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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. Catch us live weekdays

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Speaker 2: at seven am Eastern on applecar playera Android auto with

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Speaker 2: the Bloomberg Business App.

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Speaker 3: Listen on demand wherever you.

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Speaker 2: Get your podcasts, or watch us live on YouTube.

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Speaker 3: Joining us now from the Peterson Institute. This is what

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Speaker 3: the show's about, Folks. Strevenus yesterday. Ambassador has an hour

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Speaker 3: ago and now Adam Posen the Peterson Institute server. Your

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Speaker 3: headline two point five last time is going to come

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Speaker 3: down to two point three, no, two point four percent,

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Speaker 3: so a little bit is John mentioned a little bit

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Speaker 3: of statistical lift here across core inflation headline inflation as

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Speaker 3: well and on real wages, I mean real hourly earnings

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Speaker 3: inflation adjusted hourly earnings year every year, Paul Sweeney, So

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Speaker 3: one point three revised up to one point four and

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Speaker 3: enjoy a further lift at one point five percent this morning.

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Speaker 4: Yeah, exactly. So the inflation data coming in just on

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Speaker 4: the reported and on the core ex food and energy

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Speaker 4: a little bit higher than was forecast, a little bit

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Speaker 4: higher than the last month. And then initial jobscheams coming

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Speaker 4: in notably higher than expectations. So a lot of market

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Speaker 4: and we got the market selling off a little bit.

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Speaker 4: Tom Y s and p Off eleven points, the down

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Speaker 4: futures off sixty one, the nastac off fifty seven.

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Speaker 3: Kim Harvey, we continue with these with Duke University, a

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Speaker 3: small school down in North Carolina, fired up about shelter.

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Speaker 3: We'll get the shelter number here. They come out, you know,

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Speaker 3: the incredibly detailed report comes out in drips and drafts.

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Speaker 3: But again, Kim Harvey, as we spoke to Adam Posen

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Speaker 3: and Torsten Slock at Apollo, even if we get stability

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Speaker 3: or the disinflation vector lifts up a little bit, this

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Speaker 3: is a fed that has to adjust, isn't it. Yes?

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Speaker 1: And I just looked at the shelter number and it's

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Speaker 1: four point nine percent year every year. So last month

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Speaker 1: it was five point two. Now it's four point nine.

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Speaker 1: So think about that number. So again it is completely

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Speaker 1: disconnected from reality. It's the main skew of inflation. And

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Speaker 1: thirty six percent, yeah, thirty six professpr professor we studied

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Speaker 1: at Duke.

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Speaker 3: Paul goes to do decimal points thirty six point five

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Speaker 3: to two percent. Continue there you go.

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Speaker 1: So and if you just do the simple calculation of

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Speaker 1: that four point nine percent and then multiply it by

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Speaker 1: point three six. That delivers one point seven seven percent.

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Speaker 1: So one point seven seven percent of the print today

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Speaker 1: is purely due to that stored it a shelter number.

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Speaker 1: So if you substitute anything in, that's closer to reality.

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Speaker 1: The inflation print is not two point four percent. It

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Speaker 1: is one percent or potentially less than one percent. So

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Speaker 1: we are we are below the fed's target. Yet they're debating,

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Speaker 1: well should we due twenty five basis points?

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Speaker 3: Come on this? Supposedly the FED is data driven.

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Speaker 1: Well, the math that we just did was not very

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Speaker 1: challenging exercise.

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Speaker 3: Let me reveal the math, professor, I love having you on.

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Speaker 3: I mean, this is this is the real world, folks.

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Speaker 3: You take the number for shelter four point nine percent,

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Speaker 3: you move the decimal point on the waiting to point

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Speaker 3: three six, five to two, and you come up with

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Speaker 3: that sub two percent number. There's disinflation in real estate, Paul,

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Speaker 3: everywhere but Summit, New Jersey exactly. I can got that right.

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Speaker 4: So Cam, supposedly you and others like you have these

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Speaker 4: discussions with various folks of the FED. What is their

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Speaker 4: response for kind of not necessarily looking at that data,

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Speaker 4: at least in that way.

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Speaker 1: So in the past I've been a visiting scholar at

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Speaker 1: the FED, but I've got not very strong connections with

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Speaker 1: the FED, perhaps because of my social media and critique.

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Speaker 1: So if they listen to me, they listen to me

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Speaker 1: on your show and other media and my social media.

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Speaker 1: And indeed there's a lot of PhD economists at the

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Speaker 1: FED over four hundred and again, I hate to call it,

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Speaker 1: but it's a lesson. It's a basic lesson and how

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Speaker 1: you put an inflation number together, and it seems like

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Speaker 1: the message is not heading through.

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Speaker 3: I gotta ask one final question, Professor Harvey, and it's

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Speaker 3: just a general question. Don't throw the chalk at me.

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Speaker 3: Are they fighting the last war?

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Speaker 1: It's actually a very deep question, and I do believe

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Speaker 1: that they are, that they are anchored in the past.

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Speaker 1: And we are far above a FED funds rate that

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Speaker 1: is reasonable given the inflation rate that is in real time,

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Speaker 1: which is less than two percent. It's actually closer to

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Speaker 1: one percent. We run the risk when you keep the

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Speaker 1: rate so high, of creating a self inflicted wound where

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Speaker 1: we purposely drive the economy into an unnecessary recession, and

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Speaker 1: we're seeing the seeds of a slowdown already, and it

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Speaker 1: needs to be aggressive and to undo the damage.

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Speaker 3: Okay, Caim, We've got to go. Sarah House has got

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Speaker 3: a slide roll out. We gotta get to her in

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Speaker 3: a moment. You gotta love a Professor Paul and his

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Speaker 3: CV the article what we know and what we know

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Speaker 3: we don't know. That's the name of the article. Cam Harvey,

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Speaker 3: Duke University. Nice to see you, guys. Take out you

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Speaker 3: and see by a point there in football. Now. The

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Speaker 3: way this works, Paul is when John Silva left Wells Fargo,

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Speaker 3: he gave Sarah House. He gave he gave Sarah House

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Speaker 3: his kouful and esser slide roll though, So when Cam

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Speaker 3: Harvey was going through the shelter math, I saw her

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Speaker 3: pop in the slide roll go on point three six

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Speaker 3: times the waight point three six times four point nine percent.

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Speaker 3: Sarah House does a sheltered dynamic matter to the FED.

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Speaker 5: So I think we've seen a big shift from FED

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Speaker 5: officials away from the official measures of shelter inflation and

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Speaker 5: some of the private sector measures towards some of the

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Speaker 5: fundamentals like Professor Harvey was was speaking about. So I

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Speaker 5: think it still matters in terms of the overall picture,

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Speaker 5: but it is not necessarily a hold up to what

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Speaker 5: the Fed is doing or what they are likely to

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Speaker 5: be doing soon as they know. There is a tremendous

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Speaker 5: lag and perhaps an even longer lag this cycle for

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Speaker 5: various reasons. So I think they they are adjusting some

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Speaker 5: of these numbers as they go.

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Speaker 4: How do you think the Federal Reserve then, Sarah, we'll

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Speaker 4: kind of look at this data today, both the inflation

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Speaker 4: data and the jobs data.

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Speaker 5: Yes, I think overall the report just you know, in

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Speaker 5: some ways very similar to the jobs numbers, came in

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Speaker 5: a little hot all around. So you saw it in

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Speaker 5: terms of the headline inflation, where you got a four

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Speaker 5: tenths increase in food even if you had energy prices

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Speaker 5: coming down. So this wasn't all just a somewhat form

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Speaker 5: of core when you look at the core core data.

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Speaker 5: So you got a pickup in goods inflation like we

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Speaker 5: were expecting, but it wasn't just a used auto story.

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Speaker 5: It was more broad based. There was a one percent

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Speaker 5: jump in apparel. You saw an increase in new vehicle

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Speaker 5: prices as well, and so I think when you combine

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Speaker 5: it with services, where yes, you saw sheltered disinflation continue

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Speaker 5: or at least moderate from the big increase we saw

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Speaker 5: last month, you did see other firming and things like

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Speaker 5: transportation services and medical care.

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Speaker 3: So I think over all.

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Speaker 5: This is this might give the FED. I'm not sure

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Speaker 5: if it's enough to actually pause in terms of their

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Speaker 5: rate cuts, but I think they'll be thinking a little

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Speaker 5: bit more about what is the trajectory of inflation from here?

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Speaker 3: Unfair question nine minutes after the report, But it's unfair Thursday, Here,

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Speaker 3: Sarah House, where is food inflation? I'm hearing that. You know,

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Speaker 3: people like you are saying, oh, it's over, food inflation

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Speaker 3: is over, and John Tucker is saying, no, it's not.

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Speaker 3: Where are we on food inflation?

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Speaker 5: Yeah, so food inflation has been running about two percent,

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Speaker 5: so a little bit lower if you're talking about grocery

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Speaker 5: food inflation, which I think is more salient to most

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Speaker 5: consumers and household But that's inflation. That's the rate of change.

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Speaker 5: That is not the level jump that we've seen over

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Speaker 5: the past four and a half years, which I think

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Speaker 5: consumers are still struggling to adjust to. So, yes, we've

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Speaker 5: seen a significant moderation in the pace in which prices

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Speaker 5: are going up, that we're still left with an overall

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Speaker 5: noticeably higher level which is still vexxing to consumers.

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Speaker 4: Sarah, how do you think the consumers doing broadly defined?

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Speaker 4: I just got back from Orlando, Florida, and boy, Disney

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Speaker 4: Worlds packed despite the fact that a hurricane was coming

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Speaker 4: and they're not given that experience away. But by the way,

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Speaker 4: it's very expensive. How's it consumer doing from your perspective?

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Speaker 5: Yeah, I think overall that the consumer is still doing

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Speaker 5: pretty well, and I think that corresponds to the fact

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Speaker 5: that the jobs market is still in good shape. Yes,

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Speaker 5: we've seen it cool off from where we were a year,

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Speaker 5: year or two years ago, but we're still adding jobs,

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Speaker 5: and importantly, we're we've seen real wage growth. So even

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Speaker 5: as maybe inflation isn't coming down as quickly at this

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Speaker 5: stage of the cycle, we're seeing wages outpaced inflation, and

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Speaker 5: so consumers are still able to go out and spend

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Speaker 5: and have those nicer land of bigations.

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Speaker 3: Okay, this is a key question. It's my last one.

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Speaker 3: I'm sorry, Sarah. We got to run here just because

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Speaker 3: so Rob Carolyn coming up at the nine o'clock, our

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Speaker 3: folks on Milton Sarah House. With this resiliency of less disinflation,

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Speaker 3: this resiliency of a certain select prosperous America. Are we

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Speaker 3: misjudging where nominal GDP is and thus misjudging corporate revenues

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Speaker 3: and thus misjudging cash flow? Are we just getting wrong

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Speaker 3: out twelve months the prosperity of America?

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Speaker 5: Well, I think that has been the pattern this cycle.

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Speaker 5: Is many agonomousts have been just too down be in

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Speaker 5: terms of the many ways the impact of tightening, and

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Speaker 5: we just have seen more resiliency out of the consumer.

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Speaker 5: We've seen more resiliency out of the jobs market and

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Speaker 5: thus far inflation as well.

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Speaker 3: And so all of that points to.

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Speaker 5: A somewhat higher nominal base of GDP growth and therefore

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Speaker 5: some of the revenue streams of many companies.

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Speaker 3: Sarah, thanks so much, greatly, greatly. I appreciate it. You

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Speaker 3: know Paul's with als Fargo, She's like, excuse me then,

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Speaker 3: And I love that she used her slide roll to

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Speaker 3: do that.

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Speaker 2: Kim, I remember you're listening to the Bloomberg Surveillance podcast.

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Speaker 2: Catch us Live weekday afternoons from seven to ten am.

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Speaker 2: Easter listen on Apple Car Play and Androyt Auto with

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Speaker 2: a Bloomberg Business app, or watch us live on YouTube.

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Speaker 3: Joining us a clean about non event analysis, ROLETA. Pedterson

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Speaker 3: joins us with all our work at Bridgewater best in

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Speaker 3: her trust in various and large banks over the years.

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Speaker 3: When someone like me says this report was a non event,

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Speaker 3: is there any such thing as a report that's a

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Speaker 3: non event? Now, there's not.

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Speaker 6: Every piece of data gives you some new information that

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Speaker 6: can help you build could build confidence in a view,

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Speaker 6: or help you change your view. So no, I think

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Speaker 6: even though this number will not change the Fed's trajectory,

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Speaker 6: it probably does give them some confidence at the margin

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Speaker 6: that things are continuing to move in the direction they want,

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Speaker 6: just a teeny bit more slowly.

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Speaker 4: We also, in addition to the CPI data, Rebecca, we

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Speaker 4: also had initial jobs claims came a little bit higher

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Speaker 4: than expect, a little bit higher than last month. Which

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Speaker 4: takes me to an essay you put it you had

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Speaker 4: in the New York Times today, the good old days

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Speaker 4: of manufacturing are long gone. That's not what the two

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Speaker 4: presidential candidates are seeing here right. What's going on with

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Speaker 4: the labor market and manufacturing?

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Speaker 6: Well, that's what prompted me to write this essay. So

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Speaker 6: I see both Vice President Harris and former President Trump

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Speaker 6: saying we're going to revitalize manufacturing, and I think it

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Speaker 6: conjures these images of the nineteen fifties, where literally one

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Speaker 6: in three Americans were employed in manufacturing, not a lot

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Speaker 6: of college degrees required. It was mainly white men born

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Speaker 6: in America. Not as many women worked. We had a

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Speaker 6: faster growing labor force because women had more kids. So

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Speaker 6: that's the image. The reality today is we don't have

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Speaker 6: enough native born Americans. So this requires immigration, which is

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Speaker 6: a tough one right now. Politically, we require foreign help.

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Speaker 7: Some of the.

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Speaker 6: Technology we need for manufacturing, like semiconductor chips, We need

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Speaker 6: to have allies who are willing to invest in America.

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Speaker 6: And last year we saw trillions of dollars of foreign

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Speaker 6: direct investment come into manufacturing. And then we also need

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Speaker 6: we need immigration, we need FDI and we need college degrees.

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Speaker 6: About half of these manufacturing jobs today college degrees. So

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Speaker 6: we will create more manufacturing jobs. But the president whoever

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Speaker 6: gets elected needs to appreciate these realities. And it's not

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Speaker 6: going to bring back the fifties or even the manufacturing

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Speaker 6: we saw in nineteen seventy nine, which was about nineteen

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Speaker 6: million workers.

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Speaker 3: I'm going to get this essay out on Twitter and LinkedIn, folks.

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Speaker 3: I really can't say enough about it. And you know,

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Speaker 3: I'm going to go frankly back to Bessemer Trust where

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Speaker 3: you wrote heard there on quiet Quality Money. We had

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Speaker 3: a technological innovation and steal with a guy named Bessemer

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Speaker 3: a few years ago. Just technology is not going to

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Speaker 3: fix our manufacturing dreams.

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Speaker 6: Is it correct?

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Speaker 3: No?

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Speaker 6: Technology is going to certainly play a role because we

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Speaker 6: won't have enough people to do these jobs. And in

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Speaker 6: some cases it makes sense to use technology. But what

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Speaker 6: we have to do today, tom is train workers. And

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Speaker 6: I was actually really heartened to see earlier this week

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Speaker 6: Gina Romundo up at the Micron plant local high school

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Speaker 6: where they're training high school kids about technical careers that

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Speaker 6: may not need a college degree. We need more of

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Speaker 6: that around the country.

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Speaker 3: This is Mike cron Idoh in my book of the

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Speaker 3: year last year, Chip War, which is even more important

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Speaker 3: now than it was two years ago. Quality academics out

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Speaker 3: a tough university at Brandeis are tough, so I can

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Speaker 3: they're all red sex fans out there. I can't remember Rebecca,

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Speaker 3: but this is a stereotype, and if Secretary of Ramando

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Speaker 3: is here, I'd say the same question or Republican Secretary

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Speaker 3: of Congress. The myth in the bias is they work

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Speaker 3: better in manufacturing processes in Asia. They're more discipline, there's

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Speaker 3: more there's less error. There's just simply better manufacturing processes

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Speaker 3: in China, in India, in Asia. Do we need to

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Speaker 3: replicate that or do something different?

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Speaker 6: Well, it's interesting. I've been following the build out of

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Speaker 6: the TSMC plant in Arizona, and they've struggled to get

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Speaker 6: enough workers, to train the workers, and then the style

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Speaker 6: of workmanship from the Taiwanese who've come over to the

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Speaker 6: United States is very different from what the American workers are.

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Speaker 3: You what's your prescription for that reality.

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Speaker 6: It's a great question. I'm not sure that Americans are

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Speaker 6: going to agree to work exactly like their counter parts

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Speaker 6: in other countries. But we're going to have to find

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Speaker 6: some happy middle if we want to have the productivity

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Speaker 6: growth that we're hoping for from things like having these

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Speaker 6: chip plants and more AI in the United States.

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Speaker 4: Some economists are a lot of economists are saying that

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Speaker 4: the migrant labor that has surged over the last three,

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Speaker 4: four or five years has actually been absorbed fairly well

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Speaker 4: by the economy. These folks are getting jobs, they're you know,

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Speaker 4: their fight is being taken out of their paycheck, whether

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Speaker 4: they know what it is or not, and taxes are

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Speaker 4: being paid, and they're spending money, and it's part of

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Speaker 4: the economy.

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Speaker 3: Is that Is that valid?

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Speaker 8: Do you think?

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Speaker 3: Yeah? It is?

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Speaker 6: I mean I was actually speaking with New York Fed

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Speaker 6: President John Williams recently and he's he said, and I'm paraphrasing,

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Speaker 6: but it was pretty darn close. We would have never

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Speaker 6: seen GDP growth over three percent if it had not

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Speaker 6: been for those immigrants coming into America, because, as you said,

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Speaker 6: they don't all get jobs on day one, but by

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Speaker 6: and large, they're working, they're spending money, some of them

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Speaker 6: depends on the job, are paying taxes, so they are

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Speaker 6: lifting growth. So they are a net positive. And that

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Speaker 6: is one of my big fears with this election, and

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Speaker 6: Adam Posen and others on your show, I have been

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Speaker 6: talking about this that depending on how many immigrants we

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Speaker 6: push out of the country, and what that does is

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Speaker 6: a chilling effect to legal immigrants. That's going to matter too.

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Speaker 6: This could be a pretty noticeable drag on GDP in

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Speaker 6: the coming years. So we have to be careful what

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Speaker 6: we wish for here in terms of the American population

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Speaker 6: and our policy makers.

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Speaker 3: Time for one more question. We've got to go back

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Speaker 3: to patterson originality, which is once again the certitude of

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Speaker 3: dollar weakness, OMG resiliency, even legit strength. I don't have

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Speaker 3: a one to fifty print on yen yet, but I

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Speaker 3: got back to one forty nine today right now forty

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Speaker 3: When does the dollar go week? Can you give us daytime, hour, month?

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Speaker 6: Well, Saturday morning at ten am, I think it's local

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Speaker 6: time in China, they're going to have a big press conference.

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Speaker 6: I believe for the dollar to week in on a

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Speaker 6: sustained base is we need to see the US doing okay,

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Speaker 6: but growth overseas having sustained positive momentum. If China does

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Speaker 6: the bazooka for the consumer in China and we have

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Speaker 6: sustained turnaround in the Chinese consumer, that could be the

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Speaker 6: ticket because it matters not just for China but for

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Speaker 6: a lot of economies that depend on China, like Germany.

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Speaker 6: If they don't, if they continue to do this drip

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Speaker 6: feed of stimulus and it's more focused on infrastructure and

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Speaker 6: the supply side, then I think the dollars stays strong.

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Speaker 3: And you heard the time zones there with Rebecca Pattison.

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Speaker 3: It's on the zeitgeist. But the answer is on the

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Speaker 3: other side of the world. All that's going to happen

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Speaker 3: sooner than you think. It's not, you know, like a Saturday.

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Speaker 3: It'll be like something like Friday evening, Friday evening seven pm.

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Speaker 6: No, I think it's literally Saturday in China, Saturday, so

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Speaker 6: it's it's not. Yeah, oh right, I see what you're saying.

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Speaker 6: I need more coffee, Tom.

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Speaker 3: We go to surveillance time zone. Course.

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Speaker 6: Yeah, someone rescue please.

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Speaker 4: Behind them in New Jersey, right behind Jersey.

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Speaker 3: Shore, Jersey's standing time. Yeah, bon Jovi can steal that.

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Speaker 3: Rebecca Patterson, thank you so much.

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Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 2: starting at seven am Eastern on applecar Play and Android

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Speaker 2: Auto with the Bloomberg Business app. You can also listen

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Speaker 2: live on Amazon Alexa from our flagship New York station,

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Speaker 2: Just Say Alexa, playing Bloomberg eleven thirty.

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Speaker 3: Edward Jones has an incredible character out of Saint Louis.

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Speaker 3: They didn't take that path of hot air. Mona Mahajan

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Speaker 3: represents Edward D. Jones' nation why here because they talk

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Speaker 3: to real people about real worries. What are your clients

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Speaker 3: doing now? Now what you're telling them? What are they

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Speaker 3: doing at Edward D. Jones.

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Speaker 7: Yeah, it's a great question, Tom, And look, we are

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Speaker 7: headed right into your end. We're headed right into that

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Speaker 7: election season. Some of our our clients are wondering should

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Speaker 7: they be doing something? Is this the time to reposition portfolios?

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Speaker 7: Should they be cautious ahead of election season? And really,

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Speaker 7: our financial advisors have done the great job of saying,

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Speaker 7: you know what, this is the time really to lean

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Speaker 7: into any market volatility. And that's really because we're seeing

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Speaker 7: the fundamentals remain in tax.

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Speaker 3: What's your measurement? What's the Mohajian exuberants look like? Right now?

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Speaker 3: How farming are we?

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Speaker 7: Yeah, you know, it's interesting. I don't think that we

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Speaker 7: are overly exuberant here in the market. There's still a

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Speaker 7: lot of cash on the sidelines in those CDs and

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Speaker 7: money markets. The VIX volatility index is slightly elevated, and

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Speaker 7: of course we got mixed CPI numbers this morning, we

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Speaker 7: got jobless claims that are elevated. But nonetheless, we are

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Speaker 7: looking at a FED that is cutting rates, that inflation

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Speaker 7: is still moving in the right direction, and earnings growth

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Speaker 7: importantly looks on track for potentially double digit this year

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Speaker 7: and maybe even double digits next year. So good backdrop.

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Speaker 3: That's kind of where I wanted to go.

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Speaker 4: We're going to hear from our good friends at JP

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Speaker 4: Morgan tomorrow. Start getting some earnings flowing here. We're looking

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Speaker 4: for this quarter for earnings.

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Speaker 7: Yeah, you know, it's a great point. And look, we

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Speaker 7: got about eleven percent you're on your earnings growth last quarter.

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Speaker 7: That expectation has dropped for this third quarter to about

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Speaker 7: four percent. So the bar has been reset lower. And

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Speaker 7: we know corporations continue to be and raise and so

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Speaker 7: we do think that this lowered bar is a positive

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Speaker 7: heading into earning season. To your point, we'll be listening

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Speaker 7: to the big banks tomorrow. We want to hear not

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Speaker 7: only you know, how lower rates impact them, we also

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Speaker 7: want to hear how is the consumer doing, how is

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Speaker 7: the consumer feeling, and where are they spending? You know,

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Speaker 7: is their lone growth on the way?

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Speaker 4: So I mean, you know, I guess what we hear

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Speaker 4: from a lot of the economists is that by and large,

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Speaker 4: the consumers in decent shape, Yes, our pockets a week

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Speaker 4: is particularly folks that maybe don't own asset stocks, bonds,

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Speaker 4: real estate, that type of thing, which is a lot

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Speaker 4: of folks. How does that influence kind of the sectors

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Speaker 4: maybe that you look at.

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Speaker 7: Yeah, and it's a good call out.

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Speaker 3: Look.

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Speaker 7: You know, consumption in the US is a little bifurcated,

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Speaker 7: and when you think about the lower income consumer versus

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Speaker 7: the mid and upper upper income consumer, Certainly that lower

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Speaker 7: income consumer has been facing more pressures with inflation continuing

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Speaker 7: to remain elevated, with savings rates moving lower. But about

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Speaker 7: eighty percent of consumption in the US is driven by

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Speaker 7: that mid and upper income consumer, and they are, to

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Speaker 7: your point, experiencing better wealth impacts from higher stock markets

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Speaker 7: rebound in housing. From a sector perspective, we like this

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Speaker 7: idea that this broadening of market leadership has some legs.

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Speaker 3: Is cash an asset? I want to go to South Tampa,

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Speaker 3: not Tampa, Florida. Hurricane runs self iness of it. It

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Speaker 3: was very serious across all of Tampa. You got Edward D.

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Speaker 3: Jones and Kennedy Boulevard in Tampa, Florida. They got some

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Speaker 3: problems this morning. They got to pick up the pieces.

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Speaker 3: What's your three year view for someone shattered in Tampa

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Speaker 3: with Edward D. Jones.

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Speaker 7: Yeah, it's a good call out. You know, our hearts

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Speaker 7: go out to everyone suffering from these natural disasters over

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Speaker 7: the last several weeks. We would say, you know, look,

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Speaker 7: if you can the three year view is anytime you

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Speaker 7: get that opportunity to build your investment portfolio, it is

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Speaker 7: a good time. And in fact, we all know Einstein

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Speaker 7: said that the eighth wonder of the world is compounding interest.

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Speaker 7: So we know that if you start early, and if

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Speaker 7: you start also early that is.

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Speaker 3: Before age on retirement plans. Right.

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Speaker 7: Absolutely, hopefully twenty two we got to do a hurricane

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Speaker 7: be Aaron Tampa, so we have to leave it.

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Speaker 3: Don't be a stranger, please come in.

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Speaker 7: Thanks guys.

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Speaker 3: Monoahazen with Edward D.

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Speaker 2: John This is the Bloomberg Surveillance Podcast. Listen live each

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00:23:39,840 --> 00:23:43,119
Speaker 2: weekday starting at seven am Eastern on applecar Play and

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Speaker 2: Android Auto with the Bloomberg Business app. You can also

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Speaker 2: watch us live every weekday on YouTube and always on

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Speaker 2: the Bloomberg terminal.

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Speaker 3: Joining US now portfolio manager Noiro Rubini, and that was America.

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Speaker 3: Fun has been way too long, nour We've got to

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Speaker 3: get genire more and more. You're traveling so much, we

437
00:24:02,680 --> 00:24:06,760
Speaker 3: hardly see you. You've teamed up with resubund at Alice America.

438
00:24:07,160 --> 00:24:10,680
Speaker 3: Are you running money now? What are you learning running money?

439
00:24:11,680 --> 00:24:14,080
Speaker 3: Alis America? We're not yet.

440
00:24:14,200 --> 00:24:18,240
Speaker 8: Actually we're in quiet period. The city is now approving

441
00:24:18,280 --> 00:24:21,600
Speaker 8: our things, so you launch it, so your registration and yeah, exactly,

442
00:24:21,640 --> 00:24:23,040
Speaker 8: And now I cannot speak.

443
00:24:23,080 --> 00:24:24,399
Speaker 3: This is going to be this is going to be

444
00:24:24,440 --> 00:24:28,080
Speaker 3: something to see nor obinion run money in the world.

445
00:24:28,160 --> 00:24:33,480
Speaker 3: We're in the great post pandemic shock has been American exceptionalism,

446
00:24:34,160 --> 00:24:38,119
Speaker 3: American prosperity. Are you willing to say this gift that

447
00:24:38,160 --> 00:24:41,320
Speaker 3: we have is nothing but trillion dollar deficits.

448
00:24:42,760 --> 00:24:46,080
Speaker 8: No, I wouldn't say it's only trillion dollars deficits. I

449
00:24:46,119 --> 00:24:49,480
Speaker 8: think that the whole bunch of things have happened. We

450
00:24:49,560 --> 00:24:52,639
Speaker 8: had the Infrastructure Act, We had the IRA where the

451
00:24:52,720 --> 00:24:56,840
Speaker 8: Chips Act with actually loose migration policies that led to

452
00:24:57,000 --> 00:24:59,960
Speaker 8: an inflow of workers that increased the labor supply grow

453
00:25:00,080 --> 00:25:04,640
Speaker 8: to reduce the inflation. So certainly the physical steamulus has

454
00:25:04,680 --> 00:25:07,760
Speaker 8: helped the margin. But then also con see these AI

455
00:25:07,840 --> 00:25:11,440
Speaker 8: revolution and significant increasing in capects. But the private sector

456
00:25:12,160 --> 00:25:15,080
Speaker 8: potential growth of the US, given technological innovation, by the

457
00:25:15,200 --> 00:25:18,040
Speaker 8: end of this decade could be in a view higher

458
00:25:18,040 --> 00:25:21,840
Speaker 8: than three percent. That's a revolution, right. China might be

459
00:25:21,880 --> 00:25:24,000
Speaker 8: growing less than three percent by the end of this decade.

460
00:25:24,160 --> 00:25:26,600
Speaker 8: US might be growing faster than China. You know, it's

461
00:25:26,600 --> 00:25:28,320
Speaker 8: a bit of a bold prediction to make, but I

462
00:25:28,400 --> 00:25:31,600
Speaker 8: think that in spite of the dysfunctionality of our political

463
00:25:31,640 --> 00:25:35,639
Speaker 8: system we're totally partisan and you name it. The private

464
00:25:35,680 --> 00:25:38,399
Speaker 8: sector innovation is such in lots of the technologies in

465
00:25:38,440 --> 00:25:40,720
Speaker 8: the industry of the future. It's not just the eyes,

466
00:25:40,880 --> 00:25:47,000
Speaker 8: robotic automation, by medical research, space exploration, new weapons system

467
00:25:47,280 --> 00:25:51,800
Speaker 8: act tech, green tech, quantum computing. There's a flurry of

468
00:25:51,840 --> 00:25:54,760
Speaker 8: new technology can radically change the economy. And I think

469
00:25:55,040 --> 00:25:56,919
Speaker 8: part of the strength of the economy it has been

470
00:25:56,920 --> 00:25:59,480
Speaker 8: growing faster. The potential in spite of the fat for

471
00:25:59,480 --> 00:26:02,159
Speaker 8: the last few tightening, is there is a shift, is

472
00:26:02,160 --> 00:26:03,240
Speaker 8: a regime shift.

473
00:26:03,800 --> 00:26:05,760
Speaker 4: Noroe you mentioned before we going on the air, they're

474
00:26:05,760 --> 00:26:08,480
Speaker 4: going to be traveling pretty extensively over the coming weeks. Here,

475
00:26:08,560 --> 00:26:11,320
Speaker 4: I suspect internationally they're going to be asking you about

476
00:26:11,320 --> 00:26:14,360
Speaker 4: your thoughts on the US election coming up. How would

477
00:26:14,400 --> 00:26:17,160
Speaker 4: you frame a response to some of your national clients.

478
00:26:17,760 --> 00:26:20,919
Speaker 8: Well, I think that the major probable risk to the

479
00:26:21,000 --> 00:26:26,480
Speaker 8: US economy comes from the elections, and the economic policies

480
00:26:26,520 --> 00:26:29,880
Speaker 8: of a new Trump administration will be very different than

481
00:26:29,920 --> 00:26:32,600
Speaker 8: those of a Harris administration. If you take at face

482
00:26:32,720 --> 00:26:35,399
Speaker 8: value what Trump says, it says I'm going to impose

483
00:26:35,680 --> 00:26:38,399
Speaker 8: tariffs on all imports in the US of ten to

484
00:26:38,480 --> 00:26:41,840
Speaker 8: up to twenty percent, up to sixty percent on those

485
00:26:41,920 --> 00:26:45,199
Speaker 8: from China. He wants to devalue the dollar because it

486
00:26:45,240 --> 00:26:48,080
Speaker 8: thinks it's too strong and has led to the nastrialization.

487
00:26:48,720 --> 00:26:51,919
Speaker 8: He wants a more dovish FED, and you have a

488
00:26:52,000 --> 00:26:54,680
Speaker 8: chance to change some of the leaders with the FED

489
00:26:55,119 --> 00:26:57,840
Speaker 8: and the Center for Responsible Budgets, as the other day

490
00:26:57,840 --> 00:27:01,280
Speaker 8: said that his fiscal policies will ink creates the deficits

491
00:27:01,280 --> 00:27:04,639
Speaker 8: and the debt by seven point five three million dollars

492
00:27:04,680 --> 00:27:08,159
Speaker 8: over the next decade. That's well above what the harn

493
00:27:08,240 --> 00:27:11,200
Speaker 8: Harriers will have it. But unquot only three point five

494
00:27:11,760 --> 00:27:16,320
Speaker 8: and you have a restriction to migrations, severe draconie restriction migration,

495
00:27:16,400 --> 00:27:18,439
Speaker 8: not if it's going to deport millions of people, but

496
00:27:18,520 --> 00:27:21,480
Speaker 8: even not letting them in implies a significant reaction and

497
00:27:21,480 --> 00:27:24,040
Speaker 8: the labor supply. So all these things together, all these

498
00:27:24,040 --> 00:27:29,320
Speaker 8: policy trade, currency, migration, monetary, fiscal policy may view imply

499
00:27:29,920 --> 00:27:34,760
Speaker 8: higher inflation, lower economic growth, higher bond gialds, and potential

500
00:27:34,800 --> 00:27:36,040
Speaker 8: for a correction and equity.

501
00:27:36,200 --> 00:27:40,119
Speaker 3: You're not willing to give up unstackflation. A lot of

502
00:27:40,119 --> 00:27:41,720
Speaker 3: people are saying, maybe it's over.

503
00:27:43,440 --> 00:27:46,840
Speaker 8: I don't think it's over for the following reason. The

504
00:27:46,920 --> 00:27:49,720
Speaker 8: three negative aggregate supply shocks of COVID of course have

505
00:27:49,840 --> 00:27:53,720
Speaker 8: gone away. But as I pointed out, the economic policies

506
00:27:53,720 --> 00:27:58,440
Speaker 8: of a Trump administration my view, are stackflationary because weather's immigration,

507
00:27:58,760 --> 00:28:01,320
Speaker 8: whether it's the currency, whether there is trade, whether there's

508
00:28:01,400 --> 00:28:05,760
Speaker 8: monitor and fiscal policy. They are increasing inflation and they

509
00:28:05,760 --> 00:28:10,000
Speaker 8: would reduce economic growth. So that call it tactflation light restaculation,

510
00:28:10,440 --> 00:28:12,800
Speaker 8: but they would be statulationary. And as I pointed out

511
00:28:12,800 --> 00:28:15,560
Speaker 8: in my Mega thread book, there are other forces a

512
00:28:15,640 --> 00:28:21,000
Speaker 8: more medium terms that are all stackflationary. De coupling and protectionism,

513
00:28:22,080 --> 00:28:26,719
Speaker 8: restriction to migration, aging of population, reshoring and friend shoring

514
00:28:27,200 --> 00:28:33,000
Speaker 8: geopolitical riskily to fragmentation, climate change, new pandemics, backlash against

515
00:28:33,040 --> 00:28:36,080
Speaker 8: liberal democracy, leading to fiscal policies that are pro liboring

516
00:28:36,240 --> 00:28:40,320
Speaker 8: union increase wage growth and potentially even did organization gradual

517
00:28:40,360 --> 00:28:41,840
Speaker 8: but will increase essentially.

518
00:28:44,000 --> 00:28:47,360
Speaker 3: This is your wheelhouse when you're president. Can you model

519
00:28:47,440 --> 00:28:48,160
Speaker 3: a week dollar?

520
00:28:49,480 --> 00:28:52,200
Speaker 8: Can I model it in which you predict a week dollar?

521
00:28:53,880 --> 00:28:57,240
Speaker 8: It depends. You know, if we have a very large

522
00:28:57,480 --> 00:29:02,080
Speaker 8: fiscal deficits and if we have very large current account deficit,

523
00:29:02,120 --> 00:29:04,560
Speaker 8: this twin deficits are going to continue in spite of

524
00:29:04,600 --> 00:29:06,760
Speaker 8: the strengths of the private sector. I think at some

525
00:29:06,920 --> 00:29:09,960
Speaker 8: point the bond meltket vigilant is going to wake up.

526
00:29:10,560 --> 00:29:12,400
Speaker 8: And in the last few years, in spite of these

527
00:29:12,400 --> 00:29:15,560
Speaker 8: twin deficits, the dollar was strengthening because we had tight

528
00:29:15,680 --> 00:29:20,040
Speaker 8: monetary policy, and therefore the capital account was essentially compensating

529
00:29:20,080 --> 00:29:22,520
Speaker 8: for a very large current account deficit. But if the

530
00:29:22,760 --> 00:29:25,959
Speaker 8: large current account deficiit remains. At the same time, interest

531
00:29:26,000 --> 00:29:29,320
Speaker 8: rate differential are implying that the capital inflo in the

532
00:29:29,360 --> 00:29:31,600
Speaker 8: US are going to be less. Let alone, the fact

533
00:29:31,600 --> 00:29:34,600
Speaker 8: that we're weaponizing the dollar in some country may be

534
00:29:34,680 --> 00:29:38,880
Speaker 8: gradually the dollarizing. That would imply over time a weeker

535
00:29:39,000 --> 00:29:41,840
Speaker 8: dollar over time. I'm not talking over the crash of

536
00:29:41,840 --> 00:29:44,640
Speaker 8: the US dollar will be. The counter argument is that

537
00:29:44,680 --> 00:29:46,800
Speaker 8: there is so much innovation in the US that the

538
00:29:46,800 --> 00:29:48,640
Speaker 8: influence of capital is not going to be into fixed

539
00:29:48,640 --> 00:29:51,840
Speaker 8: income treasuries but rather inequities. That has sustained, of course,

540
00:29:51,880 --> 00:29:54,120
Speaker 8: the dollar for the last few years. If that continues,

541
00:29:54,160 --> 00:29:57,840
Speaker 8: then that might be partially supportive of the dollar leaded

542
00:29:57,880 --> 00:29:59,640
Speaker 8: to less of a weakening pro faster.

543
00:29:59,760 --> 00:30:04,000
Speaker 4: Most US grew up with globalization as a thing, as

544
00:30:04,040 --> 00:30:07,240
Speaker 4: something we learned and experienced, but that seems to have

545
00:30:07,840 --> 00:30:09,600
Speaker 4: reversed itself a little bit over the last four or

546
00:30:09,640 --> 00:30:12,440
Speaker 4: five six years. Do you agree with that and be

547
00:30:12,960 --> 00:30:14,360
Speaker 4: will that continue?

548
00:30:14,920 --> 00:30:15,200
Speaker 3: Yes?

549
00:30:15,320 --> 00:30:20,120
Speaker 8: I would say that both the trends of geopolitical fragmentation

550
00:30:20,800 --> 00:30:23,600
Speaker 8: are leading to some degree of call it either the

551
00:30:23,680 --> 00:30:31,320
Speaker 8: globalization or the coupling, or the risking or reshoring and

552
00:30:31,360 --> 00:30:36,400
Speaker 8: French shoring or changing in the global supply chains from

553
00:30:36,720 --> 00:30:39,800
Speaker 8: just in time to just in case, from China to

554
00:30:39,920 --> 00:30:43,640
Speaker 8: challenge a plus one or plus two, from emphasizing in

555
00:30:43,640 --> 00:30:48,520
Speaker 8: investment economic security rather economic efficiency. So the question is

556
00:30:48,560 --> 00:30:52,640
Speaker 8: not whether the direction is one towards fragmentation is going

557
00:30:52,680 --> 00:30:57,040
Speaker 8: to continue, given geopolitics, given AI, given other pressures that

558
00:30:57,120 --> 00:31:00,280
Speaker 8: are on labor income. The question is not web but

559
00:31:00,360 --> 00:31:01,880
Speaker 8: only how much and how fast?

560
00:31:02,240 --> 00:31:05,760
Speaker 3: Norabini with us here, folks, the down negative ninety two,

561
00:31:05,840 --> 00:31:08,360
Speaker 3: the Vics twenty one point two three, a little bit

562
00:31:08,400 --> 00:31:12,280
Speaker 3: of wait to take this morning, noural. With all that said,

563
00:31:12,520 --> 00:31:16,560
Speaker 3: we're in a bull market tomorrow. JP Morgan earnings for

564
00:31:17,040 --> 00:31:20,680
Speaker 3: the last ten years annual return on JP Morgan's twelve

565
00:31:20,720 --> 00:31:24,840
Speaker 3: thirteen fourteen percent per year. How do you explain the

566
00:31:24,920 --> 00:31:28,720
Speaker 3: lift in asset valuations in America?

567
00:31:29,520 --> 00:31:32,440
Speaker 8: Well, I explained it by the fact that one we

568
00:31:32,560 --> 00:31:36,240
Speaker 8: achieved a soft landing, and we achieved it not because

569
00:31:36,280 --> 00:31:39,000
Speaker 8: of what the FED did, but because we got lucky.

570
00:31:39,040 --> 00:31:42,880
Speaker 8: Those three negative aggregate supply shocks of COVID reverse the things.

571
00:31:42,880 --> 00:31:43,840
Speaker 3: The FED got lucky.

572
00:31:44,320 --> 00:31:47,360
Speaker 8: They got lucky because in any other situation, FED going

573
00:31:47,400 --> 00:31:50,280
Speaker 8: from zero and QE to five and a half in

574
00:31:50,360 --> 00:31:53,000
Speaker 8: QT would have led not only the load inflation, but

575
00:31:53,080 --> 00:31:56,840
Speaker 8: also to significant lower growth and even a recession. Now

576
00:31:56,880 --> 00:31:58,920
Speaker 8: we had the load inflation, but we did not have

577
00:31:58,960 --> 00:32:02,200
Speaker 8: the recession. Why my explanation is that tree in aggat

578
00:32:02,240 --> 00:32:05,520
Speaker 8: we aggregate supply shocks of COVID, the impact of COVID

579
00:32:05,560 --> 00:32:08,760
Speaker 8: on supply goods and services and supply chains and labor

580
00:32:09,000 --> 00:32:12,160
Speaker 8: went away. The impact of the shock of Russia Ukraine

581
00:32:12,560 --> 00:32:15,720
Speaker 8: on commodity prices went away, and China face down the

582
00:32:15,800 --> 00:32:18,320
Speaker 8: zero COVID policy. On top of those three, we got

583
00:32:18,400 --> 00:32:22,040
Speaker 8: other things that happened. One was immigration two point five

584
00:32:22,080 --> 00:32:25,280
Speaker 8: million people entering US for the last four years, documentary

585
00:32:25,480 --> 00:32:29,280
Speaker 8: or undocumented, that kept the lead on wage growth, increased growth.

586
00:32:29,480 --> 00:32:32,000
Speaker 8: We had the Ai Revolution that also has led significant

587
00:32:32,040 --> 00:32:36,320
Speaker 8: increase in private capecs. So all those factors explained why

588
00:32:36,400 --> 00:32:39,760
Speaker 8: we said stronger growth and inflation and lower was not

589
00:32:39,920 --> 00:32:41,880
Speaker 8: really the fact was just we got lucky, and we

590
00:32:41,920 --> 00:32:44,360
Speaker 8: got immigration, and we got the I Revolution.

591
00:32:45,360 --> 00:32:48,200
Speaker 4: Geopolitical risk ats front and center for investors really over

592
00:32:48,200 --> 00:32:50,400
Speaker 4: the last several years, probably more so than it has

593
00:32:50,440 --> 00:32:53,040
Speaker 4: been in a while. Yet markets are seen.

594
00:32:52,840 --> 00:32:53,640
Speaker 3: To churn higher.

595
00:32:53,680 --> 00:32:57,040
Speaker 4: How do you factor whether it's coming out of Ukraine

596
00:32:57,120 --> 00:32:59,400
Speaker 4: or the Middle East? Had effactored that in well.

597
00:32:59,440 --> 00:33:03,000
Speaker 8: My explaining is that for the time being, market have

598
00:33:03,160 --> 00:33:08,480
Speaker 8: correctly estimated that all these conflicts are regional rather than global.

599
00:33:08,920 --> 00:33:12,640
Speaker 8: After all, Russia Ukraine is very ugly. It has damaged

600
00:33:12,880 --> 00:33:16,280
Speaker 8: severely the Ukrainian economy. It's called some damage to Russia.

601
00:33:16,600 --> 00:33:20,280
Speaker 8: It's had initial impact on global commodity prices, but now

602
00:33:20,480 --> 00:33:23,400
Speaker 8: more oil and natural gas from the milita US has

603
00:33:23,480 --> 00:33:26,320
Speaker 8: led to even the European being able to phase out

604
00:33:26,360 --> 00:33:30,000
Speaker 8: the Russian oil for now. The conflict between Israel and

605
00:33:30,040 --> 00:33:32,800
Speaker 8: a mass was on Gaza. There is a risk of

606
00:33:32,880 --> 00:33:36,320
Speaker 8: regionalization so far has not occurred, and the Cold War

607
00:33:36,320 --> 00:33:38,840
Speaker 8: between US and China is a cold war, but it

608
00:33:38,920 --> 00:33:41,640
Speaker 8: is probably not escalating and the speeding is going to

609
00:33:41,680 --> 00:33:44,480
Speaker 8: become a hot war in the short run or having

610
00:33:44,480 --> 00:33:47,720
Speaker 8: global consequences. So then markets have correctly said these things

611
00:33:47,760 --> 00:33:51,120
Speaker 8: are terrible for specific countries and region, but they don't

612
00:33:51,120 --> 00:33:53,080
Speaker 8: have a global impact. Of all of them. I would

613
00:33:53,080 --> 00:33:57,600
Speaker 8: say the biggest risk today is that if if Israel

614
00:33:57,600 --> 00:34:00,800
Speaker 8: were to go and strike Iran. There is a consensus

615
00:34:00,800 --> 00:34:03,600
Speaker 8: within Israel, not just on the right nathaniaw but even

616
00:34:03,840 --> 00:34:06,400
Speaker 8: people that are on the opposition, like Benny Gantz has

617
00:34:06,440 --> 00:34:09,040
Speaker 8: said we have to get rid of this regime in Iran.

618
00:34:09,280 --> 00:34:11,760
Speaker 8: Then if Israel were to go to try to achieve

619
00:34:11,800 --> 00:34:14,640
Speaker 8: regime change in Iran, you could have really a conflagration

620
00:34:14,760 --> 00:34:17,680
Speaker 8: at the Gulf. You could have essentially the production and

621
00:34:17,760 --> 00:34:21,040
Speaker 8: expert of all from the Gulf being blocked for several months.

622
00:34:21,239 --> 00:34:23,200
Speaker 8: You could have a shock like nineteen seventy the Yom

623
00:34:23,280 --> 00:34:26,600
Speaker 8: Kippur or nineteen seventy nine Islamic Arena revolution. I think

624
00:34:26,640 --> 00:34:29,560
Speaker 8: that's the biggest risk. And by the way, if Trump

625
00:34:29,560 --> 00:34:31,879
Speaker 8: gets elected, the chance is going to give a green

626
00:34:31,960 --> 00:34:34,359
Speaker 8: light to Nathaniel to go and say bomb the hell

627
00:34:34,400 --> 00:34:36,440
Speaker 8: out of Iran, get rid of the regime will be

628
00:34:36,600 --> 00:34:38,360
Speaker 8: higher than ander Harris administer.

629
00:34:38,440 --> 00:34:41,560
Speaker 3: We're just Turkey filing this. Your father moved rugs in

630
00:34:41,600 --> 00:34:45,839
Speaker 3: Turkey years ago, nural Beini on the next era one,

631
00:34:46,120 --> 00:34:47,480
Speaker 3: what do you expect to see there?

632
00:34:47,840 --> 00:34:51,960
Speaker 8: Well, the economy is still quite fragile. The good news

633
00:34:51,960 --> 00:34:55,920
Speaker 8: that he put in place as a finance minister, I

634
00:34:56,040 --> 00:34:59,839
Speaker 8: met Simshek who was actually very mainstream and orthodo, which yeah,

635
00:35:00,200 --> 00:35:03,799
Speaker 8: very good. And therefore inflation is gradually falling, but still

636
00:35:03,840 --> 00:35:06,359
Speaker 8: too high. But they're going at least in directions that

637
00:35:06,440 --> 00:35:11,319
Speaker 8: are less a tertodox economic policy and gradually more orthodox one.

638
00:35:11,400 --> 00:35:13,680
Speaker 8: So I would say that actually Turkey is a country

639
00:35:13,680 --> 00:35:18,920
Speaker 8: that based on overall fundamentals strong manufacturing sector, innovation, good

640
00:35:18,960 --> 00:35:20,319
Speaker 8: financial sector could do well.

641
00:35:20,480 --> 00:35:24,080
Speaker 3: Okay, but America, we've heard this scenario. Are you telling

642
00:35:24,120 --> 00:35:26,400
Speaker 3: me I got thirty seconds? Yes? Are you telling me

643
00:35:26,480 --> 00:35:28,960
Speaker 3: your long Turkish lira? Is that going to be your

644
00:35:29,000 --> 00:35:30,000
Speaker 3: first trade year? No?

645
00:35:30,000 --> 00:35:32,440
Speaker 8: No, I'm not long ters lear because the inflation rate

646
00:35:32,560 --> 00:35:35,720
Speaker 8: is still too high and the amount of monitoring physical

647
00:35:35,719 --> 00:35:38,520
Speaker 8: and credit titaning is not yet sufficient. But I'm saying

648
00:35:38,520 --> 00:35:41,000
Speaker 8: at least they're moving in the right direction compared to

649
00:35:41,040 --> 00:35:44,120
Speaker 8: what it was the situation before the last presidential election.

650
00:35:44,560 --> 00:35:47,960
Speaker 8: So finally Loganez realized there was a risk of occurrence

651
00:35:47,960 --> 00:35:52,239
Speaker 8: and a financial crisis. It gave power to some orthodox

652
00:35:52,760 --> 00:35:56,400
Speaker 8: central bankers and finance ministers, and therefore the economic policies

653
00:35:56,520 --> 00:35:57,880
Speaker 8: are moving in the right direction.

654
00:35:58,040 --> 00:36:00,799
Speaker 3: Don't be a strange it's been way to Thank you

655
00:36:00,840 --> 00:36:04,880
Speaker 3: so much with Alice America, fun Rubini Macro Associates, and

656
00:36:04,920 --> 00:36:10,439
Speaker 3: of course his affiliation with New York University over the years.

657
00:36:10,480 --> 00:36:12,360
Speaker 3: Really can't say enough about it. Look for his books.

658
00:36:12,360 --> 00:36:14,480
Speaker 3: I'm begging for a new book from Rabinie Badies.

659
00:36:19,800 --> 00:36:23,640
Speaker 2: You're listening to the Bloomberg Surveillance podcast. Catch us live

660
00:36:23,760 --> 00:36:27,040
Speaker 2: weekday afternoons from seven to ten am Eastern. Listen on

661
00:36:27,120 --> 00:36:30,360
Speaker 2: Apple car Play and Android Otto with a Bloomberg Business app,

662
00:36:30,440 --> 00:36:32,000
Speaker 2: or want us live on YouTube.

663
00:36:32,120 --> 00:36:34,680
Speaker 3: This is a joy with our question. Our conversation of

664
00:36:34,719 --> 00:36:39,040
Speaker 3: the day is our conversation with James Trevetus yesterday really

665
00:36:39,080 --> 00:36:42,480
Speaker 3: shed some light on where this nation is going with

666
00:36:42,600 --> 00:36:46,600
Speaker 3: their foreign policy. Richard Hass is served both Republicans and Democrats.

667
00:36:46,840 --> 00:36:49,439
Speaker 3: We're not going to talk about Harris Trump. He'll serve

668
00:36:49,480 --> 00:36:53,200
Speaker 3: as Secretary of State for either one whoever wins. But

669
00:36:53,280 --> 00:36:56,920
Speaker 3: we will speak to Richard Haass about the many foreign

670
00:36:56,920 --> 00:37:01,440
Speaker 3: policy issues of this nation. You invented the Internet and

671
00:37:01,480 --> 00:37:05,520
Speaker 3: international relations. It's CFR. The Middle East challenge for the

672
00:37:05,640 --> 00:37:09,600
Speaker 3: United States. James Lindsay, Stephen A. Cook, and Amy Hawthorn

673
00:37:09,960 --> 00:37:12,720
Speaker 3: The Middle East challenge. Where are we in our Eastern

674
00:37:12,800 --> 00:37:15,240
Speaker 3: Mediterranean policy in twelve months?

675
00:37:16,920 --> 00:37:19,319
Speaker 9: I would think the Middle East looks not dissimilar from

676
00:37:19,320 --> 00:37:21,040
Speaker 9: the way it looks now. Tom, you know when peace

677
00:37:21,120 --> 00:37:23,960
Speaker 9: is not at hand. This is a think of it

678
00:37:24,000 --> 00:37:27,880
Speaker 9: as a as a like California, multiple earthquake fault lines.

679
00:37:28,239 --> 00:37:31,600
Speaker 9: So Middle East has the Israel around fault line. There's Hasbala,

680
00:37:31,640 --> 00:37:35,279
Speaker 9: this Hamas in Gaza, there's the West Bank, all of

681
00:37:35,320 --> 00:37:38,000
Speaker 9: these fault lines are going to be churning to one

682
00:37:38,040 --> 00:37:41,799
Speaker 9: degree or another at the moment. Diplomacy has virtually no role,

683
00:37:42,080 --> 00:37:45,480
Speaker 9: and these are going to be lower, maybe medium intensity conflicts.

684
00:37:45,560 --> 00:37:50,120
Speaker 3: What happens if you stop talking? Not a whole lot.

685
00:37:50,560 --> 00:37:53,759
Speaker 9: Diplomacy hasn't shaped things. All these calls for ceasefire have

686
00:37:53,760 --> 00:37:58,200
Speaker 9: been more rhetorical than real. And the real question right now,

687
00:37:58,239 --> 00:38:01,200
Speaker 9: I think, how far is Israel plan to go in Lebanon?

688
00:38:01,239 --> 00:38:05,319
Speaker 9: What's their definition of success? Will Israel introduce a strategic

689
00:38:05,400 --> 00:38:10,560
Speaker 9: after policy in Gaza? Will they continue to militarize relations

690
00:38:10,560 --> 00:38:13,920
Speaker 9: in the West Bank? And most important, what is Israel

691
00:38:13,960 --> 00:38:15,759
Speaker 9: prepared to do or not to do when it comes

692
00:38:15,800 --> 00:38:18,120
Speaker 9: to Iran? And how will how would Iran retaliate?

693
00:38:18,800 --> 00:38:19,120
Speaker 3: Richard?

694
00:38:19,239 --> 00:38:23,000
Speaker 4: How Richard, how concerning or how surprising is it to

695
00:38:23,040 --> 00:38:26,800
Speaker 4: you the waning influence of the US during this conflict?

696
00:38:26,880 --> 00:38:30,560
Speaker 4: Here it seems like mister Netanyahu and Israel is basically

697
00:38:30,880 --> 00:38:34,160
Speaker 4: not paying much attention to the US.

698
00:38:34,239 --> 00:38:36,000
Speaker 9: It seems that way because that's the way it is.

699
00:38:36,680 --> 00:38:41,279
Speaker 9: He's discounted US pressure. Better to ask for forgiveness than

700
00:38:41,320 --> 00:38:44,080
Speaker 9: permission is clearly his motto. He believes he has a

701
00:38:44,120 --> 00:38:47,479
Speaker 9: basis support in the United States that could challenge any

702
00:38:47,520 --> 00:38:50,040
Speaker 9: president if the president decides to move against him. Plus,

703
00:38:50,040 --> 00:38:53,239
Speaker 9: this administration has made the mistake of putting almost all

704
00:38:53,280 --> 00:38:55,760
Speaker 9: of its eggs and what I would call the persuasion basket.

705
00:38:56,000 --> 00:38:59,560
Speaker 9: Persuasion is easy to push back against rather than carrying

706
00:38:59,560 --> 00:39:02,759
Speaker 9: out a serious independent policy. So for twelve months we've

707
00:39:02,760 --> 00:39:05,200
Speaker 9: implored the Israelis not to do certain things in gods

708
00:39:05,239 --> 00:39:07,200
Speaker 9: and for the most point, for the most part, they've

709
00:39:07,239 --> 00:39:09,040
Speaker 9: rejected us with no cost.

710
00:39:09,440 --> 00:39:14,319
Speaker 3: July eighth, fourteen years ago, Richard huss presiding Benjamin Who,

711
00:39:14,400 --> 00:39:17,759
Speaker 3: Prime Minister of Israel at the Counts on Foreign Relations.

712
00:39:17,960 --> 00:39:22,279
Speaker 3: How is he different now from that afternoon July eight?

713
00:39:22,960 --> 00:39:23,879
Speaker 3: It's a good question, Tom.

714
00:39:23,920 --> 00:39:26,399
Speaker 9: I think the biggest difference is the political context he's

715
00:39:26,400 --> 00:39:30,279
Speaker 9: put himself in. He's surrounded by people to his far right,

716
00:39:30,440 --> 00:39:34,920
Speaker 9: some of whom are literally Messianic, and he as a

717
00:39:34,960 --> 00:39:38,600
Speaker 9: result has constrained himself. That plus also his own personal

718
00:39:38,640 --> 00:39:41,279
Speaker 9: legal challenges, has made him much more of what you

719
00:39:41,360 --> 00:39:42,840
Speaker 9: might call a wartime prime minister.

720
00:39:42,960 --> 00:39:45,800
Speaker 3: And it almost goes to your important work in Northern

721
00:39:45,840 --> 00:39:49,759
Speaker 3: Ireland years ago, and its Edminalstavite is just to say, look,

722
00:39:49,760 --> 00:39:53,000
Speaker 3: it's seven million people. I believe he said seven million Jews.

723
00:39:53,040 --> 00:39:56,040
Speaker 3: I can't remember the exact quote. Versus Iran with I'm

724
00:39:56,080 --> 00:39:59,040
Speaker 3: going to say ninety million people. Do we understand the

725
00:39:59,120 --> 00:40:03,080
Speaker 3: smallness of Israel and their requirement to have allies?

726
00:40:03,760 --> 00:40:06,480
Speaker 9: Well, it's the smallness of their population, also the smallness

727
00:40:06,480 --> 00:40:09,680
Speaker 9: of their territory. So you know, Israel is nal or.

728
00:40:09,719 --> 00:40:12,440
Speaker 9: For example, Iran still has close to three thousand ballistic

729
00:40:12,480 --> 00:40:15,920
Speaker 9: missiles it hasn't yet used. No, Israel is dependent on

730
00:40:15,960 --> 00:40:18,759
Speaker 9: the United States to a large degree for its qualitative

731
00:40:18,800 --> 00:40:22,879
Speaker 9: military advantage. But again, the Israelis essentially assume that they

732
00:40:22,920 --> 00:40:24,600
Speaker 9: have American support for the most.

733
00:40:24,480 --> 00:40:27,879
Speaker 4: Part, do they, I mean, don't we have leverage here

734
00:40:27,960 --> 00:40:28,759
Speaker 4: in this discussion.

735
00:40:28,920 --> 00:40:31,040
Speaker 9: Well, we have leverage if at times we choose to

736
00:40:31,120 --> 00:40:33,839
Speaker 9: use it. But also part of the challenge facing US

737
00:40:33,880 --> 00:40:36,240
Speaker 9: is how do we disagree, say, with an Israeli government

738
00:40:36,280 --> 00:40:39,359
Speaker 9: when it comes to Hamas and Gaza. At the same time,

739
00:40:39,400 --> 00:40:41,839
Speaker 9: we may agree within Israeli government for the most part

740
00:40:41,880 --> 00:40:45,560
Speaker 9: in the North vis Isabela or obviously versus Iran and

741
00:40:45,600 --> 00:40:48,280
Speaker 9: Iran for example, not being allowed to get nuclear weapons.

742
00:40:48,440 --> 00:40:51,680
Speaker 9: This is a real foreign policy challenge for any American administration.

743
00:40:52,360 --> 00:40:55,040
Speaker 4: What do you think the Israelis will do as it

744
00:40:55,120 --> 00:40:58,399
Speaker 4: relates to Iran? Here in terms of their response, what.

745
00:40:58,400 --> 00:41:01,520
Speaker 9: I'm hoping they do think what they will respond. What

746
00:41:01,560 --> 00:41:03,959
Speaker 9: I'm hoping they do is limit their response to going

747
00:41:04,000 --> 00:41:07,560
Speaker 9: after sites associated with the production and storage of the

748
00:41:07,640 --> 00:41:10,319
Speaker 9: kinds of missiles that have attacked Israel. I think that

749
00:41:10,360 --> 00:41:14,200
Speaker 9: would be proportionate. It would check their germaneness, irrelevance box.

750
00:41:14,600 --> 00:41:17,560
Speaker 9: I don't believe they ought to be going after energy installations.

751
00:41:17,840 --> 00:41:20,840
Speaker 9: Iron could clearly retaliate against the Soidies and others, and

752
00:41:20,920 --> 00:41:23,080
Speaker 9: I don't think at this moment a strike against the

753
00:41:23,160 --> 00:41:27,880
Speaker 9: nuclear facilities would either succeed or be strategically warranted.

754
00:41:28,000 --> 00:41:30,800
Speaker 3: We continue with Richard Haass the Council on Foreign Relations,

755
00:41:30,800 --> 00:41:34,400
Speaker 3: Ambassador hoss here on the Eastern Mediterranean. You and John

756
00:41:34,520 --> 00:41:38,480
Speaker 3: Carey in discussion. I want you to brief now haarisites

757
00:41:38,640 --> 00:41:43,239
Speaker 3: and Trump bites on the nuclear threat. Carrie spent a

758
00:41:43,320 --> 00:41:48,319
Speaker 3: lot of time worrying about Iran point and missiles. Give

759
00:41:48,440 --> 00:41:50,279
Speaker 3: us an update, Ambassador.

760
00:41:50,280 --> 00:41:53,720
Speaker 9: Yes, John Kerrey negotiate an agreement with Ron which essentially

761
00:41:53,800 --> 00:41:57,720
Speaker 9: parked the Iranian nuclear challenge for roughly a decade Donald

762
00:41:57,760 --> 00:42:01,000
Speaker 9: Trump took us out of the agreement, than Iran has

763
00:42:01,160 --> 00:42:04,560
Speaker 9: increased the amount of highly enriched geranium, the stuff of

764
00:42:04,560 --> 00:42:07,560
Speaker 9: bomb nuclear weapons. It's not quite at weapons grade, but

765
00:42:07,600 --> 00:42:09,160
Speaker 9: it could get there in a matter of days or

766
00:42:09,200 --> 00:42:12,880
Speaker 9: weeks days. But Tom, what's still missing, as best we

767
00:42:12,920 --> 00:42:15,279
Speaker 9: can tell, is Iran has not put into place what

768
00:42:15,320 --> 00:42:18,120
Speaker 9: you would call the weaponization. In order to preaate you

769
00:42:18,120 --> 00:42:20,560
Speaker 9: a nuclear weapon, you need not just fiscile material of

770
00:42:20,600 --> 00:42:22,919
Speaker 9: a certain degree of enrichment, sorry to get silwonki here.

771
00:42:23,200 --> 00:42:26,000
Speaker 9: You also need the casing and the explosives and so forth.

772
00:42:26,120 --> 00:42:29,320
Speaker 9: So my guess is Iran is somewhere from six months

773
00:42:29,320 --> 00:42:31,680
Speaker 9: to year away, and part depending on help it might

774
00:42:31,719 --> 00:42:32,680
Speaker 9: receive from the outside.

775
00:42:32,800 --> 00:42:35,360
Speaker 3: So if I'm at CFR, I'm having the acclaimed horrors

776
00:42:35,440 --> 00:42:39,240
Speaker 3: divorce of the CFR. Where that coffee in, that wine

777
00:42:39,280 --> 00:42:40,279
Speaker 3: in the afternoon, I.

778
00:42:40,200 --> 00:42:42,880
Speaker 9: Am not responsible for the food and drink anymore.

779
00:42:43,080 --> 00:42:46,799
Speaker 3: Somebody says, ambassador, Oh, Israel can just send missiles in

780
00:42:46,880 --> 00:42:49,960
Speaker 3: and take out the nuclear capability of Iran. How do

781
00:42:50,000 --> 00:42:50,839
Speaker 3: you respond to that?

782
00:42:50,960 --> 00:42:52,680
Speaker 9: They don't know what they're talking about. A lot of

783
00:42:52,680 --> 00:42:57,040
Speaker 9: the nuclear program is deeply underground and fortified locations, Assuming

784
00:42:57,080 --> 00:42:59,279
Speaker 9: we know where it all is, you can't take out

785
00:42:59,320 --> 00:43:01,800
Speaker 9: the intellectual dimensions of it. So I think what you

786
00:43:01,840 --> 00:43:05,040
Speaker 9: would say is if Israel used military force, it could

787
00:43:05,160 --> 00:43:07,880
Speaker 9: buy some time. It could set back the Iranian program

788
00:43:07,960 --> 00:43:10,279
Speaker 9: months or even years. But what would happen is it

789
00:43:10,320 --> 00:43:14,480
Speaker 9: would be reconstituted underground, probably in places and locations far

790
00:43:14,560 --> 00:43:15,640
Speaker 9: more difficult to take out.

791
00:43:15,960 --> 00:43:19,040
Speaker 4: Are you surprised that Israel has not yet responded to

792
00:43:19,080 --> 00:43:21,759
Speaker 4: Iran more than a week from that last of time?

793
00:43:21,840 --> 00:43:23,800
Speaker 9: What they're doing is in some ways responding to Iran

794
00:43:23,840 --> 00:43:27,440
Speaker 9: by what they're doing in Lebanon. Degrading hisbula to the

795
00:43:27,560 --> 00:43:31,439
Speaker 9: degree Israel has done it is quite strategically significant because

796
00:43:31,520 --> 00:43:35,120
Speaker 9: Hisbola was in some ways a powerful Iranian instrument, hanging

797
00:43:35,160 --> 00:43:37,680
Speaker 9: over the head of Israel, with that hundreds of thousands

798
00:43:37,719 --> 00:43:41,160
Speaker 9: of rockets that could hit Tel Aviv Bengorian Airport. So

799
00:43:41,200 --> 00:43:45,799
Speaker 9: the decapitation and degradation of his Bula is strategically the

800
00:43:45,840 --> 00:43:47,800
Speaker 9: most interesting thing that's happened in this part of the

801
00:43:47,800 --> 00:43:48,560
Speaker 9: world recently.

802
00:43:48,680 --> 00:43:51,480
Speaker 3: What then, do we do with your collective memory of

803
00:43:51,560 --> 00:43:55,000
Speaker 3: that horrific afternoon. I believe it was ort morning in

804
00:43:55,120 --> 00:43:59,440
Speaker 3: nineteen eighty Two, how does the US project to Lebanon

805
00:43:59,680 --> 00:44:02,360
Speaker 3: a Lebanon if they take out Hezbolah?

806
00:44:02,760 --> 00:44:05,200
Speaker 9: Well, but you're predicate. Is the quick can you take

807
00:44:05,239 --> 00:44:07,719
Speaker 9: out Hezbela? Not clear to me? And right now there's

808
00:44:07,719 --> 00:44:10,799
Speaker 9: an interesting conversation going on, Tom, what's the definition of

809
00:44:10,840 --> 00:44:13,880
Speaker 9: success in Lebanon? Is it to degrade? Is it to

810
00:44:13,960 --> 00:44:16,360
Speaker 9: degrade his bula to the point you push them north?

811
00:44:16,680 --> 00:44:19,840
Speaker 9: So presumably you got to cease fire, you reduce the

812
00:44:19,880 --> 00:44:22,320
Speaker 9: threat to Israelis living in the northern part of Israel's

813
00:44:22,320 --> 00:44:24,520
Speaker 9: sixty seventy thousand Israelis.

814
00:44:24,040 --> 00:44:24,600
Speaker 3: Can go home?

815
00:44:25,080 --> 00:44:29,560
Speaker 9: Or is it to remove his bolah as a military entity,

816
00:44:29,719 --> 00:44:32,640
Speaker 9: as a state within a state in Lebanon? And right

817
00:44:32,680 --> 00:44:35,040
Speaker 9: now there's a debate going on in Israel, and I

818
00:44:35,080 --> 00:44:37,920
Speaker 9: expect between Israel and United States. What is the definition

819
00:44:37,960 --> 00:44:40,640
Speaker 9: of victory? Just how ambitious or what Israel to be

820
00:44:40,680 --> 00:44:41,160
Speaker 9: in Lebanon.

821
00:44:41,560 --> 00:44:44,440
Speaker 3: Richard hass joins, this is the president of Meretith that

822
00:44:44,520 --> 00:44:46,960
Speaker 3: counts on foreign relations and with interview.

823
00:44:47,400 --> 00:44:50,359
Speaker 4: As this interview he's a banker guy.

824
00:44:50,480 --> 00:44:53,280
Speaker 3: Yeah, you know, he's a but he's look at the people.

825
00:44:53,360 --> 00:44:58,800
Speaker 3: He's whim Richard Case, I mean for starters. William Edwards.

826
00:44:58,840 --> 00:45:00,640
Speaker 3: I mean on a cent of you partners. As a

827
00:45:00,680 --> 00:45:04,120
Speaker 3: senior counselor as well, I made a joke that we

828
00:45:04,200 --> 00:45:06,040
Speaker 3: have to take your book and throw it at people

829
00:45:06,040 --> 00:45:09,239
Speaker 3: and say shut up and read it. What happened to

830
00:45:09,320 --> 00:45:13,040
Speaker 3: Civics Center school system? Do you blame the education system

831
00:45:13,360 --> 00:45:15,640
Speaker 3: like Jeff Sachs would blame it? Do you blame the

832
00:45:15,719 --> 00:45:18,200
Speaker 3: parents like me? Who do you blame?

833
00:45:19,160 --> 00:45:21,680
Speaker 9: CIVICS has lost a lot of altitude in schools. It

834
00:45:21,719 --> 00:45:24,000
Speaker 9: wasn't an anti Civics movement, tom It was more like

835
00:45:24,080 --> 00:45:27,880
Speaker 9: musical chairs, And we kept adding new requirements, stem and

836
00:45:27,880 --> 00:45:31,080
Speaker 9: so forth, and CIVICS just lost out. People assumed it

837
00:45:31,160 --> 00:45:34,080
Speaker 9: was somehow not necessary. They assume people would get it

838
00:45:34,080 --> 00:45:36,200
Speaker 9: by drinking the water. I don't know, but we have

839
00:45:36,320 --> 00:45:39,399
Speaker 9: failed to tell our story. We've failed to explain why

840
00:45:39,440 --> 00:45:43,600
Speaker 9: democracy is valuable and important, why it's precious but also vulnerable,

841
00:45:43,840 --> 00:45:47,080
Speaker 9: what it takes for democracies and democracies to succeed. So

842
00:45:47,480 --> 00:45:51,520
Speaker 9: ought not surprise us that and polls we're seeing the

843
00:45:51,560 --> 00:45:54,839
Speaker 9: younger Americans are increasingly shrugging their shoulders saying why should

844
00:45:54,880 --> 00:45:57,600
Speaker 9: I care? Why should I vote? Why does democracy matter?

845
00:45:57,880 --> 00:46:00,560
Speaker 9: And then even worse, we have things like jear six

846
00:46:00,680 --> 00:46:03,640
Speaker 9: or the most recent poll I saw today, something like

847
00:46:03,680 --> 00:46:07,239
Speaker 9: ten percent of Americans now believe political violence is warranted

848
00:46:07,520 --> 00:46:09,280
Speaker 9: to realize their political ends.

849
00:46:10,000 --> 00:46:13,399
Speaker 4: So Richard John from the fifth floor writes in here

850
00:46:13,440 --> 00:46:16,759
Speaker 4: and he wants to know on that topic. There, you're

851
00:46:16,800 --> 00:46:19,040
Speaker 4: in the Department of State, you're in the Department of Defense.

852
00:46:19,280 --> 00:46:21,160
Speaker 4: Talk to us about the people that are going into

853
00:46:21,239 --> 00:46:25,160
Speaker 4: government today to serve this country, to serve their government,

854
00:46:25,160 --> 00:46:27,480
Speaker 4: to serve their people. How has it changed today versus

855
00:46:27,480 --> 00:46:29,359
Speaker 4: maybe when you were in government.

856
00:46:29,840 --> 00:46:33,000
Speaker 9: All things people Obviously there's exceptions fall, but it's not

857
00:46:33,040 --> 00:46:35,520
Speaker 9: nearly as good. The best in the brightest aren't going

858
00:46:35,520 --> 00:46:38,360
Speaker 9: into government. In part, we've devalued government service. If you

859
00:46:38,440 --> 00:46:41,520
Speaker 9: trash government enough, as you say, government is the problem

860
00:46:41,640 --> 00:46:45,080
Speaker 9: which Ronald Reagan began, and people like Donald Trump and

861
00:46:45,120 --> 00:46:48,759
Speaker 9: the others have accelerated. Not surprisingly, people don't want to

862
00:46:48,800 --> 00:46:51,200
Speaker 9: do it. You don't get great pay. The best in

863
00:46:51,239 --> 00:46:54,160
Speaker 9: the brightest much more now go to do Goldman Sachs

864
00:46:54,280 --> 00:46:59,360
Speaker 9: and places here in the financial world. Plus in the

865
00:46:59,440 --> 00:47:03,040
Speaker 9: narrow farm policy conversation, the State Department has been poorly

866
00:47:03,120 --> 00:47:05,960
Speaker 9: led for the most part in recent years, and it's

867
00:47:06,000 --> 00:47:09,600
Speaker 9: lost out dramatically to the National Security Council, which essentially

868
00:47:09,680 --> 00:47:13,279
Speaker 9: is now what Jake Sullivan runs is almost ten times

869
00:47:13,320 --> 00:47:16,719
Speaker 9: literally ten times the size when Brench Scocroff ran it.

870
00:47:17,280 --> 00:47:20,399
Speaker 3: Afterthought had to do a paper on Vietnam. Richard Os

871
00:47:20,440 --> 00:47:22,600
Speaker 3: you and I live this. I realized because of the

872
00:47:22,640 --> 00:47:26,000
Speaker 3: trauma I faced in others, I did not serve. I

873
00:47:26,000 --> 00:47:29,239
Speaker 3: hadn't read a word about Vietnam. I just pushed it

874
00:47:29,280 --> 00:47:32,080
Speaker 3: aside in my collective ute. So I went out and

875
00:47:32,080 --> 00:47:35,080
Speaker 3: read Max Hastings nine hundred pages, great book, great book,

876
00:47:35,120 --> 00:47:38,320
Speaker 3: all that, you know, just shocking a book about Vietnam.

877
00:47:38,719 --> 00:47:41,719
Speaker 3: And the heart of the matter is we need to

878
00:47:41,760 --> 00:47:46,759
Speaker 3: get engaged forward. What's the best practice for Trump or

879
00:47:46,920 --> 00:47:50,960
Speaker 3: Harris foreign policy on November sixth, or frankly the third

880
00:47:51,000 --> 00:47:54,160
Speaker 3: week of January. What we have to avoid, what's the

881
00:47:54,280 --> 00:47:55,239
Speaker 3: new practice.

882
00:47:55,360 --> 00:47:58,040
Speaker 9: What we've got to do, Tom is avoid two extremes

883
00:47:58,080 --> 00:48:01,000
Speaker 9: which have I think really bedeviled the American farm policy

884
00:48:01,000 --> 00:48:04,200
Speaker 9: now for several decades. One is overreach, thinking we can

885
00:48:04,280 --> 00:48:06,759
Speaker 9: transform the world, kind of what w tried to do

886
00:48:06,800 --> 00:48:10,520
Speaker 9: in Iraq and Afghanistan. And the other is underreach, essentially

887
00:48:10,640 --> 00:48:14,520
Speaker 9: some flavor of neo isolation. Assuming that we have no

888
00:48:14,640 --> 00:48:16,919
Speaker 9: interest in the world, it's not worth it. We've got

889
00:48:16,920 --> 00:48:19,640
Speaker 9: to find, if you will, the Goldilock's answer, where we

890
00:48:19,719 --> 00:48:22,000
Speaker 9: continue to do what foreign policy is meant to do,

891
00:48:22,280 --> 00:48:25,440
Speaker 9: which is shape the foreign policy choices of others, shape

892
00:48:25,440 --> 00:48:28,919
Speaker 9: what the Russians do in Europe, shape what China does

893
00:48:29,000 --> 00:48:31,560
Speaker 9: or doesn't do in Asia. That's what American foreign policy

894
00:48:31,600 --> 00:48:32,000
Speaker 9: needs to do.

895
00:48:32,120 --> 00:48:34,360
Speaker 4: I mean, I'm of an age where I kind of

896
00:48:34,360 --> 00:48:36,920
Speaker 4: grew up from a political perspective and from an economic

897
00:48:36,960 --> 00:48:41,320
Speaker 4: perspective of globalization, and globalization is good, and the US

898
00:48:41,360 --> 00:48:44,600
Speaker 4: can play a leading role in globalization, and that can

899
00:48:44,640 --> 00:48:47,920
Speaker 4: be good for most, if not all, of the world

900
00:48:48,160 --> 00:48:51,680
Speaker 4: that seems to be now be in recession. Here people

901
00:48:51,680 --> 00:48:55,000
Speaker 4: who are like America first or just you know, on

902
00:48:55,160 --> 00:48:55,960
Speaker 4: shoring friendship.

903
00:48:56,000 --> 00:48:57,080
Speaker 1: I'm not sure where that You're.

904
00:48:56,960 --> 00:49:00,000
Speaker 3: Right on both counts. Globalization was good for them.

905
00:49:00,280 --> 00:49:02,200
Speaker 9: But look at look at how the economies of the

906
00:49:02,200 --> 00:49:04,520
Speaker 9: world grew at a time. For example, we had quote

907
00:49:04,560 --> 00:49:08,120
Speaker 9: unquote free trade. It wasn't perfect, not everybody benefit benefited

908
00:49:08,160 --> 00:49:11,320
Speaker 9: equally or adequately, but all things being equal, it was

909
00:49:11,800 --> 00:49:13,440
Speaker 9: I think a benign thing. But yeah, there's been a

910
00:49:13,440 --> 00:49:16,080
Speaker 9: real rejection of it. We're in an era of deglobalization.

911
00:49:16,760 --> 00:49:20,520
Speaker 9: Suddenly free trade is an endangered species. We now have

912
00:49:20,560 --> 00:49:24,239
Speaker 9: industrial planning. Increasingly, we have more and more protectionism, more

913
00:49:24,239 --> 00:49:27,279
Speaker 9: and more blocks. So yeah, globalization wasn't perfect, but the

914
00:49:27,280 --> 00:49:29,760
Speaker 9: alternative is going to cough up its own real problems.

915
00:49:29,840 --> 00:49:32,040
Speaker 3: Richard Austin, thank you for this. You know, folks, I

916
00:49:32,120 --> 00:49:36,560
Speaker 3: flag Foreign Affairs Magazine. It's a price of two Hotel martinis.

917
00:49:37,080 --> 00:49:40,520
Speaker 3: Even better. Hosts demanded that the font stay large so

918
00:49:40,560 --> 00:49:44,960
Speaker 3: you can actually read the thing. Unlike the Economist Good Morning, Zaney,

919
00:49:45,360 --> 00:49:48,759
Speaker 3: you gotta make the font bigger In the economists Ambassador House,

920
00:49:49,000 --> 00:49:52,920
Speaker 3: Chris Fhalen is killing it over at Foreign Affairs on China.

921
00:49:53,280 --> 00:49:57,399
Speaker 3: From your combine as emeritus at CFR Foreign Affairs, your

922
00:49:57,480 --> 00:50:03,480
Speaker 3: international combine can g a men away from the present Beijing.

923
00:50:03,160 --> 00:50:07,279
Speaker 9: Tone canny, yes, will he know? What he's basically done

924
00:50:07,360 --> 00:50:12,040
Speaker 9: is institutionalized the primacy of politics, person and party over

925
00:50:12,080 --> 00:50:16,200
Speaker 9: all else, even at the cost of some percentage of

926
00:50:16,239 --> 00:50:18,880
Speaker 9: economic growth, even at the cost of relations with the

927
00:50:18,920 --> 00:50:22,160
Speaker 9: outside world. This is this is not Dungshaoping's China, Tom,

928
00:50:22,160 --> 00:50:23,879
Speaker 9: This is a qualitatively different China.

929
00:50:24,000 --> 00:50:26,279
Speaker 3: My essay last year, I mean you got Liz's economy

930
00:50:26,280 --> 00:50:29,759
Speaker 3: at CFR, host throws her out the tour to go

931
00:50:29,800 --> 00:50:33,120
Speaker 3: work for Raymondo. And you feel it with Zanyang zoluy

932
00:50:33,320 --> 00:50:36,200
Speaker 3: and I hope I'm butchering that produnciation. It was my

933
00:50:36,440 --> 00:50:37,719
Speaker 3: essay of the year last year.

934
00:50:37,719 --> 00:50:40,120
Speaker 9: We've also got a very good there China expert named

935
00:50:40,200 --> 00:50:43,520
Speaker 9: David Sachs is probably the best young China scholar working

936
00:50:43,520 --> 00:50:44,319
Speaker 9: on issues of China.

937
00:50:44,400 --> 00:50:46,279
Speaker 3: What do they say we need to do? What's the

938
00:50:46,360 --> 00:50:49,800
Speaker 3: Hank Paulson pixied US for America with a new policy

939
00:50:49,840 --> 00:50:50,360
Speaker 3: on China.

940
00:50:50,440 --> 00:50:52,359
Speaker 9: Well, partially we need a new policy on us. We've

941
00:50:52,360 --> 00:50:55,400
Speaker 9: got to stay strong and more united domestically so we

942
00:50:55,440 --> 00:50:57,960
Speaker 9: can compete with China. We've got to keep our alliance

943
00:50:57,960 --> 00:51:00,320
Speaker 9: a strong above all with Japan, and we've got to

944
00:51:00,360 --> 00:51:02,239
Speaker 9: have more of a physical presence in that part of that.

945
00:51:02,520 --> 00:51:05,000
Speaker 9: We'll never get China to give up its dreams on Taiwan.

946
00:51:05,280 --> 00:51:07,600
Speaker 9: What we want to do is persuade jijiinpaying that to

947
00:51:07,680 --> 00:51:10,520
Speaker 9: act on those dreams would be Foolhardy.

948
00:51:10,280 --> 00:51:12,959
Speaker 4: Richard, please give us thirty seconds on what you see

949
00:51:12,960 --> 00:51:16,120
Speaker 4: in Ukraine and how this might play out. It feels

950
00:51:16,120 --> 00:51:17,840
Speaker 4: like it's kind of faded to the back pages of

951
00:51:17,880 --> 00:51:18,359
Speaker 4: the new news.

952
00:51:18,560 --> 00:51:20,480
Speaker 9: It has I don't think either side can prevail on

953
00:51:20,520 --> 00:51:23,080
Speaker 9: the battlefield, so somewhere in twenty twenty five, at the

954
00:51:23,120 --> 00:51:25,920
Speaker 9: latest twenty six, I believe the focus in Ukraine is

955
00:51:25,920 --> 00:51:29,440
Speaker 9: going to turn not away from the battlefield towards the

956
00:51:29,440 --> 00:51:31,279
Speaker 9: negotiating table. I think that's inevitable.

957
00:51:31,360 --> 00:51:33,680
Speaker 3: This has been wonderful. Thank you for the ample time

958
00:51:33,760 --> 00:51:36,279
Speaker 3: Richard Haas with us. We only talked about half the

959
00:51:36,280 --> 00:51:39,799
Speaker 3: themes we wanted to touch upon. He is President Emeritus

960
00:51:39,800 --> 00:51:43,960
Speaker 3: of the Council on Foreign Relations and with Centerview as well,

961
00:51:44,120 --> 00:51:47,360
Speaker 3: Senior counsel or Centerview Partners.

962
00:51:47,760 --> 00:51:52,200
Speaker 2: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

963
00:51:52,360 --> 00:51:56,000
Speaker 2: and anywhere else you get your podcasts. Listen live each

964
00:51:56,040 --> 00:51:59,440
Speaker 2: weekday seven to ten am Eastern on Bloomberg dot Com,

965
00:51:59,560 --> 00:52:03,160
Speaker 2: the radio app tune In, and the Bloomberg Business app.

966
00:52:03,440 --> 00:52:06,520
Speaker 2: You can also watch us live every weekday on YouTube

967
00:52:06,800 --> 00:52:08,600
Speaker 2: and always on the Bloomberg terminal.