Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg the
Speaker 1: bond Market. The story as follows. Treasuries that look a
Speaker 1: little something like this yields dead flatter two at four
Speaker 1: in the US tenure, and we are up just a
Speaker 1: basis point on a US two year note to two
Speaker 1: point to six percent for the White House Palace intrigue.
Speaker 1: Terry Haynes of ever Corp wrote the following, Mike Pompeio
Speaker 1: bringing to the table a harder line national security background
Speaker 1: and bent the signals a fundamental shift in the state's
Speaker 1: roll away from conventional negotiator and smoother of diplomatic difficulties
Speaker 1: to one that may be more confrontational on all sorts
Speaker 1: of relationships, including trade. So let's talk about that and
Speaker 1: bring in Bloomberg's chief Asia economics correspondent and the current
Speaker 1: and Ron temple Let's out Asset Management cohead of multi
Speaker 1: asset and head of US equity strategy. He joins us.
Speaker 1: Right now, let's begin with you, Ron. Are we moving
Speaker 1: towards a confrontational approach on all sorts of relationships, including traite.
Speaker 1: I do think trade is actually is going to be
Speaker 1: basically a challenge over the next six to twelve months
Speaker 1: or longer. And I think we're going to see an
Speaker 1: ongoing flow of negative trade news out of the administration.
Speaker 1: So what I'm hearing from d C is that there's
Speaker 1: quite a bit more lined up. I think there's a
Speaker 1: focus on the technology sector in particular, once you get
Speaker 1: beyond some of the old industrial areas like stealing aluminum.
Speaker 1: So I do worry that this protectionist policy is being
Speaker 1: embraced by the administration. And let's be honest, Donald Trump
Speaker 1: did campaign on a platform of protectionism, and so, um,
Speaker 1: what's disturbing to me. By the way, as if you
Speaker 1: look at it, it's somewhat of a bipartisan appeal. Um.
Speaker 1: If I look back to the twenties sixteen presidential campaign,
Speaker 1: there were twenty candidates on the two different stages on
Speaker 1: the democratic and Republican stage. I don't believe one of
Speaker 1: them defended free trade. And so I think this is
Speaker 1: a transition towards a more confrontational trade policy for the
Speaker 1: US on across the server to ENDERCARA, and the several
Speaker 1: reports in the United States today about the next move
Speaker 1: from this administration on China. There's a political report. There's
Speaker 1: also a RUTERUS report saying that the president is areing
Speaker 1: tariffs of up to sixty billion dollars on Chinese goods,
Speaker 1: mainly focused in the tech and telecommunication sector. And how
Speaker 1: is this going down in China. I think Jonathan, that
Speaker 1: China right now is doing two things. A They're trying
Speaker 1: to figure out just what is going on with the
Speaker 1: US trade policy. But we know, for example, a lou
Speaker 1: Hos visit to Washington, he's shooting being topic you can ordervise.
Speaker 1: A few weeks ago. One of his request was give
Speaker 1: me the list in terms of what you need. And
Speaker 1: secondly to the sense that while they are bracing for
Speaker 1: things to get toughered, it's also feeling China is willing
Speaker 1: to make some concessions shine headed off of the past
Speaker 1: that don't want a trade war. It's not in their interest.
Speaker 1: They know that China's economy would suffer even if they
Speaker 1: want to strikes back. So there's the feeling that when
Speaker 1: it comes to the three or one, and the I
Speaker 1: p probe that perhaps China makes some key concessions that
Speaker 1: would give Mr Trump the kind of victory looking for
Speaker 1: and would go somewhere towards singing the trade that of
Speaker 1: China's own economy on economy can absorb, you know, if
Speaker 1: those ap neither are blowered and exhausted. China's also made
Speaker 1: clear that they can respond if needed. Well, let's be
Speaker 1: clear here ender as well. News for everyone. China doesn't
Speaker 1: want the steel jobs. They want the manufacturing value add
Speaker 1: jobs in Germany and the United States of America. I
Speaker 1: imagine China are quite willing to give some some concessions
Speaker 1: around things like steel and aluminum, But the real issues
Speaker 1: that are ones coming down the road, aren't they That
Speaker 1: it's entirely right, you've nailed You've nailed it on the head.
Speaker 1: The issue for Chinese that they're the steel and aluminium tariffs,
Speaker 1: for example, we really have a negative impact on China's economy.
Speaker 1: The washing machine and solar channel tariffs a few weeks ago,
Speaker 1: a similar story. If the US they are heading down
Speaker 1: the Trump heading down the road of targeting much more
Speaker 1: to Fitt scated good that China is trying to get
Speaker 1: up the value chain on in the area technology and
Speaker 1: electronics and the like. That's where it becomes much more
Speaker 1: sensitive and much more difficult for Shanna not to really
Speaker 1: where they do not want to give up on the ground,
Speaker 1: and that's where we could start hitting down the road
Speaker 1: of pisser the caliation. And China has made clear to
Speaker 1: get a target for example, US agricultural goods story being
Speaker 1: strogne Bick a target Chinese orders for US and good
Speaker 1: and the target wider US investment in China. So there
Speaker 1: are plenty of values they could go down definits of
Speaker 1: Trump does go after their high value add stuff and
Speaker 1: the current thank you so much greatly appreciated in China's
Speaker 1: Morning Round Temple. You to hear Mr Kerran from China
Speaker 1: there and it's the immediacy of real things have to
Speaker 1: get real done. Do you change investment perspective? And visible
Speaker 1: steel and aluminum producers such as Boeing the news today
Speaker 1: with some of their demand for aluminum from China that
Speaker 1: we are definitely taking into account. What might happen to
Speaker 1: the cost structure of different companies in which we might
Speaker 1: invest in terms of going through and saying Okay, if
Speaker 1: there's a tariff on aluminium, temper cent tariff on steal,
Speaker 1: I mean, what does it mean to the company's cost
Speaker 1: of goods? What's your first look at that? Well, you
Speaker 1: know it varies by company, and so then you pick
Speaker 1: somebody big leg Boeing come out. Well, what we're doing
Speaker 1: is a company by company analysis and effectively looking and
Speaker 1: saying okay, if company X is basically affected by it,
Speaker 1: then the next step of the analysis, Okay, what about
Speaker 1: their competitors. Are there competitors importing steel? Are they're using
Speaker 1: domestic steel? So does it have the same cost implication
Speaker 1: across companies to regardless of the sector. And John, what's
Speaker 1: so interesting about this is that David Lynch article in
Speaker 1: the Washington Post a few days ago from Joplin, Missouri,
Speaker 1: which is the guy just said, look, this is not
Speaker 1: about price, it's about quality. And the guy had to
Speaker 1: bring in foreign steel because it was better made than
Speaker 1: the product you could get here. I just think we've
Speaker 1: got to get off the topic of steel and aluminum.
Speaker 1: At the end of the day, China has a ten
Speaker 1: year plan and it's not to dominate steel and illuminum.
Speaker 1: It is a made in China ten year plan to
Speaker 1: take over key industries in technology and manufacturing. That is
Speaker 1: why the deal for Qualcom has been bought by the
Speaker 1: President of the United States. They need to compete with
Speaker 1: China on all fronts, and it's not steel and aluminum.
Speaker 1: So I just wonder why we're sitting here talking about
Speaker 1: it so much, because the Germans are incredibly paranoid right
Speaker 1: now about a state that JELI has taken in Dimeler,
Speaker 1: their own technology at home being taken abroad by the
Speaker 1: Chinese from Germany. This isn't just about the United States
Speaker 1: of America and this administration defending steel and an aluminum.
Speaker 1: This is about the United States and Europe becoming increasingly
Speaker 1: paranoid about a ten year plan of the Chinese to
Speaker 1: take over some really key industries, and I imagined ron
Speaker 1: the tension is going to heighten from here and we
Speaker 1: won't be talking about metals over the coming years. What
Speaker 1: we're talking about real high end value added jobs in
Speaker 1: the United States for America that are growing in Europe
Speaker 1: and the West and ultimately will be challenged by China.
Speaker 1: I think there are two different facets this discussion. Number One,
Speaker 1: I completely agree steel in aluminum in some ways, it's
Speaker 1: a tiny part of total trade in the world. It's
Speaker 1: a tiny part of our imports in the US. What
Speaker 1: I would say on that point, by the way, is
Speaker 1: I think what the US really should be focusing on
Speaker 1: is not tariffs, but basically figuring out what we did
Speaker 1: wrong from a policy perspective related to these heavy industries
Speaker 1: and textiles. And you might say the old economy, we
Speaker 1: effectively agreed to free trade agreements, but then we failed
Speaker 1: to invest in the infrastructure, the education, and human capital
Speaker 1: to compete effectively. We didn't make the right choices. Let's
Speaker 1: fix that and make the right choices in terms of
Speaker 1: investing in our own country. More importantly, though, if you
Speaker 1: look to the future, I absolutely agree with you. China
Speaker 1: has been very explicit about their strategy in terms of
Speaker 1: semiconductors and other high tech industries where they want to
Speaker 1: be basically a category killer. And I think what you're
Speaker 1: seeing from Washington right now is a fear that they
Speaker 1: will either buy in or steel intellectual property. Do we
Speaker 1: have a strategy that was done, But the whole issue
Speaker 1: is the whole make America right again. You know, people
Speaker 1: might laugh and joke about it, but that actually needs
Speaker 1: to be a strategy to take on what the Chinese
Speaker 1: are doing, because the Chinese tom has been chating. The
Speaker 1: Chinese are able to go into a country like the
Speaker 1: United States and like Europe and take big stakes in
Speaker 1: the companies. Try doing it the other way, and that's
Speaker 1: what's about to be clamped down on. And that's what
Speaker 1: we're seeing in the last twenty four hours. But but
Speaker 1: I think the Chinese are winning because we forfeited. We
Speaker 1: don't have a strategy. And I'm not suggesting, by the way,
Speaker 1: the United States should have jopt the Chinese style central
Speaker 1: planned economy. I think what we should do is look
Speaker 1: back and say, what made this country the richest country
Speaker 1: in the world sixty seventy years ago. It was our investment.
Speaker 1: It was basically having consistent, predictable rule of law, which,
Speaker 1: by the way, when you get back to Washington intrigue,
Speaker 1: having some consistency and stability is actually important, you know.
Speaker 1: So I think we actually have to step back and
Speaker 1: reassess how we're approaching government right now and think about
Speaker 1: how do you have a five year budget not six
Speaker 1: month continuing resolutions? Right our Congress and president have failed
Speaker 1: for years to deliver a budget that you could actually
Speaker 1: make investment decisions based on as a company. And so
Speaker 1: I think we actually have to start actually trying to
Speaker 1: be strategic and having a long term view. And the
Speaker 1: only one with a long term geo strategic view right
Speaker 1: now seems to be China. And ultimately that's the problem.
Speaker 1: Ron Sampole las our Asset Management, cohead of multi Asset
Speaker 1: and head of US Equity, jointing US him in New
Speaker 1: York City. Do he, like all of the national media
Speaker 1: visiting Southwest Pennsylvania, has done a tour to force and
Speaker 1: no question, when all this is over, Kevin's really deserves
Speaker 1: a yng ling beer of his choice and he joins
Speaker 1: US now from Southwest Pennsylvania. Kevin, what are you focused
Speaker 1: on right now? Is we try to get to twelve noon?
Speaker 1: Is it a recount? Is it something else? But now
Speaker 1: what I'm focused on is just watching these absentee ballots
Speaker 1: return come in. Look, it's it's increasingly unlikely that the
Speaker 1: public and Rick to coone will be able to flip
Speaker 1: the lead to Democrat Connor Lambs, but it's still too
Speaker 1: close to call. And until these results are certified, uh,
Speaker 1: you know, we're not gonna know look. I spoke with
Speaker 1: a former a former official in the Governor Wolf administration,
Speaker 1: governor of Pennsylvania Republican, who told me that the recount
Speaker 1: laws are so complex in Pennsylvania, and this is you
Speaker 1: gotta remember, this district is not going to exist after November.
Speaker 1: So there's just a lot that I think a lot
Speaker 1: of folks were paying right now. Um, but you know,
Speaker 1: Connor Lambs, even if he does, even if the leak
Speaker 1: goes away, I was able to turn out a massive flip,
Speaker 1: explained to our global audience, including John Farow of the
Speaker 1: United Kingdom, explained to them how the Republicans will adapt
Speaker 1: if Mr Lamb wins. Well, they're going to have to.
Speaker 1: There are a couple of things. I mean, President Trump,
Speaker 1: who knows how, But I think that people can retire
Speaker 1: the progressive bait so active right now and in the
Speaker 1: blue wave of what you're hearing from Democratic strategist that
Speaker 1: could come in November. And a lot of Republicans now
Speaker 1: in particular, are looking and saying, wow, this President Trump
Speaker 1: won this district by and he couldn't even you know,
Speaker 1: and and a Republican couldn't win there. They're gonna look
Speaker 1: at their own future Kevin. Can we talk about the
Speaker 1: uniqueness of this and not just it's about weather. A
Speaker 1: young Democrat with a military background, not exactly running on
Speaker 1: a traditional Democrat platform. Was he Can this really be
Speaker 1: replicated across the country. That's a really great question because
Speaker 1: Republicans the strategist to speaker Ryan made that point to
Speaker 1: me last night. And I think the point of Connor
Speaker 1: Lamb being a centrist is fascinating because he ran away
Speaker 1: from House Minardi leader in it Pelosi. He was in
Speaker 1: the middle of the road on the Second Amendment on
Speaker 1: gun control, the middle of the road on abortion um
Speaker 1: and and did not run on a progressive populist message.
Speaker 1: He ran in lock step of labor unions, which is interesting,
Speaker 1: especially for our audience. But he but he uh, but
Speaker 1: he was. He was a centrist and not a not
Speaker 1: a massive liberal or a socialist. I mean within that
Speaker 1: is a throwback. So I guess an old Democratic party
Speaker 1: can Connor Lamb? Can Connor Lamb Congressman Lamb? If he wins,
Speaker 1: can he get along with Senator Warren of Massachusetts? I mean,
Speaker 1: how is that gonna work? Forget about where you are
Speaker 1: right now in Cannonsville. How's it gonna work in Washington. Well,
Speaker 1: he's goingly gonna be there for a couple of months
Speaker 1: start campaigning again, which everyone supporters of Lamb and the
Speaker 1: Cone were frustrated with. I was, you know, last night,
Speaker 1: I've heard a lot of political speeches, but watching Connor
Speaker 1: Lamp speak last night, there was a close that stood out,
Speaker 1: and it was when he thanked Labor. I thought that
Speaker 1: was interesting. But also when he said I'm a Pennsylvania Democrat.
Speaker 1: That is something that you hear a lot when you
Speaker 1: when you cover former Vice President Joe Biden, who plays
Speaker 1: up his Scranton, Pennsylvania roots. Siden, of course, was here
Speaker 1: campaigning for Connor Lamp. That's a very stark contrast from
Speaker 1: when I cover Senator Elizabeth Warren or senator standards. They're
Speaker 1: not saying, they're not making that pitch, and they've argued
Speaker 1: that in the Midwest, in particularly, how to run even
Speaker 1: more progressive Connor Lamb, Senator Tidy hight Camp, Joe mansions
Speaker 1: of the world. They disagree. Uh, Kevin Surlier, gonna let
Speaker 1: you go because we know you had so much to
Speaker 1: do today, plus the exhaustion a sudden I would go
Speaker 1: with a black and tan jangling by the way Mr
Speaker 1: surliers available, it's what they're can always be an argument
Speaker 1: about when the financial crisis, the Great Recession began. I
Speaker 1: always have put it as a third week of August
Speaker 1: two thousand seven, Library O I s went out, excuse me,
Speaker 1: T bill went out for standard deviations and we were
Speaker 1: off to the races. A lot of Europeans were thrown
Speaker 1: around the French banks, etcetera. Well we can all agree,
Speaker 1: is we all know where we were. It's seven oh
Speaker 1: six pm Wall Street time, March sixteen of two thousand eight,
Speaker 1: and then it was on into a dash into March seventeen. UH.
Speaker 1: The next day the single headline headline came across JP
Speaker 1: Morgan Chase to acquire bear Strings for two dollars per share,
Speaker 1: John Farrell. It was stunning at the time. It was
Speaker 1: absolutely just jaw dropping here at Bloomberg, de City and
Speaker 1: most remarkable as ten years has past, Tommy, you just
Speaker 1: wonder how many investors are still conditioned off the body
Speaker 1: events of ten years ago. I think so joining us now,
Speaker 1: we are honored to bring you Robert sin for years
Speaker 1: definitive with Alan Schwartz at bear Stearns in UH thick
Speaker 1: research and of course at the time at Bank of
Speaker 1: America running their foreign exchange and fixed and commandate with
Speaker 1: David Goldman, among others. Bob says, you were at Bank
Speaker 1: of America overlooking Central Park South. What was it like
Speaker 1: when you saw that two dollars statistic from Mr Diamond?
Speaker 1: Good morning guys. Well, obviously incredibly stunning and for for
Speaker 1: a lot of people that that I had worked with
Speaker 1: very early in my career at Bear Stearns. One of
Speaker 1: the things about about the organization and about the sentiment
Speaker 1: there is that is that people didn't didn't sell the
Speaker 1: stock um you know, they held onto it. They viewed
Speaker 1: it as their retirement package. And a lot of people,
Speaker 1: you know, not really senior people, but mid level people
Speaker 1: have just been accumulating stock, accumulating stock for decades, suddenly
Speaker 1: saw that, you know, collapse, I mean what the stock
Speaker 1: had gotten up to a hundred sixty or something and
Speaker 1: went to do I mean, this was this was devastating
Speaker 1: for a lot of people who didn't even think about
Speaker 1: selling the stock during their whole career. And John jump
Speaker 1: in here, but it was absolutely part of the fabric
Speaker 1: that you got stock dividends from Bear Stearns. They were
Speaker 1: different and you got more stock when you owned because
Speaker 1: it was a currency that was worth something UM than
Speaker 1: it Wilson Bob to what extent, and we rice this
Speaker 1: very briefly at the top of this segment. Our investors
Speaker 1: today still conditioned by the events of ten years ago.
Speaker 1: You know, I think it's it's beginning to fade. UH.
Speaker 1: We're certainly seeing retail investors become and millennials become more
Speaker 1: involved in inequity markets. UM. You know, but I think
Speaker 1: that it's it's it's not a much different UM, you know,
Speaker 1: much different characteristic of the investment. You know, investors are
Speaker 1: much more oriented towards UM you know, towards passive products,
Speaker 1: towards et f products UM. Uh. The world has changed
Speaker 1: a lot in terms of the sentiment, and I think
Speaker 1: that that investors are much more skeptical about the ability
Speaker 1: for uh, for themselves or for for brokers frankly, to
Speaker 1: be able to UM, to be able to pick individual stocks.
Speaker 1: And I think that that's something that's that's you know,
Speaker 1: Van Guards been at the forefront of but really has
Speaker 1: has set into the mindset over the years. It certainly
Speaker 1: changed the investor approach to investing in inequities to that extent,
Speaker 1: But I still see investors climbing the so called wall
Speaker 1: of worry, haunted by the paranoia of what might be
Speaker 1: around the corner, Bob, and for that matter, haunted by
Speaker 1: the prospect of a recession. We've forgotten what the average
Speaker 1: recession is like, and we just have this memory of
Speaker 1: this deep down term post two thousand and eight. It
Speaker 1: doesn't have to be that way, does it, Bob. It doesn't.
Speaker 1: And I think this the environment we're in, you know,
Speaker 1: augurs reasonably well. Deep recessions come from from building up
Speaker 1: excesses in the economy or in the financial markets. Um,
Speaker 1: there's not a lot of that in the private sector,
Speaker 1: I would argue right now maybe some companies that might
Speaker 1: be overpaying for some other companies. I think the real
Speaker 1: accesses that are built up in this cycle have really
Speaker 1: been on the government death side, and I think that's
Speaker 1: where a lot of the uncertainty is going forward with,
Speaker 1: you know, financing of of US deficits. Yet the bond
Speaker 1: markets are incredibly complacent about these financing needs. As we
Speaker 1: go forward over the next not just the next year,
Speaker 1: but I think the next five to ten years, there's
Speaker 1: a real struggle in in the US budget outlook and
Speaker 1: how that's going to be financed globally. Yet you know
Speaker 1: ten year yields are sitting here still below three percent.
Speaker 1: Very quickly, Bob, with that fiscal impulse, do you just
Speaker 1: assume week dollar? You know, the dollar is an interesting
Speaker 1: character right now cyclically, as we know, with interest rates
Speaker 1: differentials movie sharply in favor of the US, the dollar
Speaker 1: probably ought to be five to ten higher than it is.
Speaker 1: This is really one of those structural environments where the markets,
Speaker 1: i think, are focusing on the twin deficits and the
Speaker 1: lack of confidence in US policy, and you're just not
Speaker 1: seeing the capital inflows into the US that normally should
Speaker 1: be taking place given the level of US rates relative
Speaker 1: to the rest of the world. And let's pay upon
Speaker 1: global strategists, uh our interview of the day, without question,
Speaker 1: James Travinus, the Fletcher School. Admiral Stevinus, of course, more
Speaker 1: than familiar to all of our listeners worldwide. I can't
Speaker 1: say enough again about the work he has done into
Speaker 1: his book. Last night, Admiral, regardless of anyone's politics, this
Speaker 1: nation was transfixed on just simply the movable events of
Speaker 1: a twenty for our span. How was this taken by
Speaker 1: members of the Pentagon, members of the military, And I
Speaker 1: want to bring it right down to Quarters A at
Speaker 1: the Washington Navy Yard, and what Admiral Richardson in chief
Speaker 1: of naval operation you see a Secretary of State fired,
Speaker 1: I would suggest, differently than General Haig of another time
Speaker 1: in place, what does Admiral Richardson the do the next
Speaker 1: day to provide stability to the sailors? Well? As always, Tom,
Speaker 1: you've got to look back to history to kind of
Speaker 1: get a sense of this, And I'm going to take
Speaker 1: you way back to the seventeenth century British Admiral John Byng,
Speaker 1: and he lost a major battle and he was executed
Speaker 1: for failing to do his utmost And Voltaire said, occasionally
Speaker 1: the British shooting admiral in order to encourage the others.
Speaker 1: And I feel there's a bit of that going on
Speaker 1: in this White House. And I think what all of
Speaker 1: our naval leadership need to do, in all our military
Speaker 1: leadership is just kind of put their arms around their
Speaker 1: troops and say, look, that's distant thunder out there. Of politics, Um,
Speaker 1: we've got an operational job to do. And I think
Speaker 1: that's what General Madis is doing over in the Pentagon today.
Speaker 1: Do you link General Maddis to the uproar in the
Speaker 1: White House all of the speculation in the rumor of
Speaker 1: General McMaster's future, of Mr Shulkin's future at the Veteran's Administration?
Speaker 1: Is Mr Maddis bundled into this or is the General separate?
Speaker 1: I think he's completely separate for three reasons. One is
Speaker 1: his enormous personal reputation integrity. Number two, he operates an
Speaker 1: enormous department that is running extremely well. You simply can't
Speaker 1: fault him on a performance basis. And number three because
Speaker 1: Donald Trump has a kind of a built in proclivity
Speaker 1: for military In fact, look at the replacement for Secretary
Speaker 1: Killer Center will be Mike Pompeo West Point graduate number
Speaker 1: one in his class. By the way, I did not
Speaker 1: know that. Yes, Admirals Tevitas, good morning to you and
Speaker 1: thanks for being with us as a former NATO Supreme
Speaker 1: Allied Commander for Europe two thousand nine to two thousand
Speaker 1: and thirteen, and wondering if you can comment about the
Speaker 1: Russian Russian violations of NATO airspace over the Baltic and
Speaker 1: also probably the acquisition of anti missile defense systems by
Speaker 1: Turkey and NATO ally, and those acquisitions are being made
Speaker 1: from Russia. Yeah, both of these are very very concerning
Speaker 1: and and really part of Putin's ongoing efforts to undermine
Speaker 1: the West and above all to kind of break apart
Speaker 1: the NATO alliance. Any succeeding extremely well. He's got us
Speaker 1: in an uproar after intruding into our elections. He is
Speaker 1: pushed into Ukraine, not an NATO member, but an important country,
Speaker 1: invaded and annexed. Any any operationally pushes not only in
Speaker 1: the air to in but also on ships at sea,
Speaker 1: coming very very close and very offensive ways in the
Speaker 1: Black and Baltic Sea. The sale of the S four
Speaker 1: hundred anti air missiles to Turkey will pull Turkey further
Speaker 1: out of the alliance and it will make it hard
Speaker 1: operationally to integrate their air defense with NATO air defense.
Speaker 1: So I'd say overall, Putin is succeeding in putting great
Speaker 1: pressure on the trans Atlantic Alliance in general and NATO
Speaker 1: in particular. And what would you recommend if you got
Speaker 1: a call from the White House? Is there anything that
Speaker 1: the US administration can do with its European allies to
Speaker 1: thwart these advances. When I was interviewed by Mr Trump,
Speaker 1: then candidate elect Trump to become Secretary of State in
Speaker 1: twenty sixteen in the fall of seen, he asked me
Speaker 1: the same question, and I would give him the same
Speaker 1: advice now, which is, we need to confront Russia. We
Speaker 1: should confront them on the cyber intrusions, on their behavior
Speaker 1: in Ukraine and their support for a war criminal assad
Speaker 1: and Syria. We should confront them where we must, but
Speaker 1: we should cooperate where we can, and there are zones
Speaker 1: of potential cooperation with the Russian Federation, counter narcotics, counter cyber,
Speaker 1: counter operations in an Arctic, in the High North. We've
Speaker 1: got zones where we can cooperate. So we don't want
Speaker 1: to stumble back into a full blown Cold war, but boy,
Speaker 1: I can see one from here. Let's let's do the ballet.
Speaker 1: And I don't think I need to be an adible
Speaker 1: in the Navy to know Russia or respond to the
Speaker 1: Prime Minister made speech of an hour ago with stunning headlines,
Speaker 1: and yet they're by all reports, there's a relative silence
Speaker 1: from the President of the United States. You've spoken to
Speaker 1: President Trump about these delicate issues with Russia. What what
Speaker 1: should he be advised by General Kelly and General Madison
Speaker 1: others to say, Secretary designant Pompeo to say, immediately in
Speaker 1: support of our key ally, uh, he should first of
Speaker 1: all align himself with with the British completely. We should
Speaker 1: consider expelling Russian diplomats in solidarity with the Brits. We
Speaker 1: should strengthen our own Cyberg defenses because that's how he'll
Speaker 1: continue to try and retaliate against US. Um. We should. Uh. Thirdly,
Speaker 1: we should be standing operationally alongside the Brits out at
Speaker 1: sea and in the air, because, believe me, Putin will
Speaker 1: continue to press on them and his responses will include
Speaker 1: expelling British diplomats but also up temple operational challenges to
Speaker 1: British armed forces at sea and in the air. We
Speaker 1: need to be with them. Tell us about smart power
Speaker 1: and are we being smart with the smart power that
Speaker 1: the United States has hard and soft? Yeah, we're not. Um.
Speaker 1: I think we're doing quite well in the hard power realm.
Speaker 1: We have the most capable military in the world, full stop. Um.
Speaker 1: We are a blooded army, we are a seagoing navy,
Speaker 1: or we own the air in many ways. UM, so
Speaker 1: we're very good at the hard power. We can launch
Speaker 1: missiles all day long. We need to get better at
Speaker 1: launching ideas, and that means combining that hard power with
Speaker 1: development aid, our deployment of hospital ships, are engagement in
Speaker 1: everything from education and to literacy training. If we combine
Speaker 1: that hard and soft power, that's what we call smart power.
Speaker 1: I think. Unfortunately this administration is very top heavy with
Speaker 1: military leadership, and frankly Secretary Pompeo, as I mentioned West
Speaker 1: Point graduate plenty of combat time, terrific person, terrific officer.
Speaker 1: But when you add it to all the other generals,
Speaker 1: you have to start asking yourself, Um, if your only
Speaker 1: tool is a hammer, maybe everything looks like a nail.
Speaker 1: We ought to be combining soft power alongside the hard power.
Speaker 1: Let's come back with James te Vedas, dean of the
Speaker 1: Fletcher School, Toughs University Animals to Vedas, of course, giving
Speaker 1: us a good perspective. All we Thanks for listening to
Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on
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Speaker 1: on Twitter at Tom Keene. Before the podcast. You can
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