WEBVTT - Equity Rally Continues as Tariff Pause Continues 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.000 us live on YouTube. 0:00:27.080 --> 0:00:30.560 We start strong with Frankly Folks. The most important interview 0:00:30.600 --> 0:00:33.960 of the day. Acid allocators are Diamond does and every 0:00:34.000 --> 0:00:37.880 firm's got ten twenty thirty people loving. They want to 0:00:37.920 --> 0:00:41.519 get out there and allocate your assets. Steve chiveron is 0:00:41.520 --> 0:00:45.199 it federated federate inter medicine? He does it with a 0:00:45.479 --> 0:00:50.440 shocking clarity and directness. Are we over diversified right now? 0:00:50.479 --> 0:00:50.960 O wise? 0:00:51.000 --> 0:00:55.520 One depends on where you're investing. I think in the US, 0:00:55.640 --> 0:00:58.440 I think investors are about right. I think being overweight 0:00:58.480 --> 0:01:01.280 the US. I think that home bio is actually appropriate 0:01:01.360 --> 0:01:04.880 right now. And I think the non US equity outperformance 0:01:04.920 --> 0:01:08.800 of the first half will prove to be relatively short lived. 0:01:09.440 --> 0:01:12.039 I was in you say the worst is behind US. 0:01:12.240 --> 0:01:14.440 Worst of the tariffun certainty. Yeah, I agree, I think 0:01:14.440 --> 0:01:17.240 it is, and I think you're in a de escalation 0:01:17.360 --> 0:01:20.959 phase there. I wasn't surprised by the presidents kind of 0:01:21.000 --> 0:01:23.600 slapping around of Europe on Friday. There was a little 0:01:23.640 --> 0:01:27.360 bit of complacency I think, both amongst the negotiating parties 0:01:27.360 --> 0:01:29.920 and the market that you know, once he had de escalated, 0:01:29.959 --> 0:01:32.480 that was it and you could kind of slow walk it. 0:01:32.560 --> 0:01:34.720 So he needed to kind of shock the system a 0:01:34.760 --> 0:01:38.280 little bit. I also wasn't surprised when that had its 0:01:38.319 --> 0:01:41.200 intended effect and he pushed back out to July. But 0:01:41.680 --> 0:01:45.640 Tom talking to investors outside the United States, they were 0:01:45.720 --> 0:01:49.320 shockingly under allocated to the US. You know, you have 0:01:49.600 --> 0:01:51.880 folks on the mainland with maybe only twenty percent in 0:01:52.000 --> 0:01:56.160 US equities, which is sixty percent, seventy percent of the 0:01:56.200 --> 0:01:59.560 global market cap of the kind of MSCI world or 0:01:59.680 --> 0:02:02.680 MSCA country world. And so I think there's still buyers 0:02:02.720 --> 0:02:05.080 to come into this market. And I think the most 0:02:05.120 --> 0:02:09.320 likely outcome here is a slow Sole crushing grind higher 0:02:09.320 --> 0:02:12.480 in US equities that will pull the skeptics in over 0:02:12.480 --> 0:02:13.239 the course of the year. 0:02:13.560 --> 0:02:17.120 Sol Crushing Grind that was on Everston Lincoln Palmer's third album, 0:02:17.960 --> 0:02:20.000 Crazy Crushing. 0:02:20.160 --> 0:02:22.239 There's a reserve going to do here, given some of 0:02:22.280 --> 0:02:24.560 the economic data we're seeing here and some of the 0:02:25.240 --> 0:02:29.120 I guess some of the uncertainty that from the tariff discussions. 0:02:29.919 --> 0:02:33.399 You know, look, I find some of the rhetoric uncertainty 0:02:33.440 --> 0:02:38.160 out of the Federal Reserve a little surprising. I get 0:02:38.200 --> 0:02:40.840 wanting to be patient. I think that's right. I think 0:02:40.840 --> 0:02:44.720 if you think thoughtfully about any impact of tariffs, the 0:02:44.760 --> 0:02:47.359 impacts are much more severe on growth than they are inflation. 0:02:47.919 --> 0:02:49.680 And I think you have an economy that has slowed 0:02:49.680 --> 0:02:52.560 in a consumer that's under some pressure. So I hear 0:02:52.600 --> 0:02:54.960 them talk about patients, I think they're going to cut 0:02:54.960 --> 0:02:56.280 this year. They just don't know it yet. 0:02:56.400 --> 0:03:00.600 You have an advantage of adults, it federated. Are people 0:03:00.680 --> 0:03:03.760 old and grizzled? I mean, you're doing asset allocation and 0:03:03.800 --> 0:03:06.919 that and your clear memo is by American, by technology. 0:03:07.360 --> 0:03:09.600 Is that what your portfolio managers are doing. 0:03:09.840 --> 0:03:12.480 That's what we did this cycle. I mean, you know, 0:03:13.160 --> 0:03:14.679 we said at the beginning of the year I was 0:03:14.720 --> 0:03:17.840 on this show that we were strapping ourselves to the mast. 0:03:17.919 --> 0:03:21.000 We weren't going to get caught in the emotional you know, turmoil, 0:03:21.160 --> 0:03:24.720 and that we wanted to add to equities through the distress. 0:03:24.840 --> 0:03:27.600 And we did and where we added Tom was in 0:03:27.680 --> 0:03:30.440 large cap growth. You got the mag seven and the 0:03:30.520 --> 0:03:34.280 large cap Growth index somewhere around six multiple points below 0:03:34.280 --> 0:03:38.080 it's three year average. You don't pass on a six 0:03:38.200 --> 0:03:41.840 multiple point discount with companies that are generating the kind 0:03:41.880 --> 0:03:43.960 of cash flow and growth that those companies are. And 0:03:44.000 --> 0:03:46.800 so that was the buy this time around. I'll tell 0:03:46.800 --> 0:03:48.680 you I still think and I know it's been waiting 0:03:48.720 --> 0:03:51.280 for goodou, but I think the second half story is 0:03:51.280 --> 0:03:54.600 going to be ones where small caps and cyclicals assert 0:03:54.680 --> 0:03:55.520 themselves as well. 0:03:56.560 --> 0:04:01.040 So what do we we had the U that downgraded, 0:04:01.120 --> 0:04:03.120 I mean, does that kind of call into any question 0:04:04.320 --> 0:04:07.040 recession risk here? I mean? Or we're just kind of 0:04:07.040 --> 0:04:08.880 a slowing economy grind higher. 0:04:09.320 --> 0:04:13.600 As goes the US consumer goes the US economy, and 0:04:13.720 --> 0:04:16.680 as goes the US labor market goes the US consumer. 0:04:17.600 --> 0:04:17.800 You know. 0:04:17.880 --> 0:04:20.600 And here's the thing, and here's why I don't buy 0:04:20.680 --> 0:04:24.560 into the kind of recession views. Companies had a wonderful 0:04:24.600 --> 0:04:27.640 excuse if they wanted it to lay off workers last month. 0:04:28.040 --> 0:04:31.240 They had terriff uncertainty, they had growth slowed downs, They 0:04:31.240 --> 0:04:32.800 could have slashed their guidance. 0:04:32.839 --> 0:04:33.279 They didn't. 0:04:33.279 --> 0:04:36.400 They pulled it in some cases, and they didn't take it. 0:04:36.440 --> 0:04:38.839 And I think this is the lesson of twenty twenty 0:04:39.200 --> 0:04:42.279 when folks, you know, companies fired folks and then it 0:04:42.320 --> 0:04:44.560 took them three years and thirty percent more to hire 0:04:44.560 --> 0:04:47.760 them back. And so unless you see that labor market break, 0:04:48.320 --> 0:04:51.280 I don't think you have recession on the table. I'd 0:04:51.279 --> 0:04:53.360 also say Paul, that you know there's this there's this 0:04:53.560 --> 0:04:57.000 wonderful romanticism around the bond vigilantes, and that's what's pushing 0:04:57.080 --> 0:05:00.520 yields up. But that doesn't explain German bunniel. That doesn't 0:05:00.520 --> 0:05:04.080 explain Japanese government bond yields. And if that really is 0:05:04.080 --> 0:05:08.240 a story of three separate bond market issues, would you 0:05:08.440 --> 0:05:12.640 rather buy the bond when they're raising debt to buy bullets, 0:05:12.680 --> 0:05:15.279 or would you rather buy the US treasury where they're 0:05:15.320 --> 0:05:16.839 raising debt to stimulate. 0:05:16.480 --> 0:05:18.920 I don't care. The reason we hedge in is I 0:05:18.960 --> 0:05:21.000 want you to talk about it is a new way. 0:05:21.080 --> 0:05:22.960 I did this the other day at a fabulous meeting 0:05:23.040 --> 0:05:27.480 with your good competitor PIMCO, and we talked about all 0:05:27.520 --> 0:05:32.080 these new derivative instruments. Federated and your good competitor, PIMCOH 0:05:32.480 --> 0:05:37.920 Fidelity and others are incredibly vanilla you avoid the derivative plague. 0:05:38.000 --> 0:05:41.440 Right now, we got lots of buy right strategies. Everybody's 0:05:41.480 --> 0:05:44.839 got a buffer thing going in that tell me about 0:05:45.000 --> 0:05:50.240 asset allocation and the solution being all these gimmicky investments. 0:05:50.839 --> 0:05:51.080 Yeah. 0:05:51.120 --> 0:05:55.080 Look, I think for very specific client needs, whether it's 0:05:55.200 --> 0:05:58.599 enhancing income or you've got real risk aversion, you know, 0:05:58.680 --> 0:06:01.800 derivatives can play a role over the long run in 0:06:01.880 --> 0:06:06.960 terms of building sustainable, quiet wealth, if you will. The 0:06:07.000 --> 0:06:10.960 story is about staying invested. I mean everything around that 0:06:11.160 --> 0:06:13.919 is just behavioral. It's about staying invested. So the question 0:06:14.080 --> 0:06:17.240 is how do you understand the client, how do you 0:06:17.320 --> 0:06:20.840 understand what their what their risk tolerance is, and then 0:06:20.920 --> 0:06:24.480 build them a long term asset allocation and then be 0:06:24.600 --> 0:06:28.200 tactical enough tom that you don't whips all your way 0:06:28.200 --> 0:06:31.760 out of returns, but you provide the client with enough 0:06:31.760 --> 0:06:33.960 comfort to say, Okay, we're not just sitting here blindly. 0:06:34.000 --> 0:06:35.360 Because at the end of the day, the story is 0:06:35.400 --> 0:06:39.159 really simple. Just because it's difficult doesn't mean that it's complicated. 0:06:39.320 --> 0:06:42.400 Investing is difficult because it's hard to stay invested, it's 0:06:42.400 --> 0:06:45.400 hard to stay unemotional, but it's not nearly as complicated 0:06:45.440 --> 0:06:47.200 as we make it out to be. That's just us 0:06:47.760 --> 0:06:49.520 making ourselves feel better that it's hard. 0:06:49.720 --> 0:06:52.640 See how he gets he just ramps it up there. 0:06:52.760 --> 0:06:55.880 Sure he gets a totally mental engage like stand up. 0:06:56.680 --> 0:06:58.320 That was brilliant. I think we're going to use that 0:06:58.400 --> 0:07:01.200 on single best idea to Steve shiveron Thank you so 0:07:01.320 --> 0:07:04.560 much with feeder airms. What you just heard there, folks, Karanzi. 0:07:04.760 --> 0:07:08.640 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:07:08.680 --> 0:07:11.960 starting at seven am Eastern on Applecarplay. 0:07:11.200 --> 0:07:13.640 And Android Auto with the Bloomberg Business app. 0:07:13.720 --> 0:07:16.760 You can also listen live on Amazon Alexa from our 0:07:16.800 --> 0:07:21.320 flagship New York station, Just say Alexa play Bloomberg eleven thirty. 0:07:21.640 --> 0:07:24.160 He is definitive as a public service of the nation. 0:07:24.320 --> 0:07:28.440 Nicholas Burns joins us now with this work across our 0:07:28.480 --> 0:07:32.800 State Department, our diplomacy for decades, culminating and extended to 0:07:32.840 --> 0:07:37.040 her duty as ambassador to China. We welcome Nick Burns 0:07:37.040 --> 0:07:38.960 of Wellesley, Massachusetts this morning. 0:07:39.400 --> 0:07:39.640 Nick. 0:07:39.800 --> 0:07:42.960 What I loved great about your eight day work week 0:07:43.400 --> 0:07:46.880 in China was there you would be working doing the 0:07:46.920 --> 0:07:50.400 diplomatic thing in Beijing, and then you get on the 0:07:50.520 --> 0:07:54.160 train here's a caption. Folks, most people in China. Folks 0:07:54.200 --> 0:07:57.880 like me, we go to Hong Kong, Shanghai, to blocks 0:07:57.880 --> 0:07:59.920 of Beijing, and we say we went to China. Nick 0:08:00.080 --> 0:08:04.280 Burns has done further. We crossed the Yellow River at 0:08:04.320 --> 0:08:07.400 Hanan at one hundred and ninety one miles an hour 0:08:07.960 --> 0:08:11.600 on the high speed train. What do we most get wrong, 0:08:11.720 --> 0:08:17.200 Nick Burns, about the inner China that you experienced, Well. 0:08:17.080 --> 0:08:19.640 Good morning, Tom, and it's great pleasure to be with 0:08:19.680 --> 0:08:23.600 you after a long, long stretch. You know, China is 0:08:23.840 --> 0:08:26.960 a multifacet society. On the one hand, you have the 0:08:26.960 --> 0:08:30.680 Communist Party of China, major competitor of the United States 0:08:30.680 --> 0:08:34.640 and military, tech, economic, human rights ground. So I had 0:08:34.640 --> 0:08:37.560 a you know, kind of a combative relationship at times 0:08:37.600 --> 0:08:40.280 with that government, and we had to be aggressive in 0:08:40.360 --> 0:08:43.560 holding the line. On the other hand, the other job 0:08:43.600 --> 0:08:45.720 of being an ambassador is not just to the government 0:08:45.760 --> 0:08:48.120 of China, to the to the one point four billion 0:08:48.160 --> 0:08:52.400 people of China. And I found the Chinese people outside 0:08:52.440 --> 0:08:58.120 the Communist Party to be extraordinarily entrepreneurial, to be very 0:08:58.240 --> 0:09:01.960 very hard working, creative, innovative, and very civil when you 0:09:02.040 --> 0:09:06.439 met them. My wife, Liby and I didn't encounter any 0:09:06.559 --> 0:09:09.720 direct anti americanism when you're talking to the Chinese people. 0:09:09.720 --> 0:09:11.880 I encountered a lot of it when I work with 0:09:11.920 --> 0:09:15.240 the government of China, and so we decided that, you know, 0:09:15.240 --> 0:09:17.040 we had to travel in China to get to know 0:09:17.280 --> 0:09:23.040 party secretaries, governors, business leaders, universities, and we went most 0:09:23.080 --> 0:09:27.120 often by high speed rail because they have a magnificent 0:09:27.160 --> 0:09:30.280 trains and that's how you get to know people on 0:09:30.320 --> 0:09:33.480 the train and see the countryside and get to understand 0:09:33.520 --> 0:09:34.000 the country. 0:09:34.120 --> 0:09:37.239 Do we have a knowledge behind those red doors in Beijing? 0:09:37.480 --> 0:09:40.280 Is it like when we were with the Russians before 0:09:40.320 --> 0:09:44.360 the collapse where our intelligence was lacking. Is there's a 0:09:44.400 --> 0:09:47.199 mystery to ji in the government or do we actually 0:09:47.280 --> 0:09:50.400 have a handle on what's going on? Well, I'd say 0:09:50.440 --> 0:09:50.959 two things. 0:09:51.000 --> 0:09:53.640 First, you know, we had daily contact with the government 0:09:53.720 --> 0:09:56.280 of China, and you I spend a lot of time 0:09:56.320 --> 0:09:59.760 with a Chinese leadership, with ministers, for instance, and so 0:09:59.840 --> 0:10:03.040 you do get to know them. But the party, the 0:10:03.080 --> 0:10:07.000 Communist Party, which is so powerful right now, is very 0:10:07.000 --> 0:10:11.679 good at being opaque and Chinese politicians, political leaders do 0:10:11.720 --> 0:10:15.079 not reveal the private side of them of their lives 0:10:14.920 --> 0:10:16.920 as they do in the United States and most. 0:10:16.760 --> 0:10:17.640 Of the rest of the world. 0:10:17.679 --> 0:10:22.400 So there is a lack of transparency there and sometimes 0:10:22.440 --> 0:10:25.000 it's a guessing game. But we did our best, obviously 0:10:25.080 --> 0:10:27.080 and working with them to get a sense of what 0:10:27.160 --> 0:10:30.600 their motivations were. You know, we were as I said before, 0:10:31.240 --> 0:10:33.959 I figured about eighty percent of my job was competing 0:10:34.120 --> 0:10:36.319 with China on behalf of the United States, and maybe 0:10:36.360 --> 0:10:41.280 twenty percent was working on climate change and working on fentanyl, 0:10:41.360 --> 0:10:44.640 which is a critical issue for US and on the 0:10:44.679 --> 0:10:48.719 cooperative side. And so this is not an easy relationship 0:10:48.720 --> 0:10:49.720 for the United States. 0:10:50.720 --> 0:10:55.640 Nicholas, how do you think that the Chinese government wants 0:10:55.679 --> 0:10:58.040 to proceed with the US? Do they want to engage 0:10:58.080 --> 0:11:01.240 with the West or are they comfortable? And what's kind 0:11:01.240 --> 0:11:05.240 of becoming I guess a new Cold war, certainly technological 0:11:05.400 --> 0:11:07.320 Cold war between China and the West. How do they 0:11:07.320 --> 0:11:08.000 want to approach it? 0:11:08.760 --> 0:11:12.120 That's such a fascinating subject. On the one hand, given 0:11:12.120 --> 0:11:15.040 the fact that China has the world's largest export economy 0:11:15.040 --> 0:11:18.400 and manufacturing economy, they have to have ties with the 0:11:18.480 --> 0:11:21.720 United States, Japan, Korea, and Europe because that's the market 0:11:22.120 --> 0:11:25.079 for their economy and that keeps their GDP growth rate up, 0:11:25.480 --> 0:11:28.480 So there is a sense a part of China inc. 0:11:28.880 --> 0:11:31.680 Which wants to be integrated with the rest of the world. 0:11:31.440 --> 0:11:34.199 But you're right. I mean what has emerged over the 0:11:34.280 --> 0:11:38.240 last several years is a very close strategic partnership between 0:11:38.320 --> 0:11:41.640 China and Russia and at times when they're on in 0:11:41.679 --> 0:11:45.559 North Korea as well, and that's a formidable set of countries. 0:11:45.880 --> 0:11:48.320 What they're trying to do, which Chijinping is trying to do, 0:11:48.480 --> 0:11:51.760 is offset the real strength of the United States in 0:11:51.840 --> 0:11:55.200 global competition, and that is that we have alliances in 0:11:55.240 --> 0:11:59.720 the East Asia with Japan, South Korea, the Philippines, Thailand, 0:12:00.679 --> 0:12:04.120 in Australia. These are treaty alliances and that gives us 0:12:04.200 --> 0:12:07.360 a weight and leverage over the Chinese that they don't have, 0:12:07.400 --> 0:12:10.360 and so they've tried to offset it with these other relationships. 0:12:10.840 --> 0:12:13.760 But Russia and North Korea and Iran are not the 0:12:13.840 --> 0:12:18.360 economic powers that Japan. Certainly is that India is as 0:12:18.400 --> 0:12:20.840 a partner of the United States. So I think that's 0:12:20.880 --> 0:12:24.560 our big advantage. Maybe that's the number one lesson that 0:12:24.640 --> 0:12:28.000 I learned or relearned as ambassador to China. I'd also 0:12:28.080 --> 0:12:30.680 been ambassador to NATO that we have to count on 0:12:30.720 --> 0:12:33.520 our allies, and we have to be respectful of our 0:12:33.559 --> 0:12:37.120 allies and build those relationships. That's the best way I 0:12:37.160 --> 0:12:38.600 think to deter the Chinese. 0:12:38.880 --> 0:12:42.840 Well, that does not perhaps is the view of the 0:12:42.880 --> 0:12:47.160 Trump administration in terms of how the Trump administration is 0:12:47.200 --> 0:12:50.400 treating US allies. Here does President she in the Chinese 0:12:50.440 --> 0:12:54.960 government view that is potentially an opening to weaken the US, 0:12:55.160 --> 0:12:56.480 I guess influence globally. 0:12:57.600 --> 0:13:01.360 I think they do. You'll remember after April second, when 0:13:01.360 --> 0:13:04.720 the President made his President Trump made his major tariff announcements, 0:13:04.720 --> 0:13:07.600 the Chinese were very quick to say, to the Japanese 0:13:07.640 --> 0:13:10.640 and South Koreans in particular, let's all get together the 0:13:10.679 --> 0:13:13.160 three of US, China, South Korea, and Japan against the 0:13:13.240 --> 0:13:16.640 United States. Of course, Japan and South Korea would not 0:13:16.760 --> 0:13:21.080 have it, but they're seeking. The Chinese are seeking those openings. 0:13:21.120 --> 0:13:26.600 And as the United States in a way diminishes our 0:13:26.679 --> 0:13:29.160 faith in our alliances, the Chinese see that's a real 0:13:29.280 --> 0:13:34.079 vulnerability for the United States. As we demolished USAID, the 0:13:34.200 --> 0:13:37.559 US Agency for International Development, I think was a major 0:13:37.640 --> 0:13:41.120 mistake to fire eight thousand people in two weeks. That 0:13:41.160 --> 0:13:44.280 doesn't make much sense. The Chinese swooped in and began 0:13:44.360 --> 0:13:47.439 to tell countries South, listen, if the United States is 0:13:47.520 --> 0:13:50.640 not going to work with you or help you, we will. 0:13:50.880 --> 0:13:55.040 And so we're in a battle for global influence against China, 0:13:55.040 --> 0:13:58.640 there's no question, and we need a usaid, We need 0:13:58.679 --> 0:14:00.880 our alliances to be compared in that battle. 0:14:00.960 --> 0:14:05.200 We continue with Nicholas Burne's ambassador to China here up 0:14:05.280 --> 0:14:07.960 until the recent months, with all of his work in 0:14:08.000 --> 0:14:11.839 American diplomacy as well. We all await a book. I'm 0:14:11.840 --> 0:14:13.800 sure it's coming out here in two or three years, 0:14:13.800 --> 0:14:16.280 and we can find a free time to do it, 0:14:17.000 --> 0:14:19.520 Nick Burns, just as simple as I can. As you 0:14:19.600 --> 0:14:25.480 mentioned allies earlier, is Vietnam our ally? 0:14:25.640 --> 0:14:28.000 I think Vietnam not in the strict sense of the word. 0:14:28.000 --> 0:14:29.800 When I use the word ally as a diplomat, it's 0:14:29.800 --> 0:14:33.240 a treaty ally, a military ally like the NATO countries 0:14:33.320 --> 0:14:36.480 or Japan. Vietnam's a partner, and it's a country that 0:14:37.560 --> 0:14:40.120 the years China has had to live next door to 0:14:40.240 --> 0:14:43.560 China for all of its history, has a difficult, complicated 0:14:43.640 --> 0:14:47.160 relationship with China. So Vietnam wants to be our military partner, 0:14:47.760 --> 0:14:49.960 but at the same time, like all the other countries 0:14:49.960 --> 0:14:53.320 of Southeast Asia, China's their lead trade partner. They have 0:14:53.400 --> 0:14:56.120 to live with China, and so the Vietnamese are engaged 0:14:57.000 --> 0:15:00.480 like the Malaysians and the Singaporeans and the end it's 0:15:00.800 --> 0:15:04.160 kind of a balancing act between the United States and China. 0:15:04.360 --> 0:15:08.200 So how will this play out in the you know, 0:15:08.320 --> 0:15:13.000 you can call it non multilateral, pseudo bilateral, unilateral Trump 0:15:13.040 --> 0:15:16.880 approach to McKinley trade history, I mean, I mean, I 0:15:17.200 --> 0:15:23.640 don't understand how we battle the natural leakages of a 0:15:23.680 --> 0:15:27.840 bilateral agreement. As trade goes to Vietnam, trade goes to Malaysia, 0:15:28.080 --> 0:15:31.520 trade goes to Mexico for that matter, that's a given right. 0:15:32.920 --> 0:15:34.840 Well, you know, I think there's a little bit of 0:15:34.880 --> 0:15:38.440 a contradiction I would say in President Trump's policy. On 0:15:38.480 --> 0:15:42.160 the one hand, President Trump is right to use tariffs 0:15:42.680 --> 0:15:46.000 as a way to try to push the Chinese to 0:15:46.040 --> 0:15:48.880 be more fair minded in the way they treat American 0:15:48.920 --> 0:15:52.880 companies because they mistreat American companies. The Chinese and President 0:15:52.960 --> 0:15:56.000 Biden put major tariffs on one hundred percent on Chinese 0:15:56.040 --> 0:15:59.400 evs for instance, on China just a year ago. But 0:15:59.440 --> 0:16:02.560 the problem is when President Trump went out and put 0:16:02.600 --> 0:16:04.920 those one hundred and forty five percent tariffs on China. 0:16:05.000 --> 0:16:09.440 He also put tariffs on Japan, South Korea, European Union, Canada, 0:16:09.440 --> 0:16:12.840 and Mexico. Those are our natural allies. They all have 0:16:12.960 --> 0:16:15.560 the same problems with China as we do on trade. 0:16:15.560 --> 0:16:17.680 I think it would have been a better strategy to 0:16:17.680 --> 0:16:20.440 we have really forced on China and had some and 0:16:21.000 --> 0:16:25.040 coalesced with the Japanese, South Koreans and Europeans. It would 0:16:25.080 --> 0:16:28.240 have given us more weight at the negotiating table with 0:16:28.280 --> 0:16:28.840 the Jenese. 0:16:29.200 --> 0:16:31.520 Nick Burns, I've got to ask you about my essay 0:16:31.520 --> 0:16:33.320 of the year three years ago. You were off in 0:16:33.400 --> 0:16:36.640 some train somewhere having a long weekend with the panda's 0:16:37.160 --> 0:16:40.080 outside check do Kai. I'm not going to butcher the 0:16:40.120 --> 0:16:47.000 pronunciation Nick Kaiji c Ai xia acclaim Chinese dissident wrote 0:16:47.040 --> 0:16:51.560 for Foreign Affairs magazine and essay the weakness of Jijingping. 0:16:51.840 --> 0:16:55.680 I was thunderstruck Nick Burns by that essay and the 0:16:55.920 --> 0:17:00.760 idea of almost the thugism, the simplicity of the Chinese 0:17:00.800 --> 0:17:05.879 government are they what's the process you witnessed as ambassador 0:17:06.680 --> 0:17:09.640 of the parochialism of the Xi regime. 0:17:11.000 --> 0:17:14.119 Well, I remember that essay as well, and I was 0:17:14.160 --> 0:17:18.320 impressed by it. I would say this, Dung Chow Ping's 0:17:18.520 --> 0:17:21.879 great insight after Miles's death half century ago was that 0:17:22.000 --> 0:17:25.560 China could not afford one man rule. Mao nearly ruined 0:17:25.640 --> 0:17:30.840 China with the Culture Revolution, and so Dung practice collective leadership. 0:17:30.880 --> 0:17:31.560 That's all gone. 0:17:31.640 --> 0:17:34.360 Now China's back to one man rule, and the one 0:17:34.400 --> 0:17:38.159 man is Shixin Ping. And on the one hand, he's experienced, 0:17:38.200 --> 0:17:42.600 he's obviously very smart, he's very ambitious, he's very strategicly 0:17:42.680 --> 0:17:45.960 directed in terms of Chinese power. But on the other hand, 0:17:46.520 --> 0:17:49.600 he surrounded himself with people who have worked for him 0:17:49.640 --> 0:17:51.960 in the past. There are no peers around him. No 0:17:52.000 --> 0:17:55.360 one's perfect, and so you see Shixin Ping making some 0:17:55.440 --> 0:17:58.960 considerable mistakes. I'll just cite one. He went after the 0:17:59.040 --> 0:18:03.120 Chinese tech intre in twenty twenty one twenty twenty three, 0:18:03.280 --> 0:18:06.720 so that a lot of the tech entrepreneurs who made 0:18:06.800 --> 0:18:10.800 China wealthy, like Jack ma of Alibama, were banished from 0:18:10.800 --> 0:18:13.800 the country. Jack mad lives in Tokyo. So you see 0:18:13.840 --> 0:18:17.320 the weaknesses and some of these strategic eras because you 0:18:17.400 --> 0:18:20.320 don't have people around him to say you know, that 0:18:20.640 --> 0:18:23.240 might not be the best thing to do to question him. 0:18:23.640 --> 0:18:26.000 And I think, you know, as I've participated in our 0:18:26.040 --> 0:18:29.200 own government, we're always better when you have people around 0:18:29.240 --> 0:18:31.640 the American president who can say, you know, mister President, 0:18:32.359 --> 0:18:34.280 I know you want to go down that road roade A, 0:18:34.480 --> 0:18:36.520 but road B is going to be the easier place 0:18:37.160 --> 0:18:40.280 root for you. That doesn't happen in China nowadays, and 0:18:40.760 --> 0:18:43.520 you know, it's kind of a closed leadership. He does 0:18:43.600 --> 0:18:46.720 travel a lot, but he's never lived overseas, he's never 0:18:46.760 --> 0:18:49.119 been in business, so you see some of the limitations 0:18:49.119 --> 0:18:50.440 in Chinese decision making. 0:18:51.000 --> 0:18:54.120 So where does a Commnis party under Ji go from here? 0:18:54.200 --> 0:18:55.760 I mean, he's been in office for as long as 0:18:55.880 --> 0:19:00.320 many people can remember. What's the consensus about how the 0:19:00.440 --> 0:19:03.320 leadership in China plays out? How much longer does he 0:19:03.359 --> 0:19:05.679 stay in power? Does he enjoy the support of the people, 0:19:06.240 --> 0:19:06.879 what's next? 0:19:07.960 --> 0:19:12.840 Well, you know again, Dung Chaoping's practice was that general 0:19:12.880 --> 0:19:15.000 Secretary is of the Commonist Party, the President of China 0:19:15.760 --> 0:19:18.240 would stay in office for no more than two five 0:19:18.320 --> 0:19:21.320 year terms, so ten years. And that was the case 0:19:21.359 --> 0:19:24.439 for forty years, and Chichin Ping is now well beyond that. 0:19:25.200 --> 0:19:28.320 My own impression is that he's probably president for life. 0:19:28.840 --> 0:19:31.320 He's a Since I'm sixty nine, I can say he's 0:19:31.320 --> 0:19:35.000 a relatively young man at seventy one. But still, you know, 0:19:35.119 --> 0:19:38.639 when people get close to eighty, you know all bets 0:19:38.640 --> 0:19:41.400 are off in terms of health, and so you got 0:19:41.400 --> 0:19:46.399 to worry about well, you have to actually be concerned 0:19:46.520 --> 0:19:50.040 about stability when your leader gets older. And there's no 0:19:50.760 --> 0:19:54.880 root of secession, there's no transfer power prescribed in Chinese law. 0:19:55.440 --> 0:19:58.040 They're going to have to make up happens when xin 0:19:58.080 --> 0:20:00.000 Ping leaves power and how he leaves power. 0:20:00.160 --> 0:20:03.280 Nicholas burns with us an extended conversation. We continue with 0:20:03.320 --> 0:20:05.639 him for a little bit more. Heir Paul swinging in 0:20:05.640 --> 0:20:08.680 time keen across the nation. Good morning, as we speak 0:20:08.720 --> 0:20:11.439 to our former ambassador of China. How he did his 0:20:11.480 --> 0:20:14.720 first diplomacy at the Duck Pond in Wellesley, Massachusetts a 0:20:14.720 --> 0:20:20.120 few years ago. What was your first day like, newly minted, 0:20:20.600 --> 0:20:25.200 four languages, fancy degrees and there you were You were 0:20:25.240 --> 0:20:29.160 not wearing bermuda shorts and socks in Mauritania, were you? 0:20:29.440 --> 0:20:31.680 What was your first day like in Mauritania? 0:20:32.760 --> 0:20:36.160 Well, referring to my first job overseas for the US 0:20:36.240 --> 0:20:39.840 government nineteen eighty forty five years ago in the Sahara Desert. 0:20:40.400 --> 0:20:43.600 I was an intern, hoping to then take the oath 0:20:43.600 --> 0:20:46.320 of office and become a full fledged diplomat. And so 0:20:46.359 --> 0:20:50.280 they sent me to this tiny outpost, New Walkshot, Mauritania, 0:20:50.320 --> 0:20:52.359 where we had a two person embassy, and I was 0:20:52.359 --> 0:20:56.000 the second person, you know, doing all the different jobs. 0:20:56.520 --> 0:21:00.040 And it was fascinating. I mean, I must say I 0:21:00.040 --> 0:21:02.680 had wanted to go in the US government in college 0:21:02.720 --> 0:21:05.480 and grad school. And when you finally get in and 0:21:05.520 --> 0:21:09.680 you stand beside the American flag and you're there helping 0:21:09.720 --> 0:21:13.439 to preside over July fourth celebrations, there's an immense pride 0:21:14.040 --> 0:21:17.080 in serving our government. And I hope that you know, 0:21:17.160 --> 0:21:20.840 with all the attack federal government by Elon Musk and others, 0:21:21.280 --> 0:21:24.920 I hope people listening to us will know that the civils, 0:21:24.960 --> 0:21:27.840 the foreign service officers, the military officers, we all take 0:21:27.840 --> 0:21:29.040 an oath to the Constitution. 0:21:29.200 --> 0:21:31.760 So what do you need? Nick Burns from Marco Rubio, 0:21:31.880 --> 0:21:34.600 here's a guy. Everybody adores him. He's one of the 0:21:34.600 --> 0:21:38.240 few people in Washington. It's not worth a gazillion dollars. 0:21:38.680 --> 0:21:42.280 Marco Ruby of Florida, he's serving in the crucible of 0:21:42.320 --> 0:21:46.199 the emotions of President Trump hour by hour. What is 0:21:46.200 --> 0:21:50.600 your counsel to, Marco Rubio for those kids starting out 0:21:50.720 --> 0:21:54.960 in the most coveted job in America. 0:21:53.760 --> 0:21:56.479 That you can believe that young people who join and 0:21:56.560 --> 0:22:00.320 middle aged people the federal government are non partisan, take 0:22:00.320 --> 0:22:02.960 an oath to be nonpartisan. It's actually a law, the 0:22:03.000 --> 0:22:06.760 Hatch Act of nineteen fifty two. And I served across 0:22:06.800 --> 0:22:11.160 I served Republican presidents and Democratic presidents. I never asked 0:22:11.160 --> 0:22:13.520