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Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you,

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Speaker 1: along with my co host Lisa Brahma wits. Each day

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Speaker 1: we bring you the most noteworthy and useful interviews for

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Speaker 1: you and your money. Whether at the grocery store or

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Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple

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Speaker 1: podcast or wherever you listen to podcasts, as well as

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Speaker 1: at Bloomberg dot com. Well, we're back to green on

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Speaker 1: the screen risk on. It appears that the geopolitical risk

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Speaker 1: that have been royaling markets over the past couple days

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Speaker 1: seems to have abated here. We might be at the

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Speaker 1: tail end of that, but let's get some color on

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Speaker 1: the Middle East in general and what's going on between

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Speaker 1: us and around. There's nobody better to do that with

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Speaker 1: than our friend Jack Divine, Jack's founding partner and president

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Speaker 1: of the ark And Group, was also the former chief

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Speaker 1: of CIA's worldwide operations, and it's also the author of

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Speaker 1: a great book, Good Hunting, a Spymaster Story, which I

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Speaker 1: do recommend. Jack. Thanks so much for joining us here

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Speaker 1: in our Bloomberg Interact their Brokers studio. So the past

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Speaker 1: few days have been very event all the US, Iran

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Speaker 1: give us your sense of what President Trump tried to

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Speaker 1: do when he took out this general, right. I think

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Speaker 1: the first thing I would say is this is the

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Speaker 1: really the first real challenge in the foreign policy arended

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Speaker 1: that the president his face, the stakes were as high

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Speaker 1: as high as you got. Um. The other thing that

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Speaker 1: I would note is when you look at the decision

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Speaker 1: making process, there was a process where people did input,

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Speaker 1: He made a made a decision. I think the turning point,

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Speaker 1: and particularly for him, was when the embassy was charged.

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Speaker 1: Right now, whether the ronny has actually thought they were

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Speaker 1: going to get as far and they planned, but that

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Speaker 1: was where the red line was really covered. When I

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Speaker 1: saw that, I knew there was going to be a

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Speaker 1: major kinetic response by the president. And I think in

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Speaker 1: the end, so the money was just on the list

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Speaker 1: and he moved up for a long time. Many of

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Speaker 1: the people in intelligence military area, we're hoping somebody would

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Speaker 1: authorize his removal. Now he's been around a long time.

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Speaker 1: It's not that he's a bad guy. You're really talking

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Speaker 1: about the core of terrorism for Iran for the last

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Speaker 1: twenty five years. So that was a major blow. And um,

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Speaker 1: I think as I read the paper today, when they

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Speaker 1: went to the hill, Um the intelligence community, UM said

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Speaker 1: on the balance, take him out. When you were listening

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Speaker 1: to President Trump's announcement about the events and basically declaring victory,

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Speaker 1: although not doing a victory dance, his first comments were

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Speaker 1: about not having nuclear weapons in Iran. Why was that

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Speaker 1: so important to you? I think it's the most important

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Speaker 1: part of the speech because the time, by the time

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Speaker 1: he stood up on the podium, that we had already deescalated.

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Speaker 1: Ranny said this is the end of it. And once

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Speaker 1: they said that made it possible to move on. I

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Speaker 1: think the key point here, and if you're sitting in

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Speaker 1: to run, the key sentences you will not have a

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Speaker 1: nuclear weapon, all right. That is as hard of a

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Speaker 1: red line as you can get. So, as I mentioned offline,

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Speaker 1: and I have a lot of respect for the run

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Speaker 1: as I used to run around in operations in the

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Speaker 1: mid eighties, they are very very good, very smart at negotiationing,

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Speaker 1: finding the right line, and I think what they did

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Speaker 1: demonstrated their sensitivity to it. If I were in to

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Speaker 1: run and heard the first sentence, I think the conclusion

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Speaker 1: is would be, you know, we're not going to have

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Speaker 1: nuclear weapons, so how do we turn this into an advantage,

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Speaker 1: and that is why don't we act like we're getting

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Speaker 1: a nuclear weapon and get back to the table and

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Speaker 1: negotiate away something we're never going to have anyway. So

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Speaker 1: I think there's a real possibility here that in the

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Speaker 1: weeks ahead there will be some movement towards returning to

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Speaker 1: negotiations and a back off of this, because I think

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Speaker 1: at the end of the day, I think Trump did

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Speaker 1: demonstrate that, you know, we're not just looking to go

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Speaker 1: to the war. They're finding the cruise missiles should be

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Speaker 1: a reminder you know, this is not going to be

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Speaker 1: a bloodless event. So Jack, you know, part of the

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Speaker 1: administration's I guess reasoning for UH doing this operation against

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Speaker 1: this general was that there was evidence of an imminent attack.

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Speaker 1: Do you think that's accurate. I don't know if it

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Speaker 1: was accurate. I think it's the wrong question, not from you,

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Speaker 1: but from the world. I would have asked, is he

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Speaker 1: going to stop what he's been doing for twenty five years?

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Speaker 1: If you go back and taking down bombing our embassy,

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Speaker 1: kidnapping a CIA official torture, I mean, when was it

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Speaker 1: going to stop A thousand I think people ustimator that

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Speaker 1: kind of racist question, why now is it? Well, I

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Speaker 1: think the impeachment sitting there looks awful convenient, and we've

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Speaker 1: seen it before from presidents President Clinton. I think the

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Speaker 1: trigger was actually the assault on the embassy that okay,

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Speaker 1: they backed off with what happens tomorrow, and there was

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Speaker 1: not going to be Benghazi, so it was I'm not

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Speaker 1: saying this is a fact because I don't know, but

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Speaker 1: my assumption is the threat was considered so real that

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Speaker 1: we were vulnerable. The only way you back them off.

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Speaker 1: And I would make this this one point. We here

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Speaker 1: in the United States often underestimate, both in the policy

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Speaker 1: arena in the private community, what power means. In the

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Speaker 1: Middle East. You really have to exercise. And I'm not

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Speaker 1: saying you have forced issues, but it is very much

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Speaker 1: respected and it should be used audiciously. If you don't

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Speaker 1: use it, you also open up Pandora's box. There's a

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Speaker 1: question here. If this was a true de escalation that

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Speaker 1: we've seen and it's done, then it's being perceived by

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Speaker 1: yourself included as a big victory for President Trump. Some

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Speaker 1: people say, look over to North Korea, what message does

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Speaker 1: this send to Kim Jong un? It's a it's a

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Speaker 1: win for America, and I think we need to look

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Speaker 1: at that. I mean, this is a big setback for

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Speaker 1: terrorism and put a new red line down. I mean,

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Speaker 1: this is important to us. The second thing is one

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Speaker 1: of the problems we have an international relation is how

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Speaker 1: we roll in the war is when we have misjudgments

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Speaker 1: about each other. That's why I like dialogue in private

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Speaker 1: as well as public, so that we never misjudge each other,

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Speaker 1: or we have read phones that we can communicate. But

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Speaker 1: in every capital of the world after this, there was

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Speaker 1: a recalibration, I promise you. In in in North Korea,

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Speaker 1: they're sitting there saying, okay, there there are new red lines.

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Speaker 1: And you should realize that America and this administration is

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Speaker 1: prepared to use power in ways that have not been

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Speaker 1: used for some time. What would you say to somebody

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Speaker 1: who said that that Kim Jong is actually emboldened to

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Speaker 1: create a nuclear weapon now in order to prevent a

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Speaker 1: drone from taking him out. Well, he has nuclear weapons.

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Speaker 1: That's the that's the challenge in this equation. Um, and

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Speaker 1: once you have one, uh, it put you a new

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Speaker 1: ball game. Was none of us Well, I'm just worldwide,

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Speaker 1: no one can withstand a single nuclear attack, it changes

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Speaker 1: the way the world will look at itself going forward.

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Speaker 1: So he has to be dealt with differently than UH

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Speaker 1: than Iran, and you have South Korea the neighbor. So

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Speaker 1: I think the challenge here is to get him to

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Speaker 1: not make any more and maybe over time to Amelia

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Speaker 1: to lesson ceful back off. I don't think he'll ever

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Speaker 1: give up the nuclear weapons, but we might be able

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Speaker 1: to freeze them, and that's basically what's been going on

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Speaker 1: in the past year. If we can hold that position,

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Speaker 1: that may be the best that we can hope for.

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Speaker 1: But I do promise you that he's going to calibrate.

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Speaker 1: If he fires a missile, better not be too near

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Speaker 1: an American chip or that one of our allies. It'll

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Speaker 1: he will calibrate them, do not. I mean, he and

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Speaker 1: the Koreans have been looking at us the way the

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Speaker 1: Uranians do. They study us day and night, and his

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Speaker 1: next move will be just like the assault by Iranians,

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Speaker 1: will be a calibrated one. But I think it's much

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Speaker 1: better for everybody around the world that's in a power

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Speaker 1: position to look at us as if we would use power.

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Speaker 1: It does it reduces tension. I mean reduces UH confrontation,

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Speaker 1: not increases them. Jack Divine, so great to have your perspective.

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Speaker 1: Thank you so much for being here with us. Jack

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Speaker 1: Divine is founding partner and president of the Arkan Group,

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Speaker 1: former chief of CIA's worldwide Operations who has personal experience

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Speaker 1: negotiating with a lot of it, a lot of the

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Speaker 1: nations that we're talking about, So really a pivotal perspective

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Speaker 1: here for us to be getting well. We speak to

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Speaker 1: a lot of economists here on this program, and I

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Speaker 1: think the consensus is that as it relates to US

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Speaker 1: GDP growth in maybe two ish, which is still growing obviously,

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Speaker 1: but slower than what we've become accustomed to. But it's

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Speaker 1: often good to talk to the folks in the corporate

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Speaker 1: c suite to get a sense of what their economic

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Speaker 1: outlook is. And our next guest does just that, Sandy Cockerell,

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Speaker 1: Global CFO program leader at Deloitte based in New York City. Sandy,

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Speaker 1: thanks so much for joining us. I know you guys

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Speaker 1: just came out with your fourth quarter CFO survey. What

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Speaker 1: are some of the key takeaways? So, Paul, thanks very much. Yeah,

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Speaker 1: our fourth quarter survey really kind of centered on three

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Speaker 1: themes that came across. Number one, Um, CFOs are are cautious.

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Speaker 1: Number two we saw a fair amount of pessimism, and

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Speaker 1: number three really some defensive posturing that's starting to happen. Uh.

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Speaker 1: Of the CFOs expect a downturn to to to hit

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Speaker 1: US sometime by the end of But the silver lining

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Speaker 1: there is only three expect a technical recession. So that's

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Speaker 1: actually improved from when we asked this question back in

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Speaker 1: the first quarter. It's also buttressed by the fact when

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Speaker 1: we looked at growth metrics that are forecasted over the

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Speaker 1: next twelve months around revenue, earnings, capital spending, hiring, those

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Speaker 1: all those projections were down as well and sit really

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Speaker 1: at near low levels of our history of our survey.

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Speaker 1: I'm wondering whether if you were to do this survey now,

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Speaker 1: it would be different. Do you think so given a

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Speaker 1: fact that we've got some sort of trade truths between

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Speaker 1: the US and China, Uh, they might be feeling a

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Speaker 1: little more positive. Uh. Possibly in discussions I have with

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Speaker 1: clients and in the marketplace. Um, again, you really hit

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Speaker 1: the nail on the head. The real key is around

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Speaker 1: trade policy, and I think if we could get to

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Speaker 1: a point where we had a deal, especially with the

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Speaker 1: US China trade policy, you'd really see a tail wind

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Speaker 1: here pick up pretty quickly. So send it just to

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Speaker 1: be clear, think there's going to be a recession in

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Speaker 1: or just a slowing, a slow down, a downturn. So

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Speaker 1: and when we asked this question back in the first

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Speaker 1: quarter at that point expected a downturn by the end

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Speaker 1: of but fient, we're expecting an actual technical recession. That

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Speaker 1: number is now only three per sense, so certainly an improvement.

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Speaker 1: And what people were thinking nine months ago, did they

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Speaker 1: say anything about the rising costs of commodities for workers

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Speaker 1: as wages rise, how much that's sort of affecting their

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Speaker 1: outlook am paired with the opportunities for them to actually

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Speaker 1: increase profits. Yeah, so in terms of external concerns, trade

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Speaker 1: policies number one. But rising labor and input prices certainly

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Speaker 1: is something that they've gotten on. The labor type market

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Speaker 1: is just so tight, um and not only is it tight,

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Speaker 1: you know, what we're seeing is the you know kind

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Speaker 1: of really the revitalization the change in workforce for for

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Speaker 1: holly skilled labor. And that's really on the mind of CFOs,

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Speaker 1: is you really have to pay for that talent, So Sandy,

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Speaker 1: one of the things just thinking about CFOs and and

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Speaker 1: the c suite in general, it's not just the bottom

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Speaker 1: line and delivering results the shareholders, is also seemingly greater

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Speaker 1: demands upon you know, being a good corporate citizen, whether

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Speaker 1: it's the environment. What are CFOs saying about some of

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Speaker 1: the pressures or some of the responsibilities and demands that

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Speaker 1: are being placed upon them that maybe they didn't have

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Speaker 1: a generation to go right. So this this quarter we

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Speaker 1: ask some special questions around climate change UM and we

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Speaker 1: actually work together with our European colleagues and the surveys

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Speaker 1: that they execute very similar findings. But over seventy of

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Speaker 1: the CFOs have noted at least moderate pressure coming from employees, investors,

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Speaker 1: customers and boards in terms of dealing with climate change

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Speaker 1: as the CFO and what can the CFO do to help?

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Speaker 1: Over n of those CFOs have said they've taken at

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Speaker 1: least one action, and that typically has been to really

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Speaker 1: review energy footprints UM, how do they use energy efficiently

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Speaker 1: throughout their operations UH, and then looking to build those

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Speaker 1: kind of governance processes in place to make sure that

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Speaker 1: there's accountability around it going forward. I'm wondering how consider

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Speaker 1: distant the view out of CFOs really was. I mean,

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Speaker 1: in other words, uh, was the disparity between CFOs and

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Speaker 1: different industries bigger than it has been in the past,

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Speaker 1: or was there more convergence. One thing that we noted

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Speaker 1: UM was was in terms of this coming year, over

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Speaker 1: two thirds of the CFOs expect m and a consolidation

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Speaker 1: in certain industries and technology and manufacturing led that. So

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Speaker 1: that should make the bankers happy. So, Sandy, I know

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Speaker 1: you're your surveys global. What are you hearing from some

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Speaker 1: other parts of the world as CFOs think about you know,

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Speaker 1: some of these global CFOs think about their global business. Yes,

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Speaker 1: So this survey was was primarily of North American CFOs,

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Speaker 1: but we did ask their views of the European and

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Speaker 1: Chinese economies. UM your Their view of the of the

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Speaker 1: European economy is predismal. Only seven percent felt like the

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Speaker 1: European economy was good at this point and only five

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Speaker 1: percent expected to improve in a year. UM. With respect

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Speaker 1: to China, a teen percent view it is good, but

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Speaker 1: only eleven expect an improvement in a year. And that's

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Speaker 1: pretty interesting because when we ask about where investment focus

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Speaker 1: is going to increase. North America really is kind of

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Speaker 1: the dominant the rough. It still has a s approval

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Speaker 1: writing in terms of being good at this point. But

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Speaker 1: one thing that was quite interesting, Uh, these companies thirty

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Speaker 1: seven percent of them said that they were beginning to

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Speaker 1: look at increased investment focused in Asia but outside of China. Interesting.

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Speaker 1: Sandy Cockroll, thank you so much for being with us.

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Speaker 1: Sidney Cockroll is global CFO program leader at de Lloyd

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Speaker 1: in New York. Talking about their latest Q four CFO

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Speaker 1: Signals report on what all of those c suite executives

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Speaker 1: are thinking in a year had really interesting, how barish

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Speaker 1: they sound. It's interesting even as you think about Europe,

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Speaker 1: for example, we've seen the economic data coming out there

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Speaker 1: suggesting that, you know, perhaps it's stabilizing there and maybe

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Speaker 1: about to turn um. But you know, I guess the

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Speaker 1: folks in the C suite that are responsible reporting capital

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Speaker 1: or work, maybe they don't see it quite so much. Yea.

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Speaker 1: And we talked about how much more some of these

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Speaker 1: companies had to pay in wages. Taco bell Is evidently

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Speaker 1: offering a hundred thousand dollar salaries for restaurant managers. That

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Speaker 1: that really caught my eyes and just how much the

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Speaker 1: fast food industry in the US is changing in the

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Speaker 1: face of low unemployment rates. The hot take on Carlos

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Speaker 1: Gone and his press conference yesterday, Hell, hath no fury

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Speaker 1: like a CEO scorned. The pennment of those lots of

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Speaker 1: that particular line is Jonas Sarah, who's a calumnist for

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Speaker 1: Bloomberg Opinion, and he joins us at this time as

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Speaker 1: we normally do, get some insight from our Bloomberg Opinion colleagues. Joe, Uh,

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Speaker 1: you were watching yesterday, what was your impression of the Yeah, okay, okay,

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Speaker 1: you know I was I was going to call it

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Speaker 1: a cluster, but uh, you didn't aster risk on air

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Speaker 1: basically carry on, Okay, So um, I thought that he

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Speaker 1: he was Carlos Gone. He was arrogant, he was condescending,

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Speaker 1: he was angry, he was um entitled the expressive eyebrows. Yes,

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Speaker 1: and hands too, I might have hands. And then you know,

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Speaker 1: then we got the Q and A and it's basically

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Speaker 1: the person who yelled aloud has got to ask the question.

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Speaker 1: It was kind of crazy, but you know, it was

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Speaker 1: a man who clearly viewed his job as getting revenge

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Speaker 1: on the prosecutors who had locked them up all that time,

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Speaker 1: and and a Nissan a company. He feels completely betrayed

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Speaker 1: by um. Whether that's justified or not. I mean, on

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Speaker 1: some level it is justified. On on some other level, uh,

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Speaker 1: you know, not very many people will get to escape

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Speaker 1: to another country, UM and avoid prosecution. One of the

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Speaker 1: things that I'm learning through this whole process is I'm

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Speaker 1: getting learning about the Japanese indicial system. And I was

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Speaker 1: unaware that they that the I guess the defendant has

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Speaker 1: seems like fewer rights than you have here in the US,

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Speaker 1: and that if you do get go to travelers conviction

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Speaker 1: level something crazy like that. So does he have some

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Speaker 1: legs to stand on here? His argument about it was

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Speaker 1: an unfair conspiracy. Ah, he Well, that's two different issues.

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Speaker 1: One one is how how do the Japanese treat people

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Speaker 1: that they put in prison? The answer is they call

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Speaker 1: it hostage They don't call it hostage justice for no reason.

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Speaker 1: I mean, the idea is that they're going to extract

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Speaker 1: the confession out of you one way or the other.

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Speaker 1: They make your life completely miserable. They put you in

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Speaker 1: solitary confinement, lights around all the time, eight hours of

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Speaker 1: interrogation a day, they can re arrest you and re

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Speaker 1: arrest you. And that's what happened to him. So on

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Speaker 1: that count absolutely, On the conspiracy count, we don't really no.

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Speaker 1: I mean, his view is that Nissan wanted to get

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Speaker 1: rid of them, and the way they did it was

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Speaker 1: they went to the prosecutors and conspired with them to

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Speaker 1: to gin up a bunch of phony allegations. That's what

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Speaker 1: he says. Is that true? We don't no. But I

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Speaker 1: think one of the things that's gonna happen is we're

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Speaker 1: gonna find out because he's gonna put his facts out there,

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Speaker 1: Nissan is gonna put and it's gonna be a war

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Speaker 1: of words for the next six months to a year.

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Speaker 1: Why did Nissan do it this way? I mean, honestly,

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Speaker 1: couldn't they have just paid him to go away? That's

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Speaker 1: what I don't understand. It's that that's the nuttiest thing

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Speaker 1: of all. It's like there are a lot of See,

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Speaker 1: there are a lot of CEOs and chairman their companies

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Speaker 1: want to get rid of They get rid of them.

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Speaker 1: And by the way, if they think they have misappropriated money,

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Speaker 1: they clawback money or they sue them or whatever. They

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Speaker 1: don't throw them in jail for a hundred and thirty

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Speaker 1: days in salt theiry confinements. So what do you think

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Speaker 1: his next step are is? Is this gonna be a

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Speaker 1: just to hit every TV network, give all kinds of

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Speaker 1: interviews to get his story out there? Is that? How

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Speaker 1: do you think this might play out? Yes? I do,

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Speaker 1: And I also think he's gonna I also think he's

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Speaker 1: going to show some people some somewhere where he can

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Speaker 1: get some authority. He's gonna really lay out his case.

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Speaker 1: He's gonna show that the paperwork, and he's gonna he's

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Speaker 1: gonna dare Nissan to come up with counter facts. Uh

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Speaker 1: and and it's going to be this war of paper

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Speaker 1: It's gonna be a war of paperwork. You know, there's

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Speaker 1: a larger question here if I find fascinating the role

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Speaker 1: of the CEO as an entertainer, as a presenter and

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Speaker 1: as sort of an actor showman, because we've seen that

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Speaker 1: with you know, with a host of CEO is something

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Speaker 1: must thank you the late Steve Steve jobs. Um. You know, honestly,

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Speaker 1: even Alibaba's founder Jack Ma has come out in different

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Speaker 1: kinds of outfits and tried to entertain. How important is

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Speaker 1: that the sort of charisma of one of these sort

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Speaker 1: of larger than life personalities leading companies. I think in

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Speaker 1: a lot of companies it's really important. And look at

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Speaker 1: Carlos Gone, he held he was like Marshall Peito. He