1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's a power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections. Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:27,400 Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,840 --> 00:00:31,520 Speaker 1: I'm Tom Keen with David Gura. Daily we bring you 6 00:00:31,560 --> 00:00:36,600 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:37,000 --> 00:00:41,600 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 8 00:00:41,680 --> 00:00:49,200 Speaker 1: of course on the Bloomberg Friends of the Quad in London. 9 00:00:49,800 --> 00:00:52,120 Speaker 1: I'm Tom Keene in New York and we celebrate today 10 00:00:52,159 --> 00:00:56,360 Speaker 1: the Leader's Bookshelf. It is a book by Admiral James 11 00:00:56,360 --> 00:01:00,640 Speaker 1: Travitas of Tufts and the Fletcher School, and I'm gonna 12 00:01:00,640 --> 00:01:06,320 Speaker 1: tell you it's totally original. It is beyond original. Admiral Stevinus, 13 00:01:06,400 --> 00:01:12,080 Speaker 1: congratulations on the book. Chapter two, making time for reading 14 00:01:12,120 --> 00:01:15,160 Speaker 1: before you go into many many people in the military 15 00:01:15,200 --> 00:01:18,240 Speaker 1: and what book change their lives and is important to 16 00:01:18,240 --> 00:01:21,080 Speaker 1: them for leadership. How do you make time for reading, 17 00:01:21,440 --> 00:01:24,319 Speaker 1: Admiral Stevinus, If we don't have a lecture being stuck 18 00:01:24,319 --> 00:01:28,240 Speaker 1: on a destroyer's Yeah, if you can't go out to 19 00:01:28,280 --> 00:01:31,240 Speaker 1: sea for extended forward deployments. There are other things you 20 00:01:31,280 --> 00:01:34,240 Speaker 1: can do, tom, So I would start by saying you 21 00:01:34,280 --> 00:01:39,120 Speaker 1: can use your downtime productively. So often on an airplane, 22 00:01:39,120 --> 00:01:42,039 Speaker 1: for example, we just kind of default to a glass 23 00:01:42,080 --> 00:01:44,480 Speaker 1: of Scotch and a couple of movies, but you know 24 00:01:44,600 --> 00:01:50,560 Speaker 1: that's incredibly valuable real estate. Secondly, when you are traveling 25 00:01:50,600 --> 00:01:54,640 Speaker 1: in the car audio books are incredibly powerful, and I 26 00:01:54,640 --> 00:01:57,760 Speaker 1: would say a third trick of the trade with reading 27 00:01:58,480 --> 00:02:04,120 Speaker 1: is to read books quickly, obviously, but also to um 28 00:02:04,480 --> 00:02:07,280 Speaker 1: dive in deep when you find a book that really 29 00:02:07,360 --> 00:02:11,080 Speaker 1: has meanings. So skim a lot of books in order 30 00:02:11,120 --> 00:02:16,200 Speaker 1: to read powerfully a handful of books. An't well, what 31 00:02:16,240 --> 00:02:18,400 Speaker 1: was the strangest thing when you were writing the book? 32 00:02:18,440 --> 00:02:21,320 Speaker 1: Is there a book that you saw over and over? 33 00:02:21,440 --> 00:02:23,079 Speaker 1: I know I speak to a lot of CEOs here 34 00:02:23,280 --> 00:02:25,400 Speaker 1: in the UK, and actually I'm surprised I always look 35 00:02:25,400 --> 00:02:29,560 Speaker 1: at military books when talking about business. Yeah. One that 36 00:02:29,720 --> 00:02:33,160 Speaker 1: jumps out for business people is The Art of War 37 00:02:33,320 --> 00:02:37,840 Speaker 1: by Sun Sue, who was an ancient strategist, and he 38 00:02:37,880 --> 00:02:41,639 Speaker 1: talks a lot about innovation, about cleverness, about trying to 39 00:02:41,680 --> 00:02:44,920 Speaker 1: get behind your enemy. The Jiu jitsu of war, which 40 00:02:44,960 --> 00:02:47,920 Speaker 1: certainly all applies in business. We often forget though, that 41 00:02:48,040 --> 00:02:52,160 Speaker 1: Sun Sus said went on death ground fight, which is 42 00:02:52,320 --> 00:02:55,519 Speaker 1: about the determination you have to have as a CEO. 43 00:02:55,720 --> 00:02:59,840 Speaker 1: At times do people ask you a question of what 44 00:03:00,000 --> 00:03:02,840 Speaker 1: are they? You know? They should be reading secrets because 45 00:03:03,080 --> 00:03:05,320 Speaker 1: it's it's now a bad thing being an intellectual or 46 00:03:05,320 --> 00:03:10,000 Speaker 1: an academic, you know. I don't think reading books has 47 00:03:10,040 --> 00:03:13,600 Speaker 1: gone out of style. As I motor around and talked 48 00:03:13,600 --> 00:03:16,960 Speaker 1: to a wide variety of people, and that's one of 49 00:03:16,960 --> 00:03:19,280 Speaker 1: the nice things not being the dean of a graduate school. 50 00:03:19,320 --> 00:03:21,960 Speaker 1: You get to speak to people all around the world. 51 00:03:22,360 --> 00:03:25,639 Speaker 1: People still read and they want to exchange book ideas. 52 00:03:25,880 --> 00:03:28,320 Speaker 1: And a great way to start any conversation is what 53 00:03:28,360 --> 00:03:31,320 Speaker 1: are you reading these days? Well, I'll go with that 54 00:03:31,440 --> 00:03:35,240 Speaker 1: and dive into the book. I mentioned this earlier. Thomas 55 00:03:35,240 --> 00:03:39,000 Speaker 1: Hayward one of our great admirals, and there's there's memos 56 00:03:39,000 --> 00:03:41,240 Speaker 1: from you, Lewisy's grand he goes to World War two 57 00:03:41,280 --> 00:03:44,280 Speaker 1: and nimits I mean, and that there's that fear I 58 00:03:44,280 --> 00:03:46,640 Speaker 1: think in a lot of kids today not to go 59 00:03:46,720 --> 00:03:50,640 Speaker 1: back into our history to find the books to read. 60 00:03:50,680 --> 00:03:53,240 Speaker 1: There's something I can't read a book that's twenty years old, 61 00:03:53,400 --> 00:03:56,120 Speaker 1: like the new book, John Tucker, I'm reading Bard Schwartz 62 00:03:56,480 --> 00:03:59,640 Speaker 1: on the Supreme Court from twenty four years ago, and 63 00:03:59,720 --> 00:04:03,360 Speaker 1: yet it's like it was written yesterday. I think that's 64 00:04:03,400 --> 00:04:06,040 Speaker 1: true of so many books. And I'll make another point, Tom, 65 00:04:06,080 --> 00:04:08,880 Speaker 1: which is that a book you read in your twenties 66 00:04:09,360 --> 00:04:11,640 Speaker 1: and get a lot out of at that point in time, 67 00:04:11,680 --> 00:04:15,160 Speaker 1: say A Connecticut Yankee and King Arthur's Court by Mark Twain. 68 00:04:15,680 --> 00:04:17,880 Speaker 1: I went back and read that book again in doing 69 00:04:17,880 --> 00:04:21,640 Speaker 1: the Leader's Bookshelf and got an incredibly different experience out 70 00:04:21,640 --> 00:04:25,360 Speaker 1: of it. So there's real power in reading a nineteenth 71 00:04:25,400 --> 00:04:27,920 Speaker 1: century book, and even when you've read in your youth, 72 00:04:28,040 --> 00:04:30,840 Speaker 1: picking it up again. And now we go sensitive with 73 00:04:30,960 --> 00:04:36,480 Speaker 1: James Travitas page Are you kidding me? A River Runs 74 00:04:36,560 --> 00:04:43,800 Speaker 1: through It? Norman McLean Grog Johnson recommended this one. Uh. 75 00:04:43,880 --> 00:04:47,880 Speaker 1: A River Runs through It is a marvelous book about families. 76 00:04:48,080 --> 00:04:50,880 Speaker 1: And part of a leader's job is life balance, Tom, 77 00:04:50,880 --> 00:04:53,719 Speaker 1: and I bet many of your CEOs and senior business 78 00:04:53,720 --> 00:04:57,080 Speaker 1: people listening want to try to understand how to attain 79 00:04:57,560 --> 00:05:01,120 Speaker 1: a balance in life. Not everything is about out making 80 00:05:01,160 --> 00:05:05,160 Speaker 1: money and building your resume. And the novel a river 81 00:05:05,279 --> 00:05:08,640 Speaker 1: runs through. It is about a troubled family in Montana 82 00:05:08,760 --> 00:05:11,200 Speaker 1: and how they work through some of the great challenges 83 00:05:11,279 --> 00:05:15,240 Speaker 1: that impact them. I think it's also just a spectacularly 84 00:05:15,400 --> 00:05:19,360 Speaker 1: written book, like reading poetry page after page. Yeah, I 85 00:05:19,720 --> 00:05:22,440 Speaker 1: like you know, there's a definitely theme, Admiral, when I 86 00:05:22,640 --> 00:05:24,720 Speaker 1: go through your book the leader's bookshelf is that it's 87 00:05:24,760 --> 00:05:28,040 Speaker 1: all about preparation. And so maybe it's also a good 88 00:05:28,080 --> 00:05:31,039 Speaker 1: idea for a lot of businessmen to read books a 89 00:05:31,040 --> 00:05:33,840 Speaker 1: little bit more like army generals, because you can't leave 90 00:05:33,880 --> 00:05:38,120 Speaker 1: anything to hope or chance. That's exactly right, Francine. And 91 00:05:38,200 --> 00:05:42,000 Speaker 1: let's face it, um, our lives are preparation and we 92 00:05:42,080 --> 00:05:45,400 Speaker 1: get a chance to build ourselves as leaders by the 93 00:05:45,440 --> 00:05:48,040 Speaker 1: gifts were given. Are you tall and good looking? Which 94 00:05:48,120 --> 00:05:51,880 Speaker 1: I am not? But do you get parents who nurture 95 00:05:51,920 --> 00:05:54,920 Speaker 1: you and bring you along? Um? Do you have experiences? 96 00:05:55,000 --> 00:05:58,080 Speaker 1: But the one consistent thing you can do you have 97 00:05:58,160 --> 00:06:01,599 Speaker 1: control over, is to read, and to read consciously, to 98 00:06:01,640 --> 00:06:04,560 Speaker 1: try and learn leadership as you read, by using these 99 00:06:04,560 --> 00:06:09,240 Speaker 1: books almost as simulators, to put yourself in other leadership situations. 100 00:06:09,320 --> 00:06:12,440 Speaker 1: It is all about preparation when you look at the 101 00:06:12,480 --> 00:06:15,080 Speaker 1: state of politics. But also the state of diplomacy around 102 00:06:15,080 --> 00:06:17,960 Speaker 1: the world. Can we actually look back at history and 103 00:06:18,080 --> 00:06:21,800 Speaker 1: books on this or is two thousand and seventeen different. No. 104 00:06:22,120 --> 00:06:24,680 Speaker 1: I think I'll give you two books that I think 105 00:06:25,000 --> 00:06:30,960 Speaker 1: provide marvelous lessons, one positive, one negative. UM Winston Churchill's 106 00:06:31,000 --> 00:06:34,839 Speaker 1: The Second World War, which is really a series of books, 107 00:06:34,920 --> 00:06:40,039 Speaker 1: but it's it's the story of coalition building and determination 108 00:06:40,120 --> 00:06:45,480 Speaker 1: and overcoming enormous challenges. UM. Very inspirational read. On the 109 00:06:45,520 --> 00:06:50,160 Speaker 1: negative side, the current National Security Advisor, Lieutenant General H. R. 110 00:06:50,279 --> 00:06:55,520 Speaker 1: McMaster wrote a book about the Vietnam War called Dereliction 111 00:06:55,600 --> 00:06:58,800 Speaker 1: of Duty of the Failure of the generals to speak 112 00:06:58,839 --> 00:07:02,240 Speaker 1: truth to power. UM. Both of those books I think 113 00:07:02,240 --> 00:07:06,239 Speaker 1: are examples of UH stories that help us be better leaders. 114 00:07:06,640 --> 00:07:09,080 Speaker 1: And now we go to the question that only matters 115 00:07:09,400 --> 00:07:12,440 Speaker 1: to all listening, Amristavite, is how do we get our 116 00:07:12,520 --> 00:07:15,640 Speaker 1: kids to read? What's what's the what's the secret to 117 00:07:15,680 --> 00:07:21,040 Speaker 1: get them off minecraft? Well, first of all, I would 118 00:07:21,040 --> 00:07:23,920 Speaker 1: say you have to talk books with your kids and 119 00:07:24,400 --> 00:07:27,320 Speaker 1: get put good ideas of books in front of them. Secondly, 120 00:07:27,880 --> 00:07:31,720 Speaker 1: use electronics. This is a generation that doesn't resonate like 121 00:07:31,760 --> 00:07:33,800 Speaker 1: you and I do. Tom to picking up a dusty 122 00:07:33,880 --> 00:07:37,080 Speaker 1: volume of The Rise and Fall of the Third Reich. Um, 123 00:07:37,200 --> 00:07:39,360 Speaker 1: but they're happy to pick up a kindle and learn 124 00:07:39,400 --> 00:07:41,880 Speaker 1: to read on that. You can also read very effectively 125 00:07:41,920 --> 00:07:45,480 Speaker 1: on an iPhone, So give the kids electronic options for reading. 126 00:07:45,840 --> 00:07:49,600 Speaker 1: And thirdly, use the tie into movies and videos. Um. 127 00:07:49,680 --> 00:07:52,560 Speaker 1: What often sparks a young persons having seen a movie 128 00:07:52,640 --> 00:07:56,040 Speaker 1: like Enders Game, say gosh, you like that movie, why 129 00:07:56,040 --> 00:07:58,360 Speaker 1: don't you read the novel? So there's three things you 130 00:07:58,360 --> 00:08:01,600 Speaker 1: can try. I'm me, I'm very European today. I feel 131 00:08:01,640 --> 00:08:04,880 Speaker 1: very European. Where was Macavelli and all of this? Did 132 00:08:04,880 --> 00:08:09,160 Speaker 1: anyone mention the Prince and Machiavelli? Um? Machiavelli is in 133 00:08:09,400 --> 00:08:12,840 Speaker 1: our just outside the top fifty Francine, But I think 134 00:08:12,880 --> 00:08:15,920 Speaker 1: fell behind Sun Sue in the Art of War, which 135 00:08:16,000 --> 00:08:18,720 Speaker 1: is probably a metaphor for Asia and Europe these days. 136 00:08:19,280 --> 00:08:21,400 Speaker 1: I want to go to one book and we'll talk 137 00:08:21,440 --> 00:08:23,640 Speaker 1: current events here where that was to vetus after we 138 00:08:23,720 --> 00:08:28,120 Speaker 1: celebrate the leader's bookshelf, and this goes right to the 139 00:08:28,200 --> 00:08:32,480 Speaker 1: President Lee's lieutenants. A study in Command Douglas South of 140 00:08:32,600 --> 00:08:36,840 Speaker 1: Freedom Freeman, absolutely classic World War Two vintage book. General 141 00:08:36,920 --> 00:08:40,440 Speaker 1: Conway gave this to you from the U. S. Marine Corps. Boy, 142 00:08:40,440 --> 00:08:43,760 Speaker 1: do we need some Lee's lieutenants right now? We do? 143 00:08:44,040 --> 00:08:47,720 Speaker 1: And I'm gonna throw right back at you, agreeing with you. Um. 144 00:08:47,800 --> 00:08:52,400 Speaker 1: The compliment to it is Doris Kern's Goodwins, just magisterial 145 00:08:52,520 --> 00:08:58,080 Speaker 1: book on Lincoln's uh team of rivals that he put together. Um, boy, 146 00:08:58,120 --> 00:09:01,840 Speaker 1: Lincoln has some powerful lessons for our president, I think, um, 147 00:09:02,040 --> 00:09:06,360 Speaker 1: a sense of humor, a sense of humility, Um, of 148 00:09:06,559 --> 00:09:10,040 Speaker 1: breaching out across not only the aisle, but across personality. 149 00:09:10,120 --> 00:09:13,120 Speaker 1: In a very important book because at the time Admirals 150 00:09:13,160 --> 00:09:16,320 Speaker 1: to Venus is amidshipman was on the monitor of the Merrimacame, 151 00:09:17,040 --> 00:09:20,800 Speaker 1: which one of the two admiral One more book question 152 00:09:20,880 --> 00:09:24,240 Speaker 1: before we get to the snub of NATO. Is this 153 00:09:24,440 --> 00:09:27,120 Speaker 1: library on the cover of your book? Is this is 154 00:09:27,320 --> 00:09:32,840 Speaker 1: Travenas Library? Don't I wish? No, that's the library at 155 00:09:32,920 --> 00:09:37,200 Speaker 1: Johns Hopkins University. Isn't it beautiful? It is gorgeous. It is. 156 00:09:37,480 --> 00:09:39,080 Speaker 1: When I first saw the photo, I thought it was 157 00:09:39,080 --> 00:09:43,160 Speaker 1: an old British library. But it's right here in colonial America. Yeah, 158 00:09:43,160 --> 00:09:45,800 Speaker 1: I know. And Professor Cole Over Columbia would talk of 159 00:09:45,880 --> 00:09:50,560 Speaker 1: Johns Hopkins and Chicago is being two of our great institutions. Okay, 160 00:09:50,600 --> 00:09:53,360 Speaker 1: let's get serious. U fell apart today on TV. What 161 00:09:53,480 --> 00:09:56,120 Speaker 1: a is snub? The Secretary of Treasury of State rather 162 00:09:56,480 --> 00:10:01,600 Speaker 1: will not visit the NATO meetings is for NATO meetings, 163 00:10:01,640 --> 00:10:03,319 Speaker 1: and I guess they'll go on a junk at the 164 00:10:03,360 --> 00:10:07,080 Speaker 1: Russia China. I don't know translate this for the I 165 00:10:07,280 --> 00:10:11,000 Speaker 1: R community. What does it symbolize? Well, it's just a mistake. 166 00:10:11,200 --> 00:10:14,920 Speaker 1: When you, uh, when you begin a new administration, a 167 00:10:15,000 --> 00:10:16,560 Speaker 1: new role, you want to kind of work from the 168 00:10:16,640 --> 00:10:20,040 Speaker 1: inside out. You want to kind of begin with your 169 00:10:20,400 --> 00:10:23,640 Speaker 1: closest allies and then out to your partners, then out 170 00:10:23,679 --> 00:10:27,280 Speaker 1: to your friends. Then, having consolidated the base a term 171 00:10:27,360 --> 00:10:31,600 Speaker 1: of political administration, not understand, you then start working with 172 00:10:31,640 --> 00:10:35,160 Speaker 1: your opponents and those with whom you disagree. So it's 173 00:10:35,160 --> 00:10:38,080 Speaker 1: not only Frankly he's going to go to Russia potentially, 174 00:10:38,120 --> 00:10:40,280 Speaker 1: but he's going to miss the meeting in order to 175 00:10:40,520 --> 00:10:43,520 Speaker 1: have a meeting with President g at a summit with 176 00:10:43,960 --> 00:10:47,199 Speaker 1: President Trump. I just think it's a mistake. At a minimum, 177 00:10:47,520 --> 00:10:49,160 Speaker 1: we ought to go to NATO and ask them to 178 00:10:49,200 --> 00:10:53,080 Speaker 1: move the dates for the meeting, but to simply not attend. 179 00:10:53,160 --> 00:10:56,840 Speaker 1: I think is UH is diplomacy one oh one violation? 180 00:10:57,280 --> 00:10:59,800 Speaker 1: What is this is game theory? Well, what if the 181 00:11:00,080 --> 00:11:02,000 Speaker 1: this is a starting point as long as they pay 182 00:11:02,000 --> 00:11:04,560 Speaker 1: in tonight to write for now and they're not going anywhere, 183 00:11:04,920 --> 00:11:07,040 Speaker 1: this would be a bargaining chip to make sure that 184 00:11:07,080 --> 00:11:10,080 Speaker 1: they get a better deal or a better Say. Yeah, 185 00:11:10,120 --> 00:11:13,840 Speaker 1: I think that the UH the from the NATO side, 186 00:11:14,120 --> 00:11:16,880 Speaker 1: that is just not going to be very well received. 187 00:11:16,960 --> 00:11:20,040 Speaker 1: And it's worth knowing that. And I credit the Trump 188 00:11:20,080 --> 00:11:24,080 Speaker 1: administration for this. Since they took over, spending rates on 189 00:11:24,120 --> 00:11:27,439 Speaker 1: defense in Europe have been going up and up. Um, 190 00:11:27,480 --> 00:11:30,000 Speaker 1: this is not the time to cash that chip in. 191 00:11:30,440 --> 00:11:33,520 Speaker 1: Now is the time to really show solidarity and respond 192 00:11:33,559 --> 00:11:36,240 Speaker 1: to that first play by the Europeans. All right, but 193 00:11:36,280 --> 00:11:39,040 Speaker 1: the Secretary of State has been in the past a 194 00:11:39,080 --> 00:11:42,600 Speaker 1: couple of weeks absent from several meetings with foreign leaders. 195 00:11:42,960 --> 00:11:45,559 Speaker 1: Does this say that he's being cautious or this is 196 00:11:45,559 --> 00:11:47,560 Speaker 1: a mistake, or does it mean that he doesn't have 197 00:11:47,640 --> 00:11:52,040 Speaker 1: that much influence over foreign policy in Trump's administration. I 198 00:11:52,080 --> 00:11:54,240 Speaker 1: think it's a bit of both friend scene and I'll 199 00:11:54,240 --> 00:11:57,359 Speaker 1: add a third, which is he's not being well staffed 200 00:11:57,520 --> 00:12:00,320 Speaker 1: he doesn't have a Deputy Secretary of State aid. He 201 00:12:00,400 --> 00:12:05,319 Speaker 1: has no uh, no leadership below himself in that department. 202 00:12:05,440 --> 00:12:08,040 Speaker 1: Right now, he's kind of home alone, and I think 203 00:12:08,520 --> 00:12:11,680 Speaker 1: the department wouldn't let him make this kind of misstep. 204 00:12:12,520 --> 00:12:15,760 Speaker 1: Help me here with the battle over the weekend of 205 00:12:15,920 --> 00:12:18,840 Speaker 1: the press attending. You've had to put up with the 206 00:12:18,880 --> 00:12:23,360 Speaker 1: press for years. I'm sure there's been some ugly moments. Um. 207 00:12:23,400 --> 00:12:25,440 Speaker 1: I mean, there's a tradition to it. Is it a 208 00:12:25,480 --> 00:12:30,640 Speaker 1: good tradition to have the press tag along? It absolutely is? 209 00:12:31,080 --> 00:12:35,360 Speaker 1: And um, as a senior leader, I often took small 210 00:12:35,440 --> 00:12:38,559 Speaker 1: press pools. Nothing like a sec deaf for a sex state. 211 00:12:39,440 --> 00:12:44,200 Speaker 1: But yeah, it's inconvenient. It's occasionally annoying. Sometimes they get 212 00:12:44,200 --> 00:12:48,040 Speaker 1: the story slightly wrong. But wouldn't you rather have them 213 00:12:48,080 --> 00:12:51,120 Speaker 1: inside the tent than outside trying to figure it out, 214 00:12:51,200 --> 00:12:54,160 Speaker 1: trying to speculate, trying to work with leakers. Um. So 215 00:12:54,320 --> 00:12:57,920 Speaker 1: I think that again a mistake not to have the 216 00:12:57,960 --> 00:13:01,360 Speaker 1: press come along on these trips. And I know Secretary Matters, 217 00:13:01,440 --> 00:13:03,960 Speaker 1: for example, has been bringing the press on his trip. 218 00:13:04,080 --> 00:13:07,839 Speaker 1: I hope that Secretary Tillerson uh does so as well. 219 00:13:07,960 --> 00:13:09,960 Speaker 1: You mentioned team arrivals earlier, I mean, part of the 220 00:13:10,000 --> 00:13:13,079 Speaker 1: problem here and getting warm bodies and foggy bottom is 221 00:13:13,120 --> 00:13:16,199 Speaker 1: if you ever said anything negative about Mr Trump, you're 222 00:13:16,240 --> 00:13:20,280 Speaker 1: off the list, right, That's absolutely true. And then secondly, 223 00:13:20,520 --> 00:13:23,319 Speaker 1: let's face it thus far, the fact that you're watching 224 00:13:23,559 --> 00:13:26,680 Speaker 1: the current Secretary of State Uh not be invited to 225 00:13:26,720 --> 00:13:30,480 Speaker 1: the White House frequently, not seeming to consult on occasion, 226 00:13:30,840 --> 00:13:34,160 Speaker 1: not coming to the big meetings. So I think there's 227 00:13:34,200 --> 00:13:37,720 Speaker 1: a significant morale problem in foggy Bottom, and it's hard 228 00:13:37,720 --> 00:13:40,439 Speaker 1: to recruit people to go into an organization that doesn't 229 00:13:40,440 --> 00:13:43,360 Speaker 1: appear to be getting traction in Washington. That needs to 230 00:13:43,360 --> 00:13:47,240 Speaker 1: be reversed because as a nation, we can't afford ineffective 231 00:13:47,240 --> 00:13:51,120 Speaker 1: diplomacy anymore than we can afford ineffective defense. But there 232 00:13:51,200 --> 00:13:52,760 Speaker 1: must be someone I don't know if you call it 233 00:13:52,800 --> 00:13:56,960 Speaker 1: a dissenter or someone who criticizes the president behind closed 234 00:13:56,960 --> 00:13:59,079 Speaker 1: door that he listens to. Is that his family? Is 235 00:13:59,120 --> 00:14:04,720 Speaker 1: that his daughter Vane? Yeah, Well, let's hope that's the case. 236 00:14:04,920 --> 00:14:10,120 Speaker 1: And I saw recently a correlation drawn between the tweeting 237 00:14:10,240 --> 00:14:15,160 Speaker 1: cycle was much diminished during periods of time that Ivanka 238 00:14:15,240 --> 00:14:18,560 Speaker 1: and Jared are around the president. Um, and let's hope 239 00:14:18,600 --> 00:14:22,040 Speaker 1: that cabinet officials like Jim Madison, John Kelly and Rex 240 00:14:22,120 --> 00:14:26,000 Speaker 1: Jillerson over time can have influence on him as well. Um. 241 00:14:26,080 --> 00:14:29,200 Speaker 1: These are strong individuals who I think will be unafraid 242 00:14:29,280 --> 00:14:31,520 Speaker 1: to speak truth to power. But they got to get 243 00:14:31,520 --> 00:14:35,280 Speaker 1: in the room. And I think that's where uh Secretary 244 00:14:35,320 --> 00:14:38,400 Speaker 1: Killerson has had his challenges thus far. Um, and don't 245 00:14:38,400 --> 00:14:40,400 Speaker 1: well talk to me about the GOP. Is there a 246 00:14:40,480 --> 00:14:44,480 Speaker 1: kind of um, you know, steak and carrots way of 247 00:14:44,600 --> 00:14:47,560 Speaker 1: working where they say, look, President Trump, you need to 248 00:14:47,640 --> 00:14:50,160 Speaker 1: follow us on diplomacy and actually not start trade with 249 00:14:50,400 --> 00:14:53,480 Speaker 1: this country in this country, and in return, we'll give 250 00:14:53,520 --> 00:14:56,040 Speaker 1: you more support for I don't know if it's tax 251 00:14:56,080 --> 00:14:58,760 Speaker 1: cots or funding for some of the infrastructure projects. Does 252 00:14:58,800 --> 00:15:01,920 Speaker 1: it work like that? Yes, it does. And you can 253 00:15:02,040 --> 00:15:05,920 Speaker 1: see this tension in the GUP base in the international 254 00:15:05,960 --> 00:15:09,760 Speaker 1: sphere right now. Um. Some in the GOP want to 255 00:15:10,480 --> 00:15:14,160 Speaker 1: um effectively build those walls, not just the one with Mexico, 256 00:15:14,280 --> 00:15:17,960 Speaker 1: but tariff barriers returned to the country, cut down or 257 00:15:18,040 --> 00:15:23,560 Speaker 1: overseas military presence, whereas others, people like Paul Ryan, UH 258 00:15:23,800 --> 00:15:27,000 Speaker 1: Max Thornbury, the Chairman of the House Arm Services Committee, 259 00:15:27,120 --> 00:15:31,080 Speaker 1: are quite internationally oriented and have good views on defense. 260 00:15:31,360 --> 00:15:34,440 Speaker 1: That tension will play out in the domestic back and 261 00:15:34,520 --> 00:15:38,400 Speaker 1: forth over the issues you just mentioned. Francine, help us 262 00:15:38,600 --> 00:15:41,640 Speaker 1: with the idea of the philosophy of our domestics debate 263 00:15:41,680 --> 00:15:44,440 Speaker 1: on healthcare. We get to a vote Thursday onto a 264 00:15:44,520 --> 00:15:48,880 Speaker 1: Senate where Steve Dennis says the health bill has minimal 265 00:15:49,440 --> 00:15:52,680 Speaker 1: chance to get through and the basic ideas we need 266 00:15:52,720 --> 00:15:56,840 Speaker 1: that money, that Butter money for our guns money. How 267 00:15:56,840 --> 00:16:01,680 Speaker 1: do you filter that core question? I think that, Uh, 268 00:16:01,920 --> 00:16:04,360 Speaker 1: it's not an on and off switch, Tom, we don't 269 00:16:04,760 --> 00:16:08,320 Speaker 1: simply become a highly militarized nation at the expense of 270 00:16:08,400 --> 00:16:11,960 Speaker 1: domestic policy. Um, it's a real stat and I think 271 00:16:12,000 --> 00:16:13,960 Speaker 1: for the last eight years the real stat has been 272 00:16:14,680 --> 00:16:18,240 Speaker 1: dialed strongly in the direction of Butter. It needs to 273 00:16:18,240 --> 00:16:20,160 Speaker 1: come back a bit too. Guns. But I want to 274 00:16:20,160 --> 00:16:22,920 Speaker 1: make a point about guns. It's not just guns. It's 275 00:16:23,080 --> 00:16:26,480 Speaker 1: a state department, and it's budget, it's foreign aid, it 276 00:16:26,640 --> 00:16:30,760 Speaker 1: is all of the international programs that helps create security. 277 00:16:31,080 --> 00:16:33,520 Speaker 1: So you have to dial that real stat a bit. 278 00:16:33,920 --> 00:16:36,760 Speaker 1: That's why there is a defense increase. But at the 279 00:16:36,800 --> 00:16:41,680 Speaker 1: same time, as a nation, UM, we have big problems, 280 00:16:41,720 --> 00:16:44,800 Speaker 1: and it's not just health it's our deficit um and 281 00:16:44,840 --> 00:16:48,200 Speaker 1: I think that what's needed here back to books is 282 00:16:48,320 --> 00:16:51,200 Speaker 1: the team of rivals approach, the ability to reach across 283 00:16:51,240 --> 00:16:54,760 Speaker 1: the aisles if we if we dial those real stats individually, 284 00:16:54,840 --> 00:16:57,600 Speaker 1: it's a lot less painful than whip sawing back and 285 00:16:57,640 --> 00:17:02,320 Speaker 1: forth between administrations. James Trevita, thank you so much with 286 00:17:02,440 --> 00:17:05,080 Speaker 1: TuS Fletcher School. I can't say enough, folks about the 287 00:17:05,160 --> 00:17:10,280 Speaker 1: Leaders Bookshelf. Admiral James Devitis Uh never retired in our 288 00:17:10,359 --> 00:17:14,840 Speaker 1: manning Angel as well, on a great way to find 289 00:17:14,960 --> 00:17:18,199 Speaker 1: a lot of other books quickly and also get a 290 00:17:18,200 --> 00:17:23,000 Speaker 1: core message, an important message from each of these Uh books, 291 00:17:23,000 --> 00:17:27,080 Speaker 1: some of them very painful books about ordeal of military combat, 292 00:17:27,119 --> 00:17:30,920 Speaker 1: the memoirs of Ulysses, s. Grant and here Um. This 293 00:17:31,080 --> 00:17:35,720 Speaker 1: kind of work from the sixt T. R. Ferrenbach is 294 00:17:36,200 --> 00:17:40,359 Speaker 1: mentioned in many others. James trevidis with a successful effort 295 00:17:40,800 --> 00:17:58,000 Speaker 1: the Leaders Bookshelf. This is a wonderful treat This is 296 00:17:58,040 --> 00:18:02,000 Speaker 1: why we do Bloomberg surveillance. His book is classic. It 297 00:18:02,119 --> 00:18:05,040 Speaker 1: is The Banker to the World. His name is William Rhodes. 298 00:18:05,320 --> 00:18:08,119 Speaker 1: If you don't know the name. He was Banker to 299 00:18:08,160 --> 00:18:11,720 Speaker 1: the World for City Group and City Bank decades ago 300 00:18:11,840 --> 00:18:16,879 Speaker 1: his public service to Brown University. UH speaks volumes. Bill Rhodes, 301 00:18:16,920 --> 00:18:19,359 Speaker 1: You're the only one I wanted to talk to, maybe 302 00:18:19,440 --> 00:18:24,840 Speaker 1: James Diamond about David Rockefeller passing away, dying in a 303 00:18:24,920 --> 00:18:28,520 Speaker 1: hundred and one years old. What was David Rockefeller like 304 00:18:28,720 --> 00:18:33,000 Speaker 1: as you were a young banker. It's City Group. First 305 00:18:33,040 --> 00:18:35,760 Speaker 1: of all, David was a great man and I was 306 00:18:35,800 --> 00:18:38,520 Speaker 1: privileged to first meet him when I came back from 307 00:18:38,600 --> 00:18:43,320 Speaker 1: Latin America. Was City Bank, uh almost forty years ago. 308 00:18:43,400 --> 00:18:46,840 Speaker 1: It was forty years ago in v seven, and we 309 00:18:46,960 --> 00:18:53,280 Speaker 1: shared a mutual interest in Latin America. David, obviously everybody knows, 310 00:18:53,440 --> 00:18:56,119 Speaker 1: was a world statesman, particularly in finance, one of the 311 00:18:56,160 --> 00:18:59,560 Speaker 1: great bankers and financeeries of our age. But he had 312 00:18:59,560 --> 00:19:03,760 Speaker 1: a he had a particular love for Latin America. And 313 00:19:03,800 --> 00:19:07,520 Speaker 1: he founded the Council of the America's America Society in 314 00:19:07,600 --> 00:19:11,680 Speaker 1: nineteen sixty five, and he got me in very involved 315 00:19:11,720 --> 00:19:15,720 Speaker 1: with that. I became chairman later on for nine years, 316 00:19:15,760 --> 00:19:21,040 Speaker 1: and David was the founder and chairman for a number 317 00:19:21,080 --> 00:19:25,119 Speaker 1: of years, and he did he did tremendous work on 318 00:19:25,359 --> 00:19:28,879 Speaker 1: improving relations between the United States and Latin America. He 319 00:19:29,000 --> 00:19:33,360 Speaker 1: was patrician, and he was distant, and there was discretion 320 00:19:33,560 --> 00:19:38,160 Speaker 1: and control at every moment, and behind that was prodigious 321 00:19:38,240 --> 00:19:42,160 Speaker 1: economic abilities. He was a PhD in economics from Chicago. 322 00:19:42,640 --> 00:19:46,119 Speaker 1: Is a kid. He actually did the academic work, didn't 323 00:19:46,119 --> 00:19:51,199 Speaker 1: he exactly? But I think his lasting memory will be, 324 00:19:52,240 --> 00:19:55,919 Speaker 1: UH what he believed in in the sense of the 325 00:19:55,960 --> 00:19:59,320 Speaker 1: relationships between the United States and the rest of the world, 326 00:20:00,200 --> 00:20:05,800 Speaker 1: and particularly with my personal experience, UH was what he 327 00:20:05,840 --> 00:20:08,399 Speaker 1: did with Latin America. He is a revered figure in 328 00:20:08,480 --> 00:20:14,080 Speaker 1: Latin America. UH and always UH connected the United States 329 00:20:14,400 --> 00:20:19,200 Speaker 1: UH with Latin America and our culture, our trade UH. 330 00:20:19,240 --> 00:20:23,439 Speaker 1: And UH did tremendous work philanthropically for all areas of 331 00:20:23,480 --> 00:20:27,159 Speaker 1: the world, but particularly I would suggested the Latin America. 332 00:20:27,160 --> 00:20:29,720 Speaker 1: And he founded a center in his name for Latin 333 00:20:29,800 --> 00:20:33,080 Speaker 1: studies at Harvard. I mean he was also really a 334 00:20:33,119 --> 00:20:37,200 Speaker 1: confident of world leaders from dangsher opinion China to Nelson 335 00:20:37,240 --> 00:20:43,400 Speaker 1: Mandela in South Africa. What would he be advising President Trump? Well, 336 00:20:43,440 --> 00:20:46,400 Speaker 1: I would I think what he would be advising President 337 00:20:46,440 --> 00:20:49,800 Speaker 1: Trump at this point in time is to make sure 338 00:20:49,840 --> 00:20:52,080 Speaker 1: that we don't get in a series of trade wars 339 00:20:53,520 --> 00:20:57,560 Speaker 1: around the world. Because he always believed that free and 340 00:20:57,640 --> 00:21:00,800 Speaker 1: fair markets were very very important for the growth of 341 00:21:00,840 --> 00:21:04,560 Speaker 1: the world economy, and had been always a big supporter 342 00:21:04,600 --> 00:21:08,160 Speaker 1: of the International Monetary Fund and the World Bank. Uh. 343 00:21:08,200 --> 00:21:12,320 Speaker 1: And he dedicated his life to these relationships. You didn't 344 00:21:12,359 --> 00:21:15,679 Speaker 1: apologize for being an American banker, and that was just 345 00:21:15,840 --> 00:21:19,760 Speaker 1: Mr Rockefeller and his disciples over at the evil firm 346 00:21:20,240 --> 00:21:24,880 Speaker 1: A Chase didn't apologize for being capitalists and bankers. We've 347 00:21:24,920 --> 00:21:28,040 Speaker 1: got a lot of bankers now after this crisis, reticent 348 00:21:28,720 --> 00:21:33,800 Speaker 1: about trumpeting capitalism, about traveling abroad, about showing the American 349 00:21:33,840 --> 00:21:37,400 Speaker 1: banking flag. How do we get back to pride and banking. 350 00:21:38,760 --> 00:21:41,439 Speaker 1: That is a key question, Tom, which you and I 351 00:21:41,480 --> 00:21:43,520 Speaker 1: have discussed quite a lot. As you know, I've done 352 00:21:43,520 --> 00:21:47,920 Speaker 1: a lot of work on on on banking culture. Uh. 353 00:21:47,960 --> 00:21:50,879 Speaker 1: And I think it's it's key and David was a 354 00:21:50,880 --> 00:21:54,040 Speaker 1: good example of that because he believed that he should 355 00:21:54,080 --> 00:21:58,520 Speaker 1: use that platform to improve relationships around the world, to 356 00:21:58,520 --> 00:22:02,440 Speaker 1: to make the world closer. Uh And Uh, I think 357 00:22:02,440 --> 00:22:06,439 Speaker 1: he achieved that. And I think that, uh, this is 358 00:22:06,480 --> 00:22:09,159 Speaker 1: what the banking community ought to be doing, trying to 359 00:22:09,200 --> 00:22:12,600 Speaker 1: help it's it's it's communities to bring back the trust 360 00:22:12,680 --> 00:22:16,200 Speaker 1: and banking, which David was a good example of because 361 00:22:16,240 --> 00:22:19,800 Speaker 1: somewhere along the way, I think in the United States, 362 00:22:19,800 --> 00:22:21,880 Speaker 1: Europe and other parts of the world, trust has been 363 00:22:21,880 --> 00:22:25,280 Speaker 1: lost in in banking and we must get back to 364 00:22:25,320 --> 00:22:29,240 Speaker 1: those basic thoughts of you know, a bankers there to 365 00:22:29,320 --> 00:22:33,280 Speaker 1: help the community. Uh. And that was number one, and 366 00:22:33,280 --> 00:22:36,240 Speaker 1: that certainly was the way David looked at things. Bill 367 00:22:36,320 --> 00:22:38,440 Speaker 1: Roods thrilled to have you with us today, Mr Rhose, 368 00:22:38,480 --> 00:22:40,199 Speaker 1: of course, the author of Banker to the World in 369 00:22:40,280 --> 00:22:45,320 Speaker 1: the City Bank for years, UH, William Rhodes in honor 370 00:22:45,359 --> 00:22:57,000 Speaker 1: of David Rockefeller, brought you by Bank of America. Mary Lynch. 371 00:22:57,119 --> 00:23:01,480 Speaker 1: Dedicated to bringing our clients insights solutions to meet the 372 00:23:01,560 --> 00:23:05,959 Speaker 1: challenges of a transforming world. That's the power of global connections. 373 00:23:06,359 --> 00:23:10,879 Speaker 1: Mary Lynch, Pierce, Feeder and Smith Incorporated Member s I 374 00:23:11,000 --> 00:23:17,600 Speaker 1: p C. This is a wonderful moment to speak to 375 00:23:17,720 --> 00:23:21,160 Speaker 1: Paul Quincy. We're talking with Bill Rhodes earlier about David 376 00:23:21,240 --> 00:23:25,560 Speaker 1: Rockefeller and discretion and being proper. That's what you do 377 00:23:25,600 --> 00:23:28,760 Speaker 1: at JP Morgan Asset Management, where you're in the greatest 378 00:23:28,800 --> 00:23:34,360 Speaker 1: bull market since time began. And with within that, Paul Quincy, 379 00:23:34,440 --> 00:23:37,240 Speaker 1: if I look at the equity market. The basic emotion 380 00:23:37,400 --> 00:23:40,920 Speaker 1: is so many people have missed this bull market. How 381 00:23:40,920 --> 00:23:44,560 Speaker 1: do we catch up? Well, one way to catch up 382 00:23:44,720 --> 00:23:48,080 Speaker 1: is to look outside the US and look at markets 383 00:23:48,119 --> 00:23:50,320 Speaker 1: that have not yet been in the greatest bull market 384 00:23:50,320 --> 00:23:54,000 Speaker 1: of all time, where valuations are still more depressed, and 385 00:23:54,119 --> 00:23:58,360 Speaker 1: where I think, really importantly, we're seeing actually finally profitability 386 00:23:58,440 --> 00:24:00,359 Speaker 1: really beginning to improve. So if you just look at 387 00:24:00,359 --> 00:24:02,840 Speaker 1: the returns over the last five years, then you've compounded 388 00:24:03,080 --> 00:24:05,520 Speaker 1: a mid teens rate of gaining the SMP. That's a 389 00:24:05,560 --> 00:24:09,280 Speaker 1: tremendous result of historical standards. The compound return in U 390 00:24:09,359 --> 00:24:12,120 Speaker 1: S dollars on emerging markets over the same period one 391 00:24:13,240 --> 00:24:16,080 Speaker 1: the compound return on European equities again if you measured 392 00:24:16,080 --> 00:24:19,359 Speaker 1: in U S dollars around five So those are not 393 00:24:19,520 --> 00:24:22,160 Speaker 1: yet anything like the type of numbers that people feel 394 00:24:22,200 --> 00:24:24,480 Speaker 1: like they've missed very much on. And yet when we 395 00:24:24,480 --> 00:24:28,080 Speaker 1: look at those regions, we see valuations as you'd expect, 396 00:24:28,240 --> 00:24:32,400 Speaker 1: looking pretty reasonable, but also profitability really starting to improve 397 00:24:32,440 --> 00:24:34,399 Speaker 1: in a much more convincing way than we've seen for 398 00:24:34,440 --> 00:24:37,000 Speaker 1: some time. Paul, what is the one thing that you 399 00:24:37,040 --> 00:24:39,400 Speaker 1: can go wrong in Europe? Though? Is it the right time. 400 00:24:39,480 --> 00:24:41,800 Speaker 1: If you like European equity, should we not wait until 401 00:24:42,040 --> 00:24:45,240 Speaker 1: most of the big elections have been and gone because 402 00:24:45,280 --> 00:24:49,240 Speaker 1: they could be potentially life changing for the Eurozone. Absolutely, 403 00:24:49,240 --> 00:24:52,080 Speaker 1: and I think most people are waiting until the elections 404 00:24:52,080 --> 00:24:53,800 Speaker 1: have come and gone, and a lot of money is 405 00:24:53,800 --> 00:24:57,119 Speaker 1: sitting on the sidelines while the fundamentals continue to improve. 406 00:24:57,160 --> 00:24:59,280 Speaker 1: The problem is, of course, once you know what's going 407 00:24:59,359 --> 00:25:02,080 Speaker 1: to happen, then will be priced in fairly quickly. So 408 00:25:02,160 --> 00:25:05,000 Speaker 1: I think in a diversified portfolio and with an eight 409 00:25:05,080 --> 00:25:07,720 Speaker 1: A risk, it's worth putting some money to work now, 410 00:25:08,480 --> 00:25:12,040 Speaker 1: and rather than waiting for everything to become absolutely clear. 411 00:25:12,600 --> 00:25:14,679 Speaker 1: I can't claim to know exactly how all of these 412 00:25:14,720 --> 00:25:17,000 Speaker 1: election results are going to play out. Of course nobody does. 413 00:25:17,240 --> 00:25:20,000 Speaker 1: France seems in charge of that. Yes, we'll ask her 414 00:25:20,040 --> 00:25:22,679 Speaker 1: them the crystal ball. Yes, But I do think that 415 00:25:22,720 --> 00:25:25,160 Speaker 1: if maybe a year ago, investors were a little bit 416 00:25:26,240 --> 00:25:29,600 Speaker 1: overconfident in their ability to predict, for example, the vote 417 00:25:29,600 --> 00:25:32,240 Speaker 1: in Brexit or the outcome of the presidential election here, 418 00:25:32,520 --> 00:25:35,760 Speaker 1: then maybe now people are a little bit under confident, 419 00:25:35,800 --> 00:25:38,240 Speaker 1: and they're ignoring opinion polls and ignoring the fact that 420 00:25:38,280 --> 00:25:41,160 Speaker 1: I think it would require a much bigger shift in 421 00:25:41,480 --> 00:25:43,560 Speaker 1: opinion that we saw in either of those two instances 422 00:25:43,720 --> 00:25:47,240 Speaker 1: to have a genuine anti euro upset in France. Of 423 00:25:47,240 --> 00:25:50,440 Speaker 1: course it could still happen, but perhaps that the risks 424 00:25:50,480 --> 00:25:52,640 Speaker 1: of that are being a little bit over, a little 425 00:25:52,640 --> 00:25:56,199 Speaker 1: bit overestimated at the moment in markets. Well do you 426 00:25:56,200 --> 00:25:59,680 Speaker 1: think that economistsy or too optimistic about Europe? But it seems, 427 00:26:00,000 --> 00:26:01,560 Speaker 1: you know, when you're on the ground. I'm Italian, I 428 00:26:01,600 --> 00:26:04,439 Speaker 1: go out there and people are really unhappy. You have 429 00:26:04,560 --> 00:26:06,520 Speaker 1: huge youth unemployment. And then when you look at the 430 00:26:06,600 --> 00:26:09,359 Speaker 1: numbers and Tom we had an economist on a little 431 00:26:09,400 --> 00:26:11,600 Speaker 1: bit earlier on on TV, they say, but it's getting better. 432 00:26:11,640 --> 00:26:13,679 Speaker 1: You know, growth over on the Eurozone is around one 433 00:26:13,680 --> 00:26:16,080 Speaker 1: and a half and two percent. What are they missing? 434 00:26:17,000 --> 00:26:19,400 Speaker 1: Growth does seem to be getting a little bit better. 435 00:26:19,480 --> 00:26:22,280 Speaker 1: I wouldn't I wouldn't want to exaggerate just how how 436 00:26:22,320 --> 00:26:24,879 Speaker 1: fast it is, but growth improving a little bit at 437 00:26:24,880 --> 00:26:27,760 Speaker 1: the margin. But we're really focused on companies, and of 438 00:26:27,800 --> 00:26:30,240 Speaker 1: course corporate profits are not the same thing as g 439 00:26:30,400 --> 00:26:33,080 Speaker 1: d P. There's a lot more leverage in the European 440 00:26:33,119 --> 00:26:36,400 Speaker 1: corporate sector to what's happening globally than is the case 441 00:26:36,400 --> 00:26:39,840 Speaker 1: in many other regions. Well, this is important, I mean 442 00:26:39,840 --> 00:26:42,560 Speaker 1: a multiple. I think most of our audience has a 443 00:26:42,560 --> 00:26:46,720 Speaker 1: real understanding of a blue chip multinational in the United States, 444 00:26:47,240 --> 00:26:51,040 Speaker 1: is a blue chip multinational the same beast in Europe, 445 00:26:52,200 --> 00:26:54,880 Speaker 1: If anything, they're little more multinationals. So I think that 446 00:26:54,960 --> 00:26:57,560 Speaker 1: the very fact that the European economies haven't been terribly 447 00:26:57,600 --> 00:27:00,360 Speaker 1: exciting over the last decade is so has incur many 448 00:27:00,400 --> 00:27:03,800 Speaker 1: European companies to invest heavily abroad. And as they did that, 449 00:27:03,840 --> 00:27:06,960 Speaker 1: they picked up a fair amount of exposure to emerging markets. 450 00:27:07,000 --> 00:27:09,280 Speaker 1: So in the downturn that we saw in the emerging 451 00:27:09,320 --> 00:27:13,520 Speaker 1: economies that lasted until the middle or early last year, 452 00:27:13,920 --> 00:27:17,200 Speaker 1: they were unusually exposed to that, and that really hurt profitability, 453 00:27:17,240 --> 00:27:18,720 Speaker 1: but we weren't always hurt. You. Let me ask the 454 00:27:18,760 --> 00:27:23,200 Speaker 1: delicate question, Quincy, are they going to become more Anglo Saxon? 455 00:27:23,320 --> 00:27:25,480 Speaker 1: I mean, that's sort of the hope and prayer not 456 00:27:25,520 --> 00:27:28,439 Speaker 1: only of retail and people that you know, trying to 457 00:27:28,440 --> 00:27:33,360 Speaker 1: catch up here, but institutional as well. The continental multinationals. 458 00:27:33,880 --> 00:27:37,840 Speaker 1: They've got their moments, but they've also got a cultural heritage. 459 00:27:38,280 --> 00:27:41,400 Speaker 1: Is that going to shift in the next number of years? Yes, 460 00:27:41,440 --> 00:27:43,200 Speaker 1: and no, I think there are signs that are shifting 461 00:27:43,240 --> 00:27:46,320 Speaker 1: a little bit. I don't think you need an enormous 462 00:27:46,320 --> 00:27:49,520 Speaker 1: shift in corporate behavior to have a much better outcome 463 00:27:49,520 --> 00:27:53,080 Speaker 1: in terms of profits in the near term. So if 464 00:27:53,119 --> 00:27:55,840 Speaker 1: you've been a European investor, you've been disappointed pretty much 465 00:27:55,880 --> 00:27:58,159 Speaker 1: every year for the last five years. Typically at the 466 00:27:58,200 --> 00:28:00,760 Speaker 1: start of the year, the consensus said earnings will grow 467 00:28:00,800 --> 00:28:02,760 Speaker 1: by ten percent, and by the end of the year 468 00:28:02,880 --> 00:28:06,080 Speaker 1: you find out they've actually slightly shrunk. I really do 469 00:28:06,160 --> 00:28:08,720 Speaker 1: think this time is different. This year we will see 470 00:28:08,760 --> 00:28:12,360 Speaker 1: and we're already seeing it, proper real profits growth coming through. 471 00:28:13,040 --> 00:28:17,000 Speaker 1: Longer term, we do see some changes in behavior to 472 00:28:17,040 --> 00:28:19,960 Speaker 1: be more shareholder friendly, but there's a long long way 473 00:28:20,000 --> 00:28:22,439 Speaker 1: to go before you see, for example, a kind of 474 00:28:22,440 --> 00:28:25,680 Speaker 1: share buy back activity that's been such a critical component 475 00:28:25,720 --> 00:28:28,480 Speaker 1: of the bullmarket here in the US, it really hasn't 476 00:28:28,760 --> 00:28:31,159 Speaker 1: spread to Europe in any convincing way yet, despite the 477 00:28:31,160 --> 00:28:34,600 Speaker 1: fact that, of course, with bond deals solo in Europe, 478 00:28:34,840 --> 00:28:36,879 Speaker 1: the advantages of levering up your balance sheet a bit 479 00:28:36,920 --> 00:28:39,880 Speaker 1: and buying backstock at lower prices are even more compelling 480 00:28:40,040 --> 00:28:42,720 Speaker 1: than they are to the typical US corporate here, But 481 00:28:42,880 --> 00:28:45,000 Speaker 1: our earnings really on the upside or is it just 482 00:28:45,040 --> 00:28:47,320 Speaker 1: on cast cutting? And these animal spirits still have to 483 00:28:47,360 --> 00:28:51,520 Speaker 1: take real place. With investments, you can feel better about life, 484 00:28:51,560 --> 00:28:54,560 Speaker 1: but unless you put money on a new project, it's 485 00:28:54,600 --> 00:28:57,280 Speaker 1: just hot air. I think a number of things will 486 00:28:57,320 --> 00:29:00,440 Speaker 1: conspire to help earnings this year, so currency moves help 487 00:29:00,680 --> 00:29:04,080 Speaker 1: a little more revenue growth, both in Europe and in 488 00:29:04,160 --> 00:29:07,720 Speaker 1: the rest of the world. European companies have a surprisingly 489 00:29:07,800 --> 00:29:10,960 Speaker 1: large degree of commodity exposure, as we know, the commodity 490 00:29:11,000 --> 00:29:13,080 Speaker 1: cycle seemed to trough out about a year ago and 491 00:29:13,600 --> 00:29:16,320 Speaker 1: is looking generally better now. And then, of course we 492 00:29:16,360 --> 00:29:19,080 Speaker 1: come to the banks that have been such a focus 493 00:29:19,120 --> 00:29:21,959 Speaker 1: for investors in Europe. But where there are there are 494 00:29:22,040 --> 00:29:25,520 Speaker 1: leaders and laggert's. But on average, European banks have been 495 00:29:25,600 --> 00:29:29,840 Speaker 1: raising capital, are getting healthier and are pretty attractively priced 496 00:29:29,840 --> 00:29:32,280 Speaker 1: as well for that manner. And now with Quincy, we 497 00:29:32,360 --> 00:29:34,280 Speaker 1: go where we dare to tread and getting him in 498 00:29:34,320 --> 00:29:38,880 Speaker 1: trouble with a general council of the JP Morgan Banking Company. 499 00:29:38,920 --> 00:29:41,960 Speaker 1: Is everybody going to move to Dublin? That's the that's 500 00:29:42,000 --> 00:29:45,360 Speaker 1: the zeitgeist today at Bloomberg is Bank a bank b 501 00:29:45,640 --> 00:29:48,560 Speaker 1: Bank Cee Bank De We're gonna you know, we've looked 502 00:29:48,560 --> 00:29:51,120 Speaker 1: at our European grid and we're gonna move to Dublin. 503 00:29:51,200 --> 00:29:53,520 Speaker 1: You've lived this with Schroeder's, with City Bank, now with 504 00:29:53,640 --> 00:29:58,040 Speaker 1: JP Morgan. Are you going to move to Dublin? So 505 00:29:58,440 --> 00:30:01,480 Speaker 1: until we know what as we're dealing with, this is 506 00:30:01,480 --> 00:30:09,360 Speaker 1: gonna happen. Look, until until we know, until we know 507 00:30:09,440 --> 00:30:11,920 Speaker 1: what the rules look like, it's very very hard to 508 00:30:11,960 --> 00:30:15,440 Speaker 1: say it's really it's just an extraordinary amount of uncertainty. 509 00:30:15,920 --> 00:30:19,040 Speaker 1: So I think at this point lots of different options 510 00:30:19,080 --> 00:30:21,400 Speaker 1: are on the table. My litmus paper here is the 511 00:30:21,400 --> 00:30:24,120 Speaker 1: middle child doing the you know you're abroad, going to 512 00:30:24,240 --> 00:30:28,040 Speaker 1: every city every weekend, called up drunk from Dublin and said, hey, 513 00:30:28,080 --> 00:30:30,800 Speaker 1: I love this city. You're the young troops of JP 514 00:30:30,960 --> 00:30:33,800 Speaker 1: Morgan going to one to migrate from London to Dublin. 515 00:30:35,160 --> 00:30:37,360 Speaker 1: Dublin is a great city. There are many great cities 516 00:30:37,360 --> 00:30:40,840 Speaker 1: in Europe too, but I think in general, people particularly 517 00:30:40,840 --> 00:30:43,400 Speaker 1: in sort of mid late careers, would rather stay where 518 00:30:43,400 --> 00:30:45,000 Speaker 1: they are. We just have to see whether or not 519 00:30:45,080 --> 00:30:48,200 Speaker 1: that's going to be possible when we see what exactly 520 00:30:48,280 --> 00:30:54,400 Speaker 1: what rules we're dealing with. AV I'm moving to Dublin 521 00:30:55,480 --> 00:30:58,520 Speaker 1: Paul Quincy, Thank you so much. Jp Morgan manager, Mr 522 00:30:58,560 --> 00:31:01,440 Speaker 1: Diamonds be nice and sandum when he gets back to 523 00:31:01,520 --> 00:31:04,680 Speaker 1: the office. Wonderful to talk to you today. Thank you 524 00:31:04,800 --> 00:31:20,400 Speaker 1: so much. Our process is to look at a really 525 00:31:20,520 --> 00:31:25,880 Speaker 1: interesting research note from Capital Economics. Neil Shearing joins us 526 00:31:25,920 --> 00:31:31,120 Speaker 1: the chief Emerging um Emerging Markets economists for Capital. Neil, 527 00:31:31,200 --> 00:31:34,520 Speaker 1: I thought your note was very provocative and it really 528 00:31:34,520 --> 00:31:37,000 Speaker 1: comes down to something I think most Americans have missed. 529 00:31:37,440 --> 00:31:41,640 Speaker 1: Mexico has leverage, They have bargaining power. How possibly could 530 00:31:41,680 --> 00:31:47,440 Speaker 1: they have power against the mighty United States of America. Well, 531 00:31:47,480 --> 00:31:49,280 Speaker 1: this is true. I think that there's there's two areas 532 00:31:49,320 --> 00:31:53,360 Speaker 1: where they have power. In economic terms, they hold quite 533 00:31:53,360 --> 00:31:56,440 Speaker 1: a lot of sway, particularly over agricultural important a lot 534 00:31:56,440 --> 00:31:59,520 Speaker 1: of agricultural imports from the US and whether those agricultural 535 00:31:59,520 --> 00:32:03,480 Speaker 1: imports come from Midwestern states that helped to elect President Trump. 536 00:32:03,840 --> 00:32:06,760 Speaker 1: The second point is they hold political swade. The US 537 00:32:06,880 --> 00:32:10,160 Speaker 1: needs Mexico on side the war on drugs, particularly also 538 00:32:10,200 --> 00:32:13,840 Speaker 1: immigration through Central America to the US. So I don't 539 00:32:13,880 --> 00:32:16,160 Speaker 1: think it's quite right to say that the US holds 540 00:32:16,200 --> 00:32:19,120 Speaker 1: all the cards when it when it comes to renegotiating 541 00:32:19,320 --> 00:32:24,640 Speaker 1: naught and trading relations. I look at this and I go, 542 00:32:24,920 --> 00:32:27,120 Speaker 1: how long is the timeline? I mean, we're looking at 543 00:32:27,120 --> 00:32:31,040 Speaker 1: Brexit in Europe is being months, quarters even in the years. 544 00:32:31,440 --> 00:32:34,800 Speaker 1: How long will the left the timeline be. I think 545 00:32:34,840 --> 00:32:37,640 Speaker 1: it's going to be years rather than months. Um. I 546 00:32:37,640 --> 00:32:39,720 Speaker 1: suspect something's going to get kicked off quite soon, but 547 00:32:39,760 --> 00:32:41,800 Speaker 1: it's going to go on for a long time. Trade 548 00:32:41,800 --> 00:32:45,160 Speaker 1: deals take a long while to negotiate, and unless particularly 549 00:32:45,240 --> 00:32:47,440 Speaker 1: they want to do something substantive, if it's not going 550 00:32:47,480 --> 00:32:49,400 Speaker 1: to be substantive, then perhaps you can get wrapped up 551 00:32:49,440 --> 00:32:52,120 Speaker 1: this year. The issue, though, is the economic cycles and 552 00:32:52,160 --> 00:32:56,320 Speaker 1: trade negotiations cycles don't necessarily go inside with political cycles. 553 00:32:56,320 --> 00:32:58,520 Speaker 1: We've got US midterms at the end of next year. 554 00:32:58,880 --> 00:33:02,880 Speaker 1: We've got Mexican presidential elections at the middle of next year. 555 00:33:02,920 --> 00:33:05,240 Speaker 1: So it's quite possible that that all of this gets 556 00:33:05,240 --> 00:33:07,720 Speaker 1: bound up in political cycles and held back to I 557 00:33:07,720 --> 00:33:10,360 Speaker 1: think it's gonna be quite tricky to get something substantive done, 558 00:33:11,000 --> 00:33:14,040 Speaker 1: you know. I I look at nafter when when when 559 00:33:14,080 --> 00:33:16,920 Speaker 1: we look at the after? We look at very simplistic terms, 560 00:33:16,960 --> 00:33:20,680 Speaker 1: but needs the headline data on the after. What is 561 00:33:20,720 --> 00:33:27,440 Speaker 1: the distinction or attribute you would make visible to our listeners. 562 00:33:27,480 --> 00:33:29,440 Speaker 1: The main thing that actually, this is the whole discourse 563 00:33:29,480 --> 00:33:32,320 Speaker 1: around trade is stop thinking about trade in terms of 564 00:33:32,640 --> 00:33:35,920 Speaker 1: deficits and surfaces and balances. That's not how a country 565 00:33:36,000 --> 00:33:39,840 Speaker 1: benefits from trade. Uh, Your benefits from trade gains from 566 00:33:39,840 --> 00:33:41,840 Speaker 1: trade coming through the exchange of goods and services and 567 00:33:41,880 --> 00:33:45,040 Speaker 1: the fact that the US or Mexico can then move 568 00:33:45,080 --> 00:33:48,920 Speaker 1: into its areas of comparative advantage specialized where in production, 569 00:33:49,000 --> 00:33:51,440 Speaker 1: that where it has a comparative advantage. So it's not 570 00:33:51,480 --> 00:33:54,040 Speaker 1: really about how big Mexico survices with the U s 571 00:33:54,160 --> 00:33:57,280 Speaker 1: or how big China services with the US. It's about 572 00:33:57,880 --> 00:34:01,040 Speaker 1: does trade allie the US the specially concentrate in areas 573 00:34:01,080 --> 00:34:04,240 Speaker 1: of production where it holds a comparative advantage, And that's 574 00:34:04,280 --> 00:34:06,160 Speaker 1: where the games from trade come from. And actually, when 575 00:34:06,160 --> 00:34:08,560 Speaker 1: you look at it, Mexico has not been that big 576 00:34:08,560 --> 00:34:10,520 Speaker 1: a beneficiary from lafter. It's seen a bit of a 577 00:34:10,560 --> 00:34:13,759 Speaker 1: duptick and productivity growth after has been introduced, but it's 578 00:34:13,760 --> 00:34:16,080 Speaker 1: not been that big. Have you been surprised by piece 579 00:34:16,160 --> 00:34:19,080 Speaker 1: or strength twenty two and nineteen and Mexican pace, So 580 00:34:19,200 --> 00:34:22,880 Speaker 1: that's impressive, It is impressive and obviously it's not just 581 00:34:22,920 --> 00:34:24,120 Speaker 1: the pace of the pacer has been one of the 582 00:34:24,160 --> 00:34:27,799 Speaker 1: biggest beneficiaries, but all the currencies. Indeed, most currencies E 583 00:34:27,960 --> 00:34:31,080 Speaker 1: M and d M are up against the dollar um 584 00:34:31,239 --> 00:34:34,040 Speaker 1: this year. It seems to me that we're in a 585 00:34:34,040 --> 00:34:36,440 Speaker 1: bit of a holding pattern in financial markets. We're waiting 586 00:34:36,480 --> 00:34:40,879 Speaker 1: to see who bears influence in in economic policy terms 587 00:34:40,920 --> 00:34:43,920 Speaker 1: within the White House. Is it the Liberals Gary Cohen 588 00:34:44,000 --> 00:34:46,760 Speaker 1: and Wilbert Ross or is it the hawks Navaro, perhaps 589 00:34:46,760 --> 00:34:50,279 Speaker 1: Steve Bannon too. At the moment, it looks like we've 590 00:34:50,320 --> 00:34:53,200 Speaker 1: kind of backed away from the more immediate hawk ish 591 00:34:53,680 --> 00:34:55,840 Speaker 1: signs that we were seeing at not on the campaign trail, 592 00:34:55,960 --> 00:34:58,200 Speaker 1: and that's given a bit of support to to riscuss it. 593 00:34:59,239 --> 00:35:01,239 Speaker 1: Thanks so much. Have to keep it short today too 594 00:35:01,280 --> 00:35:12,840 Speaker 1: short sharing with a smart note from Capital Economics. Thanks 595 00:35:12,840 --> 00:35:17,280 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 596 00:35:17,360 --> 00:35:22,680 Speaker 1: to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. 597 00:35:23,440 --> 00:35:26,319 Speaker 1: I'm out on Twitter at Tom Keene, David Gura is 598 00:35:26,440 --> 00:35:30,200 Speaker 1: at David Gura. Before the podcast, you can always catch 599 00:35:30,280 --> 00:35:46,840 Speaker 1: us worldwide. I'm Bloomberg Radio, brought you by Bank of America. 600 00:35:46,920 --> 00:35:51,160 Speaker 1: Mary Lynch dedicated to bringing our clients insights and solutions 601 00:35:51,440 --> 00:35:54,759 Speaker 1: to meet the challenges of a transforming world. That's the 602 00:35:54,800 --> 00:35:59,880 Speaker 1: power of global connections. Mary Lynch, Pierce, Feeder and Smith, Incorporated, 603 00:36:00,120 --> 00:36:01,719 Speaker 1: Member s I p C