WEBVTT - U.S. Should Align with the U.K., Stavridis Says 0:00:00.080 --> 0:00:12.960 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Leye. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:32.879 Bloomberg dot Com, and of course, on the Bloomberg the 0:00:32.880 --> 0:00:35.600 bond Market. The story as follows. Treasuries that look a 0:00:35.600 --> 0:00:38.879 little something like this yields dead flatter two at four 0:00:38.880 --> 0:00:40.760 in the US tenure, and we are up just a 0:00:40.760 --> 0:00:42.640 basis point on a US two year note to two 0:00:42.640 --> 0:00:46.800 point to six percent for the White House Palace intrigue. 0:00:46.960 --> 0:00:50.159 Terry Haynes of ever Corp wrote the following, Mike Pompeio 0:00:50.360 --> 0:00:53.520 bringing to the table a harder line national security background 0:00:53.520 --> 0:00:56.840 and bent the signals a fundamental shift in the state's 0:00:56.960 --> 0:01:01.720 roll away from conventional negotiator and smoother of diplomatic difficulties 0:01:01.760 --> 0:01:04.880 to one that may be more confrontational on all sorts 0:01:04.880 --> 0:01:08.080 of relationships, including trade. So let's talk about that and 0:01:08.120 --> 0:01:11.479 bring in Bloomberg's chief Asia economics correspondent and the current 0:01:11.760 --> 0:01:15.160 and Ron temple Let's out Asset Management cohead of multi 0:01:15.160 --> 0:01:18.399 asset and head of US equity strategy. He joins us. 0:01:18.480 --> 0:01:21.000 Right now, let's begin with you, Ron. Are we moving 0:01:21.400 --> 0:01:25.880 towards a confrontational approach on all sorts of relationships, including traite. 0:01:26.319 --> 0:01:28.240 I do think trade is actually is going to be 0:01:28.280 --> 0:01:30.560 basically a challenge over the next six to twelve months 0:01:30.640 --> 0:01:32.160 or longer. And I think we're going to see an 0:01:32.200 --> 0:01:34.880 ongoing flow of negative trade news out of the administration. 0:01:34.959 --> 0:01:37.160 So what I'm hearing from d C is that there's 0:01:37.240 --> 0:01:38.760 quite a bit more lined up. I think there's a 0:01:38.800 --> 0:01:41.680 focus on the technology sector in particular, once you get 0:01:41.680 --> 0:01:44.440 beyond some of the old industrial areas like stealing aluminum. 0:01:44.520 --> 0:01:47.200 So I do worry that this protectionist policy is being 0:01:47.200 --> 0:01:50.720 embraced by the administration. And let's be honest, Donald Trump 0:01:50.760 --> 0:01:54.120 did campaign on a platform of protectionism, and so, um, 0:01:54.160 --> 0:01:56.200 what's disturbing to me. By the way, as if you 0:01:56.200 --> 0:01:58.640 look at it, it's somewhat of a bipartisan appeal. Um. 0:01:58.640 --> 0:02:01.160 If I look back to the twenties sixteen presidential campaign, 0:02:01.160 --> 0:02:03.280 there were twenty candidates on the two different stages on 0:02:03.360 --> 0:02:06.120 the democratic and Republican stage. I don't believe one of 0:02:06.160 --> 0:02:08.799 them defended free trade. And so I think this is 0:02:08.840 --> 0:02:11.679 a transition towards a more confrontational trade policy for the 0:02:11.800 --> 0:02:13.840 US on across the server to ENDERCARA, and the several 0:02:13.840 --> 0:02:16.280 reports in the United States today about the next move 0:02:16.360 --> 0:02:19.799 from this administration on China. There's a political report. There's 0:02:19.800 --> 0:02:22.800 also a RUTERUS report saying that the president is areing 0:02:22.800 --> 0:02:26.800 tariffs of up to sixty billion dollars on Chinese goods, 0:02:26.840 --> 0:02:30.720 mainly focused in the tech and telecommunication sector. And how 0:02:30.800 --> 0:02:35.120 is this going down in China. I think Jonathan, that 0:02:35.400 --> 0:02:38.239 China right now is doing two things. A They're trying 0:02:38.280 --> 0:02:40.400 to figure out just what is going on with the 0:02:40.480 --> 0:02:43.000 US trade policy. But we know, for example, a lou 0:02:43.080 --> 0:02:46.280 Hos visit to Washington, he's shooting being topic you can ordervise. 0:02:46.320 --> 0:02:48.720 A few weeks ago. One of his request was give 0:02:48.760 --> 0:02:50.919 me the list in terms of what you need. And 0:02:51.080 --> 0:02:53.880 secondly to the sense that while they are bracing for 0:02:53.919 --> 0:02:56.320 things to get toughered, it's also feeling China is willing 0:02:56.360 --> 0:02:59.720 to make some concessions shine headed off of the past 0:02:59.760 --> 0:03:02.280 that don't want a trade war. It's not in their interest. 0:03:02.320 --> 0:03:04.440 They know that China's economy would suffer even if they 0:03:04.480 --> 0:03:07.000 want to strikes back. So there's the feeling that when 0:03:07.000 --> 0:03:08.760 it comes to the three or one, and the I 0:03:08.919 --> 0:03:12.320 p probe that perhaps China makes some key concessions that 0:03:12.360 --> 0:03:14.680 would give Mr Trump the kind of victory looking for 0:03:15.040 --> 0:03:18.200 and would go somewhere towards singing the trade that of 0:03:18.480 --> 0:03:22.040 China's own economy on economy can absorb, you know, if 0:03:22.080 --> 0:03:25.040 those ap neither are blowered and exhausted. China's also made 0:03:25.040 --> 0:03:27.000 clear that they can respond if needed. Well, let's be 0:03:27.000 --> 0:03:30.520 clear here ender as well. News for everyone. China doesn't 0:03:30.560 --> 0:03:34.360 want the steel jobs. They want the manufacturing value add 0:03:34.440 --> 0:03:37.520 jobs in Germany and the United States of America. I 0:03:37.520 --> 0:03:41.040 imagine China are quite willing to give some some concessions 0:03:41.040 --> 0:03:44.640 around things like steel and aluminum, But the real issues 0:03:44.640 --> 0:03:47.680 that are ones coming down the road, aren't they That 0:03:48.120 --> 0:03:51.320 it's entirely right, you've nailed You've nailed it on the head. 0:03:51.560 --> 0:03:54.480 The issue for Chinese that they're the steel and aluminium tariffs, 0:03:54.480 --> 0:03:57.240 for example, we really have a negative impact on China's economy. 0:03:57.440 --> 0:04:00.760 The washing machine and solar channel tariffs a few weeks ago, 0:04:01.160 --> 0:04:04.560 a similar story. If the US they are heading down 0:04:04.560 --> 0:04:07.120 the Trump heading down the road of targeting much more 0:04:07.160 --> 0:04:09.600 to Fitt scated good that China is trying to get 0:04:09.640 --> 0:04:11.720 up the value chain on in the area technology and 0:04:11.680 --> 0:04:14.440 electronics and the like. That's where it becomes much more 0:04:14.520 --> 0:04:17.159 sensitive and much more difficult for Shanna not to really 0:04:17.200 --> 0:04:19.159 where they do not want to give up on the ground, 0:04:19.240 --> 0:04:21.560 and that's where we could start hitting down the road 0:04:21.560 --> 0:04:24.720 of pisser the caliation. And China has made clear to 0:04:24.760 --> 0:04:27.960 get a target for example, US agricultural goods story being 0:04:28.040 --> 0:04:32.280 strogne Bick a target Chinese orders for US and good 0:04:32.400 --> 0:04:35.840 and the target wider US investment in China. So there 0:04:35.839 --> 0:04:38.400 are plenty of values they could go down definits of 0:04:38.400 --> 0:04:41.159 Trump does go after their high value add stuff and 0:04:41.200 --> 0:04:43.760 the current thank you so much greatly appreciated in China's 0:04:43.880 --> 0:04:47.000 Morning Round Temple. You to hear Mr Kerran from China 0:04:47.040 --> 0:04:50.800 there and it's the immediacy of real things have to 0:04:50.839 --> 0:04:56.360 get real done. Do you change investment perspective? And visible 0:04:56.520 --> 0:05:00.800 steel and aluminum producers such as Boeing the news today 0:05:00.839 --> 0:05:04.880 with some of their demand for aluminum from China that 0:05:04.920 --> 0:05:07.240 we are definitely taking into account. What might happen to 0:05:07.240 --> 0:05:09.240 the cost structure of different companies in which we might 0:05:09.279 --> 0:05:11.760 invest in terms of going through and saying Okay, if 0:05:11.760 --> 0:05:14.520 there's a tariff on aluminium, temper cent tariff on steal, 0:05:14.560 --> 0:05:16.920 I mean, what does it mean to the company's cost 0:05:16.960 --> 0:05:19.240 of goods? What's your first look at that? Well, you 0:05:19.240 --> 0:05:21.800 know it varies by company, and so then you pick 0:05:21.880 --> 0:05:24.360 somebody big leg Boeing come out. Well, what we're doing 0:05:24.440 --> 0:05:26.800 is a company by company analysis and effectively looking and 0:05:26.800 --> 0:05:29.120 saying okay, if company X is basically affected by it, 0:05:29.160 --> 0:05:31.040 then the next step of the analysis, Okay, what about 0:05:31.040 --> 0:05:33.880 their competitors. Are there competitors importing steel? Are they're using 0:05:33.920 --> 0:05:36.599 domestic steel? So does it have the same cost implication 0:05:36.640 --> 0:05:39.320 across companies to regardless of the sector. And John, what's 0:05:39.360 --> 0:05:41.839 so interesting about this is that David Lynch article in 0:05:42.240 --> 0:05:45.760 the Washington Post a few days ago from Joplin, Missouri, 0:05:46.240 --> 0:05:48.039 which is the guy just said, look, this is not 0:05:48.200 --> 0:05:52.080 about price, it's about quality. And the guy had to 0:05:52.120 --> 0:05:56.200 bring in foreign steel because it was better made than 0:05:56.200 --> 0:05:58.160 the product you could get here. I just think we've 0:05:58.200 --> 0:06:00.760 got to get off the topic of steel and aluminum. 0:06:01.120 --> 0:06:03.000 At the end of the day, China has a ten 0:06:03.080 --> 0:06:07.080 year plan and it's not to dominate steel and illuminum. 0:06:07.120 --> 0:06:09.960 It is a made in China ten year plan to 0:06:10.000 --> 0:06:14.400 take over key industries in technology and manufacturing. That is 0:06:14.480 --> 0:06:17.479 why the deal for Qualcom has been bought by the 0:06:17.480 --> 0:06:20.640 President of the United States. They need to compete with 0:06:20.760 --> 0:06:23.520 China on all fronts, and it's not steel and aluminum. 0:06:23.560 --> 0:06:25.240 So I just wonder why we're sitting here talking about 0:06:25.279 --> 0:06:28.640 it so much, because the Germans are incredibly paranoid right 0:06:28.680 --> 0:06:31.280 now about a state that JELI has taken in Dimeler, 0:06:32.040 --> 0:06:35.240 their own technology at home being taken abroad by the 0:06:35.320 --> 0:06:37.800 Chinese from Germany. This isn't just about the United States 0:06:37.839 --> 0:06:40.680 of America and this administration defending steel and an aluminum. 0:06:40.880 --> 0:06:43.320 This is about the United States and Europe becoming increasingly 0:06:43.320 --> 0:06:45.880 paranoid about a ten year plan of the Chinese to 0:06:45.960 --> 0:06:49.200 take over some really key industries, and I imagined ron 0:06:49.600 --> 0:06:51.560 the tension is going to heighten from here and we 0:06:51.600 --> 0:06:54.640 won't be talking about metals over the coming years. What 0:06:54.760 --> 0:06:58.320 we're talking about real high end value added jobs in 0:06:58.360 --> 0:07:02.479 the United States for America that are growing in Europe 0:07:02.600 --> 0:07:04.919 and the West and ultimately will be challenged by China. 0:07:05.800 --> 0:07:08.120 I think there are two different facets this discussion. Number One, 0:07:08.120 --> 0:07:10.440 I completely agree steel in aluminum in some ways, it's 0:07:10.440 --> 0:07:12.280 a tiny part of total trade in the world. It's 0:07:12.280 --> 0:07:14.040 a tiny part of our imports in the US. What 0:07:14.080 --> 0:07:15.400 I would say on that point, by the way, is 0:07:15.400 --> 0:07:17.240 I think what the US really should be focusing on 0:07:17.640 --> 0:07:19.800 is not tariffs, but basically figuring out what we did 0:07:19.800 --> 0:07:22.640 wrong from a policy perspective related to these heavy industries 0:07:22.640 --> 0:07:25.200 and textiles. And you might say the old economy, we 0:07:25.240 --> 0:07:27.640 effectively agreed to free trade agreements, but then we failed 0:07:27.640 --> 0:07:30.280 to invest in the infrastructure, the education, and human capital 0:07:30.320 --> 0:07:33.000 to compete effectively. We didn't make the right choices. Let's 0:07:33.040 --> 0:07:35.000 fix that and make the right choices in terms of 0:07:35.040 --> 0:07:37.560 investing in our own country. More importantly, though, if you 0:07:37.560 --> 0:07:39.640 look to the future, I absolutely agree with you. China 0:07:39.680 --> 0:07:43.160 has been very explicit about their strategy in terms of 0:07:43.200 --> 0:07:45.600 semiconductors and other high tech industries where they want to 0:07:45.600 --> 0:07:47.960 be basically a category killer. And I think what you're 0:07:47.960 --> 0:07:49.840 seeing from Washington right now is a fear that they 0:07:49.880 --> 0:07:52.600 will either buy in or steel intellectual property. Do we 0:07:52.680 --> 0:07:57.040 have a strategy that was done, But the whole issue 0:07:57.160 --> 0:07:59.480 is the whole make America right again. You know, people 0:07:59.520 --> 0:08:01.840 might laugh and joke about it, but that actually needs 0:08:01.840 --> 0:08:04.920 to be a strategy to take on what the Chinese 0:08:04.920 --> 0:08:07.520 are doing, because the Chinese tom has been chating. The 0:08:07.600 --> 0:08:09.680 Chinese are able to go into a country like the 0:08:09.760 --> 0:08:12.480 United States and like Europe and take big stakes in 0:08:12.520 --> 0:08:15.120 the companies. Try doing it the other way, and that's 0:08:15.160 --> 0:08:16.760 what's about to be clamped down on. And that's what 0:08:16.800 --> 0:08:18.560 we're seeing in the last twenty four hours. But but 0:08:18.600 --> 0:08:20.920 I think the Chinese are winning because we forfeited. We 0:08:21.040 --> 0:08:23.240 don't have a strategy. And I'm not suggesting, by the way, 0:08:23.280 --> 0:08:25.880 the United States should have jopt the Chinese style central 0:08:25.880 --> 0:08:28.040 planned economy. I think what we should do is look 0:08:28.040 --> 0:08:30.160 back and say, what made this country the richest country 0:08:30.160 --> 0:08:33.160 in the world sixty seventy years ago. It was our investment. 0:08:33.240 --> 0:08:37.040 It was basically having consistent, predictable rule of law, which, 0:08:37.080 --> 0:08:39.080 by the way, when you get back to Washington intrigue, 0:08:39.400 --> 0:08:42.760 having some consistency and stability is actually important, you know. 0:08:42.840 --> 0:08:44.480 So I think we actually have to step back and 0:08:44.520 --> 0:08:47.800 reassess how we're approaching government right now and think about 0:08:47.840 --> 0:08:50.640 how do you have a five year budget not six 0:08:50.679 --> 0:08:54.360 month continuing resolutions? Right our Congress and president have failed 0:08:54.360 --> 0:08:57.040 for years to deliver a budget that you could actually 0:08:57.120 --> 0:08:59.719 make investment decisions based on as a company. And so 0:08:59.880 --> 0:09:02.080 I think we actually have to start actually trying to 0:09:02.080 --> 0:09:04.120 be strategic and having a long term view. And the 0:09:04.160 --> 0:09:06.560 only one with a long term geo strategic view right 0:09:06.600 --> 0:09:09.000 now seems to be China. And ultimately that's the problem. 0:09:09.120 --> 0:09:12.040 Ron Sampole las our Asset Management, cohead of multi Asset 0:09:12.080 --> 0:09:14.120 and head of US Equity, jointing US him in New 0:09:14.200 --> 0:09:29.800 York City. Do he, like all of the national media 0:09:29.920 --> 0:09:33.440 visiting Southwest Pennsylvania, has done a tour to force and 0:09:33.520 --> 0:09:37.079 no question, when all this is over, Kevin's really deserves 0:09:37.679 --> 0:09:40.320 a yng ling beer of his choice and he joins 0:09:40.400 --> 0:09:44.640 US now from Southwest Pennsylvania. Kevin, what are you focused 0:09:44.640 --> 0:09:47.640 on right now? Is we try to get to twelve noon? 0:09:47.840 --> 0:09:52.000 Is it a recount? Is it something else? But now 0:09:52.000 --> 0:09:54.640 what I'm focused on is just watching these absentee ballots 0:09:54.800 --> 0:09:59.800 return come in. Look, it's it's increasingly unlikely that the 0:10:00.000 --> 0:10:02.760 public and Rick to coone will be able to flip 0:10:02.800 --> 0:10:06.040 the lead to Democrat Connor Lambs, but it's still too 0:10:06.040 --> 0:10:09.320 close to call. And until these results are certified, uh, 0:10:09.360 --> 0:10:11.120 you know, we're not gonna know look. I spoke with 0:10:11.360 --> 0:10:17.040 a former a former official in the Governor Wolf administration, 0:10:17.200 --> 0:10:22.280 governor of Pennsylvania Republican, who told me that the recount 0:10:22.320 --> 0:10:25.680 laws are so complex in Pennsylvania, and this is you 0:10:25.679 --> 0:10:29.280 gotta remember, this district is not going to exist after November. 0:10:29.640 --> 0:10:32.360 So there's just a lot that I think a lot 0:10:32.360 --> 0:10:35.600 of folks were paying right now. Um, but you know, 0:10:35.679 --> 0:10:38.720 Connor Lambs, even if he does, even if the leak 0:10:38.840 --> 0:10:43.320 goes away, I was able to turn out a massive flip, 0:10:43.520 --> 0:10:47.760 explained to our global audience, including John Farow of the 0:10:47.800 --> 0:10:52.760 United Kingdom, explained to them how the Republicans will adapt 0:10:52.920 --> 0:10:57.199 if Mr Lamb wins. Well, they're going to have to. 0:10:57.240 --> 0:10:58.959 There are a couple of things. I mean, President Trump, 0:10:59.040 --> 0:11:03.800 who knows how, But I think that people can retire 0:11:04.920 --> 0:11:09.559 the progressive bait so active right now and in the 0:11:09.559 --> 0:11:12.400 blue wave of what you're hearing from Democratic strategist that 0:11:12.440 --> 0:11:15.600 could come in November. And a lot of Republicans now 0:11:15.840 --> 0:11:19.439 in particular, are looking and saying, wow, this President Trump 0:11:19.440 --> 0:11:23.920 won this district by and he couldn't even you know, 0:11:23.960 --> 0:11:27.280 and and a Republican couldn't win there. They're gonna look 0:11:27.320 --> 0:11:29.320 at their own future Kevin. Can we talk about the 0:11:29.400 --> 0:11:33.440 uniqueness of this and not just it's about weather. A 0:11:33.559 --> 0:11:37.480 young Democrat with a military background, not exactly running on 0:11:37.520 --> 0:11:41.120 a traditional Democrat platform. Was he Can this really be 0:11:41.160 --> 0:11:45.280 replicated across the country. That's a really great question because 0:11:45.320 --> 0:11:49.240 Republicans the strategist to speaker Ryan made that point to 0:11:49.280 --> 0:11:53.840 me last night. And I think the point of Connor 0:11:53.920 --> 0:11:58.120 Lamb being a centrist is fascinating because he ran away 0:11:58.559 --> 0:12:01.120 from House Minardi leader in it Pelosi. He was in 0:12:01.160 --> 0:12:03.480 the middle of the road on the Second Amendment on 0:12:03.520 --> 0:12:06.360 gun control, the middle of the road on abortion um 0:12:06.559 --> 0:12:10.160 and and did not run on a progressive populist message. 0:12:10.280 --> 0:12:14.280 He ran in lock step of labor unions, which is interesting, 0:12:15.040 --> 0:12:17.880 especially for our audience. But he but he uh, but 0:12:17.960 --> 0:12:21.360 he was. He was a centrist and not a not 0:12:21.480 --> 0:12:24.320 a massive liberal or a socialist. I mean within that 0:12:24.400 --> 0:12:27.520 is a throwback. So I guess an old Democratic party 0:12:27.920 --> 0:12:32.319 can Connor Lamb? Can Connor Lamb Congressman Lamb? If he wins, 0:12:32.760 --> 0:12:36.959 can he get along with Senator Warren of Massachusetts? I mean, 0:12:37.160 --> 0:12:39.800 how is that gonna work? Forget about where you are 0:12:39.880 --> 0:12:44.560 right now in Cannonsville. How's it gonna work in Washington. Well, 0:12:44.679 --> 0:12:46.720 he's goingly gonna be there for a couple of months 0:12:46.800 --> 0:12:50.120 start campaigning again, which everyone supporters of Lamb and the 0:12:50.200 --> 0:12:53.120 Cone were frustrated with. I was, you know, last night, 0:12:53.280 --> 0:12:56.360 I've heard a lot of political speeches, but watching Connor 0:12:56.440 --> 0:12:59.360 Lamp speak last night, there was a close that stood out, 0:12:59.440 --> 0:13:01.679 and it was when he thanked Labor. I thought that 0:13:01.760 --> 0:13:05.320 was interesting. But also when he said I'm a Pennsylvania Democrat. 0:13:06.000 --> 0:13:07.600 That is something that you hear a lot when you 0:13:07.679 --> 0:13:10.640 when you cover former Vice President Joe Biden, who plays 0:13:10.720 --> 0:13:14.000 up his Scranton, Pennsylvania roots. Siden, of course, was here 0:13:14.040 --> 0:13:18.480 campaigning for Connor Lamp. That's a very stark contrast from 0:13:18.480 --> 0:13:22.040 when I cover Senator Elizabeth Warren or senator standards. They're 0:13:22.080 --> 0:13:25.360 not saying, they're not making that pitch, and they've argued 0:13:25.400 --> 0:13:28.640 that in the Midwest, in particularly, how to run even 0:13:28.720 --> 0:13:33.080 more progressive Connor Lamb, Senator Tidy hight Camp, Joe mansions 0:13:33.080 --> 0:13:37.480 of the world. They disagree. Uh, Kevin Surlier, gonna let 0:13:37.480 --> 0:13:38.839 you go because we know you had so much to 0:13:38.880 --> 0:13:41.680 do today, plus the exhaustion a sudden I would go 0:13:41.760 --> 0:13:44.080 with a black and tan jangling by the way Mr 0:13:44.120 --> 0:14:01.000 surliers available, it's what they're can always be an argument 0:14:01.000 --> 0:14:05.080 about when the financial crisis, the Great Recession began. I 0:14:05.160 --> 0:14:07.160 always have put it as a third week of August 0:14:07.200 --> 0:14:10.480 two thousand seven, Library O I s went out, excuse me, 0:14:10.559 --> 0:14:13.600 T bill went out for standard deviations and we were 0:14:13.600 --> 0:14:15.880 off to the races. A lot of Europeans were thrown 0:14:15.920 --> 0:14:19.360 around the French banks, etcetera. Well we can all agree, 0:14:19.920 --> 0:14:23.000 is we all know where we were. It's seven oh 0:14:23.080 --> 0:14:27.880 six pm Wall Street time, March sixteen of two thousand eight, 0:14:28.280 --> 0:14:31.600 and then it was on into a dash into March seventeen. UH. 0:14:31.760 --> 0:14:36.280 The next day the single headline headline came across JP 0:14:36.400 --> 0:14:40.560 Morgan Chase to acquire bear Strings for two dollars per share, 0:14:41.080 --> 0:14:44.280 John Farrell. It was stunning at the time. It was 0:14:44.440 --> 0:14:48.320 absolutely just jaw dropping here at Bloomberg, de City and 0:14:48.360 --> 0:14:50.760 most remarkable as ten years has past, Tommy, you just 0:14:50.800 --> 0:14:54.000 wonder how many investors are still conditioned off the body 0:14:54.040 --> 0:14:58.160 events of ten years ago. I think so joining us now, 0:14:58.200 --> 0:15:00.920 we are honored to bring you Robert sin for years 0:15:00.960 --> 0:15:05.760 definitive with Alan Schwartz at bear Stearns in UH thick 0:15:05.840 --> 0:15:08.040 research and of course at the time at Bank of 0:15:08.080 --> 0:15:11.800 America running their foreign exchange and fixed and commandate with 0:15:11.880 --> 0:15:15.800 David Goldman, among others. Bob says, you were at Bank 0:15:15.800 --> 0:15:19.520 of America overlooking Central Park South. What was it like 0:15:19.600 --> 0:15:23.160 when you saw that two dollars statistic from Mr Diamond? 0:15:24.520 --> 0:15:29.120 Good morning guys. Well, obviously incredibly stunning and for for 0:15:29.160 --> 0:15:31.520 a lot of people that that I had worked with 0:15:31.640 --> 0:15:34.560 very early in my career at Bear Stearns. One of 0:15:34.560 --> 0:15:38.480 the things about about the organization and about the sentiment 0:15:38.520 --> 0:15:41.400 there is that is that people didn't didn't sell the 0:15:41.440 --> 0:15:44.520 stock um you know, they held onto it. They viewed 0:15:44.520 --> 0:15:48.400 it as their retirement package. And a lot of people, 0:15:48.520 --> 0:15:51.200 you know, not really senior people, but mid level people 0:15:51.240 --> 0:15:56.120 have just been accumulating stock, accumulating stock for decades, suddenly 0:15:56.200 --> 0:15:58.880 saw that, you know, collapse, I mean what the stock 0:15:58.920 --> 0:16:01.040 had gotten up to a hundred sixty or something and 0:16:01.080 --> 0:16:04.960 went to do I mean, this was this was devastating 0:16:05.000 --> 0:16:08.120 for a lot of people who didn't even think about 0:16:08.160 --> 0:16:10.520 selling the stock during their whole career. And John jump 0:16:10.520 --> 0:16:13.360 in here, but it was absolutely part of the fabric 0:16:13.480 --> 0:16:17.600 that you got stock dividends from Bear Stearns. They were 0:16:17.640 --> 0:16:21.000 different and you got more stock when you owned because 0:16:21.000 --> 0:16:23.720 it was a currency that was worth something UM than 0:16:23.760 --> 0:16:26.640 it Wilson Bob to what extent, and we rice this 0:16:26.800 --> 0:16:29.240 very briefly at the top of this segment. Our investors 0:16:29.240 --> 0:16:32.720 today still conditioned by the events of ten years ago. 0:16:34.480 --> 0:16:37.240 You know, I think it's it's beginning to fade. UH. 0:16:37.360 --> 0:16:41.400 We're certainly seeing retail investors become and millennials become more 0:16:41.440 --> 0:16:45.880 involved in inequity markets. UM. You know, but I think 0:16:45.920 --> 0:16:49.440 that it's it's it's not a much different UM, you know, 0:16:49.520 --> 0:16:52.520 much different characteristic of the investment. You know, investors are 0:16:52.560 --> 0:16:57.200 much more oriented towards UM you know, towards passive products, 0:16:57.200 --> 0:17:01.040 towards et f products UM. Uh. The world has changed 0:17:01.080 --> 0:17:03.680 a lot in terms of the sentiment, and I think 0:17:03.720 --> 0:17:07.760 that that investors are much more skeptical about the ability 0:17:07.920 --> 0:17:12.720 for uh, for themselves or for for brokers frankly, to 0:17:12.760 --> 0:17:16.880 be able to UM, to be able to pick individual stocks. 0:17:16.920 --> 0:17:19.280 And I think that that's something that's that's you know, 0:17:19.359 --> 0:17:21.959 Van Guards been at the forefront of but really has 0:17:22.320 --> 0:17:24.760 has set into the mindset over the years. It certainly 0:17:24.840 --> 0:17:28.359 changed the investor approach to investing in inequities to that extent, 0:17:28.480 --> 0:17:31.879 But I still see investors climbing the so called wall 0:17:31.920 --> 0:17:35.040 of worry, haunted by the paranoia of what might be 0:17:35.280 --> 0:17:38.119 around the corner, Bob, and for that matter, haunted by 0:17:38.119 --> 0:17:41.159 the prospect of a recession. We've forgotten what the average 0:17:41.160 --> 0:17:44.439 recession is like, and we just have this memory of 0:17:44.480 --> 0:17:47.480 this deep down term post two thousand and eight. It 0:17:47.520 --> 0:17:51.240 doesn't have to be that way, does it, Bob. It doesn't. 0:17:51.280 --> 0:17:54.560 And I think this the environment we're in, you know, 0:17:54.720 --> 0:18:00.600 augurs reasonably well. Deep recessions come from from building up 0:18:00.680 --> 0:18:04.960 excesses in the economy or in the financial markets. Um, 0:18:05.000 --> 0:18:07.199 there's not a lot of that in the private sector, 0:18:07.200 --> 0:18:09.479 I would argue right now maybe some companies that might 0:18:09.560 --> 0:18:12.720 be overpaying for some other companies. I think the real 0:18:12.760 --> 0:18:15.240 accesses that are built up in this cycle have really 0:18:15.280 --> 0:18:17.680 been on the government death side, and I think that's 0:18:17.720 --> 0:18:21.400 where a lot of the uncertainty is going forward with, 0:18:21.760 --> 0:18:26.080 you know, financing of of US deficits. Yet the bond 0:18:26.160 --> 0:18:30.760 markets are incredibly complacent about these financing needs. As we 0:18:30.800 --> 0:18:33.440 go forward over the next not just the next year, 0:18:33.560 --> 0:18:36.040 but I think the next five to ten years, there's 0:18:36.040 --> 0:18:39.320 a real struggle in in the US budget outlook and 0:18:39.320 --> 0:18:42.600 how that's going to be financed globally. Yet you know 0:18:42.680 --> 0:18:45.080 ten year yields are sitting here still below three percent. 0:18:45.520 --> 0:18:49.040 Very quickly, Bob, with that fiscal impulse, do you just 0:18:49.119 --> 0:18:54.320 assume week dollar? You know, the dollar is an interesting 0:18:55.000 --> 0:18:58.879 character right now cyclically, as we know, with interest rates 0:18:59.040 --> 0:19:01.920 differentials movie sharply in favor of the US, the dollar 0:19:02.040 --> 0:19:04.720 probably ought to be five to ten higher than it is. 0:19:05.480 --> 0:19:08.679 This is really one of those structural environments where the markets, 0:19:08.720 --> 0:19:11.439 i think, are focusing on the twin deficits and the 0:19:11.560 --> 0:19:14.480 lack of confidence in US policy, and you're just not 0:19:14.560 --> 0:19:17.560 seeing the capital inflows into the US that normally should 0:19:17.560 --> 0:19:20.919 be taking place given the level of US rates relative 0:19:20.960 --> 0:19:23.560 to the rest of the world. And let's pay upon 0:19:23.680 --> 0:19:40.119 global strategists, uh our interview of the day, without question, 0:19:40.200 --> 0:19:43.760 James Travinus, the Fletcher School. Admiral Stevinus, of course, more 0:19:43.800 --> 0:19:46.920 than familiar to all of our listeners worldwide. I can't 0:19:46.960 --> 0:19:50.240 say enough again about the work he has done into 0:19:50.280 --> 0:19:55.359 his book. Last night, Admiral, regardless of anyone's politics, this 0:19:55.560 --> 0:19:59.520 nation was transfixed on just simply the movable events of 0:19:59.520 --> 0:20:03.680 a twenty for our span. How was this taken by 0:20:03.760 --> 0:20:06.840 members of the Pentagon, members of the military, And I 0:20:06.880 --> 0:20:09.399 want to bring it right down to Quarters A at 0:20:09.400 --> 0:20:13.320 the Washington Navy Yard, and what Admiral Richardson in chief 0:20:13.359 --> 0:20:18.280 of naval operation you see a Secretary of State fired, 0:20:18.400 --> 0:20:22.080 I would suggest, differently than General Haig of another time 0:20:22.480 --> 0:20:26.760 in place, what does Admiral Richardson the do the next 0:20:26.840 --> 0:20:33.119 day to provide stability to the sailors? Well? As always, Tom, 0:20:33.440 --> 0:20:35.440 you've got to look back to history to kind of 0:20:35.600 --> 0:20:37.640 get a sense of this, And I'm going to take 0:20:37.640 --> 0:20:42.520 you way back to the seventeenth century British Admiral John Byng, 0:20:43.040 --> 0:20:46.320 and he lost a major battle and he was executed 0:20:46.359 --> 0:20:52.360 for failing to do his utmost And Voltaire said, occasionally 0:20:52.400 --> 0:20:55.879 the British shooting admiral in order to encourage the others. 0:20:56.359 --> 0:20:59.159 And I feel there's a bit of that going on 0:20:59.280 --> 0:21:02.720 in this White House. And I think what all of 0:21:02.720 --> 0:21:05.280 our naval leadership need to do, in all our military 0:21:05.359 --> 0:21:07.320 leadership is just kind of put their arms around their 0:21:07.359 --> 0:21:12.000 troops and say, look, that's distant thunder out there. Of politics, Um, 0:21:12.080 --> 0:21:14.840 we've got an operational job to do. And I think 0:21:14.880 --> 0:21:17.919 that's what General Madis is doing over in the Pentagon today. 0:21:18.160 --> 0:21:21.359 Do you link General Maddis to the uproar in the 0:21:21.400 --> 0:21:25.200 White House all of the speculation in the rumor of 0:21:25.320 --> 0:21:31.400 General McMaster's future, of Mr Shulkin's future at the Veteran's Administration? 0:21:31.920 --> 0:21:35.600 Is Mr Maddis bundled into this or is the General separate? 0:21:36.520 --> 0:21:39.760 I think he's completely separate for three reasons. One is 0:21:39.840 --> 0:21:45.479 his enormous personal reputation integrity. Number two, he operates an 0:21:45.600 --> 0:21:49.280 enormous department that is running extremely well. You simply can't 0:21:49.320 --> 0:21:52.479 fault him on a performance basis. And number three because 0:21:52.600 --> 0:21:56.040 Donald Trump has a kind of a built in proclivity 0:21:56.160 --> 0:22:00.840 for military In fact, look at the replacement for Secretary 0:22:00.920 --> 0:22:04.040 Killer Center will be Mike Pompeo West Point graduate number 0:22:04.040 --> 0:22:05.840 one in his class. By the way, I did not 0:22:06.000 --> 0:22:09.800 know that. Yes, Admirals Tevitas, good morning to you and 0:22:09.840 --> 0:22:12.880 thanks for being with us as a former NATO Supreme 0:22:12.880 --> 0:22:15.560 Allied Commander for Europe two thousand nine to two thousand 0:22:15.600 --> 0:22:17.560 and thirteen, and wondering if you can comment about the 0:22:17.680 --> 0:22:23.480 Russian Russian violations of NATO airspace over the Baltic and 0:22:23.920 --> 0:22:29.360 also probably the acquisition of anti missile defense systems by 0:22:29.359 --> 0:22:32.240 Turkey and NATO ally, and those acquisitions are being made 0:22:32.240 --> 0:22:36.639 from Russia. Yeah, both of these are very very concerning 0:22:36.760 --> 0:22:40.760