WEBVTT - Bloomberg Surveillance: Sam Altman to Microsoft

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<v Speaker 1>This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along

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<v Speaker 1>with Jonathan Farrow and Lisa Abramowitz. Join us each day

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<v Speaker 1>the Bloomberg Terminal, and the Bloomberg Business App. Right now,

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<v Speaker 1>we're going to dive into this. This is really important.

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<v Speaker 1>I'm gonna give you a little bit of visibility here.

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<v Speaker 1>There are people like men Deep Singh and our Anniragrana

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<v Speaker 1>who actually walk in offices, sit down at desks, and work.

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<v Speaker 1>Their hallmark their guidepost is a guy named David Cutler.

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<v Speaker 1>Dave Cutler was legendary at Digital Equipment Deck years ago

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<v Speaker 1>in Maynard, Massachusetts. They stole them to the West coast

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<v Speaker 1>of Microsoft is one of the founding forces behind something

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<v Speaker 1>we all do, Windows and t Man Deep sing joins

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<v Speaker 1>us now and knows Dave Cutler the giant of Microsoft programming.

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<v Speaker 1>This is about Dave Cutler's. All this is about is

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<v Speaker 1>this kid Autman can bring the meat over this Microsoft

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<v Speaker 1>well Okay.

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<v Speaker 2>I think in this case it sounds like the CEO

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<v Speaker 2>was too overconfident and didn't really talk to his executives

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<v Speaker 2>and you know, the board, and you come to a

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<v Speaker 2>point where he was making all the decisions about the

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<v Speaker 2>future of the company. And look, there's no doubt the

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<v Speaker 2>market is real. I don't think, you know, you can

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<v Speaker 2>compare it to a Tarranos or one of the hypes

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<v Speaker 2>here because there are so many other competing companies that

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<v Speaker 2>are trying to do the same. The CEO really wanted

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<v Speaker 2>to move fast in this case r and clearly the

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<v Speaker 2>board and the executives weren't, you know, in line with them.

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<v Speaker 1>There will be forty phone calls made today, mister aman Brockman.

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<v Speaker 1>I believe it is joining him as well. The attributes

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<v Speaker 1>they will use to sell a given really really supervite,

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<v Speaker 1>first in their class and and everything. One of these

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<v Speaker 1>whiz kids, what are the attributes they sell to say,

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<v Speaker 1>join us at Microsoft.

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<v Speaker 2>Well, so clearly Microsoft is the compute infrastructure that's powering

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<v Speaker 2>all the open AI lan come.

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<v Speaker 1>On stock options. Is it mariners tickets? What? What what

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<v Speaker 1>gets these guys to move their their slide role over

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<v Speaker 1>to Microsoft.

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<v Speaker 2>I mean that could be an exit, but I can't

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<v Speaker 2>imagine Microsoft really going out of the way to attract talent. Look,

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<v Speaker 2>they hired Sam Altman, and they will leave it on

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<v Speaker 2>him to figure out which of the engineers really he

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<v Speaker 2>wants on his team at Microsoft and how to get there.

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<v Speaker 1>Should they make a year, we're.

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<v Speaker 2>Talking about over a million dollars for all of these engineers.

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<v Speaker 2>So clearly, yeah, that's.

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<v Speaker 3>Why is this guy so important?

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<v Speaker 2>So he was the face of open AI and think

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<v Speaker 2>of you know, chatchipt as the verb when it comes

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<v Speaker 2>to generative AI. That's why it got so much traction,

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<v Speaker 2>and he was the face of the company. But clearly

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<v Speaker 2>there were a lot of engineers behind the scenes that

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<v Speaker 2>were part of the development and they weren't on board

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<v Speaker 2>with his approach. They had concerns around AI safety, and

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<v Speaker 2>that's one thing that I think everyone needs to think

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<v Speaker 2>about in terms of, you know, the roadmap for when

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<v Speaker 2>this technology will be deployed. There's a lot going on

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<v Speaker 2>in terms of developing it, but in terms of really

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<v Speaker 2>changing your production environments with generative AI, it could be

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<v Speaker 2>a few years. And that's where I think and not

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<v Speaker 2>everyone wasn't sync.

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<v Speaker 3>If they were more concerned about safety on Friday? Are

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<v Speaker 3>they more or less concerned this morning?

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<v Speaker 4>Now?

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<v Speaker 3>Is it Microsoft?

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<v Speaker 2>Well, so, clearly the talent loss is a big concern,

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<v Speaker 2>and that's where the board got it wrong the way

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<v Speaker 2>they went about it. And clearly, I mean, from all

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<v Speaker 2>we know, OpenAI could lose almost half of its value

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<v Speaker 2>just because of the fact that they lost the CEO.

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<v Speaker 5>But does it raise a question about policing of some

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<v Speaker 5>of the these developments at a place that is focused

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<v Speaker 5>just on making money the bottom line, and when expectations

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<v Speaker 5>are pretty high in the market.

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<v Speaker 2>Well, so look at the development of you know, chat,

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<v Speaker 2>GPT and all these large anguage models. It's pretty expensive

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<v Speaker 2>and for any startup to sustain themselves. Right now we

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<v Speaker 2>are talking about you know, billion dollar R and D budgets,

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<v Speaker 2>So how do you sustain it? So I don't blame

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<v Speaker 2>you know, Sam Altman for trying to be ahead in

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<v Speaker 2>terms of monetization and thinking about it, but not having

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<v Speaker 2>your executives on board about your thinking or your board.

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<v Speaker 2>I think that's where you got it wrong.

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<v Speaker 5>Well, but I guess I'm wondering from a humanity standpoint,

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<v Speaker 5>if we're going to go with some of the ideals

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<v Speaker 5>that they're talking about and the fact that the board

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<v Speaker 5>was concerned about bots that could kind of take on

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<v Speaker 5>a life of their own and give all sorts of

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<v Speaker 5>information online. We're already seeing some sort of emblems of that.

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<v Speaker 5>How much does that just get magnified with a move

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<v Speaker 5>to Microsoft that doesn't necessarily have a nonprofit board trying

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<v Speaker 5>to espouse these values.

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<v Speaker 2>Yeah. So the Google approach so far has been They've

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<v Speaker 2>been very protective about, you know, what they release, so

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<v Speaker 2>they have been very conservative. A lot of people have

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<v Speaker 2>actually blamed them for being slow and not releasing their

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<v Speaker 2>Gemini Large Anguige model. But this sort of validates a

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<v Speaker 2>Google approach that you have to take a measured approach

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<v Speaker 2>when it comes to releasing these models, whether it's open

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<v Speaker 2>source or proprietary. I think we know open AI was

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<v Speaker 2>even though it's a nonprofit, everything is proprietary. Well that's

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<v Speaker 2>I think this brings into focus what should be open

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<v Speaker 2>source and what can the community work on it collectively,

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<v Speaker 2>And I think that's on the table now that SAM

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<v Speaker 2>is moving to Microsoft. I won't be surprised if they

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<v Speaker 2>go with an open source approach because such an Adellas

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<v Speaker 2>focus has always been on embracing open source since the

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<v Speaker 2>time he took the helm.

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<v Speaker 3>We've had this conversation already a few times this morning.

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<v Speaker 3>Let's finish there. We've reported this some oltmums trying to

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<v Speaker 3>create some kind of rifle too in video. How seriously

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<v Speaker 3>should we take that? Now he's got to see the Microsoft, I.

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<v Speaker 2>Mean Microsoft and now a new chip of their own

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<v Speaker 2>last week, right, So clearly Microsoft also has ambitions in

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<v Speaker 2>terms of developing their chip. But at this point of time,

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<v Speaker 2>I mean now they have to think about what is

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<v Speaker 2>the IP that Sam can create over the next six months.

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<v Speaker 2>Can he develop a large ananguage model that's equivalent to

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<v Speaker 2>chat GPT in the next six months Because it's proprietary,

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<v Speaker 2>you know, that's not coming over even if he hires

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<v Speaker 2>the engineers. The engineers have to build it from scratch,

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<v Speaker 2>and data availability is in shortage. They can't get the

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<v Speaker 2>same amount of data that they had before.

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<v Speaker 3>Tough question. Microsoft's up about one percent or so in

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<v Speaker 3>a pre market. If open ai was trading in the

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<v Speaker 3>pre market, where would it be right now?

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<v Speaker 2>I mean at least fifty percent down?

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<v Speaker 3>You think that hard?

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<v Speaker 2>Yes, because now their IP is gone, I mean, especially

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<v Speaker 2>with Sam coming over this site, Microsoft has to redo

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<v Speaker 2>everything from scratch until unless the board resigns and Microsoft

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<v Speaker 2>ends up acquiring open Ai. That's a plausible scenario. But

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<v Speaker 2>if they have to build it from scratch, now we're

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<v Speaker 2>talking about a very long timeline. I mean, Google it's

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<v Speaker 2>clearly ahead in terms of developing their model.

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<v Speaker 3>So everyone's saying the Microsoft is one. But if they've

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<v Speaker 3>got to write down that stack by fifty percent, have

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<v Speaker 3>they won?

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<v Speaker 5>Well?

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<v Speaker 2>So, I mean, I think talent acquisition is one thing

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<v Speaker 2>I do think when it comes to large and wid models.

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<v Speaker 2>I mean, there are a couple of open source large

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<v Speaker 2>and AID models, but you could use that to build

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<v Speaker 2>yours on top of it. I don't think you know,

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<v Speaker 2>you can replicate what chatchipt had. Again, I go back

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<v Speaker 2>to the verb analogy, because everyone thought about you know,

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<v Speaker 2>generative AI and chat Gipt as synonymous.

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<v Speaker 3>Mante, thank you sir for the update. Manti Singher Bloomberg Intelligence.

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<v Speaker 1>Joining US is on the short list to be the

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<v Speaker 1>new Minister of the Economy for the Argentine Republic. Andrew

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<v Speaker 1>Hollenhorst joins US Chief US Economists. It's City group. Before

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<v Speaker 1>we get to the serious stuff at hand. How do

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<v Speaker 1>you save cultural human city grow with your incredible Latin

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<v Speaker 1>American experience. There no other bank has that experience.

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<v Speaker 6>How do you save Argentina?

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<v Speaker 7>Yeah, I mean, I think it's what we're seeing in

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<v Speaker 7>Argentina is what we've seen a lot of places across

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<v Speaker 7>the globe, which is this kind of anti establishment, anti

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<v Speaker 7>anti institutionalist trend that we're seeing in policy making. And

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<v Speaker 7>when you look at the inflation rate in a country

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<v Speaker 7>like Argentina, you can see why people are looking for

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<v Speaker 7>a change.

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<v Speaker 1>How are we've seen so alone now in a constructive

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<v Speaker 1>policy out of the pandemic? How a loone will American

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<v Speaker 1>policy be in twenty twenty four?

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<v Speaker 7>I mean, I think one thing that really strikes me

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<v Speaker 7>when you look at US policy relatives to the rest

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<v Speaker 7>of the world is the deficit in the US. This

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<v Speaker 7>is a country now where we're running six seven eight

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<v Speaker 7>percent of GDP deficit in a world with a very

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<v Speaker 7>low unemployment rate. There are very few countries that can

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<v Speaker 7>do that. The US may be the only one, maybe

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<v Speaker 7>some other examples that can just consistently run large deficit

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<v Speaker 7>like that and continue to provide generous fiscal support, so

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<v Speaker 7>that it's just a very different situation for the US.

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<v Speaker 3>Big data point in this week jobless claims, let's go there.

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<v Speaker 3>You mentioned this in your research at some point. This

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<v Speaker 3>loosening of the labor market is an unwelcoming deterioration in

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<v Speaker 3>the data. Are we close to that on jobless claims?

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<v Speaker 7>We may be, And I think that's yeah. I think

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<v Speaker 7>you said it earlier. We're getting some conflicting data here.

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<v Speaker 7>You have the unemployment rate that's up about half a

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<v Speaker 7>percentage point over the last few months. If you just

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<v Speaker 7>look at that data series in isolation and don't try

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<v Speaker 7>to kind of explain away what you're seeing there, and

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<v Speaker 7>that's what we tend to do as economists. That's what

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<v Speaker 7>you've seen before every recession. It looks very much like

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<v Speaker 7>the path into a recession. Now the jobless claims have

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<v Speaker 7>been low, they're still low, but they're a rising. So

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<v Speaker 7>I think that's the difficulty. We're waiting for data that

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<v Speaker 7>will confirm one of these narratives and you just don't

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<v Speaker 7>have the data in yet.

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<v Speaker 3>No Death of Anislas mancro had this great phrase in

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<v Speaker 3>the last couple of weeks, soft landing, Navanna. A lot

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<v Speaker 3>of people are embracing that soft landing divner. Are you

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<v Speaker 3>still anticipate in this dual mandate the feder Reserve is

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<v Speaker 3>going to be in conflict in the coming quarters.

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<v Speaker 7>I think more likely than not it will be, and

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<v Speaker 7>that's just based on the history of what we've seen

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<v Speaker 7>in cycle after cycle. It would be great for the FED,

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<v Speaker 7>it would be great for the economy if you just

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<v Speaker 7>had this wonderful Nirvana like scenario where everything kind of

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<v Speaker 7>slowed on the same schedule. If we had had a

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<v Speaker 7>different inflation print last week, we'd be having a very

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<v Speaker 7>different conversation now. And I think that just shows the

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<v Speaker 7>extent to which this market is focused on the very

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<v Speaker 7>recent data. So we had softer inflation print, we have

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<v Speaker 7>job those claims that are coming up a little bit

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<v Speaker 7>that looks like something that could be consistent with the

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<v Speaker 7>soft landing. But are you going to get some data

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<v Speaker 7>that starts going in different directions. Probably, and this is

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<v Speaker 7>probably going to become a lot more difficult for the FED.

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<v Speaker 5>But just to build on that, is there an inherent

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<v Speaker 5>conflict in your belief of a growing chance of a

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<v Speaker 5>hard landing of a recession but also sticky inflation.

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<v Speaker 7>Yeah, So I think that's the real difficulty, and that's

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<v Speaker 7>what we haven't seen really in decades where you have

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<v Speaker 7>inflation that's still running above target and you have growth

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<v Speaker 7>that's weakening. Now, maybe they're going to happen together, And

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<v Speaker 7>maybe they happen together and kind of just the right

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<v Speaker 7>quantum so that you get the soft landing. I think

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<v Speaker 7>it's a possibility, But the more likely scenario is that

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<v Speaker 7>we'll have these kind of going in different directions where

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<v Speaker 7>inflation probably stays stickier and higher. One issue with inflation

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<v Speaker 7>and the way that the FED is conducting this policy

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<v Speaker 7>is inflation is going to lag what's going on in

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<v Speaker 7>the rest of the economy. So even if the economy

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<v Speaker 7>starts slowing down, job market starts loosening, you'll still be

0:11:33.320 --> 0:11:36.440
<v Speaker 7>running inflation that reflects where the economy was six months

0:11:36.480 --> 0:11:38.400
<v Speaker 7>ago or a year ago, and six months or a year

0:11:38.400 --> 0:11:39.240
<v Speaker 7>ago is very strong.

0:11:39.320 --> 0:11:41.120
<v Speaker 5>So are you saying that the Fed won't be kind

0:11:41.120 --> 0:11:43.839
<v Speaker 5>of rates as much as people think next year because

0:11:43.840 --> 0:11:46.520
<v Speaker 5>they won't be able to justify it given more inflation.

0:11:46.640 --> 0:11:47.000
<v Speaker 6>Is Yeah.

0:11:47.040 --> 0:11:49.120
<v Speaker 7>I think that's really the risk here, and it could

0:11:49.120 --> 0:11:51.640
<v Speaker 7>happen a couple of ways. So you could have this

0:11:51.760 --> 0:11:54.920
<v Speaker 7>scenario where the activity data is weakening, but you still

0:11:54.920 --> 0:11:57.280
<v Speaker 7>have inflation that's sticky and high. On the other hand,

0:11:57.360 --> 0:11:59.320
<v Speaker 7>even if we're on something that ends up looking more

0:11:59.360 --> 0:12:02.439
<v Speaker 7>like a soft land trajectory, eventually there wouldn't be a

0:12:02.480 --> 0:12:04.720
<v Speaker 7>lot of urgency for the FED to cut rates in

0:12:04.760 --> 0:12:08.960
<v Speaker 7>that scenario. I know, theoretically, if inflation comes down, and

0:12:09.000 --> 0:12:11.360
<v Speaker 7>I agree at some point the FED would be cutting rates,

0:12:11.480 --> 0:12:13.560
<v Speaker 7>that could take a very long time before we would

0:12:13.640 --> 0:12:15.000
<v Speaker 7>actually get those FED cuts.

0:12:15.440 --> 0:12:18.240
<v Speaker 1>I need to ask you about the linkage from your

0:12:18.320 --> 0:12:22.160
<v Speaker 1>UCLA and the Giant Almanac in Alvitor William Sharp, who

0:12:22.240 --> 0:12:26.200
<v Speaker 1>was a student up at Stanford, eventually to you, which

0:12:26.240 --> 0:12:30.640
<v Speaker 1>is the risk free rate? You absolutely nailed the increase

0:12:30.760 --> 0:12:33.040
<v Speaker 1>in rates. Do you have any clue where the risk

0:12:33.120 --> 0:12:34.560
<v Speaker 1>free rate is in twelve months.

0:12:35.160 --> 0:12:37.600
<v Speaker 7>Yeah, Like we were just discussing, it's going to depend

0:12:37.640 --> 0:12:39.320
<v Speaker 7>on the economic scenario, and I think you have to

0:12:39.360 --> 0:12:43.560
<v Speaker 7>be open to economic scenarios here. We do know that

0:12:43.840 --> 0:12:48.000
<v Speaker 7>we're in a world where inflation has been higher, has

0:12:48.040 --> 0:12:52.160
<v Speaker 7>been more volatile. We know that the correlation between equities

0:12:52.280 --> 0:12:57.080
<v Speaker 7>and fixed income has flipped. Essentially, you have equity prices

0:12:57.120 --> 0:12:59.800
<v Speaker 7>that are falling at the same time bond prices are falling.

0:13:00.200 --> 0:13:02.240
<v Speaker 7>That means we'll probably be some more term premium in there.

0:13:02.280 --> 0:13:05.640
<v Speaker 7>That means you'll probably have a higher interest rate all LSEQL,

0:13:06.360 --> 0:13:08.440
<v Speaker 7>so if anything, that risk free rate is probably going

0:13:08.440 --> 0:13:09.000
<v Speaker 7>to be higher.

0:13:09.080 --> 0:13:12.040
<v Speaker 3>And to what changed? What changed? What changed about the

0:13:12.040 --> 0:13:14.240
<v Speaker 3>fundamentals of things that's going to lead to this different

0:13:14.280 --> 0:13:17.000
<v Speaker 3>outcome now relative to pre pandemic.

0:13:18.000 --> 0:13:20.120
<v Speaker 7>I think the single biggest thing you can point to

0:13:20.600 --> 0:13:22.959
<v Speaker 7>is what's different in goods inflation. And I think that's

0:13:23.000 --> 0:13:26.559
<v Speaker 7>what we're all not looking at enough right now because

0:13:26.720 --> 0:13:29.160
<v Speaker 7>we've had a big disinflation and good so I think

0:13:29.160 --> 0:13:30.679
<v Speaker 7>it's easy to kind of look at that and say, well,

0:13:30.720 --> 0:13:34.319
<v Speaker 7>we've kind of returned to this pre pandemic goods deflation

0:13:34.400 --> 0:13:36.760
<v Speaker 7>and that's what we had pre pandemic. Goods prices went

0:13:36.840 --> 0:13:40.360
<v Speaker 7>down over time, and I think anyone who's been out

0:13:40.400 --> 0:13:43.080
<v Speaker 7>buying things over the last couple of years certainly the

0:13:43.120 --> 0:13:46.439
<v Speaker 7>experience is not. The goods prices are down now. Some

0:13:46.520 --> 0:13:48.520
<v Speaker 7>of that was specific to the pandemic. Some of that's

0:13:48.559 --> 0:13:51.800
<v Speaker 7>not going to continue. But what will continue is this

0:13:51.960 --> 0:13:55.360
<v Speaker 7>kind of topping out of globalization, maybe going the opposite

0:13:55.360 --> 0:13:58.240
<v Speaker 7>way in terms of globalization, and that means that stream

0:13:58.280 --> 0:14:00.000
<v Speaker 7>of low cost goods it's just not going to be

0:14:00.200 --> 0:14:02.440
<v Speaker 7>there in the same way that it was putting downward

0:14:02.480 --> 0:14:04.840
<v Speaker 7>pressure on goods prices. So I think we can expect

0:14:04.840 --> 0:14:06.440
<v Speaker 7>goods inflation going forward.

0:14:06.440 --> 0:14:08.400
<v Speaker 3>So this is a secular call for you. It's not

0:14:08.400 --> 0:14:09.680
<v Speaker 3>a call about the cy cope.

0:14:09.760 --> 0:14:12.280
<v Speaker 7>So that's a secular call. Yeah, I think that we're

0:14:12.520 --> 0:14:16.080
<v Speaker 7>the idea that inflation now is higher, more volatile, that

0:14:16.120 --> 0:14:20.160
<v Speaker 7>the economy is more subject to supply shocks than demand shocks.

0:14:20.360 --> 0:14:22.520
<v Speaker 7>These are structural, secular changes.

0:14:22.320 --> 0:14:24.440
<v Speaker 3>Andrew Kreig, to get your perspective on things, Thank you, buddy,

0:14:24.440 --> 0:14:25.800
<v Speaker 3>it's going to say you, thank you. Good to your

0:14:25.800 --> 0:14:26.680
<v Speaker 3>houn Hoste.

0:14:31.320 --> 0:14:35.360
<v Speaker 1>There is no perception to what nineteen seventy five was.

0:14:35.600 --> 0:14:40.040
<v Speaker 1>It was when a governor from Georgia wandered up north,

0:14:40.240 --> 0:14:43.960
<v Speaker 1>delusional that he could actually win an election. At the

0:14:44.040 --> 0:14:48.360
<v Speaker 1>same time, Ricky Skaggs, Tony Rice, Jerry Douglas and others

0:14:48.440 --> 0:14:52.480
<v Speaker 1>were doing a seminal album in bluegrass JD. Crow In

0:14:52.560 --> 0:14:57.960
<v Speaker 1>the New South nineteen seventy five. Terry Haynes remembers this.

0:14:58.080 --> 0:15:01.320
<v Speaker 1>He remembers the shift of the Old Seuth to the

0:15:01.360 --> 0:15:04.840
<v Speaker 1>New South. In honor of the first Lady Terry Haynes.

0:15:04.880 --> 0:15:08.440
<v Speaker 1>What was the battle that the two Carters had when

0:15:08.480 --> 0:15:10.680
<v Speaker 1>they invented the New South.

0:15:12.160 --> 0:15:16.560
<v Speaker 8>Well, the battle that went on was the idea, and

0:15:16.600 --> 0:15:21.400
<v Speaker 8>this is middle Watergate post Watergate, the idea that an

0:15:21.400 --> 0:15:25.000
<v Speaker 8>insurgent could actually shake up Washington. I mean, that was

0:15:25.080 --> 0:15:28.960
<v Speaker 8>the selling point for Carter. You know, he managed to

0:15:28.960 --> 0:15:32.080
<v Speaker 8>make that case. He won by a little over President Ford.

0:15:32.640 --> 0:15:35.160
<v Speaker 8>But then he ran into the realities of Washington, where

0:15:35.560 --> 0:15:39.400
<v Speaker 8>Tip O'Neill and others took him aside and said, no, actually,

0:15:39.440 --> 0:15:41.480
<v Speaker 8>this is the time where we get to make the

0:15:41.520 --> 0:15:44.560
<v Speaker 8>policy and you get to sign the bills. And one

0:15:44.680 --> 0:15:48.720
<v Speaker 8>ended up happening was basically a three year Democratic food

0:15:48.760 --> 0:15:53.000
<v Speaker 8>fight that weakened Carter greatly, not least because Ted Kennedy

0:15:53.080 --> 0:15:58.000
<v Speaker 8>ran against him, and that ended in President Reagan's election.

0:15:58.640 --> 0:16:03.720
<v Speaker 1>Is this Democratic Party now any shade or idea of

0:16:03.760 --> 0:16:05.120
<v Speaker 1>what the two Carters knew?

0:16:07.440 --> 0:16:11.960
<v Speaker 8>Yeah, some of them are. But I think that President

0:16:12.040 --> 0:16:15.880
<v Speaker 8>Carter would likely be uh, you know, unhappy with the

0:16:16.200 --> 0:16:20.840
<v Speaker 8>progressive direction, largely because I mean he would be aspirationally progressive,

0:16:20.840 --> 0:16:23.960
<v Speaker 8>but the idea that uh, you know, they they couldn't

0:16:23.960 --> 0:16:28.240
<v Speaker 8>win on a particular platform would not be helpful. And

0:16:27.760 --> 0:16:30.320
<v Speaker 8>uh and he'd see the politics I think very very

0:16:30.320 --> 0:16:32.000
<v Speaker 8>differently than the current group does.

0:16:32.280 --> 0:16:33.520
<v Speaker 5>Who do you think Terry is going to be the

0:16:33.520 --> 0:16:36.240
<v Speaker 5>torch payer for the Democratic Party in the next four

0:16:36.280 --> 0:16:37.000
<v Speaker 5>to eight years.

0:16:38.440 --> 0:16:42.320
<v Speaker 8>Oh, you know, beyond Biden. I mean, there's going to

0:16:42.360 --> 0:16:44.480
<v Speaker 8>be a lot of people that are going to fight

0:16:44.600 --> 0:16:49.440
<v Speaker 8>that out from from Governor Newtisom uh to Governor Whitmer

0:16:49.480 --> 0:16:50.120
<v Speaker 8>of Michigan.

0:16:50.560 --> 0:16:50.880
<v Speaker 2>Uh.

0:16:51.040 --> 0:16:53.160
<v Speaker 8>You know, there will be four or five others that

0:16:53.200 --> 0:16:55.520
<v Speaker 8>will try to pop up. It's going to be very

0:16:55.560 --> 0:16:58.040
<v Speaker 8>interesting the battle for the soul of the party. The

0:16:58.080 --> 0:17:02.120
<v Speaker 8>problem is, uh, relevancy. What you've got on the left

0:17:02.160 --> 0:17:05.440
<v Speaker 8>and on the right is a world where the primary

0:17:05.480 --> 0:17:10.159
<v Speaker 8>system rewards purists and at the same time, the money

0:17:10.200 --> 0:17:13.359
<v Speaker 8>out there, the money and the energy, rewards purists as well.

0:17:13.720 --> 0:17:16.200
<v Speaker 8>So there's a huge middle in the country that feels

0:17:16.280 --> 0:17:18.960
<v Speaker 8>unserved on a lot of levels. And that's I think

0:17:19.000 --> 0:17:20.680
<v Speaker 8>that's the basis of a lot of the tensions you

0:17:20.720 --> 0:17:21.480
<v Speaker 8>see politically.

0:17:21.600 --> 0:17:23.520
<v Speaker 5>Do you think that's the reason why President Biden hasn't

0:17:23.520 --> 0:17:26.200
<v Speaker 5>stepped down and allow somebody else to run in his stead?

0:17:27.680 --> 0:17:30.280
<v Speaker 8>One reason? Yeah, I mean, but you know, Democrats are

0:17:30.320 --> 0:17:34.399
<v Speaker 8>you know, the the old order never passes quietly, I

0:17:34.400 --> 0:17:38.560
<v Speaker 8>think historically, and what you've got is in. Biden is

0:17:38.800 --> 0:17:41.840
<v Speaker 8>by and large the old order, somebody who you know,

0:17:41.920 --> 0:17:47.440
<v Speaker 8>got there on the promise of centrism, of return to normality.

0:17:47.840 --> 0:17:50.639
<v Speaker 8>And and then when you've got in that is you know,

0:17:50.680 --> 0:17:53.760
<v Speaker 8>the pull and tug between the Centrists and the progressives,

0:17:54.119 --> 0:17:57.640
<v Speaker 8>and you know that's not the direction the Democratic Party's going,

0:17:57.680 --> 0:18:00.400
<v Speaker 8>and they're going for good or real and the progressive.

0:18:00.560 --> 0:18:03.680
<v Speaker 1>Terry Haynes, who's the Nikki Haley of the Democrats right now?

0:18:04.680 --> 0:18:08.639
<v Speaker 8>Oh Nikki Haley. Goodness, there isn't one on the radar

0:18:08.680 --> 0:18:14.960
<v Speaker 8>screen everybody else who's thinking about running when independent. Witner's

0:18:15.000 --> 0:18:17.520
<v Speaker 8>probably the closest to that, But I don't think there's

0:18:17.520 --> 0:18:18.280
<v Speaker 8>a close analog.

0:18:18.880 --> 0:18:21.200
<v Speaker 5>When you talk about President Biden and some of the

0:18:21.240 --> 0:18:25.360
<v Speaker 5>poll numbers recently, I'm wondering, given the foreign policy consideration,

0:18:25.720 --> 0:18:29.439
<v Speaker 5>how much is the lack of popularity going to drive

0:18:29.520 --> 0:18:32.680
<v Speaker 5>some policy decisions on his part in the coming months.

0:18:32.680 --> 0:18:35.160
<v Speaker 5>In other words, does it reduce his support of Israel

0:18:35.520 --> 0:18:37.560
<v Speaker 5>and change any of his Middle East policy?

0:18:38.840 --> 0:18:41.639
<v Speaker 8>I don't think it changes on Israel. I think he

0:18:41.680 --> 0:18:45.080
<v Speaker 8>gets a little bit tempted on China. The Chinese have

0:18:45.119 --> 0:18:48.120
<v Speaker 8>been dangling a great deal that you know, if you'd

0:18:48.240 --> 0:18:50.880
<v Speaker 8>be a little bit more reasonable on Taiwan, We'd work

0:18:50.960 --> 0:18:52.800
<v Speaker 8>with you one in the Middle East, we'd work with

0:18:52.880 --> 0:18:57.320
<v Speaker 8>you one rushing Ukraine much more overtly. And you know,

0:18:57.359 --> 0:18:59.680
<v Speaker 8>so I think he's a little bit tempted in that direction.

0:19:00.280 --> 0:19:02.679
<v Speaker 8>But you know, the way the White House sees this,

0:19:02.760 --> 0:19:07.760
<v Speaker 8>and I was following your comments earlier, the way the

0:19:07.760 --> 0:19:10.040
<v Speaker 8>White House sees this fundamentally is, you know, it's a

0:19:10.119 --> 0:19:13.199
<v Speaker 8>race against somebody, and they think that people will end

0:19:13.320 --> 0:19:17.080
<v Speaker 8>up reluctantly pulling the lever, but actually pulling the lever

0:19:17.520 --> 0:19:21.960
<v Speaker 8>as much to avoid the likely opposition as anything else.

0:19:22.200 --> 0:19:24.200
<v Speaker 3>Harry, do you think China would be happy with another

0:19:24.240 --> 0:19:25.760
<v Speaker 3>Biden term?

0:19:26.440 --> 0:19:26.840
<v Speaker 8>Happy?

0:19:27.440 --> 0:19:27.680
<v Speaker 9>Yeah?

0:19:27.720 --> 0:19:32.119
<v Speaker 8>I think short, because what China very likely sees is

0:19:32.160 --> 0:19:35.240
<v Speaker 8>a lot of mud living through a lot of a

0:19:35.280 --> 0:19:40.119
<v Speaker 8>lot of pronouncements about new policies chips, security and the like,

0:19:40.320 --> 0:19:42.080
<v Speaker 8>but not a lot of follow through. I mean, there's

0:19:42.119 --> 0:19:45.680
<v Speaker 8>a headline on the South China Morning Post this morning saying,

0:19:45.720 --> 0:19:47.720
<v Speaker 8>you know, America is building all these chip factories, but

0:19:47.760 --> 0:19:50.639
<v Speaker 8>the federal dollars haven't started to flow, which is true.

0:19:50.960 --> 0:19:53.399
<v Speaker 8>And you know that's been a year or more after

0:19:53.440 --> 0:19:56.000
<v Speaker 8>the Ship's Bill was passed you know, one of the

0:19:56.040 --> 0:19:58.960
<v Speaker 8>things that the United States has got in terms of

0:19:59.000 --> 0:20:03.240
<v Speaker 8>a large problem is follow through as procurement is actually

0:20:03.600 --> 0:20:06.680
<v Speaker 8>becoming the arsenal democracy here at this particular.

0:20:06.200 --> 0:20:09.359
<v Speaker 3>Point, Terry, appreciate your insight. Thank you, sir, Terry Haynes.

0:20:09.400 --> 0:20:20.040
<v Speaker 3>Theare of panchea policy.

0:20:20.800 --> 0:20:22.920
<v Speaker 1>So, you know, we sort of snoozed off with Jane

0:20:22.960 --> 0:20:25.199
<v Speaker 1>Foley in London last time we saw her.

0:20:25.280 --> 0:20:26.240
<v Speaker 6>Maybe we could do better.

0:20:26.359 --> 0:20:26.920
<v Speaker 1>Why don't you.

0:20:26.840 --> 0:20:30.080
<v Speaker 2>Bring in Jane here with big moves a checkond.

0:20:30.119 --> 0:20:32.720
<v Speaker 5>We did not fall asleep, It just seemed to be rangebound.

0:20:32.800 --> 0:20:35.359
<v Speaker 5>And now we've actually broken out to one oh nine.

0:20:35.640 --> 0:20:38.000
<v Speaker 5>The low that we got over the past couple of

0:20:38.040 --> 0:20:40.280
<v Speaker 5>weeks was just a bit ago at one O six

0:20:40.400 --> 0:20:44.280
<v Speaker 5>seventy seven one O four sixty seven on October third.

0:20:44.359 --> 0:20:46.080
<v Speaker 5>This has been a big move. Is at the beginning

0:20:46.119 --> 0:20:49.119
<v Speaker 5>of something more, Jane Folly? That's really my question? You know,

0:20:49.160 --> 0:20:51.560
<v Speaker 5>are we going to start to see more protracted dollar weakness?

0:20:52.400 --> 0:20:52.600
<v Speaker 1>Oh?

0:20:52.720 --> 0:20:55.000
<v Speaker 4>You know, this is I think really exciting, you know,

0:20:55.080 --> 0:20:56.720
<v Speaker 4>and I think we're at a really equivocabal point. And

0:20:56.760 --> 0:20:59.040
<v Speaker 4>of course that started with the CPI data, and of

0:20:59.040 --> 0:21:00.960
<v Speaker 4>course right now we've got to question will is this

0:21:01.000 --> 0:21:03.280
<v Speaker 4>a little bit over extended. But you know, one thing

0:21:03.320 --> 0:21:05.720
<v Speaker 4>is for certain. You know that the dollar has a

0:21:05.760 --> 0:21:09.760
<v Speaker 4>pretty good inverted relationship with with risky assets, say they're

0:21:10.280 --> 0:21:13.639
<v Speaker 4>emerging market stocks. So basically what that says to us

0:21:13.720 --> 0:21:16.160
<v Speaker 4>is that when interest rates in the US go down, well,

0:21:16.280 --> 0:21:18.960
<v Speaker 4>risk appetite globally goes goes up and people move the

0:21:19.000 --> 0:21:21.520
<v Speaker 4>money out of dollars. So we know that. What we

0:21:21.600 --> 0:21:24.280
<v Speaker 4>don't know is if the market's got the timing right

0:21:24.720 --> 0:21:26.679
<v Speaker 4>about you know, the interest rate cuts coming from the

0:21:26.680 --> 0:21:28.399
<v Speaker 4>Federal Reserve next year, are we going to get some

0:21:28.440 --> 0:21:30.239
<v Speaker 4>pushback up? We're going to get more pushback about that.

0:21:30.320 --> 0:21:32.000
<v Speaker 4>You know for the next few weeks. Is the data

0:21:32.040 --> 0:21:33.840
<v Speaker 4>going to be a little bit more choppy? And I

0:21:33.880 --> 0:21:35.840
<v Speaker 4>think that's probably what's going to happen. We will get

0:21:35.880 --> 0:21:39.200
<v Speaker 4>some choppiness there. So we're probably not on a straight line.

0:21:39.240 --> 0:21:42.280
<v Speaker 4>But it does appear that we are a really pivotabul point,

0:21:42.400 --> 0:21:44.719
<v Speaker 4>which might just be a little bit more protracted than

0:21:44.720 --> 0:21:46.199
<v Speaker 4>many people hope it's going to be.

0:21:46.440 --> 0:21:49.520
<v Speaker 1>Jane with the multi decades at Robo Bank of Hedging,

0:21:50.200 --> 0:21:53.320
<v Speaker 1>is there a bet within this range bound market that

0:21:53.400 --> 0:21:58.800
<v Speaker 1>will allow for acceleration or convexity of moves. Is there

0:21:59.200 --> 0:22:03.000
<v Speaker 1>inability here to be surprised by big figure moves?

0:22:03.600 --> 0:22:05.920
<v Speaker 4>Well, there's always an ability to be a surprise, and

0:22:06.080 --> 0:22:07.639
<v Speaker 4>you know we've seen a lot of them now. But

0:22:07.720 --> 0:22:10.240
<v Speaker 4>we know that the central banks are a data dependent

0:22:10.320 --> 0:22:12.359
<v Speaker 4>and therefore you know, we don't get the forward guidance

0:22:12.400 --> 0:22:15.480
<v Speaker 4>there for perhaps the more scope to be surprised by

0:22:15.520 --> 0:22:16.960
<v Speaker 4>all of this. And of course you know you mentioned

0:22:17.000 --> 0:22:20.000
<v Speaker 4>the elections, this huge amount of elections in twenty twenty four.

0:22:20.080 --> 0:22:22.560
<v Speaker 4>I mean, I think it's it's there's a figure like

0:22:23.240 --> 0:22:25.639
<v Speaker 4>I think countries with a collective population of more than

0:22:25.640 --> 0:22:27.679
<v Speaker 4>four billion, half of the world's population will go to

0:22:27.720 --> 0:22:29.640
<v Speaker 4>the polls next year. So it's not just the US.

0:22:29.720 --> 0:22:32.800
<v Speaker 4>We've got a lot of the EU and Taiwan and

0:22:32.840 --> 0:22:35.560
<v Speaker 4>so many really pivotal places. So there's a lot of

0:22:35.600 --> 0:22:38.400
<v Speaker 4>scope I think for you know, excitement to be injected.

0:22:38.400 --> 0:22:41.000
<v Speaker 1>Okay, I love this, Jane, give me a big figure move,

0:22:41.040 --> 0:22:43.560
<v Speaker 1>give me your pair where I can make a Bramo

0:22:43.880 --> 0:22:47.560
<v Speaker 1>like five six big figure move into June of next year.

0:22:48.200 --> 0:22:50.200
<v Speaker 4>I think you probably look at the Swedish chrona for

0:22:50.520 --> 0:22:52.960
<v Speaker 4>one that's just started to turn around, that had huge

0:22:52.960 --> 0:22:55.040
<v Speaker 4>amount of weakness street for the last couple of years,

0:22:55.240 --> 0:22:59.040
<v Speaker 4>that's beginning to turn around, I think, coming back even

0:22:59.080 --> 0:23:02.600
<v Speaker 4>against the Euro. You know, if we look at the

0:23:02.840 --> 0:23:05.320
<v Speaker 4>Aussie dollar, if the risk appetite does pick up, and

0:23:05.320 --> 0:23:07.639
<v Speaker 4>of course that's the big if it will eventually, but

0:23:07.680 --> 0:23:10.760
<v Speaker 4>you know, this could be a protractive time of the market,

0:23:10.760 --> 0:23:12.960
<v Speaker 4>you know, trying to pick out and maybe knocks back

0:23:12.960 --> 0:23:15.000
<v Speaker 4>from data, knock back from the fad. But perhaps if

0:23:15.040 --> 0:23:17.320
<v Speaker 4>we go you know, towards the latter half of next year,

0:23:17.320 --> 0:23:19.520
<v Speaker 4>I think the Aussie will do really quite well because

0:23:19.520 --> 0:23:23.320
<v Speaker 4>the fundamentals in Australia are really quite good compared with

0:23:23.359 --> 0:23:25.600
<v Speaker 4>many other countries in the G ten. But of course

0:23:25.880 --> 0:23:29.280
<v Speaker 4>that necessitates a pick up in China too, So you know,

0:23:29.359 --> 0:23:31.480
<v Speaker 4>China is going to be a really important part of

0:23:31.560 --> 0:23:34.119
<v Speaker 4>this risk appetite story and how it emerges in twenty

0:23:34.119 --> 0:23:34.600
<v Speaker 4>twenty four.

0:23:34.680 --> 0:23:36.600
<v Speaker 1>Well, Lisa, that's right where I wanted to go, which

0:23:36.680 --> 0:23:39.240
<v Speaker 1>is Ausie off Pacific rim going. If I don't know

0:23:39.240 --> 0:23:41.720
<v Speaker 1>who you play Aussie sing Doll or Aussie China and

0:23:41.840 --> 0:23:44.320
<v Speaker 1>leave that to adults like Jane Foley, But to me,

0:23:44.520 --> 0:23:49.080
<v Speaker 1>Australia always has a modest surprise here. Plus they wanted cricket,

0:23:49.080 --> 0:23:52.760
<v Speaker 1>they'd be such an asull as India. So the long cricket,

0:23:52.800 --> 0:23:53.920
<v Speaker 1>you go long to Aussie.

0:23:54.040 --> 0:23:56.520
<v Speaker 5>I'll leave you to the cricket updates. But just sticking

0:23:56.840 --> 0:23:59.399
<v Speaker 5>with the Pacific RIM, there is a question if you

0:23:59.440 --> 0:24:01.520
<v Speaker 5>want a real big surprise, maybe Japan is the way

0:24:01.520 --> 0:24:04.160
<v Speaker 5>to go. And that's what PIMCO is doing, going into

0:24:04.160 --> 0:24:07.240
<v Speaker 5>the Yen expecting that maybe a bit of softening in

0:24:07.280 --> 0:24:09.680
<v Speaker 5>the stance of the FED, and even ray Kut sort

0:24:09.720 --> 0:24:12.639
<v Speaker 5>of gives an opening to move away from yeld curve control.

0:24:12.840 --> 0:24:13.640
<v Speaker 5>Are you buying that?

0:24:15.119 --> 0:24:17.560
<v Speaker 4>You know, I think it will happen, but I'm still

0:24:17.600 --> 0:24:20.480
<v Speaker 4>not too excited about the pace. Yes, I mean I

0:24:20.480 --> 0:24:22.840
<v Speaker 4>think the real story for twenty twenty four will be Yes,

0:24:23.320 --> 0:24:26.000
<v Speaker 4>more unwinding of view curve control. But it's when are

0:24:26.040 --> 0:24:28.240
<v Speaker 4>they going to be able to hike interest rates? And

0:24:28.280 --> 0:24:30.520
<v Speaker 4>I listened really carefully to the comments from New Adia

0:24:30.640 --> 0:24:33.400
<v Speaker 4>just a couple of weeks ago. He's still really very cautious.

0:24:33.560 --> 0:24:36.879
<v Speaker 4>And then we had some very disappointing GDP data from Japan.

0:24:37.200 --> 0:24:39.320
<v Speaker 4>Of course that's what we need. If we had better

0:24:39.400 --> 0:24:41.680
<v Speaker 4>growth in Japan, we'd all be a lot more confident

0:24:41.720 --> 0:24:43.520
<v Speaker 4>that they can move away from from negative interest rates.

0:24:43.560 --> 0:24:45.879
<v Speaker 4>So we need to watch the economic data, and as

0:24:45.920 --> 0:24:48.960
<v Speaker 4>long as that's sort of disappointing, I think it's still

0:24:49.359 --> 0:24:51.960
<v Speaker 4>difficult to get too excited about the pace at which

0:24:51.960 --> 0:24:54.240
<v Speaker 4>this unwinding net will come. But we have started all

0:24:54.359 --> 0:24:57.240
<v Speaker 4>Japan has started the process of this unwind from a

0:24:58.280 --> 0:25:02.159
<v Speaker 4>very accommodative monetary policy SETU means. What the question is

0:25:01.960 --> 0:25:03.720
<v Speaker 4>is how fast can they really go?

0:25:04.080 --> 0:25:05.840
<v Speaker 3>Jane, Let's get away from G ten, let's go to

0:25:05.880 --> 0:25:10.320
<v Speaker 3>something different. Finish on this. How does a country experiencing

0:25:10.320 --> 0:25:12.840
<v Speaker 3>more than one hundred percent inflation get rid of his

0:25:13.000 --> 0:25:16.199
<v Speaker 3>currency and replace it with the US dollar? Jane, I'm

0:25:16.240 --> 0:25:17.560
<v Speaker 3>sure you and the team we've given this some thought.

0:25:17.600 --> 0:25:19.960
<v Speaker 3>How's this going to work in Argentina? If this is

0:25:20.000 --> 0:25:21.280
<v Speaker 3>the road he wants to go down.

0:25:21.800 --> 0:25:24.240
<v Speaker 4>Well, I mean that's what he said, dollarization, you know.

0:25:24.400 --> 0:25:27.000
<v Speaker 4>And I think what they probably do is probably just

0:25:27.560 --> 0:25:30.320
<v Speaker 4>use the dollar a lot more in trade at price

0:25:30.359 --> 0:25:32.920
<v Speaker 4>things in the dollar and just piggyback off the back

0:25:32.960 --> 0:25:37.920
<v Speaker 4>of the FED much more credible interest rate to ability.

0:25:38.000 --> 0:25:42.000
<v Speaker 4>So it's just that piggybacking of the Fed as much

0:25:42.000 --> 0:25:45.119
<v Speaker 4>as they possibly can. But this is not going to

0:25:45.119 --> 0:25:47.280
<v Speaker 4>be an easy dynamic, as I think we're all aware.

0:25:47.280 --> 0:25:49.199
<v Speaker 3>Going to mean nothing easy about this. Jane, Thank you,

0:25:49.280 --> 0:25:51.080
<v Speaker 3>Jane Furley there of Rabbit Bank.

0:25:55.280 --> 0:25:57.240
<v Speaker 1>Full disclosure. I am a member of the cars on

0:25:57.320 --> 0:26:00.359
<v Speaker 1>Foreign Relations. I can't say enough about his publics service

0:26:00.440 --> 0:26:03.600
<v Speaker 1>back well to World War Two, starting with the Kenonessa

0:26:03.800 --> 0:26:07.200
<v Speaker 1>and other great moments along the way. And I remember,

0:26:07.320 --> 0:26:10.840
<v Speaker 1>I'm going to say, fifteen years ago when the CFI,

0:26:10.920 --> 0:26:14.560
<v Speaker 1>the consult Foreign Relations are the courage to reinvent themselves digitally.

0:26:15.000 --> 0:26:18.000
<v Speaker 1>It is one of the greatest successes in anything we

0:26:18.080 --> 0:26:21.720
<v Speaker 1>do this in international relations. The website of the Consolan

0:26:21.800 --> 0:26:27.400
<v Speaker 1>Foreign Relations, which is the foundational intellectual input of Richard Has.

0:26:27.880 --> 0:26:31.399
<v Speaker 1>So what do you do when has exit? The joy

0:26:31.640 --> 0:26:35.200
<v Speaker 1>is it's Michael froman president of the Consulate Foreign Relations

0:26:35.240 --> 0:26:39.280
<v Speaker 1>to say he's former US trade representative, barely describes the

0:26:39.440 --> 0:26:43.919
<v Speaker 1>miles he has clocked on airplanes for this nation. Michael,

0:26:44.040 --> 0:26:47.280
<v Speaker 1>just thrilled you could join us this morning. Congratulations on

0:26:47.720 --> 0:26:51.040
<v Speaker 1>the new effort with the Consolen Foreign Relations. It's a

0:26:51.080 --> 0:26:54.040
<v Speaker 1>little busy out there, Michael. What are you focused on

0:26:54.200 --> 0:26:54.720
<v Speaker 1>right now?

0:26:56.440 --> 0:26:59.320
<v Speaker 9>Well, we see the return of great power politics with

0:26:59.440 --> 0:27:04.119
<v Speaker 9>Russia at war. The emergence of a competition, multi dimension

0:27:04.200 --> 0:27:07.960
<v Speaker 9>competition with China, and of course you've got the war

0:27:07.960 --> 0:27:11.040
<v Speaker 9>in the Middle East breaking out, and global issues like

0:27:11.280 --> 0:27:13.639
<v Speaker 9>pandemics and climate change still to deal with. So there

0:27:13.640 --> 0:27:16.000
<v Speaker 9>are a lot of issues on the global agenda, a

0:27:16.040 --> 0:27:20.520
<v Speaker 9>lot of demands for cooperation and collaboration, precisely at a

0:27:20.560 --> 0:27:22.680
<v Speaker 9>time when there's also a lot of fragmentation.

0:27:23.040 --> 0:27:24.639
<v Speaker 6>So it's a very challenging period.

0:27:24.720 --> 0:27:28.639
<v Speaker 1>There is a bipartisan toned the console on foreign relations.

0:27:28.680 --> 0:27:32.560
<v Speaker 1>In this new Foreign Affairs magazine, your work with President Obama.

0:27:32.640 --> 0:27:36.399
<v Speaker 1>There's mister Gates, Secretary of Defense, with an important essay

0:27:36.840 --> 0:27:40.919
<v Speaker 1>in your Foreign Affairs magazine. Is it a bipartisan debate

0:27:41.040 --> 0:27:45.280
<v Speaker 1>in Washington or is our politics so fractured we're not

0:27:45.480 --> 0:27:47.760
<v Speaker 1>having a normal CFR debate?

0:27:49.440 --> 0:27:53.440
<v Speaker 9>Well, clearly the country is more polarized politically than it's

0:27:53.520 --> 0:27:56.400
<v Speaker 9>ever been. I think when it comes to foreign policy

0:27:56.680 --> 0:28:00.359
<v Speaker 9>national security, there is a bit more of a non

0:28:00.400 --> 0:28:04.879
<v Speaker 9>partisan or bipartisan debate going on. The center left and

0:28:04.920 --> 0:28:09.240
<v Speaker 9>the center right, I think share a fair number of perspectives,

0:28:09.240 --> 0:28:10.800
<v Speaker 9>and of course then there are a wide range of

0:28:10.840 --> 0:28:16.000
<v Speaker 9>perspectives in both parties as well. But right now, whether

0:28:16.040 --> 0:28:18.640
<v Speaker 9>it's Ukraine or the Middle East. I think the majority

0:28:18.640 --> 0:28:22.440
<v Speaker 9>of both parties are very focused on providing the necessary support,

0:28:22.560 --> 0:28:24.480
<v Speaker 9>and when it comes to an issue like China, there's

0:28:24.520 --> 0:28:27.120
<v Speaker 9>a very strong bipartisan consensus that we need to be

0:28:27.480 --> 0:28:30.000
<v Speaker 9>very firm with China and reset the relationship.

0:28:30.080 --> 0:28:32.720
<v Speaker 5>Focus on that master of proman. Just taking a look

0:28:32.760 --> 0:28:35.720
<v Speaker 5>at what happened last week, do you think it truly

0:28:35.920 --> 0:28:38.560
<v Speaker 5>was more of a success than maybe many people are

0:28:38.600 --> 0:28:39.320
<v Speaker 5>giving it credit for.

0:28:41.240 --> 0:28:44.080
<v Speaker 9>I think it was a success in that the goal

0:28:44.280 --> 0:28:47.960
<v Speaker 9>was to stabilize the relationship heading into twenty twenty four,

0:28:48.040 --> 0:28:50.360
<v Speaker 9>when you have elections in Taiwan and elections in the

0:28:50.440 --> 0:28:52.640
<v Speaker 9>United States where the China issue.

0:28:52.360 --> 0:28:54.560
<v Speaker 6>Is clearly going to play a role.

0:28:54.600 --> 0:28:57.680
<v Speaker 9>And I think they both achieve that in terms of

0:28:57.720 --> 0:29:01.360
<v Speaker 9>not just talking because we shouldn't can views a meeting

0:29:01.520 --> 0:29:04.760
<v Speaker 9>or a conversation with actual progress. But they did make

0:29:04.840 --> 0:29:09.680
<v Speaker 9>actual progress on issues like military to military conflict management,

0:29:10.080 --> 0:29:14.920
<v Speaker 9>on fentanyl, on climate change, and on really trying to

0:29:14.960 --> 0:29:18.920
<v Speaker 9>reset the relationship going into next year. So President she

0:29:18.960 --> 0:29:21.840
<v Speaker 9>gave a speech in San Francisco which frankly could have

0:29:21.880 --> 0:29:24.360
<v Speaker 9>been given seven or ten years ago. There was no

0:29:24.920 --> 0:29:29.320
<v Speaker 9>wolf Warrior diplomacy in evidence. There was no reference to

0:29:30.000 --> 0:29:32.960
<v Speaker 9>the challenges and conflicts that have defined the relationship over

0:29:33.000 --> 0:29:35.720
<v Speaker 9>the last few years. And I think there's a real

0:29:35.760 --> 0:29:38.200
<v Speaker 9>effort on their part for their own reasons that the

0:29:38.280 --> 0:29:40.800
<v Speaker 9>Chinese wanted to make sure that we have a more

0:29:40.840 --> 0:29:43.320
<v Speaker 9>benign international environment looking ahead.

0:29:43.400 --> 0:29:45.800
<v Speaker 5>They want the appearance of at least some sort of

0:29:45.840 --> 0:29:47.240
<v Speaker 5>back to the future and when it comes to the

0:29:47.320 --> 0:29:50.000
<v Speaker 5>business climate, but there's a real question about how much

0:29:50.680 --> 0:29:53.080
<v Speaker 5>that really carries through. There was a little discussion about

0:29:53.080 --> 0:29:56.280
<v Speaker 5>them buddying up with Iran as well as North Korea,

0:29:56.360 --> 0:30:00.080
<v Speaker 5>and particularly siding with them with respect to c and

0:30:00.120 --> 0:30:03.320
<v Speaker 5>issues in Ukraine as well as in Israel. Today Russian

0:30:03.600 --> 0:30:08.160
<v Speaker 5>delegates excuse me, Chinese delegates are meeting with urban nations

0:30:08.200 --> 0:30:09.920
<v Speaker 5>to try to discuss what's going to happen in Israel.

0:30:09.960 --> 0:30:12.680
<v Speaker 5>Do we have a sense of where they stand on this,

0:30:12.880 --> 0:30:14.600
<v Speaker 5>of what they are going to argue for.

0:30:16.320 --> 0:30:19.160
<v Speaker 9>I think China is trying to figure out what its

0:30:19.240 --> 0:30:23.560
<v Speaker 9>global role is beyond economics. It did play a role

0:30:23.560 --> 0:30:27.480
<v Speaker 9>in witnessing the normalization of relations a bit between Iran

0:30:27.520 --> 0:30:29.880
<v Speaker 9>and Saudi Arabia. That was a limited agreement around not

0:30:30.080 --> 0:30:36.360
<v Speaker 9>bombing Saudi oil infrastructure it has offered its help in Ukraine,

0:30:36.360 --> 0:30:38.560
<v Speaker 9>but given the fact that it has a friendship without

0:30:38.600 --> 0:30:42.320
<v Speaker 9>limits with Russia, that help is not being particularly welcomed

0:30:42.320 --> 0:30:45.360
<v Speaker 9>by the Ukrainians. And in the Middle East, of course,

0:30:45.840 --> 0:30:47.920
<v Speaker 9>I imagine the parties in the region will be seeking

0:30:47.920 --> 0:30:50.960
<v Speaker 9>out support wherever they can, and capitals around the world,

0:30:51.000 --> 0:30:53.760
<v Speaker 9>including in China, I think to the degree that they

0:30:53.800 --> 0:30:55.480
<v Speaker 9>can play a constructive role.

0:30:55.480 --> 0:30:56.800
<v Speaker 6>Of course it should be welcomed.

0:30:57.320 --> 0:31:00.640
<v Speaker 9>But that means really playing a role in providing a

0:31:00.680 --> 0:31:03.840
<v Speaker 9>public good that they've never really done before. China has

0:31:03.880 --> 0:31:09.400
<v Speaker 9>been amazingly disciplined about pursuing its national interests narrowly defined,

0:31:09.600 --> 0:31:11.440
<v Speaker 9>and if they really want to be a global power,

0:31:11.480 --> 0:31:13.280
<v Speaker 9>then they also have to help provide for some of

0:31:13.320 --> 0:31:13.920
<v Speaker 9>the public good.

0:31:14.320 --> 0:31:18.320
<v Speaker 1>Michael, you are more identified with TPP than anyone I know.

0:31:18.480 --> 0:31:22.360
<v Speaker 1>The failure of Transpacific Partnership something you work on. The

0:31:22.560 --> 0:31:27.120
<v Speaker 1>fact is we are deploying four military basis to the Philippines,

0:31:27.440 --> 0:31:31.560
<v Speaker 1>two in Kegayon Isabella and that long skinny island down

0:31:31.600 --> 0:31:36.080
<v Speaker 1>towards the South China Sea Palawan. Is our military doing

0:31:36.240 --> 0:31:40.680
<v Speaker 1>TPP for us? Is that the actual TPP is the

0:31:40.760 --> 0:31:45.560
<v Speaker 1>military expansion of America to the Pacific RIM.

0:31:45.880 --> 0:31:47.760
<v Speaker 9>I think one thing that's clear is that the more

0:31:47.840 --> 0:31:51.719
<v Speaker 9>that China asserts itself across the region, the more the

0:31:51.760 --> 0:31:54.280
<v Speaker 9>countries in the region want the US to be present

0:31:54.680 --> 0:31:57.520
<v Speaker 9>and engaged. And they're looking for our engagement in a

0:31:57.560 --> 0:32:02.000
<v Speaker 9>military security sense, in a political dimension, but also in

0:32:02.040 --> 0:32:06.200
<v Speaker 9>an economic dimension. This is the most economically dynamic region

0:32:06.320 --> 0:32:08.840
<v Speaker 9>of the world, and they desperately want the US to

0:32:08.880 --> 0:32:12.000
<v Speaker 9>be engaged there, not just as a military power, but

0:32:12.080 --> 0:32:13.520
<v Speaker 9>also as an economic power.

0:32:14.240 --> 0:32:17.520
<v Speaker 1>Michael Froman again congratulations new duties at the Council on

0:32:17.560 --> 0:32:21.720
<v Speaker 1>Foreign Relations. He is the President of the cf Subscribe

0:32:21.760 --> 0:32:25.480
<v Speaker 1>to the Bloomberg Surveillance podcast on Apple, Spotify and anywhere

0:32:25.520 --> 0:32:29.920
<v Speaker 1>else you get your podcasts. Listen live every weekday starting

0:32:29.960 --> 0:32:34.520
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0:32:34.840 --> 0:32:38.400
<v Speaker 1>tune In, and the Bloomberg Business app. You can watch

0:32:38.560 --> 0:32:42.840
<v Speaker 1>us live on Bloomberg Television and always. I'm the Bloomberg Terminal.

0:32:43.280 --> 0:32:47.480
<v Speaker 1>Thanks for listening. I'm Tom Keen, and this is Bloomberg