
Speaker 1: Dwyer and his usual Tony one. Doug cast is really

483
00:24:52,840 --> 00:24:55,840
Speaker 1: on the pulse of America away from the banks, away

484
00:24:55,920 --> 00:24:59,440
Speaker 1: from industrial as we saw with g and Mr Pelts yesterday,

485
00:25:00,080 --> 00:25:02,320
Speaker 1: is the death of retail. I like what Doug says,

486
00:25:02,720 --> 00:25:09,639
Speaker 1: the retail evisceration. How do you avoid the disaster of

487
00:25:09,760 --> 00:25:11,920
Speaker 1: bricks and mortar? Right now, I'm trying to think of

488
00:25:11,960 --> 00:25:14,440
Speaker 1: anything better than being on air with you and getting

489
00:25:14,440 --> 00:25:17,360
Speaker 1: a question from my pel Douggie. Um, but I don't

490
00:25:17,359 --> 00:25:20,600
Speaker 1: have made money for ninety days, so stop it. What

491
00:25:20,720 --> 00:25:24,800
Speaker 1: do we do about bricks and mortars and see it?

492
00:25:25,080 --> 00:25:27,399
Speaker 1: I don't see it changing. It's a secular trend, but

493
00:25:27,520 --> 00:25:30,520
Speaker 1: that does not necessarily mean that retail spending is down.

494
00:25:31,119 --> 00:25:34,840
Speaker 1: It's like restaurants and retailers. Bricks and mortar retailers are

495
00:25:34,880 --> 00:25:37,920
Speaker 1: in trouble because you have Amazon and Netflix. So you've

496
00:25:38,000 --> 00:25:40,400
Speaker 1: changed the makeup. I don't think human nature has changed.

497
00:25:40,760 --> 00:25:42,960
Speaker 1: If you give me money, I will spend the money.

498
00:25:43,040 --> 00:25:46,200
Speaker 1: It's what we do and and money is widely so

499
00:25:46,359 --> 00:25:49,760
Speaker 1: you're to avoid a low multiple, low book value. Terry

500
00:25:49,840 --> 00:25:52,760
Speaker 1: Londren had his retirement dinner, I believe last night a

501
00:25:52,800 --> 00:25:56,919
Speaker 1: wonderful charity event here in New York City, the giant

502
00:25:57,000 --> 00:26:01,320
Speaker 1: of Macy's. You avoid those ratios? Does that mean you

503
00:26:01,400 --> 00:26:04,320
Speaker 1: can buy something like Amazon with Norton with with with

504
00:26:04,640 --> 00:26:08,879
Speaker 1: massive multiples. I cannot comment on individual stocks, but I

505
00:26:08,920 --> 00:26:13,760
Speaker 1: will point this out, I breakfast, he would change, but

506
00:26:13,840 --> 00:26:17,280
Speaker 1: it was burnt, so it's all good. Um So that

507
00:26:17,440 --> 00:26:20,560
Speaker 1: could have been said four years ago. How long has

508
00:26:21,160 --> 00:26:24,240
Speaker 1: Sears been a value trap? How long have some of

509
00:26:24,280 --> 00:26:26,479
Speaker 1: the other retailer has been a value trap? And how

510
00:26:26,560 --> 00:26:31,000
Speaker 1: long has Amazon been overvalued? So again not coming in

511
00:26:31,000 --> 00:26:33,520
Speaker 1: on those specific stocks. We have to be careful to

512
00:26:33,680 --> 00:26:37,080
Speaker 1: misuse valuation and say low as good and high as

513
00:26:37,160 --> 00:26:40,200
Speaker 1: bad because the evidence is contrary. So I'm not talking

514
00:26:40,240 --> 00:26:42,440
Speaker 1: about specific stocks here. How about sector wise, what's most

515
00:26:42,480 --> 00:26:45,960
Speaker 1: appealing to you at this point again now for the

516
00:26:46,080 --> 00:26:49,120
Speaker 1: next six to twelve months. And we've were neutral sectors

517
00:26:49,280 --> 00:26:51,960
Speaker 1: right now, So in other words, I have no favorite sectors.

518
00:26:52,040 --> 00:26:54,960
Speaker 1: I just want to be benchmarked out of the way

519
00:26:55,040 --> 00:26:57,880
Speaker 1: while the market chops around on this political wranglings. When

520
00:26:58,080 --> 00:27:01,480
Speaker 1: it gets uh worked off some the optimism and overbought,

521
00:27:01,760 --> 00:27:04,680
Speaker 1: I want to be long what's been working the financials,

522
00:27:04,720 --> 00:27:09,320
Speaker 1: the information technology industrials, and honestly warming up to energy.

523
00:27:09,400 --> 00:27:12,920
Speaker 1: You've had an incredible drop in the energy space. Um

524
00:27:13,160 --> 00:27:16,080
Speaker 1: So I think that creates opportunity. Maybe even materials and

525
00:27:16,400 --> 00:27:19,640
Speaker 1: health care is is pretty inexpensive, So there's some seriously

526
00:27:19,720 --> 00:27:22,200
Speaker 1: fun areas to look at. Once you work off some

527
00:27:22,359 --> 00:27:25,880
Speaker 1: of the optimism that's out there, you've got these tactical indicators.

528
00:27:25,920 --> 00:27:33,119
Speaker 1: Walk us through what you're looking at. Stokeysticity asting. It

529
00:27:33,240 --> 00:27:36,600
Speaker 1: looked like you got t has what he did. I

530
00:27:37,040 --> 00:27:39,720
Speaker 1: love what they do with the stocaster to kill here.

531
00:27:42,040 --> 00:27:44,840
Speaker 1: Then I wish the listeners could see the look at

532
00:27:44,880 --> 00:27:48,639
Speaker 1: your face when you said that. Anyway, So there's four

533
00:27:48,680 --> 00:27:50,920
Speaker 1: indicators that we use to tell us when to get

534
00:27:50,960 --> 00:27:53,560
Speaker 1: into It's not when you're outside of recession. It's not

535
00:27:53,720 --> 00:27:56,840
Speaker 1: whether you're bullish. It's when you get bullish enough to

536
00:27:56,920 --> 00:27:59,920
Speaker 1: really be aggressive. That happens when the VIX goes over twenty.

537
00:28:00,040 --> 00:28:03,920
Speaker 1: Again for the listeners, the CBOE Volatility indexes the VIX

538
00:28:04,200 --> 00:28:06,679
Speaker 1: when it it's at twelve, When it gets above twenty,

539
00:28:07,160 --> 00:28:09,440
Speaker 1: when you get the percentage of stocks on the N

540
00:28:09,560 --> 00:28:12,640
Speaker 1: Y S, E, R, S, and P when only ten

541
00:28:12,760 --> 00:28:15,119
Speaker 1: percent of them are above their ten day moving average,

542
00:28:15,160 --> 00:28:17,879
Speaker 1: in other words, or below their ten day moving average

543
00:28:18,160 --> 00:28:21,280
Speaker 1: were nowhere near there. Um, when you get the weekly

544
00:28:21,359 --> 00:28:27,280
Speaker 1: stochasticity or i'll say it right, stochastic below uh fifty.

545
00:28:27,359 --> 00:28:29,440
Speaker 1: I think at this point in the market, that would

546
00:28:29,480 --> 00:28:32,760
Speaker 1: be an indicator and again the Investors Intelligence bowls you

547
00:28:32,840 --> 00:28:36,760
Speaker 1: want below for now it was at a thirty year high.

548
00:28:37,000 --> 00:28:40,000
Speaker 1: It's six or three percent two weeks ago, and now

549
00:28:40,160 --> 00:28:42,520
Speaker 1: it had an uptake of the most recent week to fifty.

550
00:28:43,400 --> 00:28:45,920
Speaker 1: It's very hard to have a market rally again when

551
00:28:45,960 --> 00:28:48,880
Speaker 1: that rubber band has already been stretched and hasn't contracted.

552
00:28:48,920 --> 00:28:52,600
Speaker 1: This is what I love. You're looking at bullishness of newsletters, right?

553
00:28:52,960 --> 00:28:56,280
Speaker 1: How does how does it work? They Investors Intelligence releases

554
00:28:56,320 --> 00:28:58,800
Speaker 1: the data and they pull all the newsletter blogs and

555
00:28:58,840 --> 00:29:01,720
Speaker 1: all those other places. Has your target for the SMP

556
00:29:02,040 --> 00:29:06,560
Speaker 1: changed at all? It has? I raised it expecting a pullback,

557
00:29:06,600 --> 00:29:09,000
Speaker 1: So it seems kind of contrary. But who wants to

558
00:29:09,120 --> 00:29:12,480
Speaker 1: buy a market for a two percent gain when it

559
00:29:12,520 --> 00:29:15,280
Speaker 1: pulls back four percent? I mean, that's no. And also

560
00:29:15,640 --> 00:29:17,600
Speaker 1: what changed me and Tom and I were talking about

561
00:29:17,600 --> 00:29:19,080
Speaker 1: this on the way over was I sat down with

562
00:29:19,120 --> 00:29:22,720
Speaker 1: a couple of company managements and they indicated their enthusiasm

563
00:29:22,840 --> 00:29:26,720
Speaker 1: for the non negative meaning no new regulations, no new taxes.

564
00:29:26,840 --> 00:29:29,600
Speaker 1: It wasn't even tax cuts and lower regulation that had

565
00:29:29,640 --> 00:29:31,960
Speaker 1: them excited. It was just the knowledge there wasn't gonna

566
00:29:31,960 --> 00:29:34,760
Speaker 1: be anything new. Let's bring the pier hotel to a

567
00:29:34,840 --> 00:29:38,160
Speaker 1: complete halt right now and go mathematics on everybody. It's

568
00:29:38,160 --> 00:29:42,240
Speaker 1: all to David, I don't know. I'm scared now this

569
00:29:42,400 --> 00:29:44,880
Speaker 1: whole world. And of course you know in the pyrote

570
00:29:44,960 --> 00:29:46,800
Speaker 1: a lot of heads fun people here that have two

571
00:29:46,880 --> 00:29:50,840
Speaker 1: in their brand. It's about a log normal world, which

572
00:29:50,880 --> 00:29:52,800
Speaker 1: means you go down faster than you go up. Is

573
00:29:52,840 --> 00:29:56,800
Speaker 1: the is the real simple mathematical phrase, This idea of

574
00:29:57,000 --> 00:29:59,880
Speaker 1: not negative which is a double negative. This goes back

575
00:29:59,880 --> 00:30:03,160
Speaker 1: to Leviathan and Hobbs. The fact is guys like you

576
00:30:03,480 --> 00:30:06,520
Speaker 1: grizzled Prose and the people frankly here at the Pier

577
00:30:06,560 --> 00:30:10,000
Speaker 1: Hotel spend a lot more time trying to not lose

578
00:30:10,080 --> 00:30:13,920
Speaker 1: money then to make money. How do I not lose

579
00:30:14,040 --> 00:30:17,920
Speaker 1: money right now? I think you lose money assets when

580
00:30:18,000 --> 00:30:21,600
Speaker 1: you underperform the market. Trying to time the drop and

581
00:30:21,680 --> 00:30:23,880
Speaker 1: then get in at the proper time on the recovery

582
00:30:24,040 --> 00:30:26,480
Speaker 1: is very difficult to do. It's almost like double buying.

583
00:30:26,560 --> 00:30:28,920
Speaker 1: If you're negative. Just to go neutral is like a

584
00:30:28,960 --> 00:30:31,640
Speaker 1: bullish trade in your emotion, but it's only neutral. So

585
00:30:31,840 --> 00:30:36,040
Speaker 1: here's our plan. If you are significantly overweight offensive sectors,

586
00:30:36,560 --> 00:30:39,400
Speaker 1: just pull it back to a market neutral position if

587
00:30:39,440 --> 00:30:41,720
Speaker 1: you've made a bunch of money in stocks and you

588
00:30:41,800 --> 00:30:43,640
Speaker 1: want to kind of cut back a little bit and

589
00:30:43,840 --> 00:30:46,240
Speaker 1: and just be prepared to buy. And David, this is

590
00:30:46,360 --> 00:30:48,480
Speaker 1: so critical and investment theory. And I'm gonna do a

591
00:30:48,520 --> 00:30:51,440
Speaker 1: shout at my good friend Jim Kramer over at the

592
00:30:51,480 --> 00:30:54,120
Speaker 1: Dusk Star and the Jim gets this. Jim gets this.

593
00:30:54,360 --> 00:30:58,480
Speaker 1: This is important. It's not by cell, it's not by

594
00:30:58,600 --> 00:31:02,240
Speaker 1: hold cell. It's more things. You own it, you go

595
00:31:02,360 --> 00:31:06,000
Speaker 1: to cash, you're in cash, you sell it, or you

596
00:31:06,080 --> 00:31:07,640
Speaker 1: go the other way. You're in cash, you buy it.

597
00:31:07,720 --> 00:31:10,560
Speaker 1: You're in cash, you sell it. In the complexity year

598
00:31:10,600 --> 00:31:13,520
Speaker 1: of Tony Dwyer's world is a lot more than just

599
00:31:14,000 --> 00:31:16,200
Speaker 1: what do I do today? Should I own it or not?

600
00:31:16,440 --> 00:31:18,800
Speaker 1: It's a the complexities what can kill you. And my

601
00:31:18,880 --> 00:31:22,160
Speaker 1: pal Jim Cramer would also agree with us and say

602
00:31:22,240 --> 00:31:25,240
Speaker 1: that every single listener has to go by their own

603
00:31:25,360 --> 00:31:27,720
Speaker 1: view and not the view of day to day people

604
00:31:27,840 --> 00:31:30,440
Speaker 1: like me that come on the radio or come on

605
00:31:30,560 --> 00:31:34,320
Speaker 1: to the system, which of course being addicted to Bloomberg.

606
00:31:35,800 --> 00:31:37,479
Speaker 1: Let's say I say by it and somebody says, well,

607
00:31:37,520 --> 00:31:38,880
Speaker 1: that's sound smart. I'm going to go out and buy

608
00:31:39,120 --> 00:31:42,280
Speaker 1: as soon as something seems to go wrong, they'll go

609
00:31:42,400 --> 00:31:45,160
Speaker 1: out and sell. So they'll make the mistake of getting

610
00:31:45,160 --> 00:31:47,479
Speaker 1: out too quick because they got in not on their

611
00:31:47,520 --> 00:31:50,320
Speaker 1: own confidence. So the tendency is to be short termist.

612
00:31:50,440 --> 00:31:51,880
Speaker 1: Is that? Is that what you're saying? No, I think that.

613
00:31:51,960 --> 00:31:54,240
Speaker 1: I think in the market where there's so much passive

614
00:31:54,320 --> 00:31:57,720
Speaker 1: investments and against that's money going into index funds and ETFs,

615
00:31:57,840 --> 00:32:00,760
Speaker 1: the best way to create significant outpre forrmants of just

616
00:32:00,880 --> 00:32:03,520
Speaker 1: putting it in an index fund is trying to time

617
00:32:03,600 --> 00:32:05,880
Speaker 1: a macro event. And to do that you have to

618
00:32:06,000 --> 00:32:09,280
Speaker 1: have money to buy when it weakens. Go back to

619
00:32:09,320 --> 00:32:11,640
Speaker 1: where we started here, we're talking about what's what's driving

620
00:32:11,680 --> 00:32:13,600
Speaker 1: the market right now. We haven't talked about central banks

621
00:32:13,920 --> 00:32:15,840
Speaker 1: very much. We have the FED meeting last week, ECB

622
00:32:15,920 --> 00:32:19,240
Speaker 1: meeting as well. When you look at what is driving

623
00:32:19,280 --> 00:32:21,440
Speaker 1: the market right now, political events, can look forward to

624
00:32:21,440 --> 00:32:24,320
Speaker 1: the elections in France, all these macro events. What roll

625
00:32:24,520 --> 00:32:26,920
Speaker 1: are central banks playing right now? It's a key role.

626
00:32:27,360 --> 00:32:30,240
Speaker 1: It is the it's the role still. The European Central

627
00:32:30,280 --> 00:32:33,080
Speaker 1: Bank changed the global economy when they announced that they

628
00:32:33,120 --> 00:32:35,280
Speaker 1: were going to buy private debt. I mean, when you're

629
00:32:35,320 --> 00:32:39,640
Speaker 1: lowering um monetary policy tend basis points further into negative

630
00:32:39,720 --> 00:32:42,960
Speaker 1: territory when nobody's up borrowing anyway, that's why you are

631
00:32:43,000 --> 00:32:45,680
Speaker 1: in malaise. When they decided to buy private corporate debt,

632
00:32:45,800 --> 00:32:48,920
Speaker 1: you're injecting money directly into the balance sheets of companies.

633
00:32:49,440 --> 00:32:52,920
Speaker 1: That is a huge deal and has created partially created

634
00:32:53,240 --> 00:32:56,479
Speaker 1: the recent recovery in Europe. Tony, thank you so much.

635
00:32:56,560 --> 00:33:01,360
Speaker 1: Tony Dryer with us today from vestment there on, maybe

636
00:33:01,400 --> 00:33:12,560
Speaker 1: the basic ideas how not to lose money brought you

637
00:33:12,720 --> 00:33:16,320
Speaker 1: by Bank of America, Mary Lynch. Dedicated to bringing our

638
00:33:16,400 --> 00:33:19,960
Speaker 1: clients insights and solutions to meet the challenges of a

639
00:33:20,040 --> 00:33:24,920
Speaker 1: transforming world. That's the power of global connections, Mary Lynch, Pierce,

640
00:33:25,040 --> 00:33:32,760
Speaker 1: Fenner and Smith Incorporated Member s I p C too

641
00:33:32,840 --> 00:33:36,760
Speaker 1: brief of a visit this morning with Nicholas Burns, former ambassador.

642
00:33:37,160 --> 00:33:40,760
Speaker 1: Ambassador Burns, there was a moment which I hope all

643
00:33:40,800 --> 00:33:43,880
Speaker 1: in Washington saw, where the Prime Minister greeted the Foreign

644
00:33:43,960 --> 00:33:48,400
Speaker 1: Minister of France in the gallery at the House of Commons.

645
00:33:48,800 --> 00:33:52,400
Speaker 1: What can this administration learn is the United Kingdom in

646
00:33:52,520 --> 00:33:56,640
Speaker 1: real time goes through a crisis. Well, I think that

647
00:33:56,720 --> 00:33:58,920
Speaker 1: we're all in this together. That when an incident like

648
00:33:59,080 --> 00:34:02,680
Speaker 1: a terrorist attack like this occurs, um you need international

649
00:34:02,760 --> 00:34:06,520
Speaker 1: cooperation because, as you know, Tom, it's not just the

650
00:34:06,640 --> 00:34:10,960
Speaker 1: military application of force, it's the police work, it's intelligence cooperation,

651
00:34:11,160 --> 00:34:14,080
Speaker 1: judicial cooperation, and I you can be sure that the

652
00:34:14,160 --> 00:34:17,400
Speaker 1: American services are trying to help Britain, as are the

653
00:34:17,480 --> 00:34:22,240
Speaker 1: European services, because these terrorists are floating across our borders,

654
00:34:22,920 --> 00:34:26,680
Speaker 1: especially the European borders, and it's an international fight against them.

655
00:34:27,680 --> 00:34:30,160
Speaker 1: What happens in Washington in the aftermath of an attack

656
00:34:30,239 --> 00:34:32,640
Speaker 1: like the one that we saw yesterday, the Secretary State

657
00:34:32,760 --> 00:34:34,600
Speaker 1: Rex Tillerson had convened a meeting of allies in the

658
00:34:34,640 --> 00:34:37,840
Speaker 1: fight against isis in bottom what's the what's the procedure,

659
00:34:37,920 --> 00:34:41,759
Speaker 1: what's the protocol? Well, certainly President Trump did the right thing.

660
00:34:41,880 --> 00:34:44,760
Speaker 1: He called Theresa May, the Prime Minister of Great Britain,

661
00:34:44,800 --> 00:34:48,080
Speaker 1: to offer our assistance and offer condolences. Rex Tillerson made

662
00:34:48,120 --> 00:34:51,160
Speaker 1: a statement because he had fifty odd foreign ministers there

663
00:34:51,200 --> 00:34:55,080
Speaker 1: on the talking about the fight against the Islamic State.

664
00:34:55,280 --> 00:35:00,799
Speaker 1: But more importantly, our intelligence and counter terror personnel. We're

665
00:35:00,840 --> 00:35:04,759
Speaker 1: reaching out, I'm sure, to their British counterparts to offer assistance.

666
00:35:04,800 --> 00:35:07,680
Speaker 1: If that assistance is necessary and the one thing that

667
00:35:07,760 --> 00:35:10,560
Speaker 1: we've learned, and the British have more experience than anyone

668
00:35:10,600 --> 00:35:14,000
Speaker 1: else because of the sordid I r a campaign against

669
00:35:14,040 --> 00:35:16,840
Speaker 1: Britain over so many decades, that you do need to

670
00:35:17,000 --> 00:35:20,880
Speaker 1: work across international borders when you're trying to combat modern terrorism.

671
00:35:20,960 --> 00:35:23,560
Speaker 1: And I admire the way the British have conducted themselves

672
00:35:23,920 --> 00:35:26,239
Speaker 1: over the last twenty four hours and going back to work,

673
00:35:26,680 --> 00:35:30,040
Speaker 1: millions of Londoners on the streets, going back into their

674
00:35:30,080 --> 00:35:32,560
Speaker 1: normal routines, which I think which the British believe is

675
00:35:32,600 --> 00:35:34,800
Speaker 1: the best answer to terrorism in their right and a

676
00:35:34,920 --> 00:35:37,839
Speaker 1: certain courage, and of course the international perspective that Prime

677
00:35:37,880 --> 00:35:41,680
Speaker 1: Minister gave Prime Minister May gave us on the injured,

678
00:35:42,160 --> 00:35:45,560
Speaker 1: UH and the dead. We speak with Nicholas Burns of course,

679
00:35:45,600 --> 00:35:49,600
Speaker 1: with his public service to the United States Ambassador UM.

680
00:35:50,239 --> 00:35:52,440
Speaker 1: I think there's a lot of value to the fears

681
00:35:52,560 --> 00:35:55,960
Speaker 1: that people have of terrorism. The President was able to

682
00:35:56,760 --> 00:36:00,840
Speaker 1: find a residence about this within his campaign. It's a

683
00:36:00,920 --> 00:36:04,600
Speaker 1: residence that leads to bands to walls, and yet here

684
00:36:04,640 --> 00:36:08,080
Speaker 1: again is a supposed lone walls that we don't really

685
00:36:08,160 --> 00:36:11,560
Speaker 1: know the details, a wall or a band here really

686
00:36:11,600 --> 00:36:14,960
Speaker 1: wouldn't have worked, would it. No, I wouldn't it. But

687
00:36:15,080 --> 00:36:17,240
Speaker 1: let me just say, Tom, I think you know. President

688
00:36:17,280 --> 00:36:20,880
Speaker 1: Trump is right that terrorism is a major threat to

689
00:36:20,920 --> 00:36:23,360
Speaker 1: the United States, as it is to allied countries like Britain.

690
00:36:23,719 --> 00:36:25,880
Speaker 1: But you have to fight it on different levels. He

691
00:36:26,040 --> 00:36:29,480
Speaker 1: convened over the over this week fifty odd countries and

692
00:36:29,560 --> 00:36:31,440
Speaker 1: the fight against the Islamic State. He was right to

693
00:36:31,520 --> 00:36:34,520
Speaker 1: do that, President Trump and Secretary Tillerson. So on the

694
00:36:34,560 --> 00:36:36,719
Speaker 1: one hand, you have to combat the Islamic State and

695
00:36:36,760 --> 00:36:39,120
Speaker 1: Syrie interact where they're bases. But on the other hand,

696
00:36:39,640 --> 00:36:43,160
Speaker 1: to protect Americans here at home or Brits in London,

697
00:36:43,560 --> 00:36:45,279
Speaker 1: you've got to be It's a different game, it's a

698
00:36:45,360 --> 00:36:49,759
Speaker 1: different struggle. And this attack apparently came in London from

699
00:36:49,840 --> 00:36:52,239
Speaker 1: someone who's been living in the United Kingdom for quite

700
00:36:52,320 --> 00:36:55,800
Speaker 1: some time, as some of the attacks h San Bernardino,

701
00:36:55,880 --> 00:36:58,479
Speaker 1: for instance, in the United States have come from people

702
00:36:58,480 --> 00:37:00,319
Speaker 1: who've been living in our country. So it's a very

703
00:37:00,440 --> 00:37:04,360
Speaker 1: different level of difficulty, and you've got our employee intelligence

704
00:37:04,400 --> 00:37:06,880
Speaker 1: and police as well as the military on different fields

705
00:37:06,920 --> 00:37:10,319
Speaker 1: of this battle. Do you feel is a grizzled pro

706
00:37:10,800 --> 00:37:16,160
Speaker 1: of bureaucracy that we are spending our intelligent budget intelligently.

707
00:37:16,800 --> 00:37:19,279
Speaker 1: Is it money well spent or do you wake up

708
00:37:19,320 --> 00:37:22,080
Speaker 1: every morning saying we're frittering it away or squandering it.

709
00:37:23,000 --> 00:37:25,880
Speaker 1: I have I served in the Diplomatic Corps, obviously, but

710
00:37:25,960 --> 00:37:28,960
Speaker 1: I have tremendous respect for the intelligence community in the

711
00:37:29,040 --> 00:37:32,520
Speaker 1: United States and for the FBI and our law enforcement community.

712
00:37:32,560 --> 00:37:35,000
Speaker 1: They are putting their lives on the line. They're very

713
00:37:35,120 --> 00:37:38,360
Speaker 1: good at what they do. No one's perfect, none of

714
00:37:38,480 --> 00:37:41,160
Speaker 1: us are perfect, and so sometimes someone gets through like

715
00:37:41,320 --> 00:37:44,200
Speaker 1: the London attack or did yesterday. But you see the

716
00:37:44,320 --> 00:37:47,000
Speaker 1: follow up, You see the speed with which the British

717
00:37:47,040 --> 00:37:50,640
Speaker 1: authorities are working our authorities under when we've been attacked,

718
00:37:50,960 --> 00:37:53,200
Speaker 1: and it truly is impressive. So I would say you

719
00:37:53,360 --> 00:37:56,480
Speaker 1: have to spend this money on our on the FBI

720
00:37:56,560 --> 00:37:58,880
Speaker 1: and intelligence services to keep us safe. And Tom and

721
00:37:59,040 --> 00:38:02,640
Speaker 1: your earlier question, it's not really a question of building walls.

722
00:38:02,880 --> 00:38:05,160
Speaker 1: Walls aren't going to help. Walls on a border don't

723
00:38:05,200 --> 00:38:09,160
Speaker 1: help intelligence and police work is what helps master bards.

724
00:38:09,160 --> 00:38:10,799
Speaker 1: I want to ask you about a relationship with NATO.

725
00:38:10,880 --> 00:38:13,279
Speaker 1: At that joint press conference last week, Chancellor Merkel and

726
00:38:13,360 --> 00:38:15,680
Speaker 1: President Trump both talked about NATO we had the President

727
00:38:16,320 --> 00:38:17,960
Speaker 1: uh saying what many had hoped he'd say for a

728
00:38:18,040 --> 00:38:20,040
Speaker 1: long time, that is that he supports the Alliance. He

729
00:38:20,080 --> 00:38:22,880
Speaker 1: pivoted very quickly to talk about how it's financed, or

730
00:38:22,920 --> 00:38:25,719
Speaker 1: how he believes it's it's financed. And then we have

731
00:38:25,760 --> 00:38:27,680
Speaker 1: rex stealers in the Secretary of State saying he couldn't

732
00:38:27,719 --> 00:38:29,719
Speaker 1: make a NATO meeting, NATO saying we're happy to apply

733
00:38:29,840 --> 00:38:33,160
Speaker 1: to change the meeting date US to accommodate him. What's

734
00:38:33,200 --> 00:38:36,839
Speaker 1: your sense of this administration's support of the alliance right now? Well,

735
00:38:36,920 --> 00:38:39,439
Speaker 1: it's tepid and they haven't really found the right notes

736
00:38:39,480 --> 00:38:42,320
Speaker 1: and the right tonality. Because the United States is the

737
00:38:42,480 --> 00:38:45,719
Speaker 1: leader of NATO, of course, Secretary Tellerston has to be

738
00:38:45,800 --> 00:38:48,239
Speaker 1: at the meeting of NATO Feur ministers before he goes

739
00:38:48,320 --> 00:38:49,800
Speaker 1: to Moscow. And it looks like now they're going to

740
00:38:49,880 --> 00:38:51,920
Speaker 1: try to rearrange the schedules that he can do that.

741
00:38:52,000 --> 00:38:54,880
Speaker 1: So there's a happier outcome here. I thought that President

742
00:38:54,920 --> 00:38:56,840
Speaker 1: Trump I was glad to hear him say that he

743
00:38:56,920 --> 00:38:59,400
Speaker 1: believes NATO is vital, but then it within a second

744
00:38:59,480 --> 00:39:01,560
Speaker 1: he trans Asian to say, but they're not paying enough.

745
00:39:01,840 --> 00:39:04,040
Speaker 1: He's right they're not paying enough, but he almost treats

746
00:39:04,040 --> 00:39:07,040
Speaker 1: it like a protection racket. If you don't pay, I'm

747
00:39:07,040 --> 00:39:09,600
Speaker 1: going to withdraw our support, which is not the way

748
00:39:09,680 --> 00:39:13,200
Speaker 1: that any American president has ever treated our allies who

749
00:39:13,280 --> 00:39:16,239
Speaker 1: came to our defense on nine eleven. And so I

750
00:39:16,320 --> 00:39:19,080
Speaker 1: think the administration really needs to get into the leadership

751
00:39:19,200 --> 00:39:22,040
Speaker 1: mode they've been following on the NATO issue. We are

752
00:39:22,120 --> 00:39:24,000
Speaker 1: the leaders of NATO, and we have to act like

753
00:39:24,120 --> 00:39:26,600
Speaker 1: it and believe in it. And I don't think we've

754
00:39:26,600 --> 00:39:29,000
Speaker 1: heard that from President Trump yet. Before we let you go,

755
00:39:29,080 --> 00:39:30,359
Speaker 1: let me put a question to you. I'm gonna put

756
00:39:30,360 --> 00:39:32,120
Speaker 1: the Emory slaughter here in a few minutes as well.

757
00:39:32,160 --> 00:39:33,759
Speaker 1: When you look at Rex Tillerson and the kind of

758
00:39:33,800 --> 00:39:36,640
Speaker 1: diplomat he is shaping up to be, what camp does

759
00:39:36,680 --> 00:39:39,279
Speaker 1: he fall into. We have structural realism and all of that.

760
00:39:39,600 --> 00:39:41,360
Speaker 1: What kind of diplomat is Rex Tillerson. What do we

761
00:39:41,480 --> 00:39:45,000
Speaker 1: know about his diplomatic tax It's just not clear because

762
00:39:45,080 --> 00:39:47,640
Speaker 1: he's been literally quiet for the last couple of months.

763
00:39:47,680 --> 00:39:51,759
Speaker 1: He hasn't been speaking publicly, he hasn't enunciated his view

764
00:39:51,840 --> 00:39:54,680
Speaker 1: of the world. Uh, it's unclear what kind of influence

765
00:39:54,719 --> 00:39:56,200
Speaker 1: he has with the White House, and so I think

766
00:39:56,239 --> 00:39:59,240
Speaker 1: we just need more time to see Secretary Tillerson in action.

767
00:39:59,320 --> 00:40:01,920
Speaker 1: But I can tell you is the Trump administration is

768
00:40:01,960 --> 00:40:04,719
Speaker 1: proposing a cut in the State Department in a I

769
00:40:04,800 --> 00:40:08,480
Speaker 1: D budgets that would be catastrophic. It would cripple our diplomats.

770
00:40:08,840 --> 00:40:10,680
Speaker 1: It's the wrong way to go. And I hope Sectary

771
00:40:10,719 --> 00:40:13,520
Speaker 1: Collison will fight this, and I hope Congress will resist

772
00:40:13,600 --> 00:40:16,399
Speaker 1: it and bring the Trump position of the administration back

773
00:40:16,480 --> 00:40:19,600
Speaker 1: to a more realistic posture that our diplomats need to

774
00:40:19,600 --> 00:40:22,160
Speaker 1: be funded. Abassador Burns, thank you so much for your

775
00:40:22,200 --> 00:40:24,680
Speaker 1: perspective this day where the Prime Minister speaks to the

776
00:40:24,760 --> 00:40:42,360
Speaker 1: House of Commons. This is special, folks. We've had a

777
00:40:42,719 --> 00:40:45,960
Speaker 1: really wonderful run of strong books. I think of admalst

778
00:40:46,120 --> 00:40:49,319
Speaker 1: Vetus book out of Fletcher School, in Tom Nichols book

779
00:40:49,320 --> 00:40:52,640
Speaker 1: out of the Naval Academy on Experts, and then a

780
00:40:52,719 --> 00:40:55,480
Speaker 1: little jewel shows up the chess board in the web

781
00:40:55,680 --> 00:40:58,560
Speaker 1: Emery Slaughter and you're like, yeah, yeah, she's great, it'll

782
00:40:58,600 --> 00:41:01,360
Speaker 1: be great, and then you open it in the joy

783
00:41:02,120 --> 00:41:06,160
Speaker 1: of how you recapitulate and bring forward this dreaded thing

784
00:41:06,840 --> 00:41:10,160
Speaker 1: game theory out of Princeton. You know that Avanash ticks

785
00:41:10,239 --> 00:41:15,040
Speaker 1: it the artist strategy. Uh is it almost a cottage industry?

786
00:41:15,200 --> 00:41:18,080
Speaker 1: And my joy as you open with the late Tom

787
00:41:18,239 --> 00:41:21,480
Speaker 1: Shelling changed how all of us think. We would all say,

788
00:41:21,719 --> 00:41:24,879
Speaker 1: why did you open this book on networks the chess

789
00:41:24,920 --> 00:41:28,960
Speaker 1: board in the web with Professor Schilling? Because Tom Shelling

790
00:41:29,160 --> 00:41:32,120
Speaker 1: defined the framework that we have used for for whip

791
00:41:32,239 --> 00:41:36,160
Speaker 1: for foreign policy since nine He took the U. S.

792
00:41:36,239 --> 00:41:40,919
Speaker 1: Soviet relationship, which was a zero sum relationship. So people thought,

793
00:41:41,000 --> 00:41:43,160
Speaker 1: and he applied game theory and he said, nope, this

794
00:41:43,320 --> 00:41:46,200
Speaker 1: is actually a bargaining game. It can be chicken where

795
00:41:46,239 --> 00:41:49,640
Speaker 1: heres adding straight at each other. It can be prisoner's dilemma,

796
00:41:49,840 --> 00:41:54,120
Speaker 1: it can be a coordination game. And that structured how

797
00:41:54,360 --> 00:41:58,520
Speaker 1: we think about other countries. That's the chessboard world, and

798
00:41:58,800 --> 00:42:01,560
Speaker 1: that for me was the some you know, the text

799
00:42:01,719 --> 00:42:03,600
Speaker 1: that you looked at. But when I look at the world,

800
00:42:03,760 --> 00:42:06,640
Speaker 1: I see state to state relations. But I also see

801
00:42:06,640 --> 00:42:09,320
Speaker 1: a world of networks. Right now, we just had a

802
00:42:09,440 --> 00:42:14,280
Speaker 1: terrorist attack inspired by the ISIS network. There are criminal networks,

803
00:42:14,360 --> 00:42:18,520
Speaker 1: their business networks, their civic networks. We have a strategy

804
00:42:18,560 --> 00:42:21,239
Speaker 1: of conflict. That was Tom Shelling's book we do not

805
00:42:21,480 --> 00:42:24,080
Speaker 1: have strategies of connection, and so I set out to

806
00:42:24,280 --> 00:42:26,680
Speaker 1: try to provide a framework for those. How much does

807
00:42:26,719 --> 00:42:30,160
Speaker 1: a diplomatic theory change? Uh, Secretary of States and Secretary

808
00:42:30,160 --> 00:42:33,000
Speaker 1: of State, is he or she choosing his or her

809
00:42:33,040 --> 00:42:34,640
Speaker 1: outlook on the world or is the outlook on the

810
00:42:34,680 --> 00:42:36,399
Speaker 1: world governed by the way that the world is shaped

811
00:42:36,400 --> 00:42:38,759
Speaker 1: at that particular time. Well, I think it's always both.

812
00:42:38,960 --> 00:42:42,319
Speaker 1: Every president, every section of state discovers that the world

813
00:42:42,400 --> 00:42:44,400
Speaker 1: gets in the way whatever it is they thought they

814
00:42:44,480 --> 00:42:47,080
Speaker 1: wanted to do. Uh, you know, the world serves them

815
00:42:47,160 --> 00:42:49,720
Speaker 1: up something different. And I remember serving with Secretary Clinton

816
00:42:49,800 --> 00:42:53,640
Speaker 1: where in one week you had the Pakistani Taliban being

817
00:42:53,760 --> 00:42:56,920
Speaker 1: within a hundred miles of Islamabad, you had the H

818
00:42:57,040 --> 00:43:00,480
Speaker 1: one N one virus breaking out in Mexico, and you

819
00:43:00,600 --> 00:43:04,239
Speaker 1: had what looked like a double dip global recession. So, uh,

820
00:43:04,760 --> 00:43:07,040
Speaker 1: you get what's thrown at you. But again, we have

821
00:43:07,200 --> 00:43:10,040
Speaker 1: better tools for dealing with what states throw at us

822
00:43:10,280 --> 00:43:12,880
Speaker 1: than what nonstate actors throw at us. You see this

823
00:43:13,000 --> 00:43:16,080
Speaker 1: networked world, But what's brought it about? Is it? Is

824
00:43:16,120 --> 00:43:18,960
Speaker 1: it technology that's led us? There? Is it something else? Well,

825
00:43:19,280 --> 00:43:22,400
Speaker 1: it's technology that's always been true. You know. John Maynard

826
00:43:22,520 --> 00:43:26,280
Speaker 1: Keynes has this famous paragraph where he describes the London

827
00:43:26,840 --> 00:43:30,040
Speaker 1: uh you know banker sitting you know in nineteen thirteen

828
00:43:30,200 --> 00:43:33,000
Speaker 1: with products from all over the world. That was enormous

829
00:43:33,080 --> 00:43:36,160
Speaker 1: globalization then, and that was brought about by the steamship

830
00:43:36,360 --> 00:43:41,080
Speaker 1: and various other uh technologies in the Industrial revolution. Today

831
00:43:41,320 --> 00:43:44,520
Speaker 1: it is again it's globalization and technology. Those two things

832
00:43:44,680 --> 00:43:47,640
Speaker 1: are connected. But our kids don't know what it's like

833
00:43:48,120 --> 00:43:50,200
Speaker 1: not to be connected. We grew up in a world

834
00:43:50,239 --> 00:43:52,120
Speaker 1: where it's us and then we connect to others. And

835
00:43:52,200 --> 00:43:54,279
Speaker 1: in our next section we'll get to the politics of

836
00:43:54,360 --> 00:43:56,440
Speaker 1: the moment. But what I would use here from electrical

837
00:43:56,520 --> 00:44:01,239
Speaker 1: engineering is slew rates, which is the right angle a circuitry,

838
00:44:01,640 --> 00:44:05,040
Speaker 1: which is things move fast, things move a light speed. Now,

839
00:44:05,440 --> 00:44:09,319
Speaker 1: let's take a corporate landscape. Somebody reading the chess board

840
00:44:09,360 --> 00:44:12,280
Speaker 1: in the web within a corporate milliew, the new strategy

841
00:44:12,320 --> 00:44:14,840
Speaker 1: there's no five year strategy. The new strategy in the

842
00:44:14,960 --> 00:44:17,759
Speaker 1: slew rate is three years exactly if if that I mean,

843
00:44:17,800 --> 00:44:20,080
Speaker 1: I often say this is no world to predict and

844
00:44:20,200 --> 00:44:22,759
Speaker 1: planned plan. It's a world in which you have to

845
00:44:22,800 --> 00:44:25,040
Speaker 1: adapt and respond. So one of the things you want

846
00:44:25,640 --> 00:44:28,880
Speaker 1: is to create the kind of fast adaptive network so

847
00:44:28,960 --> 00:44:32,120
Speaker 1: that whatever happens, you're ready. And indeed I use Stan

848
00:44:32,239 --> 00:44:34,680
Speaker 1: mc crystals work on team of teams where you know,

849
00:44:34,800 --> 00:44:37,160
Speaker 1: he had to design a network to defeat al Qaida

850
00:44:37,200 --> 00:44:40,520
Speaker 1: in the Rock and he says and he says to CEOs, look,

851
00:44:40,960 --> 00:44:43,880
Speaker 1: I needed to design a very particular kind of network

852
00:44:44,000 --> 00:44:48,000
Speaker 1: so I could let my people respond on their own

853
00:44:48,200 --> 00:44:50,480
Speaker 1: on the ground, depending what came out of And you

854
00:44:50,560 --> 00:44:52,640
Speaker 1: detail this in the book. The Crystal Group applies this

855
00:44:52,719 --> 00:44:55,120
Speaker 1: to the forrporate setting. How does it do that? Well,

856
00:44:55,360 --> 00:44:57,759
Speaker 1: the first thing it does is a network analysis of

857
00:44:57,840 --> 00:45:00,239
Speaker 1: any business and that's critical because we all all know

858
00:45:00,800 --> 00:45:04,040
Speaker 1: their informal networks. There's no organization in the world where

859
00:45:04,080 --> 00:45:06,200
Speaker 1: there's a you know, there's the hierarchy. You report to

860
00:45:06,239 --> 00:45:08,920
Speaker 1: this person, but how do things really get done? Where's

861
00:45:08,920 --> 00:45:10,839
Speaker 1: the network? So you've gotta map that and then figure

862
00:45:10,840 --> 00:45:12,680
Speaker 1: out how you tweak it. What does this mean for

863
00:45:12,760 --> 00:45:15,320
Speaker 1: the power structure in the in the diplomatic sense you

864
00:45:15,360 --> 00:45:18,239
Speaker 1: had world powers before. Is power waning because of this?

865
00:45:18,360 --> 00:45:22,359
Speaker 1: Is power being more evenly distributed among countries and among leaders? Yes,

866
00:45:22,560 --> 00:45:24,640
Speaker 1: although one of the reasons it's called the chessboard in

867
00:45:24,640 --> 00:45:26,719
Speaker 1: the web is you have to see both. Right, you

868
00:45:26,880 --> 00:45:29,400
Speaker 1: have to look at the world, the states and the

869
00:45:29,480 --> 00:45:31,719
Speaker 1: different power changes there, but you also have to look

870
00:45:31,800 --> 00:45:36,240
Speaker 1: at you know, foreign policymakers who are ceo, civic leaders,

871
00:45:36,440 --> 00:45:41,560
Speaker 1: university presidents, sadly criminals all on the other side. UH.

872
00:45:41,680 --> 00:45:43,360
Speaker 1: And so if you're in government, you need to be

873
00:45:43,440 --> 00:45:46,200
Speaker 1: doing that state to state state craft, but you need

874
00:45:46,239 --> 00:45:48,959
Speaker 1: to be doing webcraft, and that means bringing in all

875
00:45:49,160 --> 00:45:51,680
Speaker 1: these actors who are not governments. Were then very slaughter

876
00:45:51,760 --> 00:45:53,680
Speaker 1: the chess board in the web. We're going to continue here.

877
00:45:53,760 --> 00:45:56,880
Speaker 1: Breaking news out of Ford motor It gives pause. They

878
00:45:57,040 --> 00:46:00,520
Speaker 1: lower the sites dramatically. For their first quarter they were

879
00:46:00,520 --> 00:46:03,280
Speaker 1: at forty seven cents and they come way down center

880
00:46:03,360 --> 00:46:07,200
Speaker 1: tendency thirty two to thirty three cents. That is remarkable

881
00:46:07,880 --> 00:46:11,240
Speaker 1: from Fort Motile. Much more on that they site higher costs,

882
00:46:11,360 --> 00:46:15,680
Speaker 1: lower volume uh and unfavorable exchange. UM. I want to

883
00:46:15,760 --> 00:46:17,880
Speaker 1: give you the blurb reward of the year. As everyone

884
00:46:18,000 --> 00:46:20,600
Speaker 1: knows it's ever written a book. There's a game to

885
00:46:20,760 --> 00:46:23,880
Speaker 1: getting blurbs. I was honored when I did flying with

886
00:46:24,000 --> 00:46:26,880
Speaker 1: one engine. UH that I got I got a blurb

887
00:46:27,000 --> 00:46:30,360
Speaker 1: from this person, a blur from that person. In your world,

888
00:46:30,560 --> 00:46:34,279
Speaker 1: you can't do better than your first two names. Night

889
00:46:34,480 --> 00:46:36,719
Speaker 1: and Kiwen. Did you talk to them at the same time?

890
00:46:37,560 --> 00:46:40,440
Speaker 1: I mean, that is that is a great honor, isn't it?

891
00:46:40,520 --> 00:46:42,640
Speaker 1: It is? And they are dear friends of mine. And

892
00:46:42,800 --> 00:46:46,719
Speaker 1: they wrote the book in nine Power and Interdependence, and

893
00:46:46,840 --> 00:46:50,000
Speaker 1: that was the chessboard, Power and Interdependence the Web, And

894
00:46:50,200 --> 00:46:53,160
Speaker 1: so I see in many ways I'm updating their work

895
00:46:53,680 --> 00:46:56,800
Speaker 1: and giving you practical This is exactly set, folks. And

896
00:46:56,840 --> 00:47:00,319
Speaker 1: I would Paul in your Venodaker well at Berkeley as well,

897
00:47:00,520 --> 00:47:02,600
Speaker 1: and pull it back to Tom showing at the beginning

898
00:47:02,600 --> 00:47:04,879
Speaker 1: of your book, which is it's one big game of chicken.

899
00:47:05,320 --> 00:47:07,840
Speaker 1: And to get to our next section, what does President

900
00:47:07,880 --> 00:47:11,239
Speaker 1: Trump need to learn about the theory of the game

901
00:47:11,320 --> 00:47:14,960
Speaker 1: of chicken within power and interdependence and within strategy and

902
00:47:15,040 --> 00:47:18,520
Speaker 1: conflict showing that's what do we need to learn about chicken?

903
00:47:18,600 --> 00:47:21,040
Speaker 1: All right? Well, the first thing that it's over exit Bacon.

904
00:47:21,160 --> 00:47:23,920
Speaker 1: Did you know, well, except that I think that this

905
00:47:24,120 --> 00:47:28,680
Speaker 1: is a critical example of So the Russians hacked our election, right,

906
00:47:28,800 --> 00:47:32,600
Speaker 1: and we responded by you know, putting out a few

907
00:47:33,200 --> 00:47:36,160
Speaker 1: expelling some diplomats and sanctions, putin responded to that by

908
00:47:36,239 --> 00:47:40,760
Speaker 1: inviting the American diplomats children to the Kremlin. He basically

909
00:47:40,840 --> 00:47:43,440
Speaker 1: laughed at us, we need to respond, and this is

910
00:47:43,640 --> 00:47:47,520
Speaker 1: chicken in a way that actually threatens his secrets, that

911
00:47:47,760 --> 00:47:51,320
Speaker 1: humiliates him, that puts that really puts him on notice. No,

912
00:47:52,080 --> 00:47:55,200
Speaker 1: we will not stand. Where did our timidity come from?

913
00:47:55,440 --> 00:47:58,000
Speaker 1: Within the constructive game of chicken? David Gurr and I

914
00:47:58,040 --> 00:48:00,600
Speaker 1: played Chicken every morning, trying to figure out how to

915
00:48:00,640 --> 00:48:03,080
Speaker 1: get to the next couple of coffees. Well, when did

916
00:48:03,160 --> 00:48:07,160
Speaker 1: we get timid? So I do think that the sort

917
00:48:07,200 --> 00:48:11,960
Speaker 1: of national trauma of first nine eleven, but then particularly

918
00:48:12,000 --> 00:48:16,759
Speaker 1: Iraq and Afghanistan has made us extremely hesitant or made

919
00:48:16,840 --> 00:48:20,480
Speaker 1: the Obama administration to use force. And you can't play

920
00:48:20,600 --> 00:48:23,560
Speaker 1: chicken unless you've got a credible threat, and that means

921
00:48:23,600 --> 00:48:25,520
Speaker 1: you've got to use force, so people know that you're

922
00:48:25,560 --> 00:48:28,560
Speaker 1: willing to David, check that China you're heard thrown? Was

923
00:48:28,680 --> 00:48:32,040
Speaker 1: Charles Vollmer, a technical director, thrown China because the eggs

924
00:48:32,040 --> 00:48:34,880
Speaker 1: were overcooked? You write in this book of being a

925
00:48:34,960 --> 00:48:37,759
Speaker 1: student at Princeton and reading Robert Cohen's book and and

926
00:48:37,960 --> 00:48:41,279
Speaker 1: and Joseph Nye as well, how much is you know,

927
00:48:41,480 --> 00:48:43,320
Speaker 1: you've taught for a long time at Princeton. Has the

928
00:48:43,480 --> 00:48:47,080
Speaker 1: pedagogy change when it comes to foreign policy? You know

929
00:48:47,239 --> 00:48:50,480
Speaker 1: that you would still read nine Cohen I if you were,

930
00:48:50,600 --> 00:48:54,480
Speaker 1: if I were teaching, you would you would. But but

931
00:48:54,640 --> 00:48:56,880
Speaker 1: I do think one of the problems is it's become

932
00:48:57,000 --> 00:48:59,319
Speaker 1: much much more specialized. Right, so you don't take these

933
00:48:59,520 --> 00:49:04,360
Speaker 1: braw courses where you're thinking strategy. You take political strategy,

934
00:49:04,400 --> 00:49:08,040
Speaker 1: you take political economy or data. Well, we're gonna come back,

935
00:49:08,080 --> 00:49:10,360
Speaker 1: Emory Slaughter with us. We've got to cut your the

936
00:49:10,480 --> 00:49:12,600
Speaker 1: chess board in the web, and we're gonna come right

937
00:49:12,640 --> 00:49:17,040
Speaker 1: back on that idea, the broad strategy reading Kissengers Diplomas

938
00:49:17,080 --> 00:49:19,600
Speaker 1: at gunpoint you will read this book. No, you need

939
00:49:19,680 --> 00:49:22,480
Speaker 1: to read about networks in the new digital world, and

940
00:49:22,520 --> 00:49:25,719
Speaker 1: you'll do that with Emory Slaughter. We celebrate the chessboard

941
00:49:25,760 --> 00:49:28,920
Speaker 1: in the web, Strategies of Connection in a networked world

942
00:49:28,960 --> 00:49:33,239
Speaker 1: with Emory Slaughter, truly must read if you are read

943
00:49:33,320 --> 00:49:36,320
Speaker 1: on international relations, and again starting with the game theory

944
00:49:36,360 --> 00:49:41,160
Speaker 1: of time shelling uh and working off of that, I

945
00:49:41,320 --> 00:49:43,480
Speaker 1: did what any good radio slave would do. I went

946
00:49:43,560 --> 00:49:46,520
Speaker 1: to the conclusion and you wrote a chapter on Mr

947
00:49:46,600 --> 00:49:52,120
Speaker 1: Trump the rise of webcraft translate for us, the webcraft

948
00:49:52,320 --> 00:49:55,160
Speaker 1: of Twitter and the president. We didn't do this with

949
00:49:55,280 --> 00:49:59,680
Speaker 1: President Obama, President Johnson, and President Mix and we're now

950
00:50:00,040 --> 00:50:03,239
Speaker 1: reading our way through policy. Is that in your book? Well,

951
00:50:03,280 --> 00:50:06,520
Speaker 1: it is in the sense that that you know, President

952
00:50:06,600 --> 00:50:10,360
Speaker 1: Trump has a brilliant broadcast network, right, He's got twenty

953
00:50:10,440 --> 00:50:13,680
Speaker 1: six million Twitter followers. That's about half his voters. That's

954
00:50:13,719 --> 00:50:17,400
Speaker 1: a a sizeable junk of all US voters. And but

955
00:50:17,600 --> 00:50:21,280
Speaker 1: that's a one way network, right what President Obama discovered

956
00:50:21,320 --> 00:50:23,560
Speaker 1: and he had a pretty great network too in two

957
00:50:23,600 --> 00:50:26,480
Speaker 1: thousand and eight when he tried to convert those people

958
00:50:26,560 --> 00:50:29,960
Speaker 1: to advocates for Obamacare. And now President Trump would like

959
00:50:30,040 --> 00:50:33,239
Speaker 1: to have those people be advocates for repealing Obamacare. He's

960
00:50:33,239 --> 00:50:35,480
Speaker 1: got the wrong network for that. So he's got, you know,

961
00:50:35,600 --> 00:50:39,480
Speaker 1: one person at the center broadcasting to million. He needs

962
00:50:39,520 --> 00:50:42,520
Speaker 1: what I call a pod network, right of where those

963
00:50:42,600 --> 00:50:46,279
Speaker 1: supporters are actually clustered in ways that you can mobilize

964
00:50:46,360 --> 00:50:48,920
Speaker 1: them and they can take action. And that's a different

965
00:50:49,080 --> 00:50:51,800
Speaker 1: net structure of a network. So he needs to actually

966
00:50:52,000 --> 00:50:53,719
Speaker 1: learn some network theory if he's going to make it

967
00:50:53,800 --> 00:50:55,600
Speaker 1: work for what he needs to do now, Tom I'm

968
00:50:55,600 --> 00:50:57,319
Speaker 1: glad that you've brought us here because I look at

969
00:50:57,400 --> 00:50:59,320
Speaker 1: Secretary of State Rex Taylorson and I wonder where he

970
00:50:59,400 --> 00:51:02,080
Speaker 1: fits into this networked at world. We followed his trip

971
00:51:02,160 --> 00:51:05,960
Speaker 1: to Asia last week. He wasn't exactly broadcasting that trip.

972
00:51:06,000 --> 00:51:07,640
Speaker 1: He brought one journalist on the plane we got to

973
00:51:07,680 --> 00:51:09,239
Speaker 1: write up of that. He avowed in an interview with

974
00:51:09,280 --> 00:51:11,680
Speaker 1: her that he doesn't like the media, doesn't see a

975
00:51:11,760 --> 00:51:15,000
Speaker 1: need for media. I imagine that public diplomacy is key

976
00:51:15,080 --> 00:51:19,160
Speaker 1: to this networked world, being out there talking, expressing your opinions. Absolutely,

977
00:51:19,200 --> 00:51:22,279
Speaker 1: And he is now back in a very traditional chess

978
00:51:22,320 --> 00:51:24,799
Speaker 1: board world where it's sort of Manda man in a dark,

979
00:51:24,880 --> 00:51:27,799
Speaker 1: oak paneled room, and he's not an all secret right

980
00:51:27,960 --> 00:51:31,719
Speaker 1: like pre World War One secret agreements secretly arrived at

981
00:51:31,840 --> 00:51:34,520
Speaker 1: where in fact, uh, you know, he needs to do

982
00:51:34,880 --> 00:51:39,640
Speaker 1: what he needs to be, engaging uh, the public at large,

983
00:51:39,719 --> 00:51:44,040
Speaker 1: but again creating networks of pockets of support for American policy.

984
00:51:44,239 --> 00:51:47,560
Speaker 1: And we're crazy if we think it's only foreign governments

985
00:51:47,800 --> 00:51:51,080
Speaker 1: we need to influence. Again, look at terrorist attacks. That's

986
00:51:51,200 --> 00:51:54,560
Speaker 1: not governments, that's people you need to think about, not

987
00:51:54,800 --> 00:51:58,920
Speaker 1: just public diplomacy. Heat how great America is, But where

988
00:51:59,200 --> 00:52:01,879
Speaker 1: are the peak in different countries around the world, who

989
00:52:01,920 --> 00:52:05,319
Speaker 1: themselves are pushing back against the Isle narrative? And how

990
00:52:05,360 --> 00:52:08,279
Speaker 1: do you connect them first to each other and then

991
00:52:08,840 --> 00:52:11,960
Speaker 1: and then sort of in a in a broader network.

992
00:52:12,040 --> 00:52:15,200
Speaker 1: And that's that is something I think Secretary Clinton started,

993
00:52:15,800 --> 00:52:18,879
Speaker 1: uh and Secretary carry did did less than she did,

994
00:52:19,080 --> 00:52:21,600
Speaker 1: and Rex Dillerson is really heading backwards. How do you

995
00:52:21,680 --> 00:52:24,200
Speaker 1: deal with the overwhelmingness of the networked world. I can

996
00:52:24,280 --> 00:52:27,040
Speaker 1: understand the tendency because of how big and why it

997
00:52:27,320 --> 00:52:29,560
Speaker 1: is to find comfort in the wood paneled room to

998
00:52:29,640 --> 00:52:31,680
Speaker 1: want to go back to that. How do you fight that?

999
00:52:31,800 --> 00:52:33,400
Speaker 1: How do you see this as a world that you

1000
00:52:33,440 --> 00:52:36,239
Speaker 1: can navigate? You know, I think that that's a that's

1001
00:52:36,239 --> 00:52:39,239
Speaker 1: a great observation that I think it's right. There's this

1002
00:52:39,360 --> 00:52:41,040
Speaker 1: sort of feeling like, well, I'll just do what I

1003
00:52:41,200 --> 00:52:44,399
Speaker 1: know I can do, But you actually have to do both,

1004
00:52:44,520 --> 00:52:47,000
Speaker 1: so you do still need that room. Like if we're

1005
00:52:47,000 --> 00:52:49,800
Speaker 1: making a deal with Iran, that's not a global network,

1006
00:52:49,840 --> 00:52:52,520
Speaker 1: that's a negotiation, but you have That's part of the

1007
00:52:52,560 --> 00:52:54,600
Speaker 1: reason I wrote the book. Part of the reason it

1008
00:52:54,680 --> 00:52:57,319
Speaker 1: seems overwhelming is we don't have any tools. So if

1009
00:52:57,360 --> 00:52:59,600
Speaker 1: you think again, go back to shelling. Oh wait a minute,

1010
00:52:59,600 --> 00:53:02,200
Speaker 1: this is a operation game, this is a coordination game.

1011
00:53:02,480 --> 00:53:05,239
Speaker 1: This is what I do in those games. I'm saying, Oh,

1012
00:53:05,560 --> 00:53:08,400
Speaker 1: this is a resilience network. We need to build resilience.

1013
00:53:08,560 --> 00:53:10,080
Speaker 1: This is what it's got to look like. This is

1014
00:53:10,120 --> 00:53:12,600
Speaker 1: a task network. We need to get something done. That's

1015
00:53:12,640 --> 00:53:15,560
Speaker 1: team of teams, or this is a scale network. We

1016
00:53:15,640 --> 00:53:17,359
Speaker 1: need to correct people. And I think it'll be more

1017
00:53:17,440 --> 00:53:19,080
Speaker 1: manageable when you think about it that. I want to

1018
00:53:19,120 --> 00:53:21,640
Speaker 1: take the time we've got left and ask the question.

1019
00:53:21,680 --> 00:53:24,400
Speaker 1: I got a wonderful email the other day from Carol

1020
00:53:24,480 --> 00:53:28,600
Speaker 1: driving with her daughter, Uh, you know, listening to the

1021
00:53:28,719 --> 00:53:30,960
Speaker 1: hot air coming out of the Mr Gera and Mr King,

1022
00:53:31,840 --> 00:53:35,120
Speaker 1: and it brings it back to the hallmark of your academics.

1023
00:53:35,200 --> 00:53:37,319
Speaker 1: And I'm going to take this back to Charlottesville and St.

1024
00:53:37,360 --> 00:53:40,040
Speaker 1: Anne's a million years ago, which you've always been the

1025
00:53:40,080 --> 00:53:43,440
Speaker 1: adult academically in the room. You've got an understanding of

1026
00:53:43,520 --> 00:53:46,720
Speaker 1: the heritage and the reading of the literature like nine King,

1027
00:53:47,400 --> 00:53:49,879
Speaker 1: and you've also got a more modern twist as well.

1028
00:53:50,000 --> 00:53:53,960
Speaker 1: What's your recommendation to parents trying to get boys and

1029
00:53:54,080 --> 00:53:58,680
Speaker 1: girls motivated to get off the phone and to read

1030
00:53:58,800 --> 00:54:02,040
Speaker 1: the original literature. It's out there. Who did that? I did?

1031
00:54:02,239 --> 00:54:04,160
Speaker 1: And and actually I think you put your finger on it,

1032
00:54:04,280 --> 00:54:07,000
Speaker 1: which is and it goes back to they're overwhelmed, right,

1033
00:54:07,040 --> 00:54:11,160
Speaker 1: There's so much coming at them, so it's unfashionable. But

1034
00:54:11,239 --> 00:54:13,120
Speaker 1: I would say you need to go back to create

1035
00:54:13,200 --> 00:54:17,400
Speaker 1: a cannon, right, like here are basic text. Since November,

1036
00:54:17,520 --> 00:54:20,480
Speaker 1: I've gone back and I've been reading the Founders right,

1037
00:54:20,520 --> 00:54:25,760
Speaker 1: I've been reading sort of key document volume on Thomas

1038
00:54:25,840 --> 00:54:30,680
Speaker 1: Jefferson right now. Absolutely, and John Mitcham Jefferson is just wonderful.

1039
00:54:30,760 --> 00:54:33,279
Speaker 1: So I think we need to remind our kids to

1040
00:54:33,440 --> 00:54:37,360
Speaker 1: be able to process this infinite amount of information, you

1041
00:54:37,560 --> 00:54:40,080
Speaker 1: need a set of texts and you need to and

1042
00:54:40,440 --> 00:54:43,160
Speaker 1: you can master those. And that is exactly what I

1043
00:54:43,239 --> 00:54:47,479
Speaker 1: think the strategy of conflict is in in internationalition very quickly.

1044
00:54:47,560 --> 00:54:49,800
Speaker 1: Or what was it like to be intimidated by Professor

1045
00:54:49,880 --> 00:54:52,120
Speaker 1: Holman at Princeton three years ago? My god, he was

1046
00:54:52,200 --> 00:54:55,080
Speaker 1: a giant, he was, but he was very nice to

1047
00:54:55,160 --> 00:54:56,960
Speaker 1: me by the time I got there, not helped. I

1048
00:54:57,080 --> 00:54:59,840
Speaker 1: was his dean, so I was his boss, but he

1049
00:55:00,719 --> 00:55:05,120
Speaker 1: I was his boss, I was, but was yeah, but

1050
00:55:05,239 --> 00:55:08,440
Speaker 1: he was a power not enough time, don't be a

1051
00:55:08,520 --> 00:55:11,120
Speaker 1: stranger the chessboard in the Web Strategies of Connection in

1052
00:55:11,160 --> 00:55:14,439
Speaker 1: the Network World, A Marie Slaughter hits a home run

1053
00:55:14,760 --> 00:55:18,560
Speaker 1: by dragging Thomas Schelling a nine Q and I hope

1054
00:55:18,560 --> 00:55:23,400
Speaker 1: Professor Nice hearing this. I mean dragging them and dragging

1055
00:55:23,560 --> 00:55:26,640
Speaker 1: them into the modern day and age of network and

1056
00:55:27,040 --> 00:55:42,920
Speaker 1: digital his books. His thick tone is familiar to anyone

1057
00:55:43,239 --> 00:55:45,919
Speaker 1: who's been through law school Constitutional Law in its fifth edition,

1058
00:55:45,960 --> 00:55:49,160
Speaker 1: Criminal Procedure in its second Irwin Chamerinski, the founding ding

1059
00:55:49,239 --> 00:55:50,920
Speaker 1: to the School of Law at the University of California,

1060
00:55:50,920 --> 00:55:53,600
Speaker 1: Irvine joins us now as we've watched the hearings unfold

1061
00:55:53,640 --> 00:55:56,120
Speaker 1: on Capitol Hill. In the heart Senate Office up building,

1062
00:55:56,560 --> 00:55:59,480
Speaker 1: Judge Gorse has taken questions from members of the Senate Judiciary.

1063
00:55:59,520 --> 00:56:03,000
Speaker 1: Comin Marinsky joining us now in the Spectrum, Enterprise, Phoneline, Specium, Enterprise,

1064
00:56:03,120 --> 00:56:05,560
Speaker 1: Nation y I T and Infrastructure Solutions. Great to have

1065
00:56:05,680 --> 00:56:07,080
Speaker 1: you with here, sir, and I want to ask you,

1066
00:56:07,239 --> 00:56:09,360
Speaker 1: first of all, what we're getting out of all of this.

1067
00:56:09,480 --> 00:56:12,040
Speaker 1: We see the marathon hearings, We we hear the questions

1068
00:56:12,080 --> 00:56:14,560
Speaker 1: answered by the judge hoping to be a justice what

1069
00:56:14,640 --> 00:56:16,560
Speaker 1: are we learning about him over the course of this week.

1070
00:56:17,719 --> 00:56:21,360
Speaker 1: We're learning he's very smart, he's very articulate, and that

1071
00:56:21,440 --> 00:56:24,239
Speaker 1: he refuses to answer questions but anything constrained to his

1072
00:56:24,360 --> 00:56:27,959
Speaker 1: legal views. Has that always been the case? We watched

1073
00:56:28,000 --> 00:56:30,839
Speaker 1: the production here every few years as this happens. It's

1074
00:56:30,840 --> 00:56:32,600
Speaker 1: not a regular thing. It's it's a rare thing. But

1075
00:56:33,160 --> 00:56:36,000
Speaker 1: it seems like that's the game, dodging these questions, trying

1076
00:56:36,040 --> 00:56:39,520
Speaker 1: to perhaps pretend that there is no inherent jurisprudence that

1077
00:56:39,560 --> 00:56:44,080
Speaker 1: these guys have. So long as the Senate is controlled

1078
00:56:44,120 --> 00:56:47,280
Speaker 1: by the same political party as the president, the hearings

1079
00:56:47,320 --> 00:56:51,640
Speaker 1: are largely meaningless. There are fifty two Republican senators now

1080
00:56:51,880 --> 00:56:54,840
Speaker 1: one of them is indicated a desire to vote against

1081
00:56:54,960 --> 00:56:58,279
Speaker 1: Neil Gorcich. He knows that he knows he doesn't have

1082
00:56:58,360 --> 00:57:01,839
Speaker 1: to answer questions. If the additive and controlled by the Democrats,

1083
00:57:02,200 --> 00:57:05,040
Speaker 1: it's then a very different story, because then they can say,

1084
00:57:05,239 --> 00:57:07,239
Speaker 1: if you don't answer our questions, we're not going to

1085
00:57:07,280 --> 00:57:10,759
Speaker 1: confirm you. How early on do somebody who's entering the

1086
00:57:10,840 --> 00:57:14,440
Speaker 1: law develop his or her own jurisprudence. You're teaching students

1087
00:57:14,480 --> 00:57:16,520
Speaker 1: that you see, Irvon you taught students at Duke before that.

1088
00:57:17,120 --> 00:57:20,280
Speaker 1: I'm sure many of them aspire to be judges someday.

1089
00:57:20,520 --> 00:57:22,840
Speaker 1: Is there an inclination now to be private about one's

1090
00:57:22,880 --> 00:57:24,760
Speaker 1: belief because of this? In other words, how long is

1091
00:57:24,800 --> 00:57:28,840
Speaker 1: the historical record for candidates? I think you have two

1092
00:57:28,880 --> 00:57:32,720
Speaker 1: different questions. One is how soon do students develop their

1093
00:57:32,800 --> 00:57:36,040
Speaker 1: jurisprudential philosophy? And I say that many students have that

1094
00:57:36,680 --> 00:57:39,560
Speaker 1: in law school. I hear it expressed by my constitutional

1095
00:57:39,680 --> 00:57:42,280
Speaker 1: law students all the time. The second, to me is

1096
00:57:42,320 --> 00:57:46,440
Speaker 1: a much harder question. Are people now more private because

1097
00:57:46,760 --> 00:57:49,920
Speaker 1: they think someday they're nominated for a federal judge that

1098
00:57:50,320 --> 00:57:54,560
Speaker 1: their views should not be known. Maybe there are some

1099
00:57:54,760 --> 00:57:57,360
Speaker 1: that way. I once talked to a young law professors

1100
00:57:57,400 --> 00:57:59,960
Speaker 1: said he didn't want to take positions on controversial issues

1101
00:58:00,080 --> 00:58:02,680
Speaker 1: because he wanted to be a federal judge someday. But

1102
00:58:02,760 --> 00:58:06,080
Speaker 1: I think that's pretty rare. I think that um certainly

1103
00:58:06,120 --> 00:58:08,560
Speaker 1: being on the Supreme Court of like being struck by lightning.

1104
00:58:08,600 --> 00:58:11,280
Speaker 1: I don't expect that people are planning their careers from

1105
00:58:11,360 --> 00:58:15,360
Speaker 1: law school with a state hope that that might happen. Uh.

1106
00:58:15,720 --> 00:58:18,919
Speaker 1: Wonderful to have you on professor, this morning. I guess

1107
00:58:18,960 --> 00:58:21,720
Speaker 1: it required read along the way as Bernard Schwartz one

1108
00:58:21,840 --> 00:58:25,760
Speaker 1: volume on the Supreme Court, which regrettably ends long ago

1109
00:58:25,880 --> 00:58:30,560
Speaker 1: and far away like near seven. Help me here with

1110
00:58:30,720 --> 00:58:35,360
Speaker 1: the distinction between Judge Scalia's theory and Judge core such

1111
00:58:35,400 --> 00:58:38,400
Speaker 1: as theory, what's the difference and how they look at

1112
00:58:38,440 --> 00:58:44,200
Speaker 1: the original document you mentioned seven? And what's interesting about

1113
00:58:44,280 --> 00:58:47,720
Speaker 1: that year is it's when Robert Borke was denied confirmation

1114
00:58:47,840 --> 00:58:50,680
Speaker 1: for the Supreme Court. And Robert Bourke was the nied

1115
00:58:50,720 --> 00:58:54,840
Speaker 1: confirmation because of the so called originalist views, his view

1116
00:58:54,960 --> 00:58:58,200
Speaker 1: that the meaning of a constitutional prevision is the same

1117
00:58:58,320 --> 00:59:01,200
Speaker 1: today as it was adopted. The meaning of the constitutional

1118
00:59:01,280 --> 00:59:04,640
Speaker 1: provision is six when it's adopted, we changed only by amendment.

1119
00:59:05,160 --> 00:59:09,080
Speaker 1: Justice Scalia was also an originalist, and both Judge Bourke

1120
00:59:09,160 --> 00:59:13,000
Speaker 1: and Justice Scalia set from their originalist philosophy. There's no

1121
00:59:13,200 --> 00:59:16,760
Speaker 1: protection of the right to privacy under the Constitution like

1122
00:59:17,120 --> 00:59:21,560
Speaker 1: for reproductive freedom. There's no protection for women from discrimination

1123
00:59:21,640 --> 00:59:24,880
Speaker 1: under equal protection because the drafters of the Fourteenth Amendment

1124
00:59:24,960 --> 00:59:29,240
Speaker 1: eighteen sixty eight didn't contend that. Neil Gorsich is also

1125
00:59:29,560 --> 00:59:33,160
Speaker 1: an originalist, and so far as we know, his views

1126
00:59:33,200 --> 00:59:37,000
Speaker 1: are the same as Robert Bourke or Antonin Scalias. Because

1127
00:59:37,040 --> 00:59:39,480
Speaker 1: he hasn't been willing to talk about any legal issues.

1128
00:59:39,840 --> 00:59:42,760
Speaker 1: Hard to know when, if at all, he would disagree

1129
00:59:42,840 --> 00:59:47,800
Speaker 1: with them. Does his natural law treatment and the complexity

1130
00:59:48,000 --> 00:59:51,560
Speaker 1: of how natural law is studied, does it move him

1131
00:59:51,640 --> 00:59:58,040
Speaker 1: beyond Scalia and the others too? Maybe a more modern treatment. Well,

1132
00:59:58,440 --> 01:00:02,480
Speaker 1: natural law is quite different originalism. Natural law would say

1133
01:00:02,680 --> 01:00:06,480
Speaker 1: that there are rights that exist just by virtue or

1134
01:00:06,520 --> 01:00:10,040
Speaker 1: being humans, and that courts should protect those rights even

1135
01:00:10,120 --> 01:00:13,640
Speaker 1: if they're not in the Constitution. Neil Gorsich wrote a

1136
01:00:13,800 --> 01:00:18,360
Speaker 1: book about euthanasia that expressed the natural law velocity. But

1137
01:00:18,480 --> 01:00:21,520
Speaker 1: I've read hundreds of his decisions from the United Sates

1138
01:00:21,560 --> 01:00:23,560
Speaker 1: Court Appeals to the Tenth Circuit, and I don't see

1139
01:00:23,600 --> 01:00:27,240
Speaker 1: an expression of natural law there at all. Glad you

1140
01:00:27,320 --> 01:00:29,000
Speaker 1: took us there, because that's what I guess we have

1141
01:00:29,120 --> 01:00:32,600
Speaker 1: to look at. Here is his record, hundreds thousands of decisions.

1142
01:00:33,240 --> 01:00:34,800
Speaker 1: If you were to put them together, what kind of

1143
01:00:34,840 --> 01:00:36,640
Speaker 1: picture could you paint? For is here of the way

1144
01:00:36,680 --> 01:00:40,640
Speaker 1: that he's acted as a federal judge, a very conservative judge.

1145
01:00:41,200 --> 01:00:44,880
Speaker 1: Yesterday I gave a talk to lawyers who handled death

1146
01:00:44,920 --> 01:00:47,960
Speaker 1: penalty cases in Federal Defenders Offices, and I talked with

1147
01:00:48,080 --> 01:00:50,760
Speaker 1: them about his record in criminal cases and especially in

1148
01:00:50,840 --> 01:00:54,560
Speaker 1: death penalty cases. He is a consistent vote for law

1149
01:00:54,720 --> 01:00:59,520
Speaker 1: enforcement and prosecutors, often in dissent. So I think that

1150
01:00:59,640 --> 01:01:04,640
Speaker 1: he would very much be like Justice Scalia, because I

1151
01:01:04,720 --> 01:01:07,640
Speaker 1: think he'd be more conservative than Justice Scalia when it

1152
01:01:07,720 --> 01:01:10,960
Speaker 1: comes to criminal cases. Um, he's going to be exactly

1153
01:01:11,080 --> 01:01:14,120
Speaker 1: like Justice Scalia. When it comes to religion cases. He

1154
01:01:14,200 --> 01:01:16,920
Speaker 1: rejects the idea of a separation of church and state.

1155
01:01:17,320 --> 01:01:21,520
Speaker 1: He favors the ability of people diffree exercise religion, even

1156
01:01:21,640 --> 01:01:24,880
Speaker 1: it means inflicting injuries on others. You know, I think

1157
01:01:24,920 --> 01:01:27,760
Speaker 1: of the way that academia works. When a professor retires

1158
01:01:27,800 --> 01:01:31,320
Speaker 1: of say American literature, there is a tenure line. There's

1159
01:01:31,320 --> 01:01:33,880
Speaker 1: an effort to replace that person with somebody else who

1160
01:01:33,920 --> 01:01:36,760
Speaker 1: studies American literature. Is the same thing becoming true on

1161
01:01:36,800 --> 01:01:38,800
Speaker 1: the Supreme Court. We heard from President Trump saying he

1162
01:01:38,840 --> 01:01:41,880
Speaker 1: wants to find an air apparent to Justice Scalia. You

1163
01:01:41,920 --> 01:01:43,840
Speaker 1: want to replace one with with kind of a clone

1164
01:01:43,920 --> 01:01:48,800
Speaker 1: or someone like that person when it comes to jurisprudential philosophy. No,

1165
01:01:49,000 --> 01:01:52,960
Speaker 1: I don't think so. If Hillary Clinton had been elected president,

1166
01:01:53,440 --> 01:01:56,720
Speaker 1: she would want to pick the antithesis incident Scalia. In

1167
01:01:56,880 --> 01:01:59,880
Speaker 1: terms of political philosophy. Um, I think she would have

1168
01:02:00,080 --> 01:02:03,280
Speaker 1: nominated jud to Judge Merrick Garland, maybe even somebody more

1169
01:02:03,320 --> 01:02:08,040
Speaker 1: progressive than Merrick Garland. Um. He had Donald Trump decided

1170
01:02:08,080 --> 01:02:10,880
Speaker 1: he wanted to be a moderate rather than a far

1171
01:02:11,000 --> 01:02:14,360
Speaker 1: right conservative, he would have picked a moderate sal Court

1172
01:02:14,400 --> 01:02:17,440
Speaker 1: of Appeals judge or a moderate individual for the School

1173
01:02:17,520 --> 01:02:19,840
Speaker 1: of Seat. But he said from the time he campaigned

1174
01:02:20,160 --> 01:02:24,200
Speaker 1: that he wanted to pick someone just like school ideologically,

1175
01:02:24,240 --> 01:02:27,320
Speaker 1: he wanted to give this nomination to the far right.

1176
01:02:27,720 --> 01:02:31,520
Speaker 1: And the day after President Trump nominated Judge Corsets, the

1177
01:02:31,720 --> 01:02:36,560
Speaker 1: National Review and Ted Cruz were loud in their enthusiastic praise.

1178
01:02:36,960 --> 01:02:39,920
Speaker 1: I think that tells you were now Gorges on the

1179
01:02:40,000 --> 01:02:43,640
Speaker 1: ideological spectrum. Let me pick up where we left off

1180
01:02:43,720 --> 01:02:45,400
Speaker 1: with the Charlie Pellett and Gregg's story. There just a

1181
01:02:45,440 --> 01:02:47,960
Speaker 1: moment ago they're talking about the death penalty. Of course,

1182
01:02:48,000 --> 01:02:50,439
Speaker 1: the Supreme Court weighing in on those issues from time

1183
01:02:50,560 --> 01:02:53,080
Speaker 1: to time. Help us understand you the role that a

1184
01:02:53,200 --> 01:02:56,200
Speaker 1: justice course which might play when you look at the cases,

1185
01:02:56,280 --> 01:02:58,120
Speaker 1: the kinds of cases that the Supreme Court is waging.

1186
01:02:58,160 --> 01:03:00,640
Speaker 1: We've seen four four decision after four for decision here

1187
01:03:00,680 --> 01:03:04,480
Speaker 1: over the last few months. I think with the guard

1188
01:03:04,560 --> 01:03:06,840
Speaker 1: of the death penalty, there are four justice on the

1189
01:03:06,960 --> 01:03:11,400
Speaker 1: current court, led by Justice Brior and joined by Justices Ginsburg, Senter,

1190
01:03:11,440 --> 01:03:14,280
Speaker 1: and Kagan, who would vote to eliminate the death penalty

1191
01:03:14,600 --> 01:03:17,200
Speaker 1: so that it's inherently cruel and the unusual punishment. There

1192
01:03:17,240 --> 01:03:20,240
Speaker 1: are four justices to reject that, Chief Justice Roberts and

1193
01:03:20,280 --> 01:03:23,240
Speaker 1: just Kennedy, Thomas, and Alito. I think he had a

1194
01:03:23,360 --> 01:03:26,919
Speaker 1: Democratic appointee replaced Justice Scalia, there would be a fifth

1195
01:03:27,000 --> 01:03:30,000
Speaker 1: vote to declare the death penalty unconstitutional or at least

1196
01:03:30,160 --> 01:03:34,120
Speaker 1: greatly restricted to application. From everything we know about Judge

1197
01:03:34,160 --> 01:03:36,840
Speaker 1: Gorcich from his votes on the Tenth Circuit, he's going

1198
01:03:36,920 --> 01:03:39,360
Speaker 1: to be with the Conservative The death penalty will have

1199
01:03:40,040 --> 01:03:43,920
Speaker 1: five votes boppolted, five votes to reject any significant restrictions.

1200
01:03:44,240 --> 01:03:47,000
Speaker 1: A lot of people criticize this court for being overly corporatist,

1201
01:03:47,080 --> 01:03:50,200
Speaker 1: ruling the lot for corporations. We had Judge corc responding

1202
01:03:50,240 --> 01:03:52,760
Speaker 1: to questions from senators this week saying he's ruled for

1203
01:03:52,800 --> 01:03:54,720
Speaker 1: the big guy, and he's ruled for the little guy. Again,

1204
01:03:54,760 --> 01:03:58,360
Speaker 1: you've gone through many of these decisions. Can you can

1205
01:03:58,400 --> 01:04:00,360
Speaker 1: you estimate? Can you say how often he's gone for

1206
01:04:00,440 --> 01:04:03,520
Speaker 1: one or the other? Well, it's always hard to do

1207
01:04:03,640 --> 01:04:06,400
Speaker 1: those kinds of numbers. But I think when you focus

1208
01:04:06,520 --> 01:04:09,760
Speaker 1: on the divided cases where there's a majority in the descent,

1209
01:04:10,240 --> 01:04:13,160
Speaker 1: he comes down very much on the side of employer

1210
01:04:13,480 --> 01:04:17,760
Speaker 1: over employee, of business over consumer. There was one case

1211
01:04:17,800 --> 01:04:20,000
Speaker 1: they got a lot of attention in the hearings that

1212
01:04:20,160 --> 01:04:24,360
Speaker 1: it involves a truck driver whose truck broke down and

1213
01:04:24,440 --> 01:04:27,840
Speaker 1: it was extremely cold, and finally he felt literally his

1214
01:04:27,960 --> 01:04:29,520
Speaker 1: life was going to be in danger if he didn't

1215
01:04:29,640 --> 01:04:32,800
Speaker 1: move the truck. He did so and got fired for that.

1216
01:04:33,440 --> 01:04:36,040
Speaker 1: And it was Judge gors that you said he could

1217
01:04:36,120 --> 01:04:39,360
Speaker 1: be fired for doing that and if nothing else, that

1218
01:04:39,480 --> 01:04:41,800
Speaker 1: chose a lack of empathy. But I think what the

1219
01:04:41,880 --> 01:04:45,000
Speaker 1: point was the Democratic senators is it shows that he

1220
01:04:45,120 --> 01:04:48,680
Speaker 1: really sized that the employer over the employee. He I

1221
01:04:48,800 --> 01:04:51,360
Speaker 1: think again, it's going to do with the Conservative majority

1222
01:04:51,640 --> 01:04:54,520
Speaker 1: on the whole range of cases where it's business firsus

1223
01:04:54,560 --> 01:04:58,200
Speaker 1: employee or consumer. A lot of Conservatives would say professor,

1224
01:04:58,600 --> 01:05:01,760
Speaker 1: But the Conservatives won the election, so they get to

1225
01:05:01,840 --> 01:05:04,560
Speaker 1: tilt the Supreme Court. And there's a great certitude about

1226
01:05:04,600 --> 01:05:08,080
Speaker 1: picking judges and you know, literate in our history going

1227
01:05:08,160 --> 01:05:11,640
Speaker 1: back before Marshall. Frankly, you never know what a justice

1228
01:05:11,760 --> 01:05:15,160
Speaker 1: is going to do. What is the modern probability of

1229
01:05:15,240 --> 01:05:21,040
Speaker 1: any conservative justice versus Suitor or or or or Byron

1230
01:05:21,160 --> 01:05:23,680
Speaker 1: White or others? Is there something different in the kool

1231
01:05:23,720 --> 01:05:28,320
Speaker 1: aid now that makes a conservative a conservative forever? Well,

1232
01:05:28,360 --> 01:05:33,160
Speaker 1: you ask two questions. First, is winning of presidency the prerogative?

1233
01:05:33,200 --> 01:05:36,040
Speaker 1: And then determined on the Supreme Court only if you

1234
01:05:36,080 --> 01:05:38,840
Speaker 1: can get a majority of the Senate to agree. In

1235
01:05:38,960 --> 01:05:43,840
Speaker 1: the nineteenth century, the Senate rejected about of all presidential lemies,

1236
01:05:43,840 --> 01:05:47,440
Speaker 1: including one from George Washington. Um. In the twentieth century

1237
01:05:47,560 --> 01:05:51,840
Speaker 1: you had examples of John Parker in ninety one, claimant

1238
01:05:51,880 --> 01:05:56,120
Speaker 1: Hensworth hild Car as well Robert Cork. So it's not

1239
01:05:56,280 --> 01:05:59,080
Speaker 1: a presidential prerogative. The Senate as that advise and consent,

1240
01:05:59,720 --> 01:06:04,520
Speaker 1: seken Um. There's certainly instances were individuals appointed that the

1241
01:06:04,600 --> 01:06:09,160
Speaker 1: Supreme Court didn't turn out as expected. Um, David Suitor

1242
01:06:09,520 --> 01:06:13,560
Speaker 1: wasn't the conservative that the George H. W. Bush administration wanted.

1243
01:06:13,840 --> 01:06:16,880
Speaker 1: But what's notable is that David Suitor, if you read

1244
01:06:16,920 --> 01:06:19,520
Speaker 1: his opinions from the New Hampshire Supreme Court, didn't have

1245
01:06:19,680 --> 01:06:22,680
Speaker 1: a definite ideology. Um. If you look at the last

1246
01:06:22,840 --> 01:06:27,960
Speaker 1: four Supreme Court nominees, Roberts, a, Leader, and Kagan, they've

1247
01:06:28,000 --> 01:06:31,919
Speaker 1: all turned out exactly as would have been predicted. Most

1248
01:06:32,120 --> 01:06:36,440
Speaker 1: justices turn out exactly as predicted, especially if they have

1249
01:06:36,480 --> 01:06:41,480
Speaker 1: an ideological track record. Relatively few people have major ideological

1250
01:06:41,560 --> 01:06:45,920
Speaker 1: transformations in their sixties and their seventies. Antonin Scalia was

1251
01:06:46,000 --> 01:06:49,600
Speaker 1: as conservative when he died on February two thousand sixteen.

1252
01:06:49,920 --> 01:06:53,560
Speaker 1: Is went on the court in. Ruth Bader Ginsburg's liberal

1253
01:06:53,640 --> 01:06:56,640
Speaker 1: today as when she went on the court in I'll

1254
01:06:56,720 --> 01:06:59,280
Speaker 1: offer your prediction, Neil Gors which is going to be

1255
01:06:59,360 --> 01:07:04,400
Speaker 1: conservative next year, ten years, twenty years, thirty years, maybe

1256
01:07:04,480 --> 01:07:07,480
Speaker 1: forty years from now. He's forty nine years old. If

1257
01:07:07,520 --> 01:07:10,960
Speaker 1: he remains on the Supreme Court until these nineties, the

1258
01:07:11,080 --> 01:07:13,600
Speaker 1: age was just down past Stevens rehired, he'll be a

1259
01:07:13,600 --> 01:07:18,560
Speaker 1: Supreme Court justice. Let me ask you lastly to drop

1260
01:07:18,640 --> 01:07:21,160
Speaker 1: on your experience in the classroom once more. We we

1261
01:07:21,280 --> 01:07:23,800
Speaker 1: we've seen what happened to Sally Yates. We've seen what

1262
01:07:23,840 --> 01:07:25,800
Speaker 1: happened to pre Perar. When you talk to students who

1263
01:07:25,840 --> 01:07:28,640
Speaker 1: are interested in getting into the law to work in government,

1264
01:07:29,280 --> 01:07:30,800
Speaker 1: what do you tell them about what we've seen here

1265
01:07:30,840 --> 01:07:33,280
Speaker 1: over these last few months about the way the Justice

1266
01:07:33,320 --> 01:07:38,240
Speaker 1: Department is operating now under President Trump. I always encourage

1267
01:07:38,320 --> 01:07:41,400
Speaker 1: my students to go into government in public service. I'm

1268
01:07:41,520 --> 01:07:43,800
Speaker 1: very proud that of all the law schools in the country,

1269
01:07:44,160 --> 01:07:46,840
Speaker 1: we were ranked second in placing our students in government

1270
01:07:46,880 --> 01:07:49,680
Speaker 1: and public service. I think now when it comes to

1271
01:07:49,760 --> 01:07:52,920
Speaker 1: going into the federal government, assuming there's going to be

1272
01:07:52,960 --> 01:07:56,040
Speaker 1: any hiring letter, it depends on what they're going to

1273
01:07:56,080 --> 01:07:58,959
Speaker 1: be doing. My oldest son is a federal profit toitter

1274
01:07:59,080 --> 01:08:02,000
Speaker 1: doing gangs and crime cases. It's not going to be

1275
01:08:02,080 --> 01:08:04,959
Speaker 1: effected by whose Attorney General. But if a student wants

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Speaker 1: to go now into environmental work on behalf of helping

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Speaker 1: the environment, for civil rights work on behalf of the

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Speaker 1: African Americans and gays and lesbians and women, I don't

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Speaker 1: think the Sessions Justice Department is gonna be the place

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Speaker 1: to go. Iin Schamarinski, thanks very much for joining us

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Speaker 1: set today or Chamarinska, dean of the School of la

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Speaker 1: at the University of California Irvine joining us on the

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Speaker 1: Spectrum Enterprize, Phoneline, specrument FRISE and nationwide fire based network

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Speaker 1: and i T Infrastructure solutions. I wasn't joking at the

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Speaker 1: top of the show. I think that every student who

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Speaker 1: takes criminal law or constitutional law uses his textbook. So

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Speaker 1: you're leading. I mean he's huge using Duke right for

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Speaker 1: a long while, and then there was a huge battle

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Speaker 1: when he went to u k L Irvine. I mean

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Speaker 1: he blew up the state legal uh community with the

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Speaker 1: debate on a liberal conservative and all the work and

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Speaker 1: founding dean of that school. So leading a fairly young

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Speaker 1: school out there in California, trying to give you a

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Speaker 1: little more informed coverage of what we're seeing in the

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Speaker 1: Supreme Court. And one idea here I might see just

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Speaker 1: David very quickly, is is we just assume there'll be

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Speaker 1: other discussions. I mean, it's not a one off for

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Speaker 1: President Trump, That's right, And I think that's what Democrats

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Speaker 1: are weighing right now in terms of how they approach

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Speaker 1: this particular nomination, how how full throatedly they'll go against

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Speaker 1: this nominally looking ahead to who the next might be.

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Speaker 1: Thanks for listening to the Bloomberg Surveillance Podcast. Subscribe and

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Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform

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Speaker 1: you prefer. I'm out on Twitter at Tom Keene. David

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Speaker 1: Gura is at David Gura. Before the podcast, you can

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Speaker 1: always catch us worldwide. I'm Bloomberg Radio, brought you by

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Speaker 1: Bank of America Mary Lynch. Dedicated to bringing our clients

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Speaker 1: insights and solutions to meet the challenges of a transforming world.

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