Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm term Keene
Speaker 1: jay Leye. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg So
Speaker 1: what are you doing at ten am Eastern time? That
Speaker 1: is the big decision this morning? When the United States
Speaker 1: Ambassador Lightheiser testifies to a House panel, the fetes J
Speaker 1: Pal testifies to a House panel, and at the very
Speaker 1: same time, the president's former lawyer Michael Cohen testifies before
Speaker 1: a House panel. To help answer that question here in
Speaker 1: New York, Todd, Mariano, you raised a group US director
Speaker 1: and shiphap jellin news credit suite, head of FX, and
Speaker 1: a macro trading strategy. So what do you do at
Speaker 1: ten am? Todd? You've got those three screens? Which one
Speaker 1: are you watching? First of all, I try to watch
Speaker 1: all three at once, But failing that endeavor, I have
Speaker 1: to go with Lightheiser first and catching up with the
Speaker 1: other two in full later. What do you think should
Speaker 1: have I think from a pure entertainment perspective, I'd watch Coming,
Speaker 1: but I'd have to agree with Todd from a professional perspective,
Speaker 1: lighthiser comes. Yeah, it's funny that for the substance the focus,
Speaker 1: I think for many people, Tom Keane is going to
Speaker 1: be on Ambassador Lightheiser, But the distraction and the fireworks
Speaker 1: and the theater is coming from comedy. For those on radio,
Speaker 1: you just see the body language in Hannoy And as
Speaker 1: a beginning statement, it's totally different than Singapore. There at
Speaker 1: the Metropole Hotel Shob You've you've been there, John, Have
Speaker 1: you been to the metropolit Annoy? I've never been, But
Speaker 1: it's beautifully restored. It's elegant. You can buy fancy watches,
Speaker 1: you can have day what what was it, wago beef?
Speaker 1: They don't serve that on McDonald's. But the whole thing
Speaker 1: and the answer is that's a different president than what
Speaker 1: we saw in Singapore. Do you think today's events a
Speaker 1: whang on him? Somewhere? Absolutely saw it with the tweets
Speaker 1: this morning, I mean the tweets this morning, the eclectic
Speaker 1: sense of them. Todd was it was extraordinary where he
Speaker 1: is distracted by domestic issues, not that he's the first
Speaker 1: president to ever have that. He can't not be distracted
Speaker 1: by what's going on. It's it's too important to his presidency. Um,
Speaker 1: you know, certainly with with what's going on in the
Speaker 1: in the House, just in the oversight and reform let alone,
Speaker 1: you know, the various other investigations, the drip drip drip
Speaker 1: of of what comes out every day. Even his harshest
Speaker 1: critics give the President Shahab massive cred for trying to
Speaker 1: jump start a medieval kingdom towards some form of model
Speaker 1: of Asian capitalism. The President mentioned that in his comments,
Speaker 1: he's he's tremendous, I believe is the word he was.
Speaker 1: I'm paraphrasing their folks. Can he be optimistic about any
Speaker 1: sense of North Vietnam becoming like Laos Well, I think
Speaker 1: I think, having actually visited d M the DMZ some
Speaker 1: years ago and seeing that even then there were factories
Speaker 1: across the border that we're producing products for South Korea
Speaker 1: and others, the potential is clearly there, and even some
Speaker 1: of the infrastructure is already there. Uh. And with relations
Speaker 1: between South Korea and North Korea improving as well constantly, UM,
Speaker 1: we do have symplomas of hope here. But I think
Speaker 1: ultimately though It's not so much about what Trump thinks
Speaker 1: about all of this. It's the North Korea's domestic internal
Speaker 1: political structure that's very hard to read from from where
Speaker 1: I sit. For anyone waking up on Wall Street this morning,
Speaker 1: this isn't even on the radar? Is it todd? The
Speaker 1: situation in Hannoy? Is it? Is there something you're even
Speaker 1: paying attention to, Probably pay more attention tomorrow to uh,
Speaker 1: you know, actual outcomes the press conference last time and
Speaker 1: sing poor we had President Trump mentioned a couple of
Speaker 1: things during the press conference that weren't in the joint
Speaker 1: statement UM, but markets in general from a macro perspective,
Speaker 1: or as Schab was saying earlier, going to look at
Speaker 1: this from an as an up or down vote. You know,
Speaker 1: do we have a higher geopolitical risk premium um, you know,
Speaker 1: or a or a lower one or staying the same
Speaker 1: The nuance is harder at a price. And also, as
Speaker 1: you said at the top of this program, you're focus
Speaker 1: today will actually be on whatever Ambassador lighthiser has to
Speaker 1: say in front of the House panel. I just wanted
Speaker 1: to what degree the story playing out in Hannay actually
Speaker 1: folds into the trade story and China being the important
Speaker 1: piece in both. What are your thoughts on that side. Yeah, well,
Speaker 1: you know, the the chart that that Tom put up
Speaker 1: on TV earlier today is is interesting. It gets that
Speaker 1: it gets that okay more than more than okay. As
Speaker 1: as usual, Ferro didn't want me to use that chart. Explain,
Speaker 1: you don't because your focus on radios into the shot.
Speaker 1: Come on charts on radio here it is nominal GDP
Speaker 1: per capita the growth rate of the Asian nations back
Speaker 1: and Todd is is we just to quickly summarize China
Speaker 1: and Vietnam on fire, Cambodia a little less allows worse
Speaker 1: than that trailing. Yeah, this is uh, this is what
Speaker 1: I think the North Korean's what would ideally like to achieve.
Speaker 1: Of course, for for China, it's an economic opportunity as well.
Speaker 1: And what what we see across that whole region now
Speaker 1: is is competition. You know, not only over you know,
Speaker 1: just economic models and influence things like that, but you know,
Speaker 1: but certainly over technology too. So you know, China's approach
Speaker 1: here has been to um, you know, play this a
Speaker 1: little more quietly, stay behind the scenes, while uh, while
Speaker 1: the US is really out in front kind of you know,
Speaker 1: driving this semmetery with with Kim Jong Un. For them,
Speaker 1: it's a it's a longer term game. I think of
Speaker 1: economic competition. I spend a couple of it's talking about
Speaker 1: what you want to focus on a little bit later
Speaker 1: this morning, which is the hearing with Lightheiser on trait specifically,
Speaker 1: what are the missing pieces that you want some color on.
Speaker 1: I would say, UM first and foremost U S M
Speaker 1: c A. It's it's something where lawmakers have been trying
Speaker 1: to get a little bit more color from Lightheiser. Where
Speaker 1: do we um, you know, where do we stand on
Speaker 1: some of the procedural steps. UM, very importantly, where is
Speaker 1: Mexico with their labor law? And UM. You know, certainly
Speaker 1: the stealing aluminum terroffs that are still in place on
Speaker 1: Canada and Mexico ought to be lifted, you know, especially
Speaker 1: for some Republican lawmakers, you know, to give their blessing
Speaker 1: to this agreement. So some additional you know, detail from
Speaker 1: Lightheiser would would really be interesting for me, Jahab what
Speaker 1: are you looking for? But I think one of the
Speaker 1: debates in the market has been about the extent to
Speaker 1: which this apparent divide between UH some of the hardliners
Speaker 1: on China on the trade issue and light highs and
Speaker 1: might be seen as one of them, and Trump himself
Speaker 1: who's looking for a deal. Some senses as to how
Speaker 1: protracted that conflict could be if there is one, um
Speaker 1: and is it bad enough to potentially derail the talks
Speaker 1: and stop the market getting to it where it wants
Speaker 1: to with respect to this issue. Um. I don't imagine
Speaker 1: that we'll see that today, but of course if if
Speaker 1: it comes out looking negative on that front, then there
Speaker 1: could be a bit of an upset for the market
Speaker 1: on that. And I think it's good John that you
Speaker 1: bring up the China trade talks because the fact is
Speaker 1: the vast majority of Americans are completely distracted by this
Speaker 1: other stuff, and yet these are going to be substantial
Speaker 1: discussions from the Primarily the distraction will be Michael coming today,
Speaker 1: I would say, given the last twelve hours for those
Speaker 1: waking up across America right now, just the last twelve
Speaker 1: hours of the the I guess the leak of is
Speaker 1: it it too uh? Leaked to The New York Times.
Speaker 1: Of course, on the language of Mr Cohen alone brings
Speaker 1: that a new level of acuity planning to tell the
Speaker 1: committee about alleged mistates by film of box. They're going
Speaker 1: to have how many hours of this liked it today? Well,
Speaker 1: three days or two days, whatever it is. But well,
Speaker 1: of course what we're seeing now across all of news
Speaker 1: is of course these images from Hanoi as well. I
Speaker 1: think we have to leave it there, gentlemen in the
Speaker 1: news logest extraordinary. I'm going to stick with us. It's
Speaker 1: a little bit later on this actually talk about markets
Speaker 1: and in the financial markets at the back of the
Speaker 1: events in Pakistan and India right in the last couple
Speaker 1: of days, especial thanks to Todd Marianna, thank you you
Speaker 1: write A group's US director John extraordinary to see just
Speaker 1: the immediacy in the last sixty minutes of the headlines
Speaker 1: on Indian Pakistan, the econ Market Times of India says,
Speaker 1: let better sense prevail. We're willing to talk, says Mr
Speaker 1: Khan of Pakistan's that's sort of the legist nugget promise
Speaker 1: to Imran Khan is trying to make this settled down
Speaker 1: a little bit after the events of the last the
Speaker 1: last couple of days or so, the biggest escalation, I
Speaker 1: have to say in decades, India saying that an Air
Speaker 1: Force pilot was missing. After Pakistan said it has shot
Speaker 1: down to Indian fighter jets, relations between what many people
Speaker 1: consider to be arch rivals have just worsened amid the
Speaker 1: possibility potentially, of course, there is always the risk of
Speaker 1: full blown war. I want to bring in from New
Speaker 1: Delhi Ian Marlow Bloomberg, South Asia Government reporter, Ian, some
Speaker 1: fantastic reporting from the team and yourself over the last
Speaker 1: couple of days. Can you get us up to speed
Speaker 1: and where we are now, where we have been and
Speaker 1: where this is going. Yeah, at the moment, we're all
Speaker 1: still in a little bit of shock from the speed
Speaker 1: at which events have moved here. Earlier today two jets
Speaker 1: um Pakistan announced that they had shot down two jets,
Speaker 1: and then India came out and confirmed that a pilot,
Speaker 1: one of their Indian Air Force pilots was was in
Speaker 1: Pakistani custody um or at least that he was missing,
Speaker 1: missing an action. Um So, at the moment, we're all
Speaker 1: waiting to see how India responds to the developments of today.
Speaker 1: Um what pakistanalogies are two down Indian Air Force fighters
Speaker 1: And as a lot of other commentators have said, this
Speaker 1: is some of the most severe as military escalation we've
Speaker 1: seen in decades UM and UH some say dating back
Speaker 1: fifty years to the nineteen seventy one Indo Pakistani War.
Speaker 1: So Prime Minister Imran Khan Ian saying that he only
Speaker 1: took action after a ascertaining damage was done by Indian's
Speaker 1: attack on Tuesday, he called for dialogue. Essentially, he said
Speaker 1: better sense should prevail, we should sit down and talk.
Speaker 1: What is the Indian response. There hasn't been a solid
Speaker 1: Indian response to Prime Minister Khan's comments so far. UM.
Speaker 1: It would be useful to to note that over the
Speaker 1: past um year, Khan has made various gestures to India
Speaker 1: indicating that he would be happy to have some kind
Speaker 1: of peace talks with with India. But India always sort
Speaker 1: of goes back to their default position, which is that
Speaker 1: they say Pakistan sponsors terrorists UH and trains them and
Speaker 1: they strike inside India, and that they do that as
Speaker 1: a way to avoid a sort of direct military confrontation.
Speaker 1: So India says, we will not talk, and there's no
Speaker 1: point in talking unless you stop that and acknowledge that,
Speaker 1: and so at at the same time, con you know,
Speaker 1: can't come out and acknowledge that because of domestic politics
Speaker 1: and other things in India, that's what the U. S
Speaker 1: And other countries think is happening UH, and India is
Speaker 1: probably unlikely to to engage in any widespread or or
Speaker 1: sort of meaningful talks with with Pakistan at the moment.
Speaker 1: The one thing we're sort of looking at is whether
Speaker 1: there could be any sort of restricted talks in terms
Speaker 1: of getting this UH pilot back UM. And that's something
Speaker 1: that at the moment isn't quite clear because India hasn't
Speaker 1: made their made their stance known. I And as you say,
Speaker 1: it's been surprising because it's happened so quickly, the events
Speaker 1: of the last day or so. They feel somewhat clumsy
Speaker 1: the way all of this is played out in the
Speaker 1: last several hours. Your thoughts on that, Yeah, absolutely, it's
Speaker 1: been It's been pretty remarkable to UM. Each day there's
Speaker 1: something dramatically different, UM and each each side UM is
Speaker 1: claiming remarkably different set of facts here. On Monday, India
Speaker 1: said they bombed a terrorist camp and killed three people.
Speaker 1: Pack stance that nothing was hit at all, There was
Speaker 1: just some damage on a sort of hillside somewhere in
Speaker 1: the in the mountains. UM, and today we have you know,
Speaker 1: two jets, one jet, two pilots captured, one pilot captured.
Speaker 1: No one is quite sure who to believe at the
Speaker 1: moment um, it's quite clear that these are you know,
Speaker 1: very kind of diametrically opposed positions, and it's very very
Speaker 1: sort of weighted in terms of what people are allowed
Speaker 1: to say in the record. UM. You know, for example,
Speaker 1: straight whether yeah, there's twenty two major languages in India
Speaker 1: by one count all that you decide is the expert
Speaker 1: here and within those languages is an election for Mr Modi.
Speaker 1: And within the linkage of language to culture is religion.
Speaker 1: Give our viewers worldwide, our listeners rather worldwide a sense
Speaker 1: of the religion debate in India. Now after these hostilities, yeah,
Speaker 1: I mean so Kashmir is obviously a Muslim majority state,
Speaker 1: and so after the terrorist attack of earlier this month
Speaker 1: on February fourteenth, that killed forty Indian paramilitary troops, there
Speaker 1: was a strong reaction um inside UH India towards UM
Speaker 1: Kashmiris and Kashmiri businesses. You had some hotels in parts
Speaker 1: of the sort of the sort of Hindu majority states,
Speaker 1: UM saying we don't want Kashmiri's coming to our hotels.
Speaker 1: You had a a state governor who was appointed by
Speaker 1: the ruling party urging a boycott of Kashmir so saying
Speaker 1: Indians shouldn't go there for tourism, you shouldn't frequent Kashmiri businesses.
Speaker 1: And I mean obviously most most Kashmiris are Muslim And
Speaker 1: this is very waited kind of fraud language coming ahead
Speaker 1: of an election. And and the U S government you know,
Speaker 1: has warned in the past that as elections approach in India, UM,
Speaker 1: there could be religious clashes and that's something that a
Speaker 1: lot of analysts are are waiting to see. Um. No
Speaker 1: one you know has expected, um a sort of India
Speaker 1: Pakistan confrontation has the election and obviously, um, you know,
Speaker 1: Pakistan does play up every once in a while. The
Speaker 1: treatment of of Muslims in India and always great to
Speaker 1: get your thoughts and inside from from the team fantastic
Speaker 1: Bloomberg South Asia Government reported Carol Rick Odonna, where us
Speaker 1: a Bloomberg Economics. He and tim O Haiti have published
Speaker 1: on all things Pole. But first let's go to Janna Smilek,
Speaker 1: who is in the trenches of looking question to question Jenna,
Speaker 1: is the chairman gonna have to face today political questions
Speaker 1: from a Democratic House? Is there going to be a
Speaker 1: much more political chit chat than what we witnessed yesterday?
Speaker 1: You know, it's an interesting question. We did see some
Speaker 1: political chit chat yesterday. You know, there were questions about
Speaker 1: the fact that, you know, Donald Trump. Actually Jenny Ellen's
Speaker 1: comments from earlier this week that Donald Trump really is
Speaker 1: doing got raised. I think you could definitely see more
Speaker 1: of that. You're also likely to see Powell kind of
Speaker 1: dem and choose not here. I know that, okay, but
Speaker 1: let's cut to the theater. Let's cut to the theater
Speaker 1: with the news law John Farrell says, what's a trade
Speaker 1: representative testimony? Not this song and dance? Okay? Sell me
Speaker 1: on why I need to watch Powell? Is he going
Speaker 1: to answer any questions from from democratic socialists? I mean,
Speaker 1: let's cut to the chase. Is he going to have
Speaker 1: to bounce off socialism today? It's an interesting question. He
Speaker 1: certainly pushed back heavily on this idea that death that
Speaker 1: don't matter in a country that is the reserve currency.
Speaker 1: Yes r and I thought that his pushback on that
Speaker 1: was really full throated, certainly more definitive than I would
Speaker 1: have expected from Chair Power. I think. Also it's going
Speaker 1: to be really interesting to watch to see if he
Speaker 1: gets asked more about the SIDS current rethink. You know,
Speaker 1: they are considering prentically going to some sort of average
Speaker 1: inflation targeting or price level targeting regime rather than the
Speaker 1: symmetric regime that they're right now. And he got asked
Speaker 1: about that yesterday. This is a big deal for the FED,
Speaker 1: this this whole year long process symmetric symmetric teacher. Yeahs interesting.
Speaker 1: Is he going to be asked about the collapse of Duke?
Speaker 1: I mean, what do you think? I mean, one can
Speaker 1: only hope. Okay, Gina smile like a chapel hill. Thank
Speaker 1: you so much for joining us. And there's a drinking
Speaker 1: game over the over the last twenty four hours and
Speaker 1: into today as well. Do you want to know what
Speaker 1: the buzzword is? Do it for the second day of
Speaker 1: the testimony is not due. It's not my lane. Oh,
Speaker 1: it's not my line. When Chamon Pal says it's not
Speaker 1: my lane, that's when you have a shot. And I
Speaker 1: imagine you'll be getting a lot more drunk today than
Speaker 1: you've got yes, I would think so as well. Carl
Speaker 1: rickodon Here, why don't you bring in Mr Rickodna, who
Speaker 1: knows the multiple lanes of the American economy. Boom Bag
Speaker 1: Economics chief US economist Carlie says that a lot doesn't he.
Speaker 1: I don't think it's fair when you are at the
Speaker 1: controls of the largest economy in the world and the
Speaker 1: FED chair is like it or not to say that's
Speaker 1: not in my lane. Everything pretty much falls under your
Speaker 1: But he still says it, right, Yeah, he can say
Speaker 1: that they can. The FED can deny they're responsible for
Speaker 1: participation trends and productivity growth and all those good things. Uh,
Speaker 1: they have to be held accountable lot. To some extent,
Speaker 1: the Chairman's had some difficulty with communication over the last
Speaker 1: year or so. Some sounded pretty good, pretty good day
Speaker 1: going into the second day. Is that why we watch
Speaker 1: this still? Just in case? Is it that? Just in case?
Speaker 1: It is interesting? Absolutely, and so ordinarily the prepared testimony
Speaker 1: that the speech he reads that the that the onset
Speaker 1: is identical on day two. It doesn't have to be identical.
Speaker 1: So if there is a misstatement or a big market
Speaker 1: move on day one, they can tweak the language. There
Speaker 1: wasn't a big market move yesterday, So I don't expect that.
Speaker 1: I want to framework to be your Bloomberg intelligence in
Speaker 1: Bloomberg economics work, which is you have certainly your job
Speaker 1: is not to predict what the Fed will do, but
Speaker 1: you have stated very coherently, here's why we're going to
Speaker 1: see a rate rise or even two of them. That's
Speaker 1: the backdrop of all this chit chat, isn't it is?
Speaker 1: He's never been as far away from the markets as
Speaker 1: he is right now. Absolutely, I think the Fed has
Speaker 1: been rattled. Uh, they've lost a little bit of their
Speaker 1: confidence after what happened in Q four and the less,
Speaker 1: you don't raise rates when equities are already down about
Speaker 1: twelve percent going into the meeting unless you really want
Speaker 1: to create a foul mood. And so they did that.
Speaker 1: They made that communications blunder, and they had to backtrack.
Speaker 1: As a result, they're now less confident that they have
Speaker 1: the tea leaves right in the economy. And so I
Speaker 1: think we're now looking at a more reactionary FED in
Speaker 1: twenty nineteen compared to eighteen. And that reactionary behavior means
Speaker 1: that as we get more inflation heading into mid year,
Speaker 1: they're gonna reverse course on a bad day. Where's the inflation?
Speaker 1: Just because the inflation inflation for the last eight years
Speaker 1: doesn't mean they'll be wrong in twenty nineteen. Here's where
Speaker 1: the inflation is. It's in goods, it's in services, it's
Speaker 1: in wages. Inflation is up forty BIPs over the course
Speaker 1: of the last year. That acceleration is going to extend
Speaker 1: into nineteen as the economy continues to operate above trend
Speaker 1: dangerous words and economics, this time is different. What is
Speaker 1: different in twenty nineteen. We've gone through full employment and
Speaker 1: we're starting to see changes the voice. The voice changes.
Speaker 1: He knows what's coming. Is that you should see him.
Speaker 1: He can bring a bar to a complete halt. On
Speaker 1: Newtonian I've decided that I prefer timohitie, Why don't you
Speaker 1: step in here and look alone? Rick Odonna fired up
Speaker 1: inflation second half of the year. Okay, so the feed
Speaker 1: sits there, inflation starts creeping a little bit higher. Then
Speaker 1: all the duom crew come out and say, twenties coming,
Speaker 1: it's not going to be pretty. Why do they hike
Speaker 1: into that? Sure, they hike into that because they simply
Speaker 1: won't have the tolerance to sit on their hands as
Speaker 1: they reassess economic conditions at mid year and realize, Okay,
Speaker 1: we had a bit of a soft patch towards the
Speaker 1: end of eighteen and the first part of nine team,
Speaker 1: we had an earnings recession, possibly not an outright recession,
Speaker 1: and earnings recession that has subsequently passed, and we have
Speaker 1: an economy operating above trend. We have inflation above their target,
Speaker 1: and we have wage pressures at the highest at the
Speaker 1: fastest pace of the cycle, and we're seeing evidence that
Speaker 1: those wage pressures are indeed passing through into consumer prices.
Speaker 1: And they realize a setting of zero on real interest
Speaker 1: rates is not What about the argument the inflation is
Speaker 1: on the shelf for so long that we need to
Speaker 1: let an overshoot take place for a little while. Well,
Speaker 1: this site is happening very pumpluent, something Gina highlighted and
Speaker 1: something they're considering. Do you simply reset the clock every
Speaker 1: year on January one and say, let's aim for two
Speaker 1: percent this year, or do you say we need to
Speaker 1: make up for lost time? Really important, and this is
Speaker 1: the at the FED, and they're not clear on what
Speaker 1: the answer what is the history, What is the history
Speaker 1: of the quote overshoot unquote? Can they can they establish
Speaker 1: a policy to overshoot two percent? It's not in their DNA,
Speaker 1: it's not in their history. It's not in history. It's
Speaker 1: not in their DNA. If we're looking at me, absolutely
Speaker 1: asymmetric by definition, and you can see that in inflation expectations.
Speaker 1: Right as soon as we're overshooting their two percent target,
Speaker 1: they're gonna panic and start pushing more heavily on the intrket.
Speaker 1: How many basis points does a tenure pop um? Given
Speaker 1: the asymmetric nature, nature, the lack of history, we get
Speaker 1: the rick of Donna world. What's it gonna do to
Speaker 1: my portfolio on my yield market? Sure well, it's gonna
Speaker 1: push yield back up to the levels I think that's
Speaker 1: a fair assessment. Or even more, as we return to
Speaker 1: what yields looked like in the latter half of last year,
Speaker 1: those are still pretty low yields. The real yield will
Speaker 1: be the unreal yield because real yields will disappear. Can
Speaker 1: bring an important point. The FED is gonna let the
Speaker 1: market lead the way on this. If FED doesn't want
Speaker 1: to job own the market into rate hikes. If Fed's
Speaker 1: gonna sit back and say patient, patient, patient until the
Speaker 1: market is crying for rate hikes, and then jed to
Speaker 1: oblige you touched on something important. Car. Just to wrap
Speaker 1: this conversation up, real rates at the Federal Reserve, we
Speaker 1: are barely real. We are essentially at zero. Sensitive are
Speaker 1: they to that the economy has never slowed or gone
Speaker 1: into recession with rates as low as they are right now?
Speaker 1: Yet yet people think we might have gone through neutral
Speaker 1: with the rate where it is right now. And then July,
Speaker 1: when we're next talking about the semianual testimony of the
Speaker 1: FED chair on Capitol Hill, will reassess and say we
Speaker 1: weren't at neutral and the economy is still growing above trend.
Speaker 1: You've gotta be proud. Did you see how Pharaoh jumped
Speaker 1: right there to elasticities and FED dynamics. You're going to
Speaker 1: test those elasticities. Donna very Um, Crystal very Newton about
Speaker 1: the second half of this year in ran the minute
Speaker 1: at the at the Tower, I wanted to have a
Speaker 1: good discussion now with where we are in two thousand
Speaker 1: nineteen and maybe project to the future of our fractious
Speaker 1: international relations in the Pacifics, and you can, of course
Speaker 1: do that with James Travitas, formerly with Tough University, now
Speaker 1: the Carlisle Group and noted author. But I think I
Speaker 1: need to step back, as I have the last few days, Admiral,
Speaker 1: in trying to bring a little history into what is
Speaker 1: west of the Red River, what is near the wonderful
Speaker 1: like of the restored sword in Hanoi, and discussions of
Speaker 1: a prison and discussions of a hotel where the President
Speaker 1: eight and just left moments ago. But let me begin
Speaker 1: with your Hanoi of seventy two, when you wandered out
Speaker 1: to San Diego on the US Jewett. What was Vietnam
Speaker 1: like when you first put out the sea. What a
Speaker 1: wonderful question, Tom. The war was on the down slope.
Speaker 1: You'll recall we had withdrawn almost all of the U.
Speaker 1: S troops at that point. We were continuing to fund
Speaker 1: the South Vietnamese security forces. They were holding their own
Speaker 1: against the viet Cong. And then, unfortunately, before I even
Speaker 1: left the Naval Academy UH by seventy five, we cut
Speaker 1: off that funding. Saigon fell now a toki Min city
Speaker 1: helicopters lifting off the rooftop from the Embassy's not a
Speaker 1: good outcome. Flash forward, now these forty plus years, we're
Speaker 1: in a positive relationship with Vietnam. I never could have
Speaker 1: imagined that back in the nineteenth seven. What should those
Speaker 1: older think, who remember the name Alvarez and remember the
Speaker 1: name Thompson, our two longest POWs, how should they interpret
Speaker 1: where we are in two thousand nineteen. I have spoken
Speaker 1: to many of the POWs over the years, including to
Speaker 1: the most famous of them, Senator John McCain, who spent
Speaker 1: seven years in the Hanoi Hilton. I had visited his
Speaker 1: cell in the Hanoi Hilton, the Prison Hilton, and uh,
Speaker 1: they will tell you universally the POWs that they are
Speaker 1: happy to see a reduction intentions between the United States
Speaker 1: and Vietnam. Um. They have risen above the pain in
Speaker 1: the anguish they went through, and we had to salute
Speaker 1: every single one. How do you, as a former admiral
Speaker 1: and retired with a great distinction, and as an author,
Speaker 1: how do you interpret the President's tweet this morning going
Speaker 1: after the Senator from Connecticut, who I believe was a
Speaker 1: Marine reservist, and with the various deferments and and and
Speaker 1: all that, how do you interpret that tweet? This morning,
Speaker 1: Admiral Um, I'm disheartened by it. I think this is
Speaker 1: a Senator Bluementhal who's not only a Marine Corps veteran,
Speaker 1: h he has a son who's a seal and another
Speaker 1: son who's a Marine Corps officer. Um, he's someone Blumenthal
Speaker 1: who cares deeply about the country. What I hate to
Speaker 1: see going both ways, Tom, is this ad hominum attitude
Speaker 1: of personal attack. We've got big policy issues we have
Speaker 1: to solve as a nation. Let's rise above the horrible
Speaker 1: tweets and the name calling in the insults. Let's get
Speaker 1: after what we have to get done, to include solving
Speaker 1: this challenge with North Korea. Give us an update on
Speaker 1: where we should be with a DMZ in North Korea
Speaker 1: in two years or in five years. I'd say, in
Speaker 1: the most optimistic case, in two years we will have
Speaker 1: obtained an inventory of North Korean nuclear weapons. I think
Speaker 1: in five years we may be able to put in
Speaker 1: place an international observation regime around those nuclear weapons. But Tom,
Speaker 1: I'll tell you the bad news is, I think the
Speaker 1: chances of Kim john On actually giving up those weapons
Speaker 1: completely are roughly the same as the chances of the
Speaker 1: Mexicans paying for the wall. I'd say they approach negative infinity.
Speaker 1: So we've got to be mindful of how we can
Speaker 1: contain his nuclear capability. Uh, the President's dealing with a
Speaker 1: very tricky, very lethal foe in these negotiations. I wish
Speaker 1: him well, but I'm very concerned. I've been surprised and
Speaker 1: well if you're just joining us. James trevidis with us
Speaker 1: with a Carlisle group, and we're thrilled that he could
Speaker 1: be with us on this historic to day. The President
Speaker 1: meeting again with Mr Kim of North Korea. They have
Speaker 1: just had dinner at the Metropole in North Korea and
Speaker 1: the President has left all twenty minutes ago or so
Speaker 1: from that dinner in the late night of Hannoi, Vietnam.
Speaker 1: Almos Trevidez. There is Busan naval base, which I believe
Speaker 1: is the follow on South Korean naval based to JENNI
Speaker 1: explain our support of South Korea and what South Korea
Speaker 1: needs to see from this summit. I'm glad you bring
Speaker 1: that up, Tom, because we spend way too much time
Speaker 1: yelling at the North Koreans and not enough time talking
Speaker 1: to the South Koreans who understand the North Koreans in
Speaker 1: three dimensional ways that we will never completely get. So
Speaker 1: you mentioned Bussan, the naval base in the South. It's
Speaker 1: emblematic of this deep military and intelligence and cyber relationship
Speaker 1: we have with South Korea. What the South Koreans want
Speaker 1: to see is war avoidance, but they also want to
Speaker 1: see continued deterrence of Kim's not only his nuclear force
Speaker 1: tom but his conventional forces. He is one of the
Speaker 1: largest standing armies in the world. He has extensive stocks
Speaker 1: of chemical and biological weapons. If we do solve the
Speaker 1: nuclear problem, the South Koreans want us there to continue
Speaker 1: to deter those conventional forces. Whether Democrat or Republican, How
Speaker 1: do we affect a policy or initiate a policy with
Speaker 1: North Korea given what is clear documented human rights abused,
Speaker 1: as you mentioned chemical weapons just as one idea, but
Speaker 1: I mean some of the reports I've seen, which I
Speaker 1: would suggest folks are documented ore outright labor camps which
Speaker 1: are literally out of the fiction of Game of Thrones,
Speaker 1: except it's not Hollywood or or London based fiction. It's real.
Speaker 1: How do we affect a policy with a nation like that,
Speaker 1: or a regime I should say like that you know.
Speaker 1: Henry Kissinger said to me once, Tom that every time
Speaker 1: we solve a problem, we are presented with a key
Speaker 1: to a door through which lies the next problem. And
Speaker 1: if we can solve the nuclear problem, I would argue
Speaker 1: that door that we're going to open is going to
Speaker 1: have to leave us ultimately to further sanctions on North
Speaker 1: Korea for running these labor camps. And I would direct
Speaker 1: your readers. You and I always talk about books. I
Speaker 1: would direct your readers to a National Book Award winner,
Speaker 1: The Orphan Master's Son by Steve Johnson, which is a
Speaker 1: searing portrait of this utopian society. Which door does China
Speaker 1: want opened? And by Beijing? And I don't mean the
Speaker 1: fixation I have on Shanghai or Hong Kong or that,
Speaker 1: but the northeast China and that river across the North Korea.
Speaker 1: Which uh door does China want opened? On? Off this summit.
Speaker 1: I'll tell you the one that don't want opened is
Speaker 1: they don't want a war on the Korean peninsula because
Speaker 1: that would open the door to millions of refugees flowing
Speaker 1: into China. Okay, so there's twenty that there's twenty five
Speaker 1: million admiral in North Korea. How many of those millions
Speaker 1: would would drift over into China off of twenty three
Speaker 1: or million, five, five to seven million, And so China
Speaker 1: has skinned in the game here. And I would argue
Speaker 1: the Korean Peninsula is a problem we can solve with
Speaker 1: China because to get to Kim, all roads to pun
Speaker 1: Yang in the end top be to Beijing. We've got
Speaker 1: to get China in the game. Four party talks are
Speaker 1: the way to go. Let's get out of this one
Speaker 1: on one between the President and Chairman Kim James Travitas,
Speaker 1: thank you so much. I am so choked up emotionally
Speaker 1: that I'm gonna have to have you bring in our
Speaker 1: next esteem guest. Folks, it's impossible to believe this. It's
Speaker 1: sort of like the end of Raiders Have Lost Arc
Speaker 1: where they take the Ark into the Pentagon and it's
Speaker 1: you know wherever they are in the warehouse. If I
Speaker 1: take the Ark into the warehouse and it's lost there
Speaker 1: somewhere out there on the Bloomberg terminal is the audio
Speaker 1: of my first time I was ever on Bloomberg Radio.
Speaker 1: I have that audio. We need to get it. I
Speaker 1: was the sweat, I was so nervous and shaking as
Speaker 1: I was grilled and they say grilled by our next guest,
Speaker 1: and she was a saint to let me get through
Speaker 1: exactly by lengthy interview of two minutes seconds. Well, that
Speaker 1: would be the one June Grosso. June is co host
Speaker 1: of Bloomberg Politics, Policy, Power and Law, and that's every
Speaker 1: day at twelve Eastern in uh in the East shop.
Speaker 1: I haven't eight years, I know, it just comes by
Speaker 1: my desk. And so June, we're looking here at this
Speaker 1: on the our monitor here in Michael Cohen. The folks
Speaker 1: in conquissrgating seat and getting ready for this. So this
Speaker 1: Michael Cohen hearing that is coming up the testimony, What
Speaker 1: do you expect to really here today? May I first
Speaker 1: paraphrase Betty Davis who said, fasten your seatbelts. It's going
Speaker 1: to be a bumpy ride today. There's a lot of
Speaker 1: uncertainty here, Isn't there there is? But if you know,
Speaker 1: I'd read his statement, his opening statement, and that's just
Speaker 1: the opening salvo, and he starts out saying that President
Speaker 1: Trump is a racist, a comment of cheat, and then
Speaker 1: he goes into specific instances and specific incidents that we
Speaker 1: have been talking about for perhaps two years back it up.
Speaker 1: Is it loyally? It's not. It's it's not loyally, except
Speaker 1: that there is a part where he backs up what
Speaker 1: he says some of what he says with evidence. And
Speaker 1: you know, we've talked about this before, but it's very
Speaker 1: important because they're going to attack him as and he
Speaker 1: admits he's a liar. He's a convicted liar. Okay, But June,
Speaker 1: you know you're too young to remember the John Dene moment.
Speaker 1: I you know, remember the John Dee moment. I'm looking
Speaker 1: at the cameras right now. This is a huge, huge
Speaker 1: turnout for this hearing. Are we going to have a
Speaker 1: John Dene moment like in Watergate of lore? It might
Speaker 1: be close to a John Dene moment? Remember something, John Dene,
Speaker 1: his testimony became so riveting and so important because it
Speaker 1: was then backed up by the tapes, the tapes, the
Speaker 1: Nixon tapes. In this instance, you're not likely going to
Speaker 1: have that. You may have some canceled not only that,
Speaker 1: you have canceled checks, you have financial records that he
Speaker 1: sent to Deutsche Banks. So you do have. And that's
Speaker 1: why I say it is loyally in part because he
Speaker 1: does have the backup, and I think that you're going
Speaker 1: to hear things that people have said and we're suspected,
Speaker 1: and he's going to say they're true. For example, you're
Speaker 1: going to hear about the hush money payments to Stormy Daniels.
Speaker 1: That's the canceled check. Yes, Um, I'll explain that you
Speaker 1: after after the show. Okay, Um, the hush mon payments
Speaker 1: to Stormy damimals that he knew about the release of
Speaker 1: the hacked wiki leaks and things that Michael Cohen heard,
Speaker 1: things that he saw, And I think his testimony also
Speaker 1: has a sort of um literary side to it. I mean,
Speaker 1: he's he has certain things that he says that that
Speaker 1: you will appreciate. He said, uh that Donald Trump is
Speaker 1: a man who ran for office to make his brand great,
Speaker 1: not to make our country great. So there are little
Speaker 1: things sprinkled in there that you'll ensure. You think there's
Speaker 1: a smoking gun that will come out today. I think
Speaker 1: that when it won't be so much of smoking gun.
Speaker 1: We know the smoking gun now because we've seen his testimony.
Speaker 1: That's a smoking gun. But things that we have been
Speaker 1: questioning for years. Taxes, you know, all the financial statements,
Speaker 1: the dealings with Russia. This is the man who did
Speaker 1: all that, who was his personal attorney, his fixer. So yeah,
Speaker 1: I think they're gonna be some moments where there might
Speaker 1: be bombshell moments and it and it depends on what
Speaker 1: they ask. What is his approach here so he does
Speaker 1: not jeopardize his future with other prosecutions, other legal events.
Speaker 1: I don't think he is. I don't think he's considering that.
Speaker 1: I think he's going all out for it. He's facing prison.
Speaker 1: He's not a jail yet. He's going to be in
Speaker 1: jail for three years, and um no, there's this is
Speaker 1: the thing. In order for him to reduce that prison Tom,
Speaker 1: you have to have a prosecutor come forward and say
Speaker 1: to a judge, Judge, I want you to reconsider this
Speaker 1: because the Southern District prosecutors are not happy with him
Speaker 1: because he lied to them to start out with. Mueller
Speaker 1: has already really dealt with him. So the question is
Speaker 1: who would do that? So he is going to go
Speaker 1: all out here. I can't imagine him holding anything back
Speaker 1: except for what Muller has said. He can't because I
Speaker 1: have legal representation today. Or is he just showing up
Speaker 1: as a guy on his way to prison. He does
Speaker 1: have legal representation. However, I think that it's going to
Speaker 1: be mostly you're going to hear people object and that,
Speaker 1: you know, in other ways, you can't say that because
Speaker 1: we have this smaller investigation going on, that will be
Speaker 1: the only thing that stops him. And let's just say
Speaker 1: one thing, because the Republicans are going to attack him
Speaker 1: as a liar. But I just want to remind everyone
Speaker 1: that in courtrooms across the country today, they're going to
Speaker 1: be people who are the prime witnesses for the prosecution,
Speaker 1: who have lied, who have cheated, who have stolen, and
Speaker 1: they'll be believed by juries because they'll have corroboration. Important
Speaker 1: so aside, and you bring up the good point, which
Speaker 1: is this, obviously this is not a jury trial, and
Speaker 1: it's more about public relations and getting information out there. Arguably,
Speaker 1: But if if I'm a Republican senator on this community today,
Speaker 1: what's my most effective way to challenge the testimony of
Speaker 1: Michael Cohen. You're a convicted liar. You lied before, Why
Speaker 1: should we believe you now? Why aren't you lying now? Different?
Speaker 1: Because he'll give a piece of evidence, right, he will.
Speaker 1: For some of this he can't get evidence for all
Speaker 1: of this, and even some of the evidence. You know,
Speaker 1: I can imagine, and you know what is very I've
Speaker 1: struck me this morning. Some of the ramblings of Rudy
Speaker 1: Giuliani makes sense. Now. Remember when he remember when he
Speaker 1: described he kept backing, backing up about the Stormy Daniels
Speaker 1: hush payments, and finally he said, well, we really will
Speaker 1: have a talk after promise. Yeah, that's okay, No, but
Speaker 1: he will say he said, all of a sudden he
Speaker 1: came out with this, Well, there were payments that came
Speaker 1: into the into his lawyer's office, and his lawyer then
Speaker 1: and now we see why there's a canceled check. Yeah.
Speaker 1: So it's thank you so much, pleasure, appreciate, and I
Speaker 1: am willing to borrow over that tape I have of you.
Speaker 1: It's out there, folks, it's it's out there, and soon
Speaker 1: they'll be testimony in front Congress. Wonderful always to have
Speaker 1: June Grass with us with her patients a few years ago.
Speaker 1: So thanks for listening to the Bloomberg Surveillance podcast. Subscribe
Speaker 1: and listen to interviews on Apple Podcasts, SoundCloud, or whichever
Speaker 1: podcast platform you prefer. I'm on Twitter at Tom Keene
Speaker 1: before the podcast. You can always catch us worldwide. I'm
Speaker 1: Bloomberg Radio.