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Speaker 1: member s I p C. Welcome to the Bloomberg Surveillance Podcast.
Speaker 1: I'm Tom Keene with David Gura. Daily we bring you
Speaker 1: insight from the best in economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and
Speaker 1: of course on the Bloomberg Joe Quillin with US with
Speaker 1: US Trust Merry Lynch and working on a broader thematic strategy.
Speaker 1: Let me come to the theme. I was having dinner
Speaker 1: in Mayfair the evening of June twe on the fourth
Speaker 1: ten am on Junee, the world came to an end
Speaker 1: for England, for Britain, for the United Kingdom. And then
Speaker 1: the next morning was a total uproar. And at seven
Speaker 1: pm on a summer's evening, I had a dinner there.
Speaker 1: The world was gonna end. November eight, the world's gonna
Speaker 1: end once again. Here we are at twenty eight hundred.
Speaker 1: So when do I know when to get out? I
Speaker 1: think that's a great question Tom in the sense that
Speaker 1: the politicians have to pay attention to the populist movement
Speaker 1: that's angry a lot of anks. Yet the key is
Speaker 1: they're they're responding to us. So you remember austerity. Now
Speaker 1: we've got more fiscal spending. So when we if we
Speaker 1: do not get these policies in place that promote growth
Speaker 1: trickled down and I hate that concept because it rarely happens,
Speaker 1: then we're gonna see more pressure on the politicians to
Speaker 1: spend more. And I think the markets will take that
Speaker 1: the wrong way and here we go, we roll over.
Speaker 1: So's it's the key, the politics responding to the populism
Speaker 1: that creates the growth that kind of pacifies and pushes
Speaker 1: back kind of the day of reckoning when in particularly
Speaker 1: in your credit markets. So we're not there yet. But Joe,
Speaker 1: why are we seeing these record highs for in disease?
Speaker 1: Is it really unfundamentals or it's still that cheap money
Speaker 1: out there, Francy Nancy, It's combination. It is. It is
Speaker 1: cheap money, there's no doubt about that. It's the fundamentals.
Speaker 1: It's a cyclical upswing and it's also in particular the
Speaker 1: expectation that dabos Man will respond to this popular populace
Speaker 1: uprising and make it happen. Pacify the workers, everyone that's angry. Trickle.
Speaker 1: You're seeing the employment numbers gradually improve and there's a
Speaker 1: lot of noise there. So it's the expectation that the
Speaker 1: simulus is coming. Alright, what does it take to correct or,
Speaker 1: as you say, to see a little bit of a
Speaker 1: pullback from these in disease. I think it's going to
Speaker 1: be profit taking. Um, you know, I think a lot
Speaker 1: of hedge funds from Francine is too young to remember
Speaker 1: what that phrases. I have not, I have not. I
Speaker 1: have not heard that phrase seven years one time. I
Speaker 1: think you know this cliche, you know, selling may and
Speaker 1: go away. I think that's gonna be come with a vengeance.
Speaker 1: So we have calling of the twins. Do you have
Speaker 1: a tape recorder on? We just said Millard, Mr Quinlan
Speaker 1: here say selling may and go Away's gonna work this year.
Speaker 1: I'm really thinking the last four years in a row,
Speaker 1: it's been a total fraud. It's been a total all
Speaker 1: But this year from from the election, I think people
Speaker 1: will take their profits and the key will be, well,
Speaker 1: what's gonna happen in June July. When it comes to
Speaker 1: the actual policy background. If we don't get the policies
Speaker 1: coming forward, then then we're gonna have some real prompts
Speaker 1: and the critical moment will be in the summer. Help
Speaker 1: Francine here when we got you for the whole half hour,
Speaker 1: which is great. Help Francing Rechoir with your idea of
Speaker 1: a global lift. She is so weighted down by the
Speaker 1: collapse of Italy, all the political stuff, etcetera. She was
Speaker 1: weighted down by Burbery, had no plaid and there in
Speaker 1: their show this ye. But but come on, Joe, help
Speaker 1: me here with the global lift. Nobody's buying you. Well
Speaker 1: at the time, the numbers are there. I mean, you
Speaker 1: see the p m I numbers. You see China stabilizing, Brazil,
Speaker 1: Russia better. Um, you know the developed markets are playing
Speaker 1: along in Japan's numbers, so I think. But the monetary
Speaker 1: stimulus has been out there for so long as you
Speaker 1: know that it does, it's it's not gonna it's finally working.
Speaker 1: I'm not looking for like they're a bit better, but
Speaker 1: but they're not what we saw ten fifteen years ago.
Speaker 1: We're never going back to pre crisis levels. Or are
Speaker 1: we now? I would never say never, Francy and I
Speaker 1: agree with you. It's gonna be more muted growth growth.
Speaker 1: But if we can get the global GDP growth average
Speaker 1: back to three and a half three point seven percent
Speaker 1: in that range, have the emerging market stabilized, then we
Speaker 1: can kind of plod forward. And I would I would
Speaker 1: agree in the sense that maybe the markets are giving
Speaker 1: too much credit to the policy makers and the economic background.
Speaker 1: But earnings are good. I mean, corporations are doing a
Speaker 1: great job managing their expenses. They're using technology to be
Speaker 1: more productive. That you can't discount that either. Okay, but
Speaker 1: how do you deal? And and Tom and I were
Speaker 1: in Davos and it was the Davos Man or the
Speaker 1: Devils Woman. Looking at this new world order where globalization
Speaker 1: is not the name of the game anymore. When do
Speaker 1: markets realize, Well, I don't think Francy and I haven't
Speaker 1: thrown in the towel on globalization. I think we've kind
Speaker 1: of hit the pause button, and perhaps we kind of
Speaker 1: we've got to reconfigure it or rethink it, or kind
Speaker 1: of like make it more broader, more integrated. So I
Speaker 1: the markets have certainly not priced in de globalization. If
Speaker 1: they had, then we'd have a bigger problem. So we
Speaker 1: gotta look. You know, actually global trade volumes are picking up,
Speaker 1: trade flows are increasing, m and A globally is picking up.
Speaker 1: But I think there's too much I would say optimism
Speaker 1: around the policy backdrop, and so if there's any failure there,
Speaker 1: we've got problems. Let me do this for Francy, because
Speaker 1: fancy and I know you're based in Sterling. The doll
Speaker 1: this year, if you're in London up SPI underperformed. It's
Speaker 1: up only thirty six percent. The foot seas up twenty
Speaker 1: If you invested in Tokyo from Sterling, you're up thirty
Speaker 1: four percent. I mean, it's a most unloved, ginormous bullmarket, Joe,
Speaker 1: I've ever seen Francy. Get it one more question and
Speaker 1: you're not gonna do some breaking news. Yeah, what the currencies?
Speaker 1: You know, when you look at in the season around
Speaker 1: the world, what's the currency you want to be in?
Speaker 1: Um the Mexican pay So, I mean we've I've been
Speaker 1: saying that for quite some time. I think it's you know,
Speaker 1: it was oversold. I still think there's more upside. Francine
Speaker 1: at the Quad London I'm Tom keenan New York with
Speaker 1: this Joe Quinlan. We continue our discussion, let's run it
Speaker 1: over to economics. I mean just Cheer Yelling is she's
Speaker 1: central banker to the world, and I think a question
Speaker 1: for the weekend reading. Does Cheer Yelling care about the
Speaker 1: record lows in the German two year My guesses she does. Well,
Speaker 1: she she has to. You're you're right, and it's interesting
Speaker 1: we haven't talked much about the FED thus far this morning.
Speaker 1: I think the feed is looking to looking at the data,
Speaker 1: saying they're gonna move perhaps in March, if not June,
Speaker 1: maybe twice this year put some ammunition back in the bank,
Speaker 1: so they have that ready, but certainly worried about the
Speaker 1: numbers coming out of Germany. But I do think what
Speaker 1: we'll have to see how that plays out. And I'm
Speaker 1: sure she's worried about distress out of Italy in Spain
Speaker 1: that's driving those flows in the German Say paper, Joe,
Speaker 1: how would you look at political risk in Europe? Does
Speaker 1: it play out two weeks before the French election? Does
Speaker 1: it wait until something ugly happens? To talk me through
Speaker 1: the psychology of the markets right now? Well, I mean,
Speaker 1: we're looking at the Dutch elections, see how that plays out.
Speaker 1: Watch the currency. I mean, the currencies is always a
Speaker 1: canary in a coal mine. So I think, you know
Speaker 1: we're here, here's francing. We should not be so surprised
Speaker 1: in two thousand and seventeen as we were in sixteen.
Speaker 1: If we do get these political shocks quote unquote, So
Speaker 1: the markets are pricing in perhaps being a little bit
Speaker 1: more cautious, more risk management. So if Lapen or if
Speaker 1: there's any kind of a populous movement that gains traction
Speaker 1: in Europe this year, that should not be so surprising
Speaker 1: to investors. So maybe that mutes the reaction. What if
Speaker 1: we're jumping at shadows? Joe. We had a brilliant piece
Speaker 1: by Mark Gilbert, one of our Bloomberg View columnists, saying,
Speaker 1: what if Sen meant that the markets are jumping at
Speaker 1: shadows because now we're pricing political risk everywhere when there's none. Well,
Speaker 1: then that perhaps means that we have this cyclical rebound,
Speaker 1: we get the policy pro growth policy put in place.
Speaker 1: Remember we've had too much austerity and too much dependence
Speaker 1: on monetary policy since the crisis. If we do if
Speaker 1: it's a head fake, but we still get the fiscal
Speaker 1: stimulus that tells me that we've got decent overall nominal
Speaker 1: global growth, which is gonna be good for earnings and equities.
Speaker 1: When I look, Joe h the idea of I got
Speaker 1: a four O one K. And let's assume that our
Speaker 1: audience is behind those numbers I quoted earlier. How do
Speaker 1: you catch up? I mean, we've been here before. There's
Speaker 1: been other bull markets where we've been behind. But I
Speaker 1: don't believe I've ever seen you know, all the different
Speaker 1: theories and efficient markets and allocation. Come on, we just
Speaker 1: want to I just can I just do the sp
Speaker 1: And a lot of people can't say that. How do
Speaker 1: you catch up? I mean, don't swing for the fences.
Speaker 1: You and you have to save, right, I mean you
Speaker 1: have to have the capital to make capital. So we're
Speaker 1: looking at kind of these long term divotting growers. Payers
Speaker 1: don't panic the answers. We gotta put a lot more money.
Speaker 1: We gotta put a lot more money, you know, and
Speaker 1: and that takes away from discretionary spending. That's just where
Speaker 1: we're at, and I don't think we're gonna make it.
Speaker 1: Francine is the United Kingdom. The same. I have no
Speaker 1: idea is the United Kingdom the same and that everybody's
Speaker 1: under invested like we have off the Arisa Act of Well,
Speaker 1: I'm not sure. It's a great question for Joe. The
Speaker 1: I guess the million dollar question Joe is are we
Speaker 1: under invested because of bregsit or did it happen before?
Speaker 1: I think perhaps before? And I do think you know,
Speaker 1: this is a great study economists. How much did monetary
Speaker 1: policy post a crisis really create income inequality? Where inflated
Speaker 1: the asset values for people who own the assets versus
Speaker 1: the folks who didn't and created the spread which then
Speaker 1: created the ankst and anger related populism. Are talking about
Speaker 1: that one more question and offer that William Gross has
Speaker 1: told us with Jana's Capital that the financial repression will
Speaker 1: continue for years, if not decades. Are you saying at
Speaker 1: some point we will normalize and we will see assets
Speaker 1: subdue and the income disparity will lessen. Is the rich
Speaker 1: get poorer? Not necessarily rich get poor, but we kind
Speaker 1: of have the pie distribution differently. We're gonna have to
Speaker 1: bring along the folks that are left behind the populace uprising,
Speaker 1: or you should be all in the cash think of
Speaker 1: it that way. So the policy responses to be more
Speaker 1: pro growth, more stimulus, and that for a while medium
Speaker 1: term is good for equities. But I think this is
Speaker 1: one of those markets between now and when you know
Speaker 1: you you want to get out. We had a lot
Speaker 1: of clients saying that Joe I can't do two th
Speaker 1: eight again, and that's exactly what we got to keep
Speaker 1: in a COLLI thanks for the time. I greatly appreciate
Speaker 1: your Quidlin with a lot going on in Europe this morning. Uh,
Speaker 1: he is with us trust Mary Lynch and thematic strategy. Francine,
Speaker 1: what's your key in sight this morning? What? What did
Speaker 1: he learned? Excuse me through the week? Well, you know
Speaker 1: what we haven't talked about today and I learned today
Speaker 1: because of this by election. You mentioned it briefly, tom
Speaker 1: So the UK Prime Minister Theresa May. Um you have
Speaker 1: a lot of investors saying she won't last a year.
Speaker 1: That's what George Sorrows told me in Davos, because she's
Speaker 1: pushing for this clean cut heart bregsit and then yesterday
Speaker 1: and today she demonstrated her dominance of the political landscape
Speaker 1: by winning a by election. Now a by election is
Speaker 1: basically a small election in the middle of an election cycle.
Speaker 1: It's extremely rare Tom almost impossible for the government in
Speaker 1: place to win it, and she did just that. I'm
Speaker 1: glad you brought that up. Is this like a mid
Speaker 1: what we call on mid term election? Yes, it's it's
Speaker 1: not really a mid term, but when somebody steps down
Speaker 1: of a seat, then you have an election that could
Speaker 1: be just one region or or one part of the UK.
Speaker 1: But historically it's very rare that the party in charge
Speaker 1: wins in very good. Let me bring in now someone
Speaker 1: who is really a joy to speak to, Terry mccauliffe.
Speaker 1: He has been important for his Democratic Party on too
Speaker 1: many fronts. It now has maybe the best job in
Speaker 1: political America. I could say this because within all the
Speaker 1: political turmoil Governor mccauliffe in Washington, and really in my
Speaker 1: healing after the election turmoil, I'm reading everything on Jefferson
Speaker 1: i can. And so you get the bathe and all
Speaker 1: the legacy of Thomas Jefferson in Virginia, beginning with your
Speaker 1: wonderful executive mansion in Richmond, Virginia, which goes back to
Speaker 1: near eighteen twelve, the famous Alexander Paris House that you
Speaker 1: that you have there your prison, and I'm gonna ask you, Terry,
Speaker 1: some tough, delicate questions. Did Mr Trump win the election
Speaker 1: or did the Secretary State? Did Secretary Clinton lose the election?
Speaker 1: Which is it? Listen, you gotta give President Trump people
Speaker 1: on the election. I mean, uh, hindsight, I would make
Speaker 1: the argument that, uh, the our campaign should probably have
Speaker 1: leaned it more on economics, job creation, talk about all
Speaker 1: the great things that had happened. But you know, listen,
Speaker 1: he's the president at the end of the day. He's
Speaker 1: sitting in the Oval Office right now, and uh, it
Speaker 1: just was a very unique time. And you know a
Speaker 1: lot of surrounding circumstances with Comey's letter and all the
Speaker 1: Russia hats and all that. But you know, these are
Speaker 1: the things that happened in presidential politics, and you know,
Speaker 1: you get a lot of things, a lot of surprises happen,
Speaker 1: and uh, he's sitting there and he was inaugurated, so
Speaker 1: you know he wasn't It's all I can say. The
Speaker 1: fabric of your Virginia is one of the most diverse
Speaker 1: states in the nation. Maybe Illinois, maybe Georgia. I'll let
Speaker 1: you decide. You're the pro at this, I'm not, but
Speaker 1: you have a diversity in Virginia that I would suggest
Speaker 1: is like nowhere else. What is the underlying support for
Speaker 1: President Trump right now from his core constituency witnesses speech today,
Speaker 1: but particularly Terry at the marginal Republican level. Are those
Speaker 1: people with them or are they stealable by you Democrats?
Speaker 1: Well he's in He's in a bad shape politically today
Speaker 1: in Virginia. Paul came out the other day. Um, I
Speaker 1: think you know the Quinnipec Pole. He was underwater sixteen
Speaker 1: or eighteen points. We've never seen anything like it this fast. Um,
Speaker 1: so Pe, We're very concerned. We have a lot of issues.
Speaker 1: I mean, he's done the federal hiring freeze. We are
Speaker 1: very concerned about what he's gonna do on Obamacare, a
Speaker 1: repeal without replacement town would cost US two hundred million
Speaker 1: dollars a year automatically and our budget. We're very concerned
Speaker 1: about the travel ban. As you know, I went to
Speaker 1: Dallas Airport. I think I was the first elected official
Speaker 1: out when I heard there was a family being detained
Speaker 1: there with two children with US passports without access to
Speaker 1: legal counsel. Were very concerned about what is happening with
Speaker 1: ICE officials today. We had an incident at a church
Speaker 1: the other day. It was a hypothermia center. Folks went
Speaker 1: in there to get out of the coal. They came
Speaker 1: out the next day and uh six seven ICE agents
Speaker 1: accosted him. I mean the first person they talked to, Francy.
Speaker 1: And I'd make a joke here about Dallas Airport and
Speaker 1: Governor mc caull if is gonna fix the world's worst airport.
Speaker 1: But it's not funny. Unfortunately, there's so much seriousness, seriousness
Speaker 1: going on in this fancy time. If you could have
Speaker 1: been there with me, I'm telling you, with these families,
Speaker 1: it was heart wrenching. I mean families there six eight hours.
Speaker 1: They got on a plane with legal documents and were
Speaker 1: detained when they landed. And how about yesterday reports of
Speaker 1: coming off of domestic flights in America and having to
Speaker 1: show your eye, Governor. Well, the institutions work. And actually,
Speaker 1: I I don't know about the airport, Tom, but I'm
Speaker 1: a huge fan of Virginia because it reminds me of
Speaker 1: childhood memories going around Shinando, a National park with my family. Well,
Speaker 1: the institutions in America work to try and fix some
Speaker 1: of the problems you were just talking about. I believe. So.
Speaker 1: In fact, we're here this weekend the National Governors Association,
Speaker 1: which I'm the chairman of. We have our largest crowd ever.
Speaker 1: We have forty seven governors going to be here for
Speaker 1: four days. We're gonna meet several times with President Trump.
Speaker 1: We're having lunch today with Vice President Pence. We're gonna
Speaker 1: meet with the congressional leaders on Monday. Listen, we have
Speaker 1: to work together. And the point we like Listen, that
Speaker 1: executive travel ban, executive order was hastily put together with
Speaker 1: no consultation with with the Congress or the courts. And
Speaker 1: of course he paid a price for that. And you know,
Speaker 1: the border agents, custom agents did not have clear guidelines,
Speaker 1: and it really was an embarrassment for our great nation,
Speaker 1: you know, the bastion of civil liberties democracy to have
Speaker 1: that go on. But the systems will work. But in
Speaker 1: my point as chairman, which I will say to the President,
Speaker 1: we have to work together. You know, two hundred and
Speaker 1: thirty years ago in New Yorktown, Virginia, we sent the
Speaker 1: British back in the Battle of Yorktown. We got rid
Speaker 1: of the king. We're not bringing one back two d
Speaker 1: thirty five years later, he's just joining us. Terry McCall
Speaker 1: if he is the governor of the state of Virginia,
Speaker 1: Friends and Laquad in London. I'm Tom Keane in New York, Governor.
Speaker 1: When I look at immigration, I guess the feeling I have,
Speaker 1: and I think so many Americans have, as we understand
Speaker 1: on the cover of the New York Times today, the
Speaker 1: Walter Journal, the F. T. Bloomberg whatever, that there seemed
Speaker 1: to be almost two white houses. How did the cabinet
Speaker 1: officers get control of the procedural dialogue of this White House?
Speaker 1: How does Governor General Kelly, General Maddis, Mr Tillison, how
Speaker 1: do they become dominant figures? Or is that just a fiction? Well,
Speaker 1: they better become dominant or else where. This country is
Speaker 1: in for a very rough road. I'll be meeting with
Speaker 1: General Kelly. I sent him a letter in my concern
Speaker 1: about what had happened in Virginia. I'll be meeting with
Speaker 1: General Kelly on Sunday with Ice officials to go through.
Speaker 1: I mean, it's clear now we have a new standard
Speaker 1: here in America that you can randomly stop anyone you
Speaker 1: are without any due process. Any do cause that is
Speaker 1: a really that's a big shift in America that's never
Speaker 1: happened before. But my fear as governor is this to me,
Speaker 1: all comes back, the economy comes back to jobs. This
Speaker 1: could have a chilling effect on the economy. I have
Speaker 1: already lost several site visits of companies from overseas who
Speaker 1: are coming to Virginia to build manufacturing facilities have now said,
Speaker 1: you know, it's not the right time to come to America.
Speaker 1: We're scared to come to American And remember Tim and
Speaker 1: franccene that of the world's customers live outside of America.
Speaker 1: It is truly a global economy. We're doing great in Virginia,
Speaker 1: thousand new absence i've been governor. Unemployment's gone from five
Speaker 1: four to four one. But we do that because I
Speaker 1: trade on a global basis. And when when you start
Speaker 1: doing these with a fear of raids and all these
Speaker 1: other issues, it is going to affect the U. S economy. Governor,
Speaker 1: how difficult is it for Democrats and for a democratic
Speaker 1: governor to push back against some of the Trump policies.
Speaker 1: Do you not need to convince because it's very easy
Speaker 1: for the President to turn around and say, well, you're
Speaker 1: the opposition, of course you would say that, do you
Speaker 1: not need to convince people within his own party to
Speaker 1: to maybe change and take a different tack. Well, and
Speaker 1: I think the most important that we can do as
Speaker 1: governors is we have a very large bully pulpit. You know. Listen,
Speaker 1: when I went out to Dallas Airport, I was on
Speaker 1: all the networks and they carried it live on Fox
Speaker 1: and CNN. That's what you can do is raise the issue.
Speaker 1: I have been very vocal on these ice detainer issues,
Speaker 1: and I think what we can do is raise awareness.
Speaker 1: But right the federal government has the ability, you know,
Speaker 1: to do what they want to do on these federal
Speaker 1: issues as it relates to deportation and so forth. But
Speaker 1: we want to work. Listen, I listen, everybody, every governor
Speaker 1: wants the same thing. We want strong economy, we want jobs,
Speaker 1: we want a great healthcare and education system. That should
Speaker 1: be the same thing. I have known President Trump for
Speaker 1: twenty years. I've had dinner with him, I've golfed with him.
Speaker 1: He actually gave me twenty five dollars when I ran
Speaker 1: for governor. I and I just, uh, he and I
Speaker 1: should have the same goal about growing the economy. But
Speaker 1: I think he's had a very rough start. I think
Speaker 1: he's got a lot of mistakes in the first thirty days.
Speaker 1: Let's let's continue this discussion Terry mccauloff with his folks.
Speaker 1: Of course, with his service to the Democrat Party. He's
Speaker 1: somebody the Republicans have always respected in terms of just
Speaker 1: loyalty to the party. Will continue on the Democrats with
Speaker 1: this Governor mccauloff of Virginia, and it's always good to
Speaker 1: talk to him about the present politics. Terry. I want
Speaker 1: to go back to your exceptional competencies of running things
Speaker 1: for the Democratic Party, and I can take it all
Speaker 1: the way back to scenic Syracuse, New York and Bishop Laden.
Speaker 1: A few years ago, the Democrats got clobbered in Cayuga, Courtland,
Speaker 1: Madison on a Daga, and Oswego County, the heart of
Speaker 1: central New York. In Oswego County, Mr Trump took fifty
Speaker 1: of the vote. How does the next Democratic candidate, How
Speaker 1: do the progressives of the Democratic Party get back to
Speaker 1: winning their fair share of those votes. It's a good question,
Speaker 1: tom uh. One thing I have argued with the Democrats
Speaker 1: we need a stronger economic message. I mean, as I say,
Speaker 1: look at Virginia today. We traditionally used to be a
Speaker 1: red state, purple state, uh in elections. We've now moved
Speaker 1: to a blue state in presidential elections because like when
Speaker 1: I ran for governor, I ran in a strong economic message.
Speaker 1: My focus is going to be jobs, jobs, job diversifying.
Speaker 1: The academy. We're leading the country today on cybersecurity and
Speaker 1: new bioscience is human genome sequencing. Democrats have to lay
Speaker 1: out a plan. What is it you're going to do
Speaker 1: for me? And you know President Trump during the campaign,
Speaker 1: you know, he had his slogans and he has things,
Speaker 1: and it resonated with a lot of folks. You know,
Speaker 1: the end of the day, the ills of our economy
Speaker 1: cannot be put on trade. But you know it's easy
Speaker 1: to blame, let's say, in Mexico or China. I always
Speaker 1: say on trade, tim you give me a fair trade deal,
Speaker 1: protect work of rights, environmental Right. I can beat anybody
Speaker 1: in the globe. I can sell our products anywhere, give
Speaker 1: me a fair deal. But this idea that we're gonna
Speaker 1: put walls up around our country and isolated. We cannot
Speaker 1: grow by just selling to ourselves. We have to take part,
Speaker 1: as I say, in the world's customers outside America, you
Speaker 1: gotta go with those customers. So the Democratic Party message,
Speaker 1: I mean, I consider myself a very fiscally conservative, pro
Speaker 1: business Democrat. I'm socially very progressive. I just vetoed two
Speaker 1: days ago HB two. You know, a defund planned parenthood
Speaker 1: bill in Virginia. They constantly are sending me bills anti women,
Speaker 1: anti LGBP. My argument and all this is leave people alone,
Speaker 1: focus on the economy, give the children a quality education,
Speaker 1: let the transportation system work, and people are gonna be happy.
Speaker 1: And and today I have very high approval ratings because
Speaker 1: it's all about economics, It's all about jobs. And I
Speaker 1: think the Democrats have gotten their eye off the ball.
Speaker 1: I mean, how Tom did we lose Michigan when Barack
Speaker 1: Obama saved the auto industry. And that's the heart of
Speaker 1: the matter for instance. Right, But Governor, you say that
Speaker 1: Democrats need a plan, they also need a leader. Who
Speaker 1: is your party going to rally? You know, I don't
Speaker 1: know if it's gonna be one person. I mean, we
Speaker 1: have a d NC election. But you know, I served
Speaker 1: as the chairman of the party. You're not the leader
Speaker 1: of the party. In that sense, you run the mechanics,
Speaker 1: the guts of the party, you put the primaries on
Speaker 1: it to do all that. I think it's gonna be
Speaker 1: a chorus of individuals. I mean, when you have the president,
Speaker 1: obviously he's the leader of the party, I think most
Speaker 1: of the leadership is going to come out of the
Speaker 1: Governor's got to remember every day I worry about economic development, jobs.
Speaker 1: I have to have a quality education system. I can't
Speaker 1: bring businesses to Virginia. I gotta be able to move
Speaker 1: people to northern Virginia. Let me, let me interrupt you.
Speaker 1: This is so important for Francine Laqua. Governor mccauliffe held
Speaker 1: spellbound all of Paris at the climate talks. Okay, am
Speaker 1: I right to Devanka. Trump had to basically go into
Speaker 1: the Oval office yesterday and say, Dad, don't scool around
Speaker 1: with climate change. How are you going to shift the
Speaker 1: dialogue on some of these issues. Well, I think in fairness,
Speaker 1: you know, he's only thirty days. In fair but he
Speaker 1: has got some big issues. I think they've learned how
Speaker 1: tough this is. First of all, they talked about repealing Obamacare.
Speaker 1: I'm gonna do a day when when I get elected, Well,
Speaker 1: guess what Speaker Better said yesterday. The Republicans aren't going
Speaker 1: to do it. This is not easy to throw eighteen
Speaker 1: million people on the street and take their healthcare away
Speaker 1: from This is a very complex It's not a political
Speaker 1: sound bite. The president listen to me, that's no. But
Speaker 1: come on, seriously, great, come on, Terry francaying, you don't
Speaker 1: know this. The cover Francy's question is brilliant the cover
Speaker 1: of the New York Times today, Governor mcauloff, I have
Speaker 1: never seen there are not one, two, three parallel paths
Speaker 1: within the White House. Who is President Trump going to
Speaker 1: listen to? He better listen to the people. Here's what
Speaker 1: I would say. He better listen to people who have
Speaker 1: had the experience and expertise in the areas that they
Speaker 1: are in charge of. And I hope he listens to
Speaker 1: General Maddis. I hope he listens to General Kelly, because
Speaker 1: these folks are experts. They know what's going on. I mean, listen.
Speaker 1: I have a son in the Air and Forces. I
Speaker 1: have a son who's a United States Marine. I'm very
Speaker 1: proud of it. I want to make sure that when
Speaker 1: these military decisions are made, that we are protecting our
Speaker 1: young men and women uniform. And we are doing this deliberately. Governor.
Speaker 1: We didn't get to the lousy commutant Virginia, which is
Speaker 1: eighth worths in the nation, sandwich between Illinois and Georgia.
Speaker 1: Francy and I need to come to Washington, go to Williamsburg.
Speaker 1: Show Francine, how British America did things right in your
Speaker 1: Virginia before we threw the mother country across the Atlantic Ocean.
Speaker 1: We need we need to come down there and meet
Speaker 1: with you again. Terry McCullough, thank you so much. He
Speaker 1: is a governor of Virginia. Francy. You see how I
Speaker 1: did that. We can do the show from Yorktown. It's
Speaker 1: a road trip. It's not a show. It's a road trip.
Speaker 1: It's a road trip to Yorktown. We can see where
Speaker 1: corn Wallace said goodbye. Brought you by Bank of America,
Speaker 1: Mary Lynch. Dedicated to bringing our clients insights and solutions
Speaker 1: to meet the challenges of a transforming world. That's the
Speaker 1: power of global connections. Mary Lynch, Pierce Federan Smith Incorporated,
Speaker 1: Member s I P See and now, Frankly, the most
Speaker 1: important interview of the day, George Friedman is fiery with
Speaker 1: an encyclopedic knowledge of military and defense. UH, and has
Speaker 1: always interesting George. We could speak literally for five hours
Speaker 1: straight today. There's so much to talk about. He is
Speaker 1: with geopolitical futures, George. I um looked at the cover
Speaker 1: of the New York Times today, the cover of the
Speaker 1: f T, the cover of Bloomberg's work. I've never seen
Speaker 1: anything like this on issue after issue after issue. There
Speaker 1: are two streams of thought coming out of the Trump
Speaker 1: White House. Let's just begin with generals in Mexico. Tell
Speaker 1: me what we do when we project General Maddis and
Speaker 1: General Kelly in the cabinet. But I believe they have
Speaker 1: no power. How do they get a voice within the administration? Well,
Speaker 1: very frankly, we have a rule and everything a no
Speaker 1: attention what any political leader says. You wouldn't buy a
Speaker 1: stock based on what the CEO said yesterday. Watch what
Speaker 1: they've actually done. The actual actions of the administration have
Speaker 1: been much more conservative. UH. And that's what's important. So
Speaker 1: when we ask who has the influence, we assume we
Speaker 1: know what Trump is thinking, We assume we know what
Speaker 1: the power structure is inside the White House. The fact is,
Speaker 1: just look at what they're doing. They're doing what they
Speaker 1: said they were doing in a very modern and limited way. Okay,
Speaker 1: and then the next treatment and fancy and this guess
Speaker 1: that's going on a half hour with Mr Freeman. The
Speaker 1: photo yesterday that stopped all of America deadnets tracks whatever
Speaker 1: anybody believes was a domestic flight. I believe out of
Speaker 1: s f oh of I c E. Customs, immigration types,
Speaker 1: checking passports. That's almost a quasi military group. Is that
Speaker 1: a military operation? Actually, it's the rule of law. Congress
Speaker 1: passed law on immigration back in the Clinton administration. Clinton
Speaker 1: agreed to it. Um it was never enforced properly. So
Speaker 1: one of the questions is do we have laws and
Speaker 1: immigration where don't we It's not that I'm a supporter
Speaker 1: of Trump and many things, but in this particular case, uh,
Speaker 1: he's putting clean up for Obama, Bush and Clinton who
Speaker 1: never really enforced And in fancy, I wain'ted to jump
Speaker 1: in here with Mr Freedman, but Francy, let me make
Speaker 1: clear that a large body of Americans agree and here's
Speaker 1: the key word with some of the president on immigration.
Speaker 1: I mean, he's got huge support on some of these
Speaker 1: immigration actions, right. But Georgie how do you see this unfolding?
Speaker 1: You have he the president has some support, he has
Speaker 1: a lot of support, and he has a lot of dissent.
Speaker 1: Who are the institutions that will decide what comes next?
Speaker 1: I keep on being told the president, even if he's
Speaker 1: the president of the United States, can't do what he
Speaker 1: wants all the time. Well, this is law. What he
Speaker 1: is doing in dealing with illegal immigration is a law
Speaker 1: that's been in place and he's enforcing it. Now, what
Speaker 1: is going on here is an argument by those who
Speaker 1: would like to change the law and allow legal immigrants
Speaker 1: to romain United States, and then maybe a very good
Speaker 1: idea that we're going to do that regardless of what
Speaker 1: the law says. So in terms of the law, it's
Speaker 1: all on his side. In terms of the politics, um,
Speaker 1: you know, there's a large number of people in the
Speaker 1: United States who feel that first they're uncomfortable with immigration,
Speaker 1: but more important, they're very uncomfortable with the idea that
Speaker 1: a president consusably ignore the law. So I think in
Speaker 1: the long run he's going to be a pretty strong shape.
Speaker 1: All right, But Georgia, okay, and I understand, I mean,
Speaker 1: we have Look, I live in London, we have very
Speaker 1: bizarre laws. I mean, there's one law saying that you
Speaker 1: can't be drunken a pub, So of course it's law.
Speaker 1: I understand that. I get that the law has not
Speaker 1: been enforced in certain cases because illegal immigrants add a
Speaker 1: lot to certain industries. I'm thinking of the farming industry. Right. Well, yeah,
Speaker 1: you can't. This is not a bizarre law. The United
Speaker 1: States has had a law on immigrations. Uh. It has
Speaker 1: always been enforced. So if what we're going to say is, look,
Speaker 1: we're not going to enforce laws that cause economic disruption,
Speaker 1: we've got a problem. Instead, what we do is go
Speaker 1: to Congress and have them changed the law. Congress doesn't
Speaker 1: want to change the law. Uh. And now we're a
Speaker 1: poll that somebody who's gonna enforce it. So the question
Speaker 1: is a political one, not a moral one. That's right
Speaker 1: or wrong in the end. Uh, he's going to get
Speaker 1: a lot of support on this. Right now, it's being
Speaker 1: presented as if it is an arbitrary action by him.
Speaker 1: The media has been all over him. But the fact
Speaker 1: of the matter is that all he's doing is enforcing
Speaker 1: a law that's been on the books. Fears your expertise
Speaker 1: with a pentagon and with the military does does And
Speaker 1: I understand the I do not speak as of amateur folks.
Speaker 1: The difference between military and police force in seven other shades.
Speaker 1: Mr Freedman, you know better than us. Does the military
Speaker 1: want to be involved with this? Is this something they
Speaker 1: just say, you know, we don't want to do this battle?
Speaker 1: How does the Pentagon feel about the militarization of our
Speaker 1: immigration effort? Well, you know that's a media statement. The
Speaker 1: little military cannot be involved in law enforce in the
Speaker 1: United States under that called that was signed in eighteen seventies.
Speaker 1: So there is no option of taking the U. S
Speaker 1: Military and turning the police force unless you got to
Speaker 1: break the law. The second thing is is that if
Speaker 1: you were going to decide that you aren't going to
Speaker 1: take care of this problem, you're gonna writ people checking.
Speaker 1: If you want to call that the militarization, you know, great, Um,
Speaker 1: what he's doing is probably not quite right from a
Speaker 1: practical point of view, he's moving fast, but from a
Speaker 1: legal and a political point of view, it's not molitorization. Okay,
Speaker 1: So Georgia, what's been happening so far have previous administrations
Speaker 1: turned a blind eye on illegal immigration? Is that how
Speaker 1: you would describe it. They have not completely turned to
Speaker 1: briand Ie. Obama expelled two million, five dred thousand illegal immigrants,
Speaker 1: but they did not make it a priority of enforcement.
Speaker 1: To some extent, the president has the right to decide
Speaker 1: what the priorities of enforcement are, so long as within
Speaker 1: the framework of the law, and previous presidents decided politically,
Speaker 1: even if it was law, they weren't going to do it. Interestingly,
Speaker 1: the most aggressive one enforcing it was Obama Georgia. A
Speaker 1: few more questions, if we could on the present tense
Speaker 1: of Washington, d C. What is the actual relationship of
Speaker 1: the Secretary of Defense, General Maddis and the Pentagon. Well,
Speaker 1: to me, it's a mystery how the Secretary of Defense
Speaker 1: dovetails with the Pentagon. How do they do that? Well?
Speaker 1: The Secretary defends legally, Uh, These joint chiefs of Staff
Speaker 1: are answerable to him. He effectively overseas and runs them.
Speaker 1: This particular Uh, this particular Secretary Offense is extremely knowledgeable
Speaker 1: about it. And one of the things he's come in
Speaker 1: with is arguing that the military has become enormously inefficient,
Speaker 1: spending large amounts of money on things that take years
Speaker 1: to field. One of them was a armored vehicle that
Speaker 1: was badly interacted to five years to get into the field,
Speaker 1: and he intends to make it more efficient by making it,
Speaker 1: among other things, a much smaller bureaucracy in the Pentagon
Speaker 1: and many more troops in the field. George talked to
Speaker 1: me a little bit about the Secretary of State Rex Tillerson.
Speaker 1: So I've been reading a lot of US news political
Speaker 1: the Washington Post, both describing how the former exce on
Speaker 1: Mobile CEO had been cut out of the loop on
Speaker 1: some shifts in terms of foreign policy and slapt down
Speaker 1: by the White House on personnel choices. What does that
Speaker 1: mean on how President Trump will deal with his cabinet. Well,
Speaker 1: first as assumes that this is true, very good. Yeah. Secondly,
Speaker 1: it assumes it forgets that he came into the cabinet latest,
Speaker 1: so he's not really up to date, so that when
Speaker 1: he went to Europe he basically said, I'm here to
Speaker 1: listen and not to act. He's never had a government job,
Speaker 1: he has never really done this before, and he knows it,
Speaker 1: and I think he's being very careful. You can interpret
Speaker 1: the fact that things have to be done and he's
Speaker 1: not ready to do them cutting him out of the loop,
Speaker 1: or you can simply say they're going to give him
Speaker 1: a couple of months to find a seat. Uh. But
Speaker 1: also remember one thing. In Washington or in London, lots
Speaker 1: of people get cut out of the loop on decisions.
Speaker 1: The simple fact that you hold a job with a
Speaker 1: certain title doesn't mean that you're prime minister or our
Speaker 1: president is going to consult you on everything. That's just
Speaker 1: the standard way government's run, stand away companies run. Right,
Speaker 1: But he is he arguably the most important appointment for
Speaker 1: the Trump administration. He is one appointment. He runs the
Speaker 1: State Department. Uh, the appointment of Defense Department is equally
Speaker 1: important to National Security Advisor, the head of the c
Speaker 1: i A. Unfortunately, and I think this is a problem.
Speaker 1: The complexity of American decision making in foreign policy means
Speaker 1: that there is no one person and point to who
Speaker 1: is the most important. He is one of many. Well,
Speaker 1: this is a very good point, and that the president
Speaker 1: speak you this morning. We'll have that for your folks
Speaker 1: in seven minutes of seapack, and then we go on
Speaker 1: to his congressional efforts next week. Everyone can agree this
Speaker 1: is a president that likes simplicity. He likes simplistic statements,
Speaker 1: simplistic theory, simplistic plans. I'm not trying to make a
Speaker 1: judgment your folks. I'm just stating the fact you've just stated,
Speaker 1: our foreign policy and defense projection is highly complex. How
Speaker 1: is the industry, George Friedman that you're in going to
Speaker 1: deliver a simple message to the president. Well, first we
Speaker 1: have to have a simple message to deliver, and there
Speaker 1: is no simple message, partly because this really is complicated
Speaker 1: and can be boiled down to just a simple message.
Speaker 1: Partly because the industry loves to complicate it. Yeah. The
Speaker 1: more complicated the issue is, the more they own it,
Speaker 1: more you need. Yeah. So, I mean the problem that
Speaker 1: we had here is that we have reached the point
Speaker 1: is everybody points out we have six in intelligence agencies
Speaker 1: that's built to fail in his simplistic way, and the
Speaker 1: president puts things in simplistic ways. Uh. You know, he's
Speaker 1: pointed this out. You know, he's pointed out that the
Speaker 1: decision making structure of our foreign policy can't generate strategy,
Speaker 1: doesn't listen to the president when strategy is made, and
Speaker 1: so on. This has been an old discussion. Now he's
Speaker 1: going to take a shot my expectations, hopfil I mean
Speaker 1: this is this is built into our firm policy from
Speaker 1: from where you set And I say this, folks, with
Speaker 1: Mr Bannon's comments yesterday, and who knows what we'll see
Speaker 1: as we staggered a Monday, A grizzled guy like you
Speaker 1: in the middle. I love this frenzy and I love
Speaker 1: saying this. George Freeman is part of the military industrial complex.
Speaker 1: Thank you think I didn't know we were meeting, but
Speaker 1: as part of a phrase from another time in place
Speaker 1: and you know military movies from the other at the time.
Speaker 1: What does your industry do with Mr Bannon? Do you do?
Speaker 1: You do you just wait him out? Or is General
Speaker 1: Madison others going to do something? What? What's the Here's
Speaker 1: what I say. Every administration has an ideologue in his
Speaker 1: foreign policy structure. Um the Obama administration was filled with them.
Speaker 1: What you're doing is one your answerable to the president
Speaker 1: and you have to carry out the policy. Secondly, the
Speaker 1: idea logue mostly make speeches. He's in charge of whipping
Speaker 1: up the base and saying all the things are going
Speaker 1: to happen to Usually abandon has no effect. He doesn't
Speaker 1: really get down into the meetings where things really happen.
Speaker 1: But I don't know if any administration that hasn't had
Speaker 1: abandon Now this Bannon is particularly disliked by foreign policy
Speaker 1: establishment compared to some of the others that have been there.
Speaker 1: But still it has to have some sort of ideological
Speaker 1: statement for the public. And you do have to remember,
Speaker 1: as he was elected, so he is the president. So
Speaker 1: can you say with any certainty that the u S
Speaker 1: foreign policy at the moment is America first? Is that
Speaker 1: foreign policy? Well, it's supposed to be because the president
Speaker 1: is charged with making certain by the Constitution of the
Speaker 1: American safety, that's his job. I think bold presidents do that.
Speaker 1: But remember we've been to war for fifteen years. It
Speaker 1: hasn't worked. Our relationship to Mexico hasn't evolved. So Mexico
Speaker 1: when we signed MAFTA was I think they si largest
Speaker 1: economy in the world. It is now eleventh largest economy
Speaker 1: in the world. There's a different dynamic going on. So
Speaker 1: one of the problems I wish Trump would be able
Speaker 1: to enunciate is, Look, we are playing by a playbook
Speaker 1: that's ten twenty years old. It needs to be updated.
Speaker 1: Europe certainly isn't what it was in in terms of organization, structure,
Speaker 1: solidity and so on. We can't continue a foreign policy
Speaker 1: that assumes that nothing has changed, and the foreign policy
Speaker 1: establishment likes to do that. So the answer is that
Speaker 1: he was elected to transform the system. I don't know
Speaker 1: if he can do that, but part of that is
Speaker 1: he's very offensive to a lot of people, so to
Speaker 1: understand and the back law, all the things that are
Speaker 1: saying what he'd done so far in foreign policy not
Speaker 1: a whole lot. We need to talk more often. George Freedman,
Speaker 1: Thank you so much. We've got a huge response to
Speaker 1: Mr Freeman is not so much giving his opinion, but
Speaker 1: just stating in fact, like this is the law, and
Speaker 1: in this case, the president is finally affecting the law.
Speaker 1: As you heard, it's been around since President Clinton. Somehow,
Speaker 1: I would suggest this debate will continue. Frenzy like, thank
Speaker 1: you so much. We heard from David Gura. I can't
Speaker 1: even pronounce the name. He's in some city and tear
Speaker 1: de Fuego at the tip of South America, y Shiya
Speaker 1: or something, on his way back from Antarctica with his kids.
Speaker 1: So maybe we'll see David Gura on Monday. What a
Speaker 1: week it spend. Thank you so much for your attention
Speaker 1: to us on radio, on television worldwide. This is Bloomberg.
Speaker 1: Thanks for listening to the Bloomberg Surveillance Podcast. Subscribe and
Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform
Speaker 1: you prefer. I'm out on Twitter at Tom Keene. David
Speaker 1: Gura is at David Gura. Before the podcast, you can
Speaker 1: always catch us worldwide. I'm Bloomberg Radio, brought you by
Speaker 1: Bank of America Mary Lynch. Dedicated to bringing our clients
Speaker 1: insights and solutions to meet the challenges of a transforming world.
Speaker 1: That's the power of global connections. Mary Lynch, Pierce, Fenner
Speaker 1: and Smith Incorporated Member s I p C.