WEBVTT - Aerospace Bulks Up

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<v Speaker 1>Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.

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<v Speaker 1>Along with my co host Lisa Abramowitz. Each day we

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<v Speaker 1>bring you the most important, noteworthy, and useful interviews for

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<v Speaker 1>you and your money, whether you're at the grocery store

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<v Speaker 1>or the trading floor. Find the Bloomberg P M L

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<v Speaker 1>Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Well,

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<v Speaker 1>there's a setup for us talking about United Technology and

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<v Speaker 1>its acquisition of Rockwell Collins twenty three billion dollars the

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<v Speaker 1>price tag. Joining us now Doug Rothacker. He is our

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<v Speaker 1>Bloomberg intelligence expert when it comes to all things aerospace

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<v Speaker 1>and defense. Uh, Doug, thanks very much for being with me.

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<v Speaker 1>Maybe you could just explain what this is going to do,

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<v Speaker 1>first of all, to the industry and the two largest customers,

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<v Speaker 1>Boeing and Airbus. Yes, good morning, thanks for having me.

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<v Speaker 1>So the first thing is that this creates the world's

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<v Speaker 1>largest aerospace supplier, you know, forty billion dollar portfolio stretching

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<v Speaker 1>basically the inside and outside of the aircraft kind of

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<v Speaker 1>knows to tail engines, avionics, interiors, communications, etcetera. So that

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<v Speaker 1>obviously helps in protective pricing and competitive pressures. You know,

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<v Speaker 1>both among tiers and with Bowing and Airbus. And then

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<v Speaker 1>the other point I would make is that you know,

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<v Speaker 1>we've seen supplier consolidation pick up steam here over the

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<v Speaker 1>past year, and I suspect this trend obviously not to

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<v Speaker 1>this size you up and down the supply chain will

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<v Speaker 1>will continue. The supplanting suppling is really getting squeezed by

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<v Speaker 1>Bowing and Airbus from a pricing standpoint. So obviously this

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<v Speaker 1>is a way that they can u combat those challenges

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<v Speaker 1>with greater scale. Doug, maybe just give us a little

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<v Speaker 1>insight into how the industry works. Is it possible for

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<v Speaker 1>a company like United Technologies, let's say, post merger, uh

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<v Speaker 1>post acquisition with Rockwell Collins, to be able to go

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<v Speaker 1>to Boeing and say, look, you know you want to

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<v Speaker 1>buy these this Avionyx pack edge and you want to

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<v Speaker 1>buy this seat upgrade package. We've got the b E

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<v Speaker 1>Aerospace or what was formally b Aerospace in the portfolio.

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<v Speaker 1>Oh and by the way, we'd like to sell you

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<v Speaker 1>our geared turbo fan engines. Will give you, you know,

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<v Speaker 1>a discount if you take all three. Right. So I

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<v Speaker 1>would say not only to Bowing Airbus, but also to

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<v Speaker 1>the customers. Remember they the UH the one key factor

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<v Speaker 1>with the b Airspace acquisition is the large exposure to

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<v Speaker 1>direct consumer you know, the airline UH customers, So they

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<v Speaker 1>can go right to airline customers with better pricing, you know,

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<v Speaker 1>given this greater scale, UH And obviously you know there,

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<v Speaker 1>you would expect them to be able to do the

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<v Speaker 1>same directly to bowing an airbus. So I think you,

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<v Speaker 1>I think you hit the nail on the head, all right.

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<v Speaker 1>So having said that, maybe just lead us now into

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<v Speaker 1>what this does have specifically to United Technologies, because does

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<v Speaker 1>it really need to be a conglomerate that has an

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<v Speaker 1>h v A C systems business us A an otis

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<v Speaker 1>elevator and escalator business, Right, So I think that will

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<v Speaker 1>be the biggest question on investor's mind over the next

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<v Speaker 1>year as this plays out. They expect to close the

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<v Speaker 1>deal by the third quarter of two as an eighteen.

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<v Speaker 1>And it was a pretty pointed comment they had in

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<v Speaker 1>the press release announcing the deal that after the close

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<v Speaker 1>of the of the acquisition they're going to pursue any

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<v Speaker 1>and all strategic uh, you know, opportunities for United Technologies.

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<v Speaker 1>And I think that was a clear uh discussion or

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<v Speaker 1>a point to the potential for a breakup. Uh you know,

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<v Speaker 1>they've talked consistently about how they feel their shares are

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<v Speaker 1>you know, under appreciated if you will, in the marketplace

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<v Speaker 1>and undervalue, and so obviously being able to split the

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<v Speaker 1>companies up where you have larger multiples for the industrial

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<v Speaker 1>uh peers is obviously a way to be able to

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<v Speaker 1>do that. So I think in the near term that's

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<v Speaker 1>kind of on the back burner until they uh you know,

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<v Speaker 1>a focus over the next year is going to be

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<v Speaker 1>paying down a lot of the debt that they're taking

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<v Speaker 1>on uh to finance this deal. Um. But I think

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<v Speaker 1>when you get into mid end late next year that

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<v Speaker 1>that will be really a focus among the investment community

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<v Speaker 1>of what, you know, what this company looks like over

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<v Speaker 1>the next few years. And I suspect the possibility or

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<v Speaker 1>the probability, I should say, of them breaking up is

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<v Speaker 1>greater than not at this point, Doug, I beg your

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<v Speaker 1>pardon just to just to remind me again which is

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<v Speaker 1>the higher margin business and which demands the higher multiple. Sure,

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<v Speaker 1>so they have otis elevator business and h fact business,

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<v Speaker 1>and both of those uh peers in those industries command

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<v Speaker 1>greater multiples than than what you would see in the

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<v Speaker 1>aerospace business. So would that embolden management to split off

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<v Speaker 1>that business because they wanted what reward shareholders for having

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<v Speaker 1>held those companies in the portfolio beg your pardon, no problem.

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<v Speaker 1>They would just want to essentially unlocked the value that's

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<v Speaker 1>basically tied tied down if you will, right now by

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<v Speaker 1>being they're essentially gonna be overweight aerospace businesses by about

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<v Speaker 1>six percent. Now, So if you think about the multiple

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<v Speaker 1>that could be extracted or or seeing what you know,

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<v Speaker 1>high cash flow business and high margin businesses that you

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<v Speaker 1>have with the elevator and HVACT businesses um either with

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<v Speaker 1>a strategic barger excuse me, strategic buyer or in the

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<v Speaker 1>public space, uh, you know, would likely be more than

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<v Speaker 1>what they would realize as a conglomerate. Right. Yeah. The

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<v Speaker 1>shares of UT actually United Technologies are down about three

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<v Speaker 1>and three quarters of a percent. Shares of Rockwall Collins

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<v Speaker 1>up three quarters of a percent. Rockwell Collins earlier in

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<v Speaker 1>the year, I believe it was April, they closed on

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<v Speaker 1>that deal to buy b E Aerospace. So we're gonna

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<v Speaker 1>see even more consolidation. Who's left, Yeah, I think big

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<v Speaker 1>deals like this, there's really not many left. But I

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<v Speaker 1>would say, you know, up and down the supply chain

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<v Speaker 1>that there will be a considered effort to grain to

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<v Speaker 1>gain greater scale. Spirit Aero Systems, although they've kind of

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<v Speaker 1>walked a little bit back on the discussion. You know,

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<v Speaker 1>Spirit air Systems as Boeing's largest supplier, and up until

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<v Speaker 1>recently they even said that they were looking for possible

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<v Speaker 1>acquisitions in this space. So uh, you know, again, deals

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<v Speaker 1>of this size probably are likely, but I would suspect

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<v Speaker 1>that you would see uh, situations occur um for the

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<v Speaker 1>supply chain to be able to gain greater scale and

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<v Speaker 1>you know, fight the Bowing and airbus price and pressure

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<v Speaker 1>and after market pressure that they're seeing. Doug, just to

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<v Speaker 1>give you about thirty seconds or so, I know that

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<v Speaker 1>everybody's got a huge backlog for aircraft and we're predicting,

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<v Speaker 1>you know, we're gonna add lots of new airplanes, quieter, faster,

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<v Speaker 1>all that. This is a cyclical business, isn't it. It is.

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<v Speaker 1>We're ten years into the airspace cycle right now, and

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<v Speaker 1>you kind of wonder about the legs that are left.

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<v Speaker 1>I think, based on Bowing and airbus production rates, you know,

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<v Speaker 1>we see a few more years of increased production, particularly

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<v Speaker 1>with the narrow bodies, but we've seen wide body production

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<v Speaker 1>come down, particularly with the transition to the Bowing Triple

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<v Speaker 1>seven as they work into their their Triple seven X program. Um.

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<v Speaker 1>You know, Airbus A Brady production is being cut. Um,

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<v Speaker 1>So there's concerns in the wide body production rates and

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<v Speaker 1>you know about the legs if you will, of this

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<v Speaker 1>aerospace cycle. We gotta leave it there at Thanks very much,

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<v Speaker 1>Doug Rothor. He is our Bloomberg intelligence expert when it

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<v Speaker 1>comes to all things aerospace and defense. Now we're scheduled

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<v Speaker 1>to talk to Tom Hanlon. He is the global investment

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<v Speaker 1>strategist that has sent private capital management at US Bank

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<v Speaker 1>and he joins us from Minneapolis. Tom, thank you for

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<v Speaker 1>being with us. Maybe you could just start off by

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<v Speaker 1>I thought this was an interesting point that you made

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<v Speaker 1>that the U. S consumer appears indifferent to whatever the

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<v Speaker 1>volatility is, whether it is US politics or geopolitics. American

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<v Speaker 1>consumers are just going on their merry way. Where do

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<v Speaker 1>you what does that amply? Well, good morning, Tom, and

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<v Speaker 1>uh yeah, and it's not just the US consumers, it's

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<v Speaker 1>consumers worldwide. But you know, you look at the data,

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<v Speaker 1>and consumers keep on consuming and manufacturers keep on manufacturing,

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<v Speaker 1>no matter the headline is, whether it's domestic politics or geopolitics.

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<v Speaker 1>And uh um yeah, yeah. I mean you look at

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<v Speaker 1>the market action today. Um, you know, we're down a

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<v Speaker 1>little on the SMP, but more on the financials um

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<v Speaker 1>than the broad markets. That tells us that the action

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<v Speaker 1>is less to do with with North koreanda was over

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<v Speaker 1>the weekend and more to do about people's perceptions of

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<v Speaker 1>the FED. So where do you come down? I mean,

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<v Speaker 1>do you buy this notion that the consumer is going

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<v Speaker 1>to continue to spend and that manufacturing companies that continue

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<v Speaker 1>to make things regardless of what goes on in Washington

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<v Speaker 1>or another political capitals. Yeah. I mean if you look

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<v Speaker 1>at the just the underlying trends of just the broad

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<v Speaker 1>economy or or labor market or uh you know globally

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<v Speaker 1>not just in the United States but elsewhere. Um, it's

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<v Speaker 1>it's fairly sanguine. I mean, it's not aggressive to the

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<v Speaker 1>point where central banks are going to tighten aggressively. It's

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<v Speaker 1>not so a weak that that you're getting concerned about

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<v Speaker 1>the consumer. And you know, the synchronized recovery gets set

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<v Speaker 1>a lot, but it's more like a lack of dispersion

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<v Speaker 1>in growth rates around the world. So everybody is low,

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<v Speaker 1>everybody's slow, but positive and and that's a pretty decent

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<v Speaker 1>back drop for kind of all participants. Okay, So if

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<v Speaker 1>that's the backdrop and that's the position, are you and

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<v Speaker 1>all in bull we have written, we have been and

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<v Speaker 1>remain um pro risk in terms of client portfolios. We

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<v Speaker 1>we still tilt towards equities relative to fixed income on

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<v Speaker 1>our primary uh places where we look to invest are

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<v Speaker 1>still United States, Europe, in Japan where we still have

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<v Speaker 1>the highest confidence about the economics fundamentals. Have you taken

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<v Speaker 1>any profits lately? No, we haven't. We haven't many material

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<v Speaker 1>changes to our to our outlook on I think our

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<v Speaker 1>diligence and vigilance of risks is probably uh increased based

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<v Speaker 1>on the political landscape and and also domestic politics. UM,

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<v Speaker 1>but we still we still remain um kind of on

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<v Speaker 1>our trajectory of the narrative that we have, which is

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<v Speaker 1>pro growth and progres sense. So does that mean that

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<v Speaker 1>you're focusing on technology stocks? What specific industry groups can

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<v Speaker 1>you share with us? The NASDAK is up more than

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<v Speaker 1>this year. Yeah, I mean, we're still mostly broad market

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<v Speaker 1>participants on you know, anything that that benefits from a

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<v Speaker 1>low inflation um uh a fed's accommodative policy. So that's

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<v Speaker 1>that's still good for free domestic us consumption. And because

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<v Speaker 1>the global growth backdrop um U s exporters are still

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<v Speaker 1>a good place to be as well, because then I

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<v Speaker 1>never seen that in the manufacturing data. Well, tell us

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<v Speaker 1>about your view on the dollar, because that has been

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<v Speaker 1>weakening after a run of strength earlier in the year.

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<v Speaker 1>If the dollar continues to weaken or you're going to

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<v Speaker 1>see increased commodity prices, but that will be offset by

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<v Speaker 1>increased sales overseas. I think that's probably a fair assessment. Um.

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<v Speaker 1>You know another uh sort of backdrop of of a

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<v Speaker 1>week or dollar that also tends to be good for

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<v Speaker 1>UM four markets on you know, it's a good construct

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<v Speaker 1>for emerging market equities to have a dollar sound more

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<v Speaker 1>of a weakening trend and a than a strengthening trend.

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<v Speaker 1>And and uh, you know the dollar and you may

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<v Speaker 1>see it the act today coming out to Labor Day

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<v Speaker 1>weekend with the news, um it's actually weaker rather than

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<v Speaker 1>stronger today and the end's not really acting um terrely

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<v Speaker 1>volpal today, So again it tells us that's more about

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<v Speaker 1>the Fed and people trying to price in whether there's

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<v Speaker 1>a rate hike between now and your end than anything else. Well,

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<v Speaker 1>do you believe that there will be a rate hike

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<v Speaker 1>by the Federal Reserve this year? Our base case has

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<v Speaker 1>been that we were likely to see one before the

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<v Speaker 1>end of the year. UM, And we just continue to

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<v Speaker 1>monitor that and obviously got a lot of speakers this

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<v Speaker 1>week from the Fair Reserve as well to watch for it.

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<v Speaker 1>But you haven't seen this wage growth in the United States?

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<v Speaker 1>Does that temper your enthusiasm? Yeah, it's really been stubborn.

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<v Speaker 1>And it's not just the US phenomena. It's it's global

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<v Speaker 1>and it there's probably um, it's probably bifurcated in different industries.

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<v Speaker 1>You probably get wage growth in some industries where we

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<v Speaker 1>have u not a lot of supply a labor, and

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<v Speaker 1>then you know it's offset again in the areas where

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<v Speaker 1>you've got kind of surplus of labor, so it kind

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<v Speaker 1>of comes out in little wage growth. We still think

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<v Speaker 1>that we're going to see that. We still think that

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<v Speaker 1>that in general, UM, with positive economic conditions and positive consumption,

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<v Speaker 1>that that wage growth will come all right. I want

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<v Speaker 1>to thank you for for joining us, Thanks for giving

0:12:22.600 --> 0:12:24.640
<v Speaker 1>us your thoughts. You're you're a bull? Can we say

0:12:24.640 --> 0:12:28.920
<v Speaker 1>that you're a bull? But with caution? Does that make sense?

0:12:30.520 --> 0:12:33.040
<v Speaker 1>That makes all right? Good, We'll leave it there. Thanks

0:12:33.120 --> 0:12:35.840
<v Speaker 1>very much. Tom Handling, he is the global investment strategist

0:12:36.120 --> 0:12:40.320
<v Speaker 1>at Ascent Private Capital Management at a US bank. Joining

0:12:40.400 --> 0:12:56.560
<v Speaker 1>us from Minneapolis. Well, in addition to immigration or another

0:12:56.640 --> 0:13:00.559
<v Speaker 1>topic that has drawn the attention of lawmakers as well

0:13:00.559 --> 0:13:04.000
<v Speaker 1>as the administration, of course, is North Korea. Joining me

0:13:04.040 --> 0:13:06.800
<v Speaker 1>now is Dr Robert Pape. He is the author and

0:13:06.840 --> 0:13:09.959
<v Speaker 1>a professor of political science at the University of Chicago,

0:13:10.080 --> 0:13:14.040
<v Speaker 1>and he is the director of Chicago Project on Security

0:13:14.160 --> 0:13:18.240
<v Speaker 1>and Terrorism. Dr Pape, thanks very much for being with us.

0:13:18.760 --> 0:13:23.079
<v Speaker 1>You've written that the economic sanctions will not work with

0:13:23.160 --> 0:13:27.199
<v Speaker 1>North Korea. Tell us a little bit about your reasoning. Um,

0:13:27.280 --> 0:13:32.600
<v Speaker 1>China is not going to enforce the tight sanctions that

0:13:32.679 --> 0:13:37.360
<v Speaker 1>would really bite. And the reason is because China does

0:13:37.400 --> 0:13:41.600
<v Speaker 1>not want the North Korean regime to collapse. If the

0:13:41.640 --> 0:13:46.040
<v Speaker 1>North regian North Korean regime collapses, there's a very good

0:13:46.120 --> 0:13:49.760
<v Speaker 1>chance that US and South Korean troops would rush right

0:13:49.800 --> 0:13:53.240
<v Speaker 1>into North Korea, possibly up to the border with China.

0:13:53.720 --> 0:13:58.320
<v Speaker 1>That's exactly the scenario that led China to intervene in

0:13:58.360 --> 0:14:01.679
<v Speaker 1>the Korean War in the nineteen fifties. This is a

0:14:01.800 --> 0:14:06.600
<v Speaker 1>vital national security interest to China, and so bullying China

0:14:06.800 --> 0:14:09.600
<v Speaker 1>threatening to cut off trade with China, this is not

0:14:09.720 --> 0:14:12.920
<v Speaker 1>going to work, um and so we really need to

0:14:13.040 --> 0:14:17.400
<v Speaker 1>look for an alternative track because at the moment, Trump's

0:14:17.400 --> 0:14:21.600
<v Speaker 1>strategy of coercive diplomacy is backfiring. So what is the

0:14:21.640 --> 0:14:25.880
<v Speaker 1>alternative track? In your opinion, the alternative track is to

0:14:26.080 --> 0:14:31.480
<v Speaker 1>build on the cooperation among the six parties that worked

0:14:31.520 --> 0:14:34.840
<v Speaker 1>in the second part of the Bush administration. The best

0:14:34.920 --> 0:14:39.480
<v Speaker 1>we've gotten, the most we've frozen the North Korean regime's

0:14:39.640 --> 0:14:43.440
<v Speaker 1>nuclear program was from two thousand and six to two

0:14:43.480 --> 0:14:46.640
<v Speaker 1>thousand and nine when the Bush administration. This is no

0:14:46.760 --> 0:14:52.000
<v Speaker 1>wimpy administration, UH engaged in six party talks which actually

0:14:52.040 --> 0:14:54.480
<v Speaker 1>had quite a bit of effect all the way through

0:14:54.520 --> 0:14:58.880
<v Speaker 1>the end of Bush's presidency. This is something we need

0:14:58.920 --> 0:15:02.040
<v Speaker 1>to restart, and in fact we can involve. We could

0:15:02.080 --> 0:15:06.840
<v Speaker 1>evolve our current policy of pushing forward tough stenctions into

0:15:06.920 --> 0:15:14.200
<v Speaker 1>a common economic policy on North Korea, common among China, Russia,

0:15:14.440 --> 0:15:19.360
<v Speaker 1>the United States, South Korea, Japan. This would create a

0:15:19.400 --> 0:15:23.960
<v Speaker 1>real alliance against North Korea that would have some bite

0:15:24.040 --> 0:15:27.080
<v Speaker 1>over time. Well, how likely is that given the current

0:15:27.080 --> 0:15:30.720
<v Speaker 1>administration and the rhetoric that you've heard, not only from

0:15:30.760 --> 0:15:34.400
<v Speaker 1>the President but also from the Secretary of Defense. Well,

0:15:34.440 --> 0:15:36.640
<v Speaker 1>I think what you've seen over the last month is

0:15:36.680 --> 0:15:41.160
<v Speaker 1>actually the administration, Um, speaking of two minds. When you

0:15:41.200 --> 0:15:44.640
<v Speaker 1>hear Secretary Tillerson and you hear Secretary Mathis, they really

0:15:44.640 --> 0:15:49.720
<v Speaker 1>are moving more in the direction of deterrence, containment, working

0:15:49.720 --> 0:15:53.920
<v Speaker 1>with allies. Um. I'm afraid President Trump's rhetoric has not

0:15:54.040 --> 0:15:57.360
<v Speaker 1>been particularly helpful. And in fact, in the last two weeks, Um,

0:15:58.120 --> 0:16:01.360
<v Speaker 1>what we've seen is the North Korean have increased their

0:16:01.400 --> 0:16:04.120
<v Speaker 1>threat to the United States. It's still far, it's still

0:16:04.120 --> 0:16:07.440
<v Speaker 1>not you know, it's not today. Um. But nonetheless, we

0:16:07.520 --> 0:16:11.240
<v Speaker 1>need an alternative track, and I believe that Secretary Tilorson

0:16:11.280 --> 0:16:15.640
<v Speaker 1>and Maddis actually um uh would are are seeking such

0:16:15.680 --> 0:16:20.840
<v Speaker 1>a track. Are they finding any willing partners? Well, Um,

0:16:20.920 --> 0:16:24.280
<v Speaker 1>what we see is that with North ko with North Korea, noticed,

0:16:24.320 --> 0:16:29.080
<v Speaker 1>the partners are pretty obvious their China, their Russia, their Japan,

0:16:29.240 --> 0:16:32.960
<v Speaker 1>and their South Korea, UM Secretary Tilerson, that's where he

0:16:33.040 --> 0:16:37.720
<v Speaker 1>has been. He has been with our partners, working with them.

0:16:37.760 --> 0:16:41.160
<v Speaker 1>So UH. The the what has really become quite clear

0:16:41.240 --> 0:16:45.960
<v Speaker 1>now is that the current strategy of heavy handed coercive

0:16:46.000 --> 0:16:51.560
<v Speaker 1>diplomacy is simply backfiring. UH. This continuing a failing strategy

0:16:51.720 --> 0:16:55.240
<v Speaker 1>is only likely to cause South Korea and Japan to

0:16:55.320 --> 0:16:59.640
<v Speaker 1>lose confidence in US leadership, which could create more instability

0:16:59.640 --> 0:17:03.840
<v Speaker 1>in the region. So the alternative is to work with

0:17:04.040 --> 0:17:10.720
<v Speaker 1>South Korea, Japan, China again toward a common economic policy

0:17:10.880 --> 0:17:14.359
<v Speaker 1>on North Korea. Well, I'm sure it's not lost on

0:17:14.600 --> 0:17:18.240
<v Speaker 1>either the Chinese leadership or indeed the Russian President Vladimir

0:17:18.240 --> 0:17:24.119
<v Speaker 1>Putin that nuclear weapons, while aimed in a specific direction,

0:17:24.359 --> 0:17:30.040
<v Speaker 1>you don't necessarily have complete control over such such weaponry.

0:17:30.200 --> 0:17:33.000
<v Speaker 1>And China and Russia are awfully close to North Korea.

0:17:33.040 --> 0:17:36.480
<v Speaker 1>Are they not concerned about any fallout from any potential

0:17:37.040 --> 0:17:41.240
<v Speaker 1>military activity that would hurt them? I think they are. UM.

0:17:41.280 --> 0:17:44.640
<v Speaker 1>In two thousand, UM twelve and thirteen, I was involved

0:17:44.680 --> 0:17:49.760
<v Speaker 1>in some talks in Beijing UH at the People's Liberation

0:17:49.880 --> 0:17:54.720
<v Speaker 1>Army National Defense University where they were openly and explicitly

0:17:54.840 --> 0:18:00.439
<v Speaker 1>concerned about North Korea's uh nuclear program, and for very

0:18:00.520 --> 0:18:04.080
<v Speaker 1>much the reasons you suggest, which is um it is

0:18:04.480 --> 0:18:08.520
<v Speaker 1>um um. North Korea's nuclear weapons don't pose simply a

0:18:08.560 --> 0:18:10.920
<v Speaker 1>threat to the United States. They pose a threat to

0:18:11.080 --> 0:18:14.600
<v Speaker 1>all of those parties UM. And in fact, the fragility

0:18:14.680 --> 0:18:16.960
<v Speaker 1>of the North Korean regime. If if the North Korean

0:18:16.960 --> 0:18:19.800
<v Speaker 1>regime were to collapse, you have a loose nukes problem,

0:18:19.800 --> 0:18:23.120
<v Speaker 1>which is going to scare everybody in Beijing as well

0:18:23.160 --> 0:18:26.520
<v Speaker 1>as in uh, Tokyo or Soul. So you have a

0:18:26.600 --> 0:18:31.280
<v Speaker 1>situation where the six parties here really have a tremendous

0:18:31.320 --> 0:18:35.600
<v Speaker 1>amount in common. Uh. They are ready are talking with

0:18:35.640 --> 0:18:38.639
<v Speaker 1>each other. Um. And what we I think would be

0:18:38.720 --> 0:18:41.760
<v Speaker 1>very helpful would be to evolve the current set of

0:18:41.800 --> 0:18:46.760
<v Speaker 1>discussions away from essentially a failed strategy toward a more

0:18:46.840 --> 0:18:49.960
<v Speaker 1>productive outcome that we could see over the next two

0:18:50.080 --> 0:18:55.480
<v Speaker 1>or three years. Really um providing stability among the key

0:18:55.560 --> 0:18:58.160
<v Speaker 1>allies that we need if we're ever going to get

0:18:58.160 --> 0:19:00.879
<v Speaker 1>a grip on the North Korean problem. Thank you for

0:19:00.960 --> 0:19:04.280
<v Speaker 1>joining us. Dr Robert Pape is the author and professor

0:19:04.400 --> 0:19:07.960
<v Speaker 1>political science at the University of Chicago and director of

0:19:08.000 --> 0:19:14.800
<v Speaker 1>the Chicago Project on Security and Terrorism. Thanks for listening

0:19:14.800 --> 0:19:17.719
<v Speaker 1>to the Bloomberg P and L podcast. You can subscribe

0:19:17.720 --> 0:19:21.320
<v Speaker 1>and listen to interviews at Apple Podcasts, SoundCloud, or whatever

0:19:21.359 --> 0:19:24.879
<v Speaker 1>podcast platform you prefer. I'm Pim Fox. I'm on Twitter

0:19:25.119 --> 0:19:28.640
<v Speaker 1>at pim Fox. I'm on Twitter at Lisa Abramo. It's

0:19:28.720 --> 0:19:31.719
<v Speaker 1>one before the podcast. You can always catch us worldwide

0:19:31.760 --> 0:19:32.720
<v Speaker 1>on Bloomberg Radio