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Speaker 1: Ye. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. We

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Speaker 1: start potentially with history on Bloomberg Surveillance. Friday, April eighteen

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Speaker 1: may well go down as a day for the history

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Speaker 1: textbooks in decades to come. North Korean leader Kim John

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Speaker 1: Arn and South Korean President Moon Jayne agreeing to finally

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Speaker 1: end a seven decade war and pursue the complete denuclarization

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Speaker 1: of the Korean peninsula. Peter pay, Salt Bureau Chief joins

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Speaker 1: us now from seoult on the story with the North

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Speaker 1: and the South. That's talks me about the significance of

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Speaker 1: the day's events so far, well, historically very significant. This

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Speaker 1: is the first time that a North current leader stepped

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Speaker 1: over to the South. Um a lot of very visually

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Speaker 1: entertaining political backdrop. They hugged um, and they met, they

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Speaker 1: had they're actually having dinner right now. I mean extraordinary

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Speaker 1: visions of you know, basically almost like there was there

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Speaker 1: was no hostilities or going on here. However, the statements

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Speaker 1: that or the any kind of agreement that they reached

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Speaker 1: there was really more uh saying that they were aiming to.

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Speaker 1: I mean, there was no you know, no actual agreement

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Speaker 1: that would um, you know, put in place any kind

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Speaker 1: of action. So there's um a lot of pomp and

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Speaker 1: circumstance today as to what that would entail going forward. Um,

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Speaker 1: you know, there's a lot of analysts who are not

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Speaker 1: sure where, and many saying, you know, it's what the

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Speaker 1: remains to be seen pezter a declaration of peace quite clearly,

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Speaker 1: very different to creating something a lot more sustainable for

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Speaker 1: for years to come. Can we talk about the steps

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Speaker 1: to come, the steps that might be laid out that

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Speaker 1: needs to be taken over the coming months and and

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Speaker 1: coming years as well, Pizza. Yes, And then that's a

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Speaker 1: very good question, because you know, yes, they said we

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Speaker 1: are you know, we were were well, you know, we're

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Speaker 1: aiming for peace on the peninsula. Well what does that mean?

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Speaker 1: I mean, um, it's not a peace treaty that can

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Speaker 1: be only signed by the countries that actually reached the

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Speaker 1: armistice in ninety three, and that's basically China US Uh,

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Speaker 1: and North Korea. It excludes South Korea really, so technically

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Speaker 1: and legally there is no peace treaty or no South

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Speaker 1: Korea cannot reach a peace treaty with North So exactly

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Speaker 1: what that means technically, Uh, you know, there's UM In

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Speaker 1: some ways the summit with Trump UM probably will be

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Speaker 1: more substantive and and more uh you know, the impact

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Speaker 1: from that will probably be greater. Peter the President of

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Speaker 1: the United States this morning saying the Korean War is

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Speaker 1: to end, and in many ways the President of the

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Speaker 1: United States deserves a lot of credit for what we're

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Speaker 1: saying on TV screens around the world today. And I'm

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Speaker 1: just wondering whether most pressures come from Peter, is the

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Speaker 1: most pressure coming from the United States, is not what

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Speaker 1: got us here today? Or does China have a massive

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Speaker 1: role to apply as well? Uh, well, yeah, I mean

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Speaker 1: it's I think Trump can argue that he had a

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Speaker 1: lot to do it in a sense of the maximum

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Speaker 1: pressure that he put on North Korea, particularly with the

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Speaker 1: sanctions and such, But you know, he couldn't have really

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Speaker 1: done that without the help of China. I mean, China

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Speaker 1: was the lifeline to North Korea, and when they started

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Speaker 1: UM putting the screws on the economy there. Clearly that

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Speaker 1: that moved the needle UM in North Korea. So he

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Speaker 1: can Trump take all the credit probably not UM, but

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Speaker 1: he can take a large of that. Yeah, pit up,

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Speaker 1: how is fantastic to get your insight from Seoul in

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Speaker 1: South Korea on a historic day, UM for both the

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Speaker 1: North and the South. SOULT Bureau chief joining us from

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Speaker 1: South Korea. Bill Rhodes with us this morning, who has

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Speaker 1: decades of experience here and well really as a working

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Speaker 1: relationship with the leader of South Korea, who is Mr Moon.

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Speaker 1: Bill Rhodes, Well, he has been an active politician and

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Speaker 1: UH for quite a long time. I got to know

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Speaker 1: him when he was chief of staff of President No

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Speaker 1: who you will remember was the one who last met

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Speaker 1: with the North with the North Korea exactly exactly, and

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Speaker 1: so he was very much involved in that. I got

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Speaker 1: to know him because I was helping from the private

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Speaker 1: sector side put together the chorus after t A the

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Speaker 1: free trade agreement, and UH worked with him in various

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Speaker 1: meetings all over Korea, including in several in the Blue

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Speaker 1: House UH where he ran these meetings. He's as I

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Speaker 1: said on TV, which you reached just a few minutes ago.

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Speaker 1: He has been dedicated to this Sunshine policy, which was

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Speaker 1: first first put forth by President Kim DeJong when he

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Speaker 1: came into power, and that was when I restructured to debt.

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Speaker 1: So you have a man dedicated to trying to get

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Speaker 1: a peace treaty with the North, and more than that,

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Speaker 1: talking about reunification and now uh since you had the

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Speaker 1: advancement in nuclear and missile technology in the North, trying

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Speaker 1: to see if you can d nuclearize the whole peninsula.

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Speaker 1: What will the streets of Korea debate in tomorrow mornings papers?

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Speaker 1: Do they debate the economy, did they debate fear? Did

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Speaker 1: they go for an historical take? What? What would you

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Speaker 1: suggest will be the emotion of people within Korea one

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Speaker 1: and two and three days on. Well, I think it

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Speaker 1: will be positive at the outset, but there's also going

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Speaker 1: to be a lot of doubts given the history of

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Speaker 1: discussions between the North and the South, and particularly since

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Speaker 1: Kim Kim joyong talks all of the time about following

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Speaker 1: his grandfather, Kim Ill's Song, who wanted to unite the

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Speaker 1: peninsula but under communist rule. So I think you're going

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Speaker 1: to have a number of people happy that you have

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Speaker 1: the end, the formal end of the Korean War and

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Speaker 1: the talk of the nuclearization, but a lot of skepticism

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Speaker 1: too as to how this could happen and what sort

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Speaker 1: of verification process you will have in the Chinese here

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Speaker 1: are critical. People tend to forget that if it were

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Speaker 1: for the Chinese on the oil sanctions, uh you, you

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Speaker 1: might not have had Kim Jong un actually coming to

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Speaker 1: the table bill for the For the South Koreans and

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Speaker 1: for many people in the North, it will be a

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Speaker 1: serious to have hope for them as these two countries

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Speaker 1: agree to resume the resunions for for separate families as well.

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Speaker 1: Just moving forward from here, and maybe I'm getting a

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Speaker 1: few years ahead of myself, but I'm really thinking about

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Speaker 1: sphere of influence North Korea and the Chinese. There's always

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Speaker 1: been this worry that the North could fall into the

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Speaker 1: sphere of the influence of the United States if we

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Speaker 1: had a reunion with with South Korea. How are you

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Speaker 1: thinking about that at the moment? Which sphere of influence

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Speaker 1: with the North fall into if we do get sustainable

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Speaker 1: peace between the North and South. Is it China or

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Speaker 1: is it the United States? I think It's a very

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Speaker 1: interesting and key question because I think that Kim Jong

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Speaker 1: is going to look to his grandfather's policies, which was

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Speaker 1: to play one off against the other. He did a

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Speaker 1: masterful job of playing off Mao Stalin and Stalin's successors,

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Speaker 1: and I think that's where he's going to be. He

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Speaker 1: doesn't want to always be a captive of China, which

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Speaker 1: which he is today. He wants to be able to

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Speaker 1: broaden that out and gain more independence. But it's going

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Speaker 1: to be the key issue. And you're Pan has a

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Speaker 1: stake in this, and remember Russia had a big steak

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Speaker 1: of Russia was supplying uh North Korea during the Korean War.

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Speaker 1: It wasn't just China. China put the troops on, but

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Speaker 1: the Russians actually sent pilots to pilot the MiGs. So

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Speaker 1: you have all of this there, and then the Chinese

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Speaker 1: are talking about reviving the Sixth Party talks going forward.

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Speaker 1: So I think it's going to be a very interesting period.

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Speaker 1: Bill Rhodes, thank you for coming in this one. I

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Speaker 1: greatly appreciated William Rhodes with us formerly that was City

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Speaker 1: Groups book Bankers to the World as well, and also

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Speaker 1: a member of the Korea society than all of the

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Speaker 1: international relations of the day, there is that feeling of

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Speaker 1: it's May, selling May and go away. That's the first

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Speaker 1: time I've said that. In two thousand teen, John Farrell,

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Speaker 1: in charge of selling in May and going in uh May,

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Speaker 1: also in charge of his essay has it claimed essay

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Speaker 1: from five years ago, which is load the boat in

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Speaker 1: May and make capital gains. Is John Gallub of Credit

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Speaker 1: sweez you. It's got to kill you day to day

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Speaker 1: institutional and retail when people throw out trade phrases like

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Speaker 1: selling May and go away, it makes me crazy every year,

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Speaker 1: and then when you're actually well, you know, the funny

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Speaker 1: thing is if you actually go back and do the

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Speaker 1: data analysis, it actually kind of it actually has kind

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Speaker 1: of worked over the last one of years and every

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Speaker 1: single year for the last decade. I think that that

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Speaker 1: any investment strategy that you can sum up in in

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Speaker 1: a force forward rhyme is a really dumb strategy and uh,

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Speaker 1: you know, as annoying as it is, on average, it's

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Speaker 1: kind of worked, though I don't think it will this year.

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Speaker 1: I'm I'm sticking to my gun. Can go ahead, jump?

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Speaker 1: Can we talk about the numbers that we've had John

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Speaker 1: because the adding is it just terrific. The tech numbers

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Speaker 1: we've seen in the last week, absolutely solid. What wasn't

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Speaker 1: the market responding to this? You know, it's it's it's frankly,

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Speaker 1: it's not only perplexing perplexing to me, but I'm talking

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Speaker 1: to the biggest fund managers out there, and they're also

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Speaker 1: kind of shrugging their shoulders and shaking their heads. Um.

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Speaker 1: But we're seeing this will be the best earning season

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Speaker 1: in terms of percentage of companies beating ever. This will

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Speaker 1: be the biggest earning season outside of the bouncy get

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Speaker 1: right after recession. Ever, and yet the market is giving

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Speaker 1: almost no benefit to companies when they're beating on revenues

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Speaker 1: and earnings. And it's not like one sector or one

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Speaker 1: weird thing, um sixteen plus percent beats in industrials in

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Speaker 1: the ninth year of a recovery cycle. Tech companies beating

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Speaker 1: by way over ten percent, and not only beating, but

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Speaker 1: they're raising their their outlook for the remainder of the

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Speaker 1: year while they're doing it. So it's not just like

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Speaker 1: the good news behind us and the markets is shrugging

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Speaker 1: on it. Well, you hit the number nine the ninth

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Speaker 1: year of the of the recovery, and I think a

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Speaker 1: lot of people are just saying, thanks you one, Um,

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Speaker 1: is this as good as it gets? They're looking at

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Speaker 1: twenty and say, maybe we're about to hit a bit

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Speaker 1: of a cliff. What do you say back to the argument, Natchung, Well,

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Speaker 1: I think it's I think that there's some validity and

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Speaker 1: I think that that that's part of the issue. First

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Speaker 1: of all, the earnings that we're seeing this quarter, we're

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Speaker 1: going to see that all throughout team. Maybe it won't

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Speaker 1: be this good, but it'll be pretty darn good. Um.

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Speaker 1: If you look at nineteen though, there's not even a

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Speaker 1: question the earnings growth can't possibly stay. So we think

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Speaker 1: you'll get six or seven percent, And I'll tell you

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Speaker 1: right now, I think six or seven percent next year

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Speaker 1: will be We'll be fine. Um. But people are thinking,

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Speaker 1: what how does the market respond to deceleration? Not bad news?

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Speaker 1: And for some reason that they they're they're questioning that

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Speaker 1: with rates up, and you know, I don't know what

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Speaker 1: the parlor game is going in the next week's FED meeting, folks,

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Speaker 1: look for a full coverage of the FED meeting that

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Speaker 1: begins today. The Real Yield with John Farrell on Bloomberg

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Speaker 1: Television and then we go to our FED meeting on

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Speaker 1: May two, and looking forward to that on radio and television. Okay,

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Speaker 1: so we'renna have a FED meeting, and all that is

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Speaker 1: cash now in an asset, you know it with If

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Speaker 1: you can get three p on a government bond, then

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Speaker 1: you can add some kind of a spread for a

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Speaker 1: corporate bond. Um. It's it's it's now becoming more competitive

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Speaker 1: against equities than than it's been in the past. And

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Speaker 1: while companies have been returning capital in the form of

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Speaker 1: buy backs, I think that they need to redirect that

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Speaker 1: towards dividends in order to remain competitive. Not for everyone,

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Speaker 1: an institial investor doesn't care, but there are a lot

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Speaker 1: of investors who do care about that. If you if

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Speaker 1: you just think John and what's in front of you

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Speaker 1: want a dashboard. At the moment um, you've got a

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Speaker 1: better yield at the front end of treasuries. Downside protection

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Speaker 1: has got a lot more expensive over the last few

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Speaker 1: months relatives to where it was last year. And when

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Speaker 1: you add all of these things up, you are being

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Speaker 1: incentivized to de risk somewhat on you. At the beginning

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Speaker 1: of this year. You know, I'm not sure. I mean

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Speaker 1: I think and and Jonathan, you ask you a question

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Speaker 1: just a moment ago, was how long does the cycle

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Speaker 1: have to go? If you believe that this thing is

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Speaker 1: going to that the that the next recession is a

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Speaker 1: twenty nineteen or event, then then then yeah, I think

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Speaker 1: that that the risking is an option. If you think

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Speaker 1: that the business cycle is healthy, and I think that

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Speaker 1: it is, corporate profits are good and ploy you know,

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Speaker 1: jobs are being added, all these type of things, then

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Speaker 1: I think it's just it's just too early to jump

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Speaker 1: on the sidelines. The market is gonna is gonna keep moving.

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Speaker 1: I guess the reason asked the question is just if

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Speaker 1: you're in the treasury market, why take the additional duration

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Speaker 1: risk to get a tenure with a pick up a

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Speaker 1: fifty basis points over toots? And if you're thinking about

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Speaker 1: taking additional credit risk, why would you do that? So

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Speaker 1: it has kind of changed the calculation you need to

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Speaker 1: make relative to why we were twelve months ago. John Yeah,

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Speaker 1: And I wish I disagreed with you, but I don't.

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Speaker 1: And I think that if we see, you know, right now,

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Speaker 1: the difference between a two year bond and a ten

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Speaker 1: year bond is only fifty basis points. But if you

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Speaker 1: look at what the futures markets telling, it's the market

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Speaker 1: is its own prediction mechanism is that that's gonna be

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Speaker 1: to thirty basis points in a year from now. And

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Speaker 1: you you could very well ask the question is why

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Speaker 1: why bother entire money up? And I think that the

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Speaker 1: market is going to struggle with that issue more. And

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Speaker 1: and you're also credit spreads are really really tight, so

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Speaker 1: you get a little extra yield, but you're taking some

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Speaker 1: default risk. I think right now it's still worth it.

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Speaker 1: I think it's still worth it because I think that

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Speaker 1: ultimately that that money is good, but it's becoming a

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Speaker 1: little harder. John Gallup, thank you so much with Credit

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Speaker 1: Suite this morning. John Gallup on the equity markets wrapped

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Speaker 1: around a lot of coverage of this historic moment in Korea.

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Speaker 1: I want to bring in Christian Mamny Open him a

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Speaker 1: funds chief investment officer and had a fixed income Christiana,

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Speaker 1: you and I spoken so many times over the last

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Speaker 1: couple of years about the bond market. Tenua treasuries, you're

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Speaker 1: to three percent, it's that's gonna buy for you. I

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Speaker 1: think from a longer term perspective, the perspective it is

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Speaker 1: a buy before that, I think it's probably going higher

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Speaker 1: to be To be sure here, the GDP number may

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Speaker 1: be lower than last quarter, but it's better than expectations

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Speaker 1: and meaningfully better than expectations and inflation pressures as you

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Speaker 1: as you mentioned inflationary pressures picking up, so that sort

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Speaker 1: of forces the Fed's hand and it is only going

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Speaker 1: to strengthen in the second half of the year. So

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Speaker 1: if there is hope for the economy, and if there's

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Speaker 1: hope for the bond market, the Fed would have to

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Speaker 1: look at the temporary growth spurt as temporary, and if

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Speaker 1: they don't, then we'll run into problems. Genenomenal g DP

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Speaker 1: current g d P five Q three five point three

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Speaker 1: percent Q four And as you say, correctly, John, they've

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Speaker 1: been revised fourteen times. And the first look here, Christian,

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Speaker 1: this is important. It's only a slowdown to four point

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Speaker 1: three percent. So I've got a compare and contrast where

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Speaker 1: we were a year ago, which is a make America

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Speaker 1: again stick tiger on nominal GDP. Is that animal spirit

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Speaker 1: out there? Is it tangible within investment plans? So there

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Speaker 1: is a bit of animal spirits and there's a bit

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Speaker 1: of UH stimulus dollar being thrown into the economy. So

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Speaker 1: after the tax cuts, the the people were excited about

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Speaker 1: the Trump economic policies, but the the the tax cut

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Speaker 1: got them even more excited. And that's what we're going

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Speaker 1: to see through UH as I said, it's going to

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Speaker 1: accelerate in the second second half of the year. And John,

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Speaker 1: there's a line item your government consumption federal consumption National

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Speaker 1: defense down sharply and that's very fluctuaty non defense. And

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Speaker 1: then there's also government tax take from foreign British UH citizens,

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Speaker 1: which is one of the line items under g D.

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Speaker 1: What are you about to what do you think of

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Speaker 1: American tax is? John, you just went through text time.

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Speaker 1: It's incredibly difficult. It's incredibly difficult. And I was telling

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Speaker 1: we're gonna make it more simple, but it's really difficult.

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Speaker 1: You have to talk about your foreign bank accounts and

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Speaker 1: whether they had a certain amount over them, and then

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Speaker 1: they want to look at that your pension abroad as well.

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Speaker 1: There's a real overreach outside of they that would wouldn't

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Speaker 1: that be lovely if they existed? Krishna? But I think

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Speaker 1: for the overall corporate sector. The lowering of tax rates

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Speaker 1: is extraordinarily significant from an investment standpoint and from an

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Speaker 1: profitability standpoint, and we will see the effect of that.

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Speaker 1: It may not be felt today, but we will see

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Speaker 1: the effect of that in both the top line growth

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Speaker 1: and profitability and higher levels in the market down the road.

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Speaker 1: So talk to me about your conviction trade right now.

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Speaker 1: Given the setup in the macro backdrop and the setup

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Speaker 1: that we've had from corporate results through q once so far,

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Speaker 1: we still like equities. We think equities at the end

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Speaker 1: of the year, equities are going to be meaningfully higher

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Speaker 1: than where they are right now. These volatile environments provide

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Speaker 1: idea on an opportunity to add to that exposure. We

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Speaker 1: also like emerging markets. Today doesn't feel like that, but

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Speaker 1: I think from again, from if you have a reasonably

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Speaker 1: long investment horizon, emerging market growth is pretty good, inflation

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Speaker 1: and speaking, emerging markets becoming less China dependent. All of

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Speaker 1: that adds up to a really good environment for emerging

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Speaker 1: market equities. Are you comfortable taking the fex risk and

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Speaker 1: a M right now given the resurgence all we've seen. Yes,

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Speaker 1: So I think if the dollar persists at its current

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Speaker 1: current level, the FED would have to back down. There's

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Speaker 1: really no no way around that. And once that happens,

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Speaker 1: we will see a resurgence in emerging market effects. Again,

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Speaker 1: emerging market growth alone can be will be enough to

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Speaker 1: drive emerging market equities. Uh eff x is a bonus.

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Speaker 1: Christian Mamonic Openomic Funds, chief investment officer and head of

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Speaker 1: fixed income. Quite have you gut us on a program?

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Speaker 1: I think in JDP print relative to expectations coming at

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Speaker 1: two point three pc, we were looking for two percent.

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Speaker 1: That was the median estimate on Bloomberg tom It is

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Speaker 1: a drop down, a big drop down from the previous

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Speaker 1: quarter though of two point nine percent. And the backdrop

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Speaker 1: to all of this is price pressure bubbling away. I'll

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Speaker 1: go with that price pres but the first quarter John

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Speaker 1: year after year, yeahs absolutely, and nobody can get the

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Speaker 1: heads around what happened. In English we got twenty seconds.

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Speaker 1: What happened? Is there a point one percent? Do we

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Speaker 1: blame it on? We don't blame it on baby Lewis.

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Speaker 1: I think we do not. The Member of the Commonwealth

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Speaker 1: than we finished strong with a conversation on Bloomberg surveillance

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Speaker 1: with Richard Hass of the Council on Foreign Relations, Ambassador,

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Speaker 1: I want to go back a few years to your book,

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Speaker 1: The Reluctant Sheriff the United States after the Cold War?

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Speaker 1: Is Mr Trump? Is President Trump been the sheriff on

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Speaker 1: the watch of these historic events? In many ways, Mr

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Speaker 1: Trump is his own form of a reluctant sheriff because

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Speaker 1: in many areas he's taken the United States out of

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Speaker 1: various international and regional institutions and efforts to promote this

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Speaker 1: or that outcome. In the case of North Korea, what

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Speaker 1: we what we don't know still is a lot more

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Speaker 1: than what we do know, Tom. We don't know of

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Speaker 1: what brought North Korea to where it seems to be

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Speaker 1: in emphasized or teams are American threats, Chinese pressure, sanctions, pressure,

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Speaker 1: or possibly the fact that their nuclear missile programs reached

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Speaker 1: a degree of maturity that gives them confidence and that

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Speaker 1: they have no intention of giving up. When when pros

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Speaker 1: like you say negotiation, there's view A, view B. Maybe

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Speaker 1: in the case of Korea, View C, D, E, F,

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Speaker 1: and G. How do you begin the process of negotiation

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Speaker 1: with party that have been so polarized over decades? Well,

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Speaker 1: when you begin warily until your begin I think realistically,

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Speaker 1: and you and I think it's actually in some ways

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Speaker 1: your your question goes to the heart of it. Do

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Speaker 1: we try to resolve or solve once and for all

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Speaker 1: all the questions of the peninsula, all the questions about

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Speaker 1: North Korea? Or do we set ourselves more modest but

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Speaker 1: I would say still ambitious goals. So the idea that,

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Speaker 1: for example, they would have to get rid of every

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Speaker 1: not just every nuclear weapon, but all their nuclear material,

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Speaker 1: all their ability to produce nuclear material, this would all

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Speaker 1: have to be absolutely verified. The idea that that is

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Speaker 1: our definition of success, I would suggest, may well set

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Speaker 1: us up for failure. So I think what we've got

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Speaker 1: to do is, first amongst ourselves in the United States,

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Speaker 1: and then with South Korea, with Japan, ultimately China and Russia.

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Speaker 1: We've got to come up with a set of realistic goals.

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Speaker 1: And now we've also got to think very hard about

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Speaker 1: what we're prepared to offer up an exchange for them.

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Speaker 1: Richard hass If the photographs that we've seen of both

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Speaker 1: North and South Korean leaders were published during the Obama

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Speaker 1: administration or the previous Bush administration, would the conversation about

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Speaker 1: the administration's foreign policy be different than it is today.

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Speaker 1: It's an interesting question. Uh, people might have been slightly

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Speaker 1: more generous. I think with Mr Trump is a degree

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Speaker 1: of skepticism. Also, there might have been more right wing

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Speaker 1: or conservative criticism that they were being to what's the

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Speaker 1: word too unsuspecting? I don't know. I mean the fact

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Speaker 1: is that Mr Trump is is radical or untraditional in

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Speaker 1: his approaches. It may just be then in this case

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Speaker 1: it is paid off. I would just simply say I

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Speaker 1: hope so. But even he had said even he said

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Speaker 1: in one of his tweets today and positive things are happening,

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Speaker 1: but it's too soon to tell or only time will tell.

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Speaker 1: And I think that's right. I wouldn't I wouldn't show

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Speaker 1: the champion quite yet. Having said that, is this akin

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Speaker 1: to Nixon and it's opening and his opening with China. No,

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Speaker 1: it only will become that if this really pans out.

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Speaker 1: To compare this to save some of the big moments

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Speaker 1: in Middle East diplomacy or US Chinese diplomacy, or any

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Speaker 1: diplomatic breakthrough, this has to essentially go from the level

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Speaker 1: of rhetoric to the level of reality. So when we

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Speaker 1: look back on this, that this could be seen as

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Speaker 1: something truly historic and transformational or transitional, or could be

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Speaker 1: seen as yet another disappointment where policy didn't ultimately back

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Speaker 1: up the promise. Richard House with US of the Council

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Speaker 1: on Foreign Relations, you have a spectacular explainer, Ambassador House

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Speaker 1: at cf are of the nuclear path over twenty and

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Speaker 1: three years. Tell our audience what we most get wrong

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Speaker 1: about nuclear Korea. I'm not sure I really quite followed Tom.

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Speaker 1: Do we have a knowledge base of what nor Korea has?

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Speaker 1: Do we have? I mean, obviously we have a knowledge

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Speaker 1: based of South Korea, but do we really have intelligence

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Speaker 1: on what's out there? In my experience, it's one of

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Speaker 1: the toughest intelligence targets, and what we don't know is

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Speaker 1: considerable and that raises real problems for any negotiation because

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Speaker 1: to say, North Korea what to agree to give up,

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Speaker 1: quote unquote it's nuclear weapons. Our ability to ever verify

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Speaker 1: that in fact had done that, I think would be

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Speaker 1: extremely uncertain, as they said they were going to give

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Speaker 1: up materials or production capabilities. Again, this is the most

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Speaker 1: closed society in many ways on the planet Earth, so

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Speaker 1: it raises enormous obstacles for having competence uh that that

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Speaker 1: they're actually doing what they say they're due that they

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Speaker 1: say they're doing. Can the President use what is taking

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Speaker 1: place on the Korean peninsula to his benefit when in

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Speaker 1: his conversations with German Chancellor Angela Merkle Visa v. The

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Speaker 1: Iran nuclear deal. That's an interesting question. Thought about it maybe,

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Speaker 1: And what he might say is this is this is

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Speaker 1: proof or evidence about why we shouldn't compromise. So it

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Speaker 1: may it may in fact lead him to get out

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Speaker 1: of the Iran agreement, which Hill, which he says, is

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Speaker 1: an imperfect agreement. It's a compromise. It wasn't demanding enough.

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Speaker 1: And my my guesses I hadn't thought about it. To

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Speaker 1: your question, is my guess is that he will say

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Speaker 1: this strengthens the argument for a more confrontational approach. You

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Speaker 1: have a lot of experience as a negotiator. I'm wondering

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Speaker 1: if you could offer your thoughts about the American the

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Speaker 1: administration's negotiating position visa not only the Germans and the

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Speaker 1: French and the European Union, but just generally are negotiating

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Speaker 1: posture and its potential for success for other trade agreements. Well,

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Speaker 1: it's quite a confrontational one. Essentially, we often come out

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Speaker 1: of the box, threatening unilateral action, and on occasion that

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Speaker 1: might work and might get others to back down. On

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Speaker 1: the other hand, the fact that it's so public and

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Speaker 1: so confrontational seems to ignore that they too have politics,

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Speaker 1: and you almost never get everything you ask for, so

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Speaker 1: you begin to create problems for yourself that you you,

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Speaker 1: yourself have had backed down and again with allies in particular,

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Speaker 1: I wouldn't I wouldn't recommend this approach simply because they

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Speaker 1: are allies and this is not a way we should

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Speaker 1: be dealing with allies. It's just been hours of secretaries

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Speaker 1: day Pompeo, Richard Hawes. Is there going to be a

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Speaker 1: difference in body language between tell Ersen and Pompeo. Oh?

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Speaker 1: Absolutely Uh. Pompeo begins the job with much more experience

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Speaker 1: and government, much more knowledge or foreign policy, and an

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Speaker 1: incomparably better relationship with the President of the United States.

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Speaker 1: Retched Tillerson had none of those. Rich Tillison was something

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Speaker 1: of a loner. Mike Pompeo is a real people person.

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Speaker 1: You will see somebody much more comfortable in the job.

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Speaker 1: Thank you, inbassadors, Thank you so much for the brief

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Speaker 1: against short notice. Richard haws of the Council and Foreign Relations,

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Speaker 1: and they really must say, folks, for your weekend briefing you,

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Speaker 1: there's there's there's no downside to attending the Council on

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Speaker 1: Foreign Relations website. Thanks for listening to the Bloomberg Surveillance podcast.

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Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or

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Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom

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Speaker 1: Keene before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio