1 00:00:00,080 --> 00:00:12,960 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:32,879 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg the 5 00:00:32,880 --> 00:00:35,600 Speaker 1: bond Market. The story as follows. Treasuries that look a 6 00:00:35,600 --> 00:00:38,879 Speaker 1: little something like this yields dead flatter two at four 7 00:00:38,880 --> 00:00:40,760 Speaker 1: in the US tenure, and we are up just a 8 00:00:40,760 --> 00:00:42,640 Speaker 1: basis point on a US two year note to two 9 00:00:42,640 --> 00:00:46,800 Speaker 1: point to six percent for the White House Palace intrigue. 10 00:00:46,960 --> 00:00:50,159 Speaker 1: Terry Haynes of ever Corp wrote the following, Mike Pompeio 11 00:00:50,360 --> 00:00:53,520 Speaker 1: bringing to the table a harder line national security background 12 00:00:53,520 --> 00:00:56,840 Speaker 1: and bent the signals a fundamental shift in the state's 13 00:00:56,960 --> 00:01:01,720 Speaker 1: roll away from conventional negotiator and smoother of diplomatic difficulties 14 00:01:01,760 --> 00:01:04,880 Speaker 1: to one that may be more confrontational on all sorts 15 00:01:04,880 --> 00:01:08,080 Speaker 1: of relationships, including trade. So let's talk about that and 16 00:01:08,120 --> 00:01:11,479 Speaker 1: bring in Bloomberg's chief Asia economics correspondent and the current 17 00:01:11,760 --> 00:01:15,160 Speaker 1: and Ron temple Let's out Asset Management cohead of multi 18 00:01:15,160 --> 00:01:18,399 Speaker 1: asset and head of US equity strategy. He joins us. 19 00:01:18,480 --> 00:01:21,000 Speaker 1: Right now, let's begin with you, Ron. Are we moving 20 00:01:21,400 --> 00:01:25,880 Speaker 1: towards a confrontational approach on all sorts of relationships, including traite. 21 00:01:26,319 --> 00:01:28,240 Speaker 1: I do think trade is actually is going to be 22 00:01:28,280 --> 00:01:30,560 Speaker 1: basically a challenge over the next six to twelve months 23 00:01:30,640 --> 00:01:32,160 Speaker 1: or longer. And I think we're going to see an 24 00:01:32,200 --> 00:01:34,880 Speaker 1: ongoing flow of negative trade news out of the administration. 25 00:01:34,959 --> 00:01:37,160 Speaker 1: So what I'm hearing from d C is that there's 26 00:01:37,240 --> 00:01:38,760 Speaker 1: quite a bit more lined up. I think there's a 27 00:01:38,800 --> 00:01:41,680 Speaker 1: focus on the technology sector in particular, once you get 28 00:01:41,680 --> 00:01:44,440 Speaker 1: beyond some of the old industrial areas like stealing aluminum. 29 00:01:44,520 --> 00:01:47,200 Speaker 1: So I do worry that this protectionist policy is being 30 00:01:47,200 --> 00:01:50,720 Speaker 1: embraced by the administration. And let's be honest, Donald Trump 31 00:01:50,760 --> 00:01:54,120 Speaker 1: did campaign on a platform of protectionism, and so, um, 32 00:01:54,160 --> 00:01:56,200 Speaker 1: what's disturbing to me. By the way, as if you 33 00:01:56,200 --> 00:01:58,640 Speaker 1: look at it, it's somewhat of a bipartisan appeal. Um. 34 00:01:58,640 --> 00:02:01,160 Speaker 1: If I look back to the twenties sixteen presidential campaign, 35 00:02:01,160 --> 00:02:03,280 Speaker 1: there were twenty candidates on the two different stages on 36 00:02:03,360 --> 00:02:06,120 Speaker 1: the democratic and Republican stage. I don't believe one of 37 00:02:06,160 --> 00:02:08,799 Speaker 1: them defended free trade. And so I think this is 38 00:02:08,840 --> 00:02:11,679 Speaker 1: a transition towards a more confrontational trade policy for the 39 00:02:11,800 --> 00:02:13,840 Speaker 1: US on across the server to ENDERCARA, and the several 40 00:02:13,840 --> 00:02:16,280 Speaker 1: reports in the United States today about the next move 41 00:02:16,360 --> 00:02:19,799 Speaker 1: from this administration on China. There's a political report. There's 42 00:02:19,800 --> 00:02:22,800 Speaker 1: also a RUTERUS report saying that the president is areing 43 00:02:22,800 --> 00:02:26,800 Speaker 1: tariffs of up to sixty billion dollars on Chinese goods, 44 00:02:26,840 --> 00:02:30,720 Speaker 1: mainly focused in the tech and telecommunication sector. And how 45 00:02:30,800 --> 00:02:35,120 Speaker 1: is this going down in China. I think Jonathan, that 46 00:02:35,400 --> 00:02:38,239 Speaker 1: China right now is doing two things. A They're trying 47 00:02:38,280 --> 00:02:40,400 Speaker 1: to figure out just what is going on with the 48 00:02:40,480 --> 00:02:43,000 Speaker 1: US trade policy. But we know, for example, a lou 49 00:02:43,080 --> 00:02:46,280 Speaker 1: Hos visit to Washington, he's shooting being topic you can ordervise. 50 00:02:46,320 --> 00:02:48,720 Speaker 1: A few weeks ago. One of his request was give 51 00:02:48,760 --> 00:02:50,919 Speaker 1: me the list in terms of what you need. And 52 00:02:51,080 --> 00:02:53,880 Speaker 1: secondly to the sense that while they are bracing for 53 00:02:53,919 --> 00:02:56,320 Speaker 1: things to get toughered, it's also feeling China is willing 54 00:02:56,360 --> 00:02:59,720 Speaker 1: to make some concessions shine headed off of the past 55 00:02:59,760 --> 00:03:02,280 Speaker 1: that don't want a trade war. It's not in their interest. 56 00:03:02,320 --> 00:03:04,440 Speaker 1: They know that China's economy would suffer even if they 57 00:03:04,480 --> 00:03:07,000 Speaker 1: want to strikes back. So there's the feeling that when 58 00:03:07,000 --> 00:03:08,760 Speaker 1: it comes to the three or one, and the I 59 00:03:08,919 --> 00:03:12,320 Speaker 1: p probe that perhaps China makes some key concessions that 60 00:03:12,360 --> 00:03:14,680 Speaker 1: would give Mr Trump the kind of victory looking for 61 00:03:15,040 --> 00:03:18,200 Speaker 1: and would go somewhere towards singing the trade that of 62 00:03:18,480 --> 00:03:22,040 Speaker 1: China's own economy on economy can absorb, you know, if 63 00:03:22,080 --> 00:03:25,040 Speaker 1: those ap neither are blowered and exhausted. China's also made 64 00:03:25,040 --> 00:03:27,000 Speaker 1: clear that they can respond if needed. Well, let's be 65 00:03:27,000 --> 00:03:30,520 Speaker 1: clear here ender as well. News for everyone. China doesn't 66 00:03:30,560 --> 00:03:34,360 Speaker 1: want the steel jobs. They want the manufacturing value add 67 00:03:34,440 --> 00:03:37,520 Speaker 1: jobs in Germany and the United States of America. I 68 00:03:37,520 --> 00:03:41,040 Speaker 1: imagine China are quite willing to give some some concessions 69 00:03:41,040 --> 00:03:44,640 Speaker 1: around things like steel and aluminum, But the real issues 70 00:03:44,640 --> 00:03:47,680 Speaker 1: that are ones coming down the road, aren't they That 71 00:03:48,120 --> 00:03:51,320 Speaker 1: it's entirely right, you've nailed You've nailed it on the head. 72 00:03:51,560 --> 00:03:54,480 Speaker 1: The issue for Chinese that they're the steel and aluminium tariffs, 73 00:03:54,480 --> 00:03:57,240 Speaker 1: for example, we really have a negative impact on China's economy. 74 00:03:57,440 --> 00:04:00,760 Speaker 1: The washing machine and solar channel tariffs a few weeks ago, 75 00:04:01,160 --> 00:04:04,560 Speaker 1: a similar story. If the US they are heading down 76 00:04:04,560 --> 00:04:07,120 Speaker 1: the Trump heading down the road of targeting much more 77 00:04:07,160 --> 00:04:09,600 Speaker 1: to Fitt scated good that China is trying to get 78 00:04:09,640 --> 00:04:11,720 Speaker 1: up the value chain on in the area technology and 79 00:04:11,680 --> 00:04:14,440 Speaker 1: electronics and the like. That's where it becomes much more 80 00:04:14,520 --> 00:04:17,159 Speaker 1: sensitive and much more difficult for Shanna not to really 81 00:04:17,200 --> 00:04:19,159 Speaker 1: where they do not want to give up on the ground, 82 00:04:19,240 --> 00:04:21,560 Speaker 1: and that's where we could start hitting down the road 83 00:04:21,560 --> 00:04:24,720 Speaker 1: of pisser the caliation. And China has made clear to 84 00:04:24,760 --> 00:04:27,960 Speaker 1: get a target for example, US agricultural goods story being 85 00:04:28,040 --> 00:04:32,280 Speaker 1: strogne Bick a target Chinese orders for US and good 86 00:04:32,400 --> 00:04:35,840 Speaker 1: and the target wider US investment in China. So there 87 00:04:35,839 --> 00:04:38,400 Speaker 1: are plenty of values they could go down definits of 88 00:04:38,400 --> 00:04:41,159 Speaker 1: Trump does go after their high value add stuff and 89 00:04:41,200 --> 00:04:43,760 Speaker 1: the current thank you so much greatly appreciated in China's 90 00:04:43,880 --> 00:04:47,000 Speaker 1: Morning Round Temple. You to hear Mr Kerran from China 91 00:04:47,040 --> 00:04:50,800 Speaker 1: there and it's the immediacy of real things have to 92 00:04:50,839 --> 00:04:56,360 Speaker 1: get real done. Do you change investment perspective? And visible 93 00:04:56,520 --> 00:05:00,800 Speaker 1: steel and aluminum producers such as Boeing the news today 94 00:05:00,839 --> 00:05:04,880 Speaker 1: with some of their demand for aluminum from China that 95 00:05:04,920 --> 00:05:07,240 Speaker 1: we are definitely taking into account. What might happen to 96 00:05:07,240 --> 00:05:09,240 Speaker 1: the cost structure of different companies in which we might 97 00:05:09,279 --> 00:05:11,760 Speaker 1: invest in terms of going through and saying Okay, if 98 00:05:11,760 --> 00:05:14,520 Speaker 1: there's a tariff on aluminium, temper cent tariff on steal, 99 00:05:14,560 --> 00:05:16,920 Speaker 1: I mean, what does it mean to the company's cost 100 00:05:16,960 --> 00:05:19,240 Speaker 1: of goods? What's your first look at that? Well, you 101 00:05:19,240 --> 00:05:21,800 Speaker 1: know it varies by company, and so then you pick 102 00:05:21,880 --> 00:05:24,360 Speaker 1: somebody big leg Boeing come out. Well, what we're doing 103 00:05:24,440 --> 00:05:26,800 Speaker 1: is a company by company analysis and effectively looking and 104 00:05:26,800 --> 00:05:29,120 Speaker 1: saying okay, if company X is basically affected by it, 105 00:05:29,160 --> 00:05:31,040 Speaker 1: then the next step of the analysis, Okay, what about 106 00:05:31,040 --> 00:05:33,880 Speaker 1: their competitors. Are there competitors importing steel? Are they're using 107 00:05:33,920 --> 00:05:36,599 Speaker 1: domestic steel? So does it have the same cost implication 108 00:05:36,640 --> 00:05:39,320 Speaker 1: across companies to regardless of the sector. And John, what's 109 00:05:39,360 --> 00:05:41,839 Speaker 1: so interesting about this is that David Lynch article in 110 00:05:42,240 --> 00:05:45,760 Speaker 1: the Washington Post a few days ago from Joplin, Missouri, 111 00:05:46,240 --> 00:05:48,039 Speaker 1: which is the guy just said, look, this is not 112 00:05:48,200 --> 00:05:52,080 Speaker 1: about price, it's about quality. And the guy had to 113 00:05:52,120 --> 00:05:56,200 Speaker 1: bring in foreign steel because it was better made than 114 00:05:56,200 --> 00:05:58,160 Speaker 1: the product you could get here. I just think we've 115 00:05:58,200 --> 00:06:00,760 Speaker 1: got to get off the topic of steel and aluminum. 116 00:06:01,120 --> 00:06:03,000 Speaker 1: At the end of the day, China has a ten 117 00:06:03,080 --> 00:06:07,080 Speaker 1: year plan and it's not to dominate steel and illuminum. 118 00:06:07,120 --> 00:06:09,960 Speaker 1: It is a made in China ten year plan to 119 00:06:10,000 --> 00:06:14,400 Speaker 1: take over key industries in technology and manufacturing. That is 120 00:06:14,480 --> 00:06:17,479 Speaker 1: why the deal for Qualcom has been bought by the 121 00:06:17,480 --> 00:06:20,640 Speaker 1: President of the United States. They need to compete with 122 00:06:20,760 --> 00:06:23,520 Speaker 1: China on all fronts, and it's not steel and aluminum. 123 00:06:23,560 --> 00:06:25,240 Speaker 1: So I just wonder why we're sitting here talking about 124 00:06:25,279 --> 00:06:28,640 Speaker 1: it so much, because the Germans are incredibly paranoid right 125 00:06:28,680 --> 00:06:31,280 Speaker 1: now about a state that JELI has taken in Dimeler, 126 00:06:32,040 --> 00:06:35,240 Speaker 1: their own technology at home being taken abroad by the 127 00:06:35,320 --> 00:06:37,800 Speaker 1: Chinese from Germany. This isn't just about the United States 128 00:06:37,839 --> 00:06:40,680 Speaker 1: of America and this administration defending steel and an aluminum. 129 00:06:40,880 --> 00:06:43,320 Speaker 1: This is about the United States and Europe becoming increasingly 130 00:06:43,320 --> 00:06:45,880 Speaker 1: paranoid about a ten year plan of the Chinese to 131 00:06:45,960 --> 00:06:49,200 Speaker 1: take over some really key industries, and I imagined ron 132 00:06:49,600 --> 00:06:51,560 Speaker 1: the tension is going to heighten from here and we 133 00:06:51,600 --> 00:06:54,640 Speaker 1: won't be talking about metals over the coming years. What 134 00:06:54,760 --> 00:06:58,320 Speaker 1: we're talking about real high end value added jobs in 135 00:06:58,360 --> 00:07:02,479 Speaker 1: the United States for America that are growing in Europe 136 00:07:02,600 --> 00:07:04,919 Speaker 1: and the West and ultimately will be challenged by China. 137 00:07:05,800 --> 00:07:08,120 Speaker 1: I think there are two different facets this discussion. Number One, 138 00:07:08,120 --> 00:07:10,440 Speaker 1: I completely agree steel in aluminum in some ways, it's 139 00:07:10,440 --> 00:07:12,280 Speaker 1: a tiny part of total trade in the world. It's 140 00:07:12,280 --> 00:07:14,040 Speaker 1: a tiny part of our imports in the US. What 141 00:07:14,080 --> 00:07:15,400 Speaker 1: I would say on that point, by the way, is 142 00:07:15,400 --> 00:07:17,240 Speaker 1: I think what the US really should be focusing on 143 00:07:17,640 --> 00:07:19,800 Speaker 1: is not tariffs, but basically figuring out what we did 144 00:07:19,800 --> 00:07:22,640 Speaker 1: wrong from a policy perspective related to these heavy industries 145 00:07:22,640 --> 00:07:25,200 Speaker 1: and textiles. And you might say the old economy, we 146 00:07:25,240 --> 00:07:27,640 Speaker 1: effectively agreed to free trade agreements, but then we failed 147 00:07:27,640 --> 00:07:30,280 Speaker 1: to invest in the infrastructure, the education, and human capital 148 00:07:30,320 --> 00:07:33,000 Speaker 1: to compete effectively. We didn't make the right choices. Let's 149 00:07:33,040 --> 00:07:35,000 Speaker 1: fix that and make the right choices in terms of 150 00:07:35,040 --> 00:07:37,560 Speaker 1: investing in our own country. More importantly, though, if you 151 00:07:37,560 --> 00:07:39,640 Speaker 1: look to the future, I absolutely agree with you. China 152 00:07:39,680 --> 00:07:43,160 Speaker 1: has been very explicit about their strategy in terms of 153 00:07:43,200 --> 00:07:45,600 Speaker 1: semiconductors and other high tech industries where they want to 154 00:07:45,600 --> 00:07:47,960 Speaker 1: be basically a category killer. And I think what you're 155 00:07:47,960 --> 00:07:49,840 Speaker 1: seeing from Washington right now is a fear that they 156 00:07:49,880 --> 00:07:52,600 Speaker 1: will either buy in or steel intellectual property. Do we 157 00:07:52,680 --> 00:07:57,040 Speaker 1: have a strategy that was done, But the whole issue 158 00:07:57,160 --> 00:07:59,480 Speaker 1: is the whole make America right again. You know, people 159 00:07:59,520 --> 00:08:01,840 Speaker 1: might laugh and joke about it, but that actually needs 160 00:08:01,840 --> 00:08:04,920 Speaker 1: to be a strategy to take on what the Chinese 161 00:08:04,920 --> 00:08:07,520 Speaker 1: are doing, because the Chinese tom has been chating. The 162 00:08:07,600 --> 00:08:09,680 Speaker 1: Chinese are able to go into a country like the 163 00:08:09,760 --> 00:08:12,480 Speaker 1: United States and like Europe and take big stakes in 164 00:08:12,520 --> 00:08:15,120 Speaker 1: the companies. Try doing it the other way, and that's 165 00:08:15,160 --> 00:08:16,760 Speaker 1: what's about to be clamped down on. And that's what 166 00:08:16,800 --> 00:08:18,560 Speaker 1: we're seeing in the last twenty four hours. But but 167 00:08:18,600 --> 00:08:20,920 Speaker 1: I think the Chinese are winning because we forfeited. We 168 00:08:21,040 --> 00:08:23,240 Speaker 1: don't have a strategy. And I'm not suggesting, by the way, 169 00:08:23,280 --> 00:08:25,880 Speaker 1: the United States should have jopt the Chinese style central 170 00:08:25,880 --> 00:08:28,040 Speaker 1: planned economy. I think what we should do is look 171 00:08:28,040 --> 00:08:30,160 Speaker 1: back and say, what made this country the richest country 172 00:08:30,160 --> 00:08:33,160 Speaker 1: in the world sixty seventy years ago. It was our investment. 173 00:08:33,240 --> 00:08:37,040 Speaker 1: It was basically having consistent, predictable rule of law, which, 174 00:08:37,080 --> 00:08:39,080 Speaker 1: by the way, when you get back to Washington intrigue, 175 00:08:39,400 --> 00:08:42,760 Speaker 1: having some consistency and stability is actually important, you know. 176 00:08:42,840 --> 00:08:44,480 Speaker 1: So I think we actually have to step back and 177 00:08:44,520 --> 00:08:47,800 Speaker 1: reassess how we're approaching government right now and think about 178 00:08:47,840 --> 00:08:50,640 Speaker 1: how do you have a five year budget not six 179 00:08:50,679 --> 00:08:54,360 Speaker 1: month continuing resolutions? Right our Congress and president have failed 180 00:08:54,360 --> 00:08:57,040 Speaker 1: for years to deliver a budget that you could actually 181 00:08:57,120 --> 00:08:59,719 Speaker 1: make investment decisions based on as a company. And so 182 00:08:59,880 --> 00:09:02,080 Speaker 1: I think we actually have to start actually trying to 183 00:09:02,080 --> 00:09:04,120 Speaker 1: be strategic and having a long term view. And the 184 00:09:04,160 --> 00:09:06,560 Speaker 1: only one with a long term geo strategic view right 185 00:09:06,600 --> 00:09:09,000 Speaker 1: now seems to be China. And ultimately that's the problem. 186 00:09:09,120 --> 00:09:12,040 Speaker 1: Ron Sampole las our Asset Management, cohead of multi Asset 187 00:09:12,080 --> 00:09:14,120 Speaker 1: and head of US Equity, jointing US him in New 188 00:09:14,200 --> 00:09:29,800 Speaker 1: York City. Do he, like all of the national media 189 00:09:29,920 --> 00:09:33,440 Speaker 1: visiting Southwest Pennsylvania, has done a tour to force and 190 00:09:33,520 --> 00:09:37,079 Speaker 1: no question, when all this is over, Kevin's really deserves 191 00:09:37,679 --> 00:09:40,320 Speaker 1: a yng ling beer of his choice and he joins 192 00:09:40,400 --> 00:09:44,640 Speaker 1: US now from Southwest Pennsylvania. Kevin, what are you focused 193 00:09:44,640 --> 00:09:47,640 Speaker 1: on right now? Is we try to get to twelve noon? 194 00:09:47,840 --> 00:09:52,000 Speaker 1: Is it a recount? Is it something else? But now 195 00:09:52,000 --> 00:09:54,640 Speaker 1: what I'm focused on is just watching these absentee ballots 196 00:09:54,800 --> 00:09:59,800 Speaker 1: return come in. Look, it's it's increasingly unlikely that the 197 00:10:00,000 --> 00:10:02,760 Speaker 1: public and Rick to coone will be able to flip 198 00:10:02,800 --> 00:10:06,040 Speaker 1: the lead to Democrat Connor Lambs, but it's still too 199 00:10:06,040 --> 00:10:09,320 Speaker 1: close to call. And until these results are certified, uh, 200 00:10:09,360 --> 00:10:11,120 Speaker 1: you know, we're not gonna know look. I spoke with 201 00:10:11,360 --> 00:10:17,040 Speaker 1: a former a former official in the Governor Wolf administration, 202 00:10:17,200 --> 00:10:22,280 Speaker 1: governor of Pennsylvania Republican, who told me that the recount 203 00:10:22,320 --> 00:10:25,680 Speaker 1: laws are so complex in Pennsylvania, and this is you 204 00:10:25,679 --> 00:10:29,280 Speaker 1: gotta remember, this district is not going to exist after November. 205 00:10:29,640 --> 00:10:32,360 Speaker 1: So there's just a lot that I think a lot 206 00:10:32,360 --> 00:10:35,600 Speaker 1: of folks were paying right now. Um, but you know, 207 00:10:35,679 --> 00:10:38,720 Speaker 1: Connor Lambs, even if he does, even if the leak 208 00:10:38,840 --> 00:10:43,320 Speaker 1: goes away, I was able to turn out a massive flip, 209 00:10:43,520 --> 00:10:47,760 Speaker 1: explained to our global audience, including John Farow of the 210 00:10:47,800 --> 00:10:52,760 Speaker 1: United Kingdom, explained to them how the Republicans will adapt 211 00:10:52,920 --> 00:10:57,199 Speaker 1: if Mr Lamb wins. Well, they're going to have to. 212 00:10:57,240 --> 00:10:58,959 Speaker 1: There are a couple of things. I mean, President Trump, 213 00:10:59,040 --> 00:11:03,800 Speaker 1: who knows how, But I think that people can retire 214 00:11:04,920 --> 00:11:09,559 Speaker 1: the progressive bait so active right now and in the 215 00:11:09,559 --> 00:11:12,400 Speaker 1: blue wave of what you're hearing from Democratic strategist that 216 00:11:12,440 --> 00:11:15,600 Speaker 1: could come in November. And a lot of Republicans now 217 00:11:15,840 --> 00:11:19,439 Speaker 1: in particular, are looking and saying, wow, this President Trump 218 00:11:19,440 --> 00:11:23,920 Speaker 1: won this district by and he couldn't even you know, 219 00:11:23,960 --> 00:11:27,280 Speaker 1: and and a Republican couldn't win there. They're gonna look 220 00:11:27,320 --> 00:11:29,320 Speaker 1: at their own future Kevin. Can we talk about the 221 00:11:29,400 --> 00:11:33,440 Speaker 1: uniqueness of this and not just it's about weather. A 222 00:11:33,559 --> 00:11:37,480 Speaker 1: young Democrat with a military background, not exactly running on 223 00:11:37,520 --> 00:11:41,120 Speaker 1: a traditional Democrat platform. Was he Can this really be 224 00:11:41,160 --> 00:11:45,280 Speaker 1: replicated across the country. That's a really great question because 225 00:11:45,320 --> 00:11:49,240 Speaker 1: Republicans the strategist to speaker Ryan made that point to 226 00:11:49,280 --> 00:11:53,840 Speaker 1: me last night. And I think the point of Connor 227 00:11:53,920 --> 00:11:58,120 Speaker 1: Lamb being a centrist is fascinating because he ran away 228 00:11:58,559 --> 00:12:01,120 Speaker 1: from House Minardi leader in it Pelosi. He was in 229 00:12:01,160 --> 00:12:03,480 Speaker 1: the middle of the road on the Second Amendment on 230 00:12:03,520 --> 00:12:06,360 Speaker 1: gun control, the middle of the road on abortion um 231 00:12:06,559 --> 00:12:10,160 Speaker 1: and and did not run on a progressive populist message. 232 00:12:10,280 --> 00:12:14,280 Speaker 1: He ran in lock step of labor unions, which is interesting, 233 00:12:15,040 --> 00:12:17,880 Speaker 1: especially for our audience. But he but he uh, but 234 00:12:17,960 --> 00:12:21,360 Speaker 1: he was. He was a centrist and not a not 235 00:12:21,480 --> 00:12:24,320 Speaker 1: a massive liberal or a socialist. I mean within that 236 00:12:24,400 --> 00:12:27,520 Speaker 1: is a throwback. So I guess an old Democratic party 237 00:12:27,920 --> 00:12:32,319 Speaker 1: can Connor Lamb? Can Connor Lamb Congressman Lamb? If he wins, 238 00:12:32,760 --> 00:12:36,959 Speaker 1: can he get along with Senator Warren of Massachusetts? I mean, 239 00:12:37,160 --> 00:12:39,800 Speaker 1: how is that gonna work? Forget about where you are 240 00:12:39,880 --> 00:12:44,560 Speaker 1: right now in Cannonsville. How's it gonna work in Washington. Well, 241 00:12:44,679 --> 00:12:46,720 Speaker 1: he's goingly gonna be there for a couple of months 242 00:12:46,800 --> 00:12:50,120 Speaker 1: start campaigning again, which everyone supporters of Lamb and the 243 00:12:50,200 --> 00:12:53,120 Speaker 1: Cone were frustrated with. I was, you know, last night, 244 00:12:53,280 --> 00:12:56,360 Speaker 1: I've heard a lot of political speeches, but watching Connor 245 00:12:56,440 --> 00:12:59,360 Speaker 1: Lamp speak last night, there was a close that stood out, 246 00:12:59,440 --> 00:13:01,679 Speaker 1: and it was when he thanked Labor. I thought that 247 00:13:01,760 --> 00:13:05,320 Speaker 1: was interesting. But also when he said I'm a Pennsylvania Democrat. 248 00:13:06,000 --> 00:13:07,600 Speaker 1: That is something that you hear a lot when you 249 00:13:07,679 --> 00:13:10,640 Speaker 1: when you cover former Vice President Joe Biden, who plays 250 00:13:10,720 --> 00:13:14,000 Speaker 1: up his Scranton, Pennsylvania roots. Siden, of course, was here 251 00:13:14,040 --> 00:13:18,480 Speaker 1: campaigning for Connor Lamp. That's a very stark contrast from 252 00:13:18,480 --> 00:13:22,040 Speaker 1: when I cover Senator Elizabeth Warren or senator standards. They're 253 00:13:22,080 --> 00:13:25,360 Speaker 1: not saying, they're not making that pitch, and they've argued 254 00:13:25,400 --> 00:13:28,640 Speaker 1: that in the Midwest, in particularly, how to run even 255 00:13:28,720 --> 00:13:33,080 Speaker 1: more progressive Connor Lamb, Senator Tidy hight Camp, Joe mansions 256 00:13:33,080 --> 00:13:37,480 Speaker 1: of the world. They disagree. Uh, Kevin Surlier, gonna let 257 00:13:37,480 --> 00:13:38,839 Speaker 1: you go because we know you had so much to 258 00:13:38,880 --> 00:13:41,680 Speaker 1: do today, plus the exhaustion a sudden I would go 259 00:13:41,760 --> 00:13:44,080 Speaker 1: with a black and tan jangling by the way Mr 260 00:13:44,120 --> 00:14:01,000 Speaker 1: surliers available, it's what they're can always be an argument 261 00:14:01,000 --> 00:14:05,080 Speaker 1: about when the financial crisis, the Great Recession began. I 262 00:14:05,160 --> 00:14:07,160 Speaker 1: always have put it as a third week of August 263 00:14:07,200 --> 00:14:10,480 Speaker 1: two thousand seven, Library O I s went out, excuse me, 264 00:14:10,559 --> 00:14:13,600 Speaker 1: T bill went out for standard deviations and we were 265 00:14:13,600 --> 00:14:15,880 Speaker 1: off to the races. A lot of Europeans were thrown 266 00:14:15,920 --> 00:14:19,360 Speaker 1: around the French banks, etcetera. Well we can all agree, 267 00:14:19,920 --> 00:14:23,000 Speaker 1: is we all know where we were. It's seven oh 268 00:14:23,080 --> 00:14:27,880 Speaker 1: six pm Wall Street time, March sixteen of two thousand eight, 269 00:14:28,280 --> 00:14:31,600 Speaker 1: and then it was on into a dash into March seventeen. UH. 270 00:14:31,760 --> 00:14:36,280 Speaker 1: The next day the single headline headline came across JP 271 00:14:36,400 --> 00:14:40,560 Speaker 1: Morgan Chase to acquire bear Strings for two dollars per share, 272 00:14:41,080 --> 00:14:44,280 Speaker 1: John Farrell. It was stunning at the time. It was 273 00:14:44,440 --> 00:14:48,320 Speaker 1: absolutely just jaw dropping here at Bloomberg, de City and 274 00:14:48,360 --> 00:14:50,760 Speaker 1: most remarkable as ten years has past, Tommy, you just 275 00:14:50,800 --> 00:14:54,000 Speaker 1: wonder how many investors are still conditioned off the body 276 00:14:54,040 --> 00:14:58,160 Speaker 1: events of ten years ago. I think so joining us now, 277 00:14:58,200 --> 00:15:00,920 Speaker 1: we are honored to bring you Robert sin for years 278 00:15:00,960 --> 00:15:05,760 Speaker 1: definitive with Alan Schwartz at bear Stearns in UH thick 279 00:15:05,840 --> 00:15:08,040 Speaker 1: research and of course at the time at Bank of 280 00:15:08,080 --> 00:15:11,800 Speaker 1: America running their foreign exchange and fixed and commandate with 281 00:15:11,880 --> 00:15:15,800 Speaker 1: David Goldman, among others. Bob says, you were at Bank 282 00:15:15,800 --> 00:15:19,520 Speaker 1: of America overlooking Central Park South. What was it like 283 00:15:19,600 --> 00:15:23,160 Speaker 1: when you saw that two dollars statistic from Mr Diamond? 284 00:15:24,520 --> 00:15:29,120 Speaker 1: Good morning guys. Well, obviously incredibly stunning and for for 285 00:15:29,160 --> 00:15:31,520 Speaker 1: a lot of people that that I had worked with 286 00:15:31,640 --> 00:15:34,560 Speaker 1: very early in my career at Bear Stearns. One of 287 00:15:34,560 --> 00:15:38,480 Speaker 1: the things about about the organization and about the sentiment 288 00:15:38,520 --> 00:15:41,400 Speaker 1: there is that is that people didn't didn't sell the 289 00:15:41,440 --> 00:15:44,520 Speaker 1: stock um you know, they held onto it. They viewed 290 00:15:44,520 --> 00:15:48,400 Speaker 1: it as their retirement package. And a lot of people, 291 00:15:48,520 --> 00:15:51,200 Speaker 1: you know, not really senior people, but mid level people 292 00:15:51,240 --> 00:15:56,120 Speaker 1: have just been accumulating stock, accumulating stock for decades, suddenly 293 00:15:56,200 --> 00:15:58,880 Speaker 1: saw that, you know, collapse, I mean what the stock 294 00:15:58,920 --> 00:16:01,040 Speaker 1: had gotten up to a hundred sixty or something and 295 00:16:01,080 --> 00:16:04,960 Speaker 1: went to do I mean, this was this was devastating 296 00:16:05,000 --> 00:16:08,120 Speaker 1: for a lot of people who didn't even think about 297 00:16:08,160 --> 00:16:10,520 Speaker 1: selling the stock during their whole career. And John jump 298 00:16:10,520 --> 00:16:13,360 Speaker 1: in here, but it was absolutely part of the fabric 299 00:16:13,480 --> 00:16:17,600 Speaker 1: that you got stock dividends from Bear Stearns. They were 300 00:16:17,640 --> 00:16:21,000 Speaker 1: different and you got more stock when you owned because 301 00:16:21,000 --> 00:16:23,720 Speaker 1: it was a currency that was worth something UM than 302 00:16:23,760 --> 00:16:26,640 Speaker 1: it Wilson Bob to what extent, and we rice this 303 00:16:26,800 --> 00:16:29,240 Speaker 1: very briefly at the top of this segment. Our investors 304 00:16:29,240 --> 00:16:32,720 Speaker 1: today still conditioned by the events of ten years ago. 305 00:16:34,480 --> 00:16:37,240 Speaker 1: You know, I think it's it's beginning to fade. UH. 306 00:16:37,360 --> 00:16:41,400 Speaker 1: We're certainly seeing retail investors become and millennials become more 307 00:16:41,440 --> 00:16:45,880 Speaker 1: involved in inequity markets. UM. You know, but I think 308 00:16:45,920 --> 00:16:49,440 Speaker 1: that it's it's it's not a much different UM, you know, 309 00:16:49,520 --> 00:16:52,520 Speaker 1: much different characteristic of the investment. You know, investors are 310 00:16:52,560 --> 00:16:57,200 Speaker 1: much more oriented towards UM you know, towards passive products, 311 00:16:57,200 --> 00:17:01,040 Speaker 1: towards et f products UM. Uh. The world has changed 312 00:17:01,080 --> 00:17:03,680 Speaker 1: a lot in terms of the sentiment, and I think 313 00:17:03,720 --> 00:17:07,760 Speaker 1: that that investors are much more skeptical about the ability 314 00:17:07,920 --> 00:17:12,720 Speaker 1: for uh, for themselves or for for brokers frankly, to 315 00:17:12,760 --> 00:17:16,880 Speaker 1: be able to UM, to be able to pick individual stocks. 316 00:17:16,920 --> 00:17:19,280 Speaker 1: And I think that that's something that's that's you know, 317 00:17:19,359 --> 00:17:21,959 Speaker 1: Van Guards been at the forefront of but really has 318 00:17:22,320 --> 00:17:24,760 Speaker 1: has set into the mindset over the years. It certainly 319 00:17:24,840 --> 00:17:28,359 Speaker 1: changed the investor approach to investing in inequities to that extent, 320 00:17:28,480 --> 00:17:31,879 Speaker 1: But I still see investors climbing the so called wall 321 00:17:31,920 --> 00:17:35,040 Speaker 1: of worry, haunted by the paranoia of what might be 322 00:17:35,280 --> 00:17:38,119 Speaker 1: around the corner, Bob, and for that matter, haunted by 323 00:17:38,119 --> 00:17:41,159 Speaker 1: the prospect of a recession. We've forgotten what the average 324 00:17:41,160 --> 00:17:44,439 Speaker 1: recession is like, and we just have this memory of 325 00:17:44,480 --> 00:17:47,480 Speaker 1: this deep down term post two thousand and eight. It 326 00:17:47,520 --> 00:17:51,240 Speaker 1: doesn't have to be that way, does it, Bob. It doesn't. 327 00:17:51,280 --> 00:17:54,560 Speaker 1: And I think this the environment we're in, you know, 328 00:17:54,720 --> 00:18:00,600 Speaker 1: augurs reasonably well. Deep recessions come from from building up 329 00:18:00,680 --> 00:18:04,960 Speaker 1: excesses in the economy or in the financial markets. Um, 330 00:18:05,000 --> 00:18:07,199 Speaker 1: there's not a lot of that in the private sector, 331 00:18:07,200 --> 00:18:09,479 Speaker 1: I would argue right now maybe some companies that might 332 00:18:09,560 --> 00:18:12,720 Speaker 1: be overpaying for some other companies. I think the real 333 00:18:12,760 --> 00:18:15,240 Speaker 1: accesses that are built up in this cycle have really 334 00:18:15,280 --> 00:18:17,680 Speaker 1: been on the government death side, and I think that's 335 00:18:17,720 --> 00:18:21,400 Speaker 1: where a lot of the uncertainty is going forward with, 336 00:18:21,760 --> 00:18:26,080 Speaker 1: you know, financing of of US deficits. Yet the bond 337 00:18:26,160 --> 00:18:30,760 Speaker 1: markets are incredibly complacent about these financing needs. As we 338 00:18:30,800 --> 00:18:33,440 Speaker 1: go forward over the next not just the next year, 339 00:18:33,560 --> 00:18:36,040 Speaker 1: but I think the next five to ten years, there's 340 00:18:36,040 --> 00:18:39,320 Speaker 1: a real struggle in in the US budget outlook and 341 00:18:39,320 --> 00:18:42,600 Speaker 1: how that's going to be financed globally. Yet you know 342 00:18:42,680 --> 00:18:45,080 Speaker 1: ten year yields are sitting here still below three percent. 343 00:18:45,520 --> 00:18:49,040 Speaker 1: Very quickly, Bob, with that fiscal impulse, do you just 344 00:18:49,119 --> 00:18:54,320 Speaker 1: assume week dollar? You know, the dollar is an interesting 345 00:18:55,000 --> 00:18:58,879 Speaker 1: character right now cyclically, as we know, with interest rates 346 00:18:59,040 --> 00:19:01,920 Speaker 1: differentials movie sharply in favor of the US, the dollar 347 00:19:02,040 --> 00:19:04,720 Speaker 1: probably ought to be five to ten higher than it is. 348 00:19:05,480 --> 00:19:08,679 Speaker 1: This is really one of those structural environments where the markets, 349 00:19:08,720 --> 00:19:11,439 Speaker 1: i think, are focusing on the twin deficits and the 350 00:19:11,560 --> 00:19:14,480 Speaker 1: lack of confidence in US policy, and you're just not 351 00:19:14,560 --> 00:19:17,560 Speaker 1: seeing the capital inflows into the US that normally should 352 00:19:17,560 --> 00:19:20,919 Speaker 1: be taking place given the level of US rates relative 353 00:19:20,960 --> 00:19:23,560 Speaker 1: to the rest of the world. And let's pay upon 354 00:19:23,680 --> 00:19:40,119 Speaker 1: global strategists, uh our interview of the day, without question, 355 00:19:40,200 --> 00:19:43,760 Speaker 1: James Travinus, the Fletcher School. Admiral Stevinus, of course, more 356 00:19:43,800 --> 00:19:46,920 Speaker 1: than familiar to all of our listeners worldwide. I can't 357 00:19:46,960 --> 00:19:50,240 Speaker 1: say enough again about the work he has done into 358 00:19:50,280 --> 00:19:55,359 Speaker 1: his book. Last night, Admiral, regardless of anyone's politics, this 359 00:19:55,560 --> 00:19:59,520 Speaker 1: nation was transfixed on just simply the movable events of 360 00:19:59,520 --> 00:20:03,680 Speaker 1: a twenty for our span. How was this taken by 361 00:20:03,760 --> 00:20:06,840 Speaker 1: members of the Pentagon, members of the military, And I 362 00:20:06,880 --> 00:20:09,399 Speaker 1: want to bring it right down to Quarters A at 363 00:20:09,400 --> 00:20:13,320 Speaker 1: the Washington Navy Yard, and what Admiral Richardson in chief 364 00:20:13,359 --> 00:20:18,280 Speaker 1: of naval operation you see a Secretary of State fired, 365 00:20:18,400 --> 00:20:22,080 Speaker 1: I would suggest, differently than General Haig of another time 366 00:20:22,480 --> 00:20:26,760 Speaker 1: in place, what does Admiral Richardson the do the next 367 00:20:26,840 --> 00:20:33,119 Speaker 1: day to provide stability to the sailors? Well? As always, Tom, 368 00:20:33,440 --> 00:20:35,440 Speaker 1: you've got to look back to history to kind of 369 00:20:35,600 --> 00:20:37,640 Speaker 1: get a sense of this, And I'm going to take 370 00:20:37,640 --> 00:20:42,520 Speaker 1: you way back to the seventeenth century British Admiral John Byng, 371 00:20:43,040 --> 00:20:46,320 Speaker 1: and he lost a major battle and he was executed 372 00:20:46,359 --> 00:20:52,360 Speaker 1: for failing to do his utmost And Voltaire said, occasionally 373 00:20:52,400 --> 00:20:55,879 Speaker 1: the British shooting admiral in order to encourage the others. 374 00:20:56,359 --> 00:20:59,159 Speaker 1: And I feel there's a bit of that going on 375 00:20:59,280 --> 00:21:02,720 Speaker 1: in this White House. And I think what all of 376 00:21:02,720 --> 00:21:05,280 Speaker 1: our naval leadership need to do, in all our military 377 00:21:05,359 --> 00:21:07,320 Speaker 1: leadership is just kind of put their arms around their 378 00:21:07,359 --> 00:21:12,000 Speaker 1: troops and say, look, that's distant thunder out there. Of politics, Um, 379 00:21:12,080 --> 00:21:14,840 Speaker 1: we've got an operational job to do. And I think 380 00:21:14,880 --> 00:21:17,919 Speaker 1: that's what General Madis is doing over in the Pentagon today. 381 00:21:18,160 --> 00:21:21,359 Speaker 1: Do you link General Maddis to the uproar in the 382 00:21:21,400 --> 00:21:25,200 Speaker 1: White House all of the speculation in the rumor of 383 00:21:25,320 --> 00:21:31,400 Speaker 1: General McMaster's future, of Mr Shulkin's future at the Veteran's Administration? 384 00:21:31,920 --> 00:21:35,600 Speaker 1: Is Mr Maddis bundled into this or is the General separate? 385 00:21:36,520 --> 00:21:39,760 Speaker 1: I think he's completely separate for three reasons. One is 386 00:21:39,840 --> 00:21:45,479 Speaker 1: his enormous personal reputation integrity. Number two, he operates an 387 00:21:45,600 --> 00:21:49,280 Speaker 1: enormous department that is running extremely well. You simply can't 388 00:21:49,320 --> 00:21:52,479 Speaker 1: fault him on a performance basis. And number three because 389 00:21:52,600 --> 00:21:56,040 Speaker 1: Donald Trump has a kind of a built in proclivity 390 00:21:56,160 --> 00:22:00,840 Speaker 1: for military In fact, look at the replacement for Secretary 391 00:22:00,920 --> 00:22:04,040 Speaker 1: Killer Center will be Mike Pompeo West Point graduate number 392 00:22:04,040 --> 00:22:05,840 Speaker 1: one in his class. By the way, I did not 393 00:22:06,000 --> 00:22:09,800 Speaker 1: know that. Yes, Admirals Tevitas, good morning to you and 394 00:22:09,840 --> 00:22:12,880 Speaker 1: thanks for being with us as a former NATO Supreme 395 00:22:12,880 --> 00:22:15,560 Speaker 1: Allied Commander for Europe two thousand nine to two thousand 396 00:22:15,600 --> 00:22:17,560 Speaker 1: and thirteen, and wondering if you can comment about the 397 00:22:17,680 --> 00:22:23,480 Speaker 1: Russian Russian violations of NATO airspace over the Baltic and 398 00:22:23,920 --> 00:22:29,360 Speaker 1: also probably the acquisition of anti missile defense systems by 399 00:22:29,359 --> 00:22:32,240 Speaker 1: Turkey and NATO ally, and those acquisitions are being made 400 00:22:32,240 --> 00:22:36,639 Speaker 1: from Russia. Yeah, both of these are very very concerning 401 00:22:36,760 --> 00:22:40,760 Speaker 1: and and really part of Putin's ongoing efforts to undermine 402 00:22:40,760 --> 00:22:42,919 Speaker 1: the West and above all to kind of break apart 403 00:22:42,960 --> 00:22:47,040 Speaker 1: the NATO alliance. Any succeeding extremely well. He's got us 404 00:22:47,040 --> 00:22:50,280 Speaker 1: in an uproar after intruding into our elections. He is 405 00:22:50,760 --> 00:22:55,120 Speaker 1: pushed into Ukraine, not an NATO member, but an important country, 406 00:22:55,560 --> 00:22:59,520 Speaker 1: invaded and annexed. Any any operationally pushes not only in 407 00:22:59,560 --> 00:23:02,280 Speaker 1: the air to in but also on ships at sea, 408 00:23:02,400 --> 00:23:04,919 Speaker 1: coming very very close and very offensive ways in the 409 00:23:04,920 --> 00:23:07,880 Speaker 1: Black and Baltic Sea. The sale of the S four 410 00:23:07,960 --> 00:23:12,040 Speaker 1: hundred anti air missiles to Turkey will pull Turkey further 411 00:23:12,200 --> 00:23:14,000 Speaker 1: out of the alliance and it will make it hard 412 00:23:14,119 --> 00:23:17,560 Speaker 1: operationally to integrate their air defense with NATO air defense. 413 00:23:17,600 --> 00:23:21,280 Speaker 1: So I'd say overall, Putin is succeeding in putting great 414 00:23:21,280 --> 00:23:24,600 Speaker 1: pressure on the trans Atlantic Alliance in general and NATO 415 00:23:24,720 --> 00:23:27,679 Speaker 1: in particular. And what would you recommend if you got 416 00:23:27,720 --> 00:23:29,920 Speaker 1: a call from the White House? Is there anything that 417 00:23:29,960 --> 00:23:33,399 Speaker 1: the US administration can do with its European allies to 418 00:23:33,440 --> 00:23:39,159 Speaker 1: thwart these advances. When I was interviewed by Mr Trump, 419 00:23:39,240 --> 00:23:43,680 Speaker 1: then candidate elect Trump to become Secretary of State in 420 00:23:43,760 --> 00:23:47,000 Speaker 1: twenty sixteen in the fall of seen, he asked me 421 00:23:47,040 --> 00:23:49,560 Speaker 1: the same question, and I would give him the same 422 00:23:49,600 --> 00:23:53,119 Speaker 1: advice now, which is, we need to confront Russia. We 423 00:23:53,119 --> 00:23:56,000 Speaker 1: should confront them on the cyber intrusions, on their behavior 424 00:23:56,000 --> 00:23:59,080 Speaker 1: in Ukraine and their support for a war criminal assad 425 00:23:59,200 --> 00:24:02,119 Speaker 1: and Syria. We should confront them where we must, but 426 00:24:02,200 --> 00:24:05,359 Speaker 1: we should cooperate where we can, and there are zones 427 00:24:05,359 --> 00:24:11,720 Speaker 1: of potential cooperation with the Russian Federation, counter narcotics, counter cyber, 428 00:24:11,800 --> 00:24:15,800 Speaker 1: counter operations in an Arctic, in the High North. We've 429 00:24:15,840 --> 00:24:18,520 Speaker 1: got zones where we can cooperate. So we don't want 430 00:24:18,520 --> 00:24:21,200 Speaker 1: to stumble back into a full blown Cold war, but boy, 431 00:24:21,240 --> 00:24:23,760 Speaker 1: I can see one from here. Let's let's do the ballet. 432 00:24:23,800 --> 00:24:25,240 Speaker 1: And I don't think I need to be an adible 433 00:24:25,280 --> 00:24:27,199 Speaker 1: in the Navy to know Russia or respond to the 434 00:24:27,200 --> 00:24:31,520 Speaker 1: Prime Minister made speech of an hour ago with stunning headlines, 435 00:24:32,040 --> 00:24:35,720 Speaker 1: and yet they're by all reports, there's a relative silence 436 00:24:35,760 --> 00:24:38,199 Speaker 1: from the President of the United States. You've spoken to 437 00:24:38,240 --> 00:24:43,359 Speaker 1: President Trump about these delicate issues with Russia. What what 438 00:24:43,520 --> 00:24:46,880 Speaker 1: should he be advised by General Kelly and General Madison 439 00:24:46,920 --> 00:24:52,480 Speaker 1: others to say, Secretary designant Pompeo to say, immediately in 440 00:24:52,640 --> 00:24:56,920 Speaker 1: support of our key ally, uh, he should first of 441 00:24:56,960 --> 00:25:01,040 Speaker 1: all align himself with with the British completely. We should 442 00:25:01,119 --> 00:25:06,560 Speaker 1: consider expelling Russian diplomats in solidarity with the Brits. We 443 00:25:06,640 --> 00:25:11,720 Speaker 1: should strengthen our own Cyberg defenses because that's how he'll 444 00:25:11,720 --> 00:25:16,440 Speaker 1: continue to try and retaliate against US. Um. We should. Uh. Thirdly, 445 00:25:16,680 --> 00:25:20,959 Speaker 1: we should be standing operationally alongside the Brits out at 446 00:25:21,000 --> 00:25:24,200 Speaker 1: sea and in the air, because, believe me, Putin will 447 00:25:24,200 --> 00:25:26,800 Speaker 1: continue to press on them and his responses will include 448 00:25:26,800 --> 00:25:31,800 Speaker 1: expelling British diplomats but also up temple operational challenges to 449 00:25:31,920 --> 00:25:34,800 Speaker 1: British armed forces at sea and in the air. We 450 00:25:34,880 --> 00:25:37,720 Speaker 1: need to be with them. Tell us about smart power 451 00:25:37,760 --> 00:25:40,159 Speaker 1: and are we being smart with the smart power that 452 00:25:40,200 --> 00:25:44,240 Speaker 1: the United States has hard and soft? Yeah, we're not. Um. 453 00:25:44,280 --> 00:25:47,119 Speaker 1: I think we're doing quite well in the hard power realm. 454 00:25:47,119 --> 00:25:51,199 Speaker 1: We have the most capable military in the world, full stop. Um. 455 00:25:51,359 --> 00:25:54,879 Speaker 1: We are a blooded army, we are a seagoing navy, 456 00:25:55,040 --> 00:25:58,400 Speaker 1: or we own the air in many ways. UM, so 457 00:25:58,640 --> 00:26:00,520 Speaker 1: we're very good at the hard power. We can launch 458 00:26:00,600 --> 00:26:03,040 Speaker 1: missiles all day long. We need to get better at 459 00:26:03,119 --> 00:26:07,360 Speaker 1: launching ideas, and that means combining that hard power with 460 00:26:07,880 --> 00:26:12,399 Speaker 1: development aid, our deployment of hospital ships, are engagement in 461 00:26:12,920 --> 00:26:18,200 Speaker 1: everything from education and to literacy training. If we combine 462 00:26:18,240 --> 00:26:20,879 Speaker 1: that hard and soft power, that's what we call smart power. 463 00:26:21,320 --> 00:26:25,439 Speaker 1: I think. Unfortunately this administration is very top heavy with 464 00:26:25,600 --> 00:26:30,080 Speaker 1: military leadership, and frankly Secretary Pompeo, as I mentioned West 465 00:26:30,080 --> 00:26:35,640 Speaker 1: Point graduate plenty of combat time, terrific person, terrific officer. 466 00:26:36,040 --> 00:26:38,480 Speaker 1: But when you add it to all the other generals, 467 00:26:38,560 --> 00:26:41,639 Speaker 1: you have to start asking yourself, Um, if your only 468 00:26:41,680 --> 00:26:44,200 Speaker 1: tool is a hammer, maybe everything looks like a nail. 469 00:26:44,760 --> 00:26:47,920 Speaker 1: We ought to be combining soft power alongside the hard power. 470 00:26:48,119 --> 00:26:50,520 Speaker 1: Let's come back with James te Vedas, dean of the 471 00:26:50,520 --> 00:26:54,760 Speaker 1: Fletcher School, Toughs University Animals to Vedas, of course, giving 472 00:26:54,840 --> 00:27:05,399 Speaker 1: us a good perspective. All we Thanks for listening to 473 00:27:05,480 --> 00:27:10,000 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on 474 00:27:10,040 --> 00:27:15,880 Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm 475 00:27:15,920 --> 00:27:19,240 Speaker 1: on Twitter at Tom Keene. Before the podcast. You can 476 00:27:19,280 --> 00:27:22,480 Speaker 1: always catch us worldwide. I'm Bloomberg Radio.