Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you,
Speaker 1: along with my co host Lisa Brahma wits. Each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money. Whether at the grocery store or
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
Speaker 1: podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. Well, we're back to green on
Speaker 1: the screen risk on. It appears that the geopolitical risk
Speaker 1: that have been royaling markets over the past couple days
Speaker 1: seems to have abated here. We might be at the
Speaker 1: tail end of that, but let's get some color on
Speaker 1: the Middle East in general and what's going on between
Speaker 1: us and around. There's nobody better to do that with
Speaker 1: than our friend Jack Divine, Jack's founding partner and president
Speaker 1: of the ark And Group, was also the former chief
Speaker 1: of CIA's worldwide operations, and it's also the author of
Speaker 1: a great book, Good Hunting, a Spymaster Story, which I
Speaker 1: do recommend. Jack. Thanks so much for joining us here
Speaker 1: in our Bloomberg Interact their Brokers studio. So the past
Speaker 1: few days have been very event all the US, Iran
Speaker 1: give us your sense of what President Trump tried to
Speaker 1: do when he took out this general, right. I think
Speaker 1: the first thing I would say is this is the
Speaker 1: really the first real challenge in the foreign policy arended
Speaker 1: that the president his face, the stakes were as high
Speaker 1: as high as you got. Um. The other thing that
Speaker 1: I would note is when you look at the decision
Speaker 1: making process, there was a process where people did input,
Speaker 1: He made a made a decision. I think the turning point,
Speaker 1: and particularly for him, was when the embassy was charged.
Speaker 1: Right now, whether the ronny has actually thought they were
Speaker 1: going to get as far and they planned, but that
Speaker 1: was where the red line was really covered. When I
Speaker 1: saw that, I knew there was going to be a
Speaker 1: major kinetic response by the president. And I think in
Speaker 1: the end, so the money was just on the list
Speaker 1: and he moved up for a long time. Many of
Speaker 1: the people in intelligence military area, we're hoping somebody would
Speaker 1: authorize his removal. Now he's been around a long time.
Speaker 1: It's not that he's a bad guy. You're really talking
Speaker 1: about the core of terrorism for Iran for the last
Speaker 1: twenty five years. So that was a major blow. And um,
Speaker 1: I think as I read the paper today, when they
Speaker 1: went to the hill, Um the intelligence community, UM said
Speaker 1: on the balance, take him out. When you were listening
Speaker 1: to President Trump's announcement about the events and basically declaring victory,
Speaker 1: although not doing a victory dance, his first comments were
Speaker 1: about not having nuclear weapons in Iran. Why was that
Speaker 1: so important to you? I think it's the most important
Speaker 1: part of the speech because the time, by the time
Speaker 1: he stood up on the podium, that we had already deescalated.
Speaker 1: Ranny said this is the end of it. And once
Speaker 1: they said that made it possible to move on. I
Speaker 1: think the key point here, and if you're sitting in
Speaker 1: to run, the key sentences you will not have a
Speaker 1: nuclear weapon, all right. That is as hard of a
Speaker 1: red line as you can get. So, as I mentioned offline,
Speaker 1: and I have a lot of respect for the run
Speaker 1: as I used to run around in operations in the
Speaker 1: mid eighties, they are very very good, very smart at negotiationing,
Speaker 1: finding the right line, and I think what they did
Speaker 1: demonstrated their sensitivity to it. If I were in to
Speaker 1: run and heard the first sentence, I think the conclusion
Speaker 1: is would be, you know, we're not going to have
Speaker 1: nuclear weapons, so how do we turn this into an advantage,
Speaker 1: and that is why don't we act like we're getting
Speaker 1: a nuclear weapon and get back to the table and
Speaker 1: negotiate away something we're never going to have anyway. So
Speaker 1: I think there's a real possibility here that in the
Speaker 1: weeks ahead there will be some movement towards returning to
Speaker 1: negotiations and a back off of this, because I think
Speaker 1: at the end of the day, I think Trump did
Speaker 1: demonstrate that, you know, we're not just looking to go
Speaker 1: to the war. They're finding the cruise missiles should be
Speaker 1: a reminder you know, this is not going to be
Speaker 1: a bloodless event. So Jack, you know, part of the
Speaker 1: administration's I guess reasoning for UH doing this operation against
Speaker 1: this general was that there was evidence of an imminent attack.
Speaker 1: Do you think that's accurate. I don't know if it
Speaker 1: was accurate. I think it's the wrong question, not from you,
Speaker 1: but from the world. I would have asked, is he
Speaker 1: going to stop what he's been doing for twenty five years?
Speaker 1: If you go back and taking down bombing our embassy,
Speaker 1: kidnapping a CIA official torture, I mean, when was it
Speaker 1: going to stop A thousand I think people ustimator that
Speaker 1: kind of racist question, why now is it? Well, I
Speaker 1: think the impeachment sitting there looks awful convenient, and we've
Speaker 1: seen it before from presidents President Clinton. I think the
Speaker 1: trigger was actually the assault on the embassy that okay,
Speaker 1: they backed off with what happens tomorrow, and there was
Speaker 1: not going to be Benghazi, so it was I'm not
Speaker 1: saying this is a fact because I don't know, but
Speaker 1: my assumption is the threat was considered so real that
Speaker 1: we were vulnerable. The only way you back them off.
Speaker 1: And I would make this this one point. We here
Speaker 1: in the United States often underestimate, both in the policy
Speaker 1: arena in the private community, what power means. In the
Speaker 1: Middle East. You really have to exercise. And I'm not
Speaker 1: saying you have forced issues, but it is very much
Speaker 1: respected and it should be used audiciously. If you don't
Speaker 1: use it, you also open up Pandora's box. There's a
Speaker 1: question here. If this was a true de escalation that
Speaker 1: we've seen and it's done, then it's being perceived by
Speaker 1: yourself included as a big victory for President Trump. Some
Speaker 1: people say, look over to North Korea, what message does
Speaker 1: this send to Kim Jong un? It's a it's a
Speaker 1: win for America, and I think we need to look
Speaker 1: at that. I mean, this is a big setback for
Speaker 1: terrorism and put a new red line down. I mean,
Speaker 1: this is important to us. The second thing is one
Speaker 1: of the problems we have an international relation is how
Speaker 1: we roll in the war is when we have misjudgments
Speaker 1: about each other. That's why I like dialogue in private
Speaker 1: as well as public, so that we never misjudge each other,
Speaker 1: or we have read phones that we can communicate. But
Speaker 1: in every capital of the world after this, there was
Speaker 1: a recalibration, I promise you. In in in North Korea,
Speaker 1: they're sitting there saying, okay, there there are new red lines.
Speaker 1: And you should realize that America and this administration is
Speaker 1: prepared to use power in ways that have not been
Speaker 1: used for some time. What would you say to somebody
Speaker 1: who said that that Kim Jong is actually emboldened to
Speaker 1: create a nuclear weapon now in order to prevent a
Speaker 1: drone from taking him out. Well, he has nuclear weapons.
Speaker 1: That's the that's the challenge in this equation. Um, and
Speaker 1: once you have one, uh, it put you a new
Speaker 1: ball game. Was none of us Well, I'm just worldwide,
Speaker 1: no one can withstand a single nuclear attack, it changes
Speaker 1: the way the world will look at itself going forward.
Speaker 1: So he has to be dealt with differently than UH
Speaker 1: than Iran, and you have South Korea the neighbor. So
Speaker 1: I think the challenge here is to get him to
Speaker 1: not make any more and maybe over time to Amelia
Speaker 1: to lesson ceful back off. I don't think he'll ever
Speaker 1: give up the nuclear weapons, but we might be able
Speaker 1: to freeze them, and that's basically what's been going on
Speaker 1: in the past year. If we can hold that position,
Speaker 1: that may be the best that we can hope for.
Speaker 1: But I do promise you that he's going to calibrate.
Speaker 1: If he fires a missile, better not be too near
Speaker 1: an American chip or that one of our allies. It'll
Speaker 1: he will calibrate them, do not. I mean, he and
Speaker 1: the Koreans have been looking at us the way the
Speaker 1: Uranians do. They study us day and night, and his
Speaker 1: next move will be just like the assault by Iranians,
Speaker 1: will be a calibrated one. But I think it's much
Speaker 1: better for everybody around the world that's in a power
Speaker 1: position to look at us as if we would use power.
Speaker 1: It does it reduces tension. I mean reduces UH confrontation,
Speaker 1: not increases them. Jack Divine, so great to have your perspective.
Speaker 1: Thank you so much for being here with us. Jack
Speaker 1: Divine is founding partner and president of the Arkan Group,
Speaker 1: former chief of CIA's worldwide Operations who has personal experience
Speaker 1: negotiating with a lot of it, a lot of the
Speaker 1: nations that we're talking about, So really a pivotal perspective
Speaker 1: here for us to be getting well. We speak to
Speaker 1: a lot of economists here on this program, and I
Speaker 1: think the consensus is that as it relates to US
Speaker 1: GDP growth in maybe two ish, which is still growing obviously,
Speaker 1: but slower than what we've become accustomed to. But it's
Speaker 1: often good to talk to the folks in the corporate
Speaker 1: c suite to get a sense of what their economic
Speaker 1: outlook is. And our next guest does just that, Sandy Cockerell,
Speaker 1: Global CFO program leader at Deloitte based in New York City. Sandy,
Speaker 1: thanks so much for joining us. I know you guys
Speaker 1: just came out with your fourth quarter CFO survey. What
Speaker 1: are some of the key takeaways? So, Paul, thanks very much. Yeah,
Speaker 1: our fourth quarter survey really kind of centered on three
Speaker 1: themes that came across. Number one, Um, CFOs are are cautious.
Speaker 1: Number two we saw a fair amount of pessimism, and
Speaker 1: number three really some defensive posturing that's starting to happen. Uh.
Speaker 1: Of the CFOs expect a downturn to to to hit
Speaker 1: US sometime by the end of But the silver lining
Speaker 1: there is only three expect a technical recession. So that's
Speaker 1: actually improved from when we asked this question back in
Speaker 1: the first quarter. It's also buttressed by the fact when
Speaker 1: we looked at growth metrics that are forecasted over the
Speaker 1: next twelve months around revenue, earnings, capital spending, hiring, those
Speaker 1: all those projections were down as well and sit really
Speaker 1: at near low levels of our history of our survey.
Speaker 1: I'm wondering whether if you were to do this survey now,
Speaker 1: it would be different. Do you think so given a
Speaker 1: fact that we've got some sort of trade truths between
Speaker 1: the US and China, Uh, they might be feeling a
Speaker 1: little more positive. Uh. Possibly in discussions I have with
Speaker 1: clients and in the marketplace. Um, again, you really hit
Speaker 1: the nail on the head. The real key is around
Speaker 1: trade policy, and I think if we could get to
Speaker 1: a point where we had a deal, especially with the
Speaker 1: US China trade policy, you'd really see a tail wind
Speaker 1: here pick up pretty quickly. So send it just to
Speaker 1: be clear, think there's going to be a recession in
Speaker 1: or just a slowing, a slow down, a downturn. So
Speaker 1: and when we asked this question back in the first
Speaker 1: quarter at that point expected a downturn by the end
Speaker 1: of but fient, we're expecting an actual technical recession. That
Speaker 1: number is now only three per sense, so certainly an improvement.
Speaker 1: And what people were thinking nine months ago, did they
Speaker 1: say anything about the rising costs of commodities for workers
Speaker 1: as wages rise, how much that's sort of affecting their
Speaker 1: outlook am paired with the opportunities for them to actually
Speaker 1: increase profits. Yeah, so in terms of external concerns, trade
Speaker 1: policies number one. But rising labor and input prices certainly
Speaker 1: is something that they've gotten on. The labor type market
Speaker 1: is just so tight, um and not only is it tight,
Speaker 1: you know, what we're seeing is the you know kind
Speaker 1: of really the revitalization the change in workforce for for
Speaker 1: holly skilled labor. And that's really on the mind of CFOs,
Speaker 1: is you really have to pay for that talent, So Sandy,
Speaker 1: one of the things just thinking about CFOs and and
Speaker 1: the c suite in general, it's not just the bottom
Speaker 1: line and delivering results the shareholders, is also seemingly greater
Speaker 1: demands upon you know, being a good corporate citizen, whether
Speaker 1: it's the environment. What are CFOs saying about some of
Speaker 1: the pressures or some of the responsibilities and demands that
Speaker 1: are being placed upon them that maybe they didn't have
Speaker 1: a generation to go right. So this this quarter we
Speaker 1: ask some special questions around climate change UM and we
Speaker 1: actually work together with our European colleagues and the surveys
Speaker 1: that they execute very similar findings. But over seventy of
Speaker 1: the CFOs have noted at least moderate pressure coming from employees, investors,
Speaker 1: customers and boards in terms of dealing with climate change
Speaker 1: as the CFO and what can the CFO do to help?
Speaker 1: Over n of those CFOs have said they've taken at
Speaker 1: least one action, and that typically has been to really
Speaker 1: review energy footprints UM, how do they use energy efficiently
Speaker 1: throughout their operations UH, and then looking to build those
Speaker 1: kind of governance processes in place to make sure that
Speaker 1: there's accountability around it going forward. I'm wondering how consider
Speaker 1: distant the view out of CFOs really was. I mean,
Speaker 1: in other words, uh, was the disparity between CFOs and
Speaker 1: different industries bigger than it has been in the past,
Speaker 1: or was there more convergence. One thing that we noted
Speaker 1: UM was was in terms of this coming year, over
Speaker 1: two thirds of the CFOs expect m and a consolidation
Speaker 1: in certain industries and technology and manufacturing led that. So
Speaker 1: that should make the bankers happy. So, Sandy, I know
Speaker 1: you're your surveys global. What are you hearing from some
Speaker 1: other parts of the world as CFOs think about you know,
Speaker 1: some of these global CFOs think about their global business. Yes,
Speaker 1: So this survey was was primarily of North American CFOs,
Speaker 1: but we did ask their views of the European and
Speaker 1: Chinese economies. UM your Their view of the of the
Speaker 1: European economy is predismal. Only seven percent felt like the
Speaker 1: European economy was good at this point and only five
Speaker 1: percent expected to improve in a year. UM. With respect
Speaker 1: to China, a teen percent view it is good, but
Speaker 1: only eleven expect an improvement in a year. And that's
Speaker 1: pretty interesting because when we ask about where investment focus
Speaker 1: is going to increase. North America really is kind of
Speaker 1: the dominant the rough. It still has a s approval
Speaker 1: writing in terms of being good at this point. But
Speaker 1: one thing that was quite interesting, Uh, these companies thirty
Speaker 1: seven percent of them said that they were beginning to
Speaker 1: look at increased investment focused in Asia but outside of China. Interesting.
Speaker 1: Sandy Cockroll, thank you so much for being with us.
Speaker 1: Sidney Cockroll is global CFO program leader at de Lloyd
Speaker 1: in New York. Talking about their latest Q four CFO
Speaker 1: Signals report on what all of those c suite executives
Speaker 1: are thinking in a year had really interesting, how barish
Speaker 1: they sound. It's interesting even as you think about Europe,
Speaker 1: for example, we've seen the economic data coming out there
Speaker 1: suggesting that, you know, perhaps it's stabilizing there and maybe
Speaker 1: about to turn um. But you know, I guess the
Speaker 1: folks in the C suite that are responsible reporting capital
Speaker 1: or work, maybe they don't see it quite so much. Yea.
Speaker 1: And we talked about how much more some of these
Speaker 1: companies had to pay in wages. Taco bell Is evidently
Speaker 1: offering a hundred thousand dollar salaries for restaurant managers. That
Speaker 1: that really caught my eyes and just how much the
Speaker 1: fast food industry in the US is changing in the
Speaker 1: face of low unemployment rates. The hot take on Carlos
Speaker 1: Gone and his press conference yesterday, Hell, hath no fury
Speaker 1: like a CEO scorned. The pennment of those lots of
Speaker 1: that particular line is Jonas Sarah, who's a calumnist for
Speaker 1: Bloomberg Opinion, and he joins us at this time as
Speaker 1: we normally do, get some insight from our Bloomberg Opinion colleagues. Joe, Uh,
Speaker 1: you were watching yesterday, what was your impression of the Yeah, okay, okay,
Speaker 1: you know I was I was going to call it
Speaker 1: a cluster, but uh, you didn't aster risk on air
Speaker 1: basically carry on, Okay, So um, I thought that he
Speaker 1: he was Carlos Gone. He was arrogant, he was condescending,
Speaker 1: he was angry, he was um entitled the expressive eyebrows. Yes,
Speaker 1: and hands too, I might have hands. And then you know,
Speaker 1: then we got the Q and A and it's basically
Speaker 1: the person who yelled aloud has got to ask the question.
Speaker 1: It was kind of crazy, but you know, it was
Speaker 1: a man who clearly viewed his job as getting revenge
Speaker 1: on the prosecutors who had locked them up all that time,
Speaker 1: and and a Nissan a company. He feels completely betrayed
Speaker 1: by um. Whether that's justified or not. I mean, on
Speaker 1: some level it is justified. On on some other level, uh,
Speaker 1: you know, not very many people will get to escape
Speaker 1: to another country, UM and avoid prosecution. One of the
Speaker 1: things that I'm learning through this whole process is I'm
Speaker 1: getting learning about the Japanese indicial system. And I was
Speaker 1: unaware that they that the I guess the defendant has
Speaker 1: seems like fewer rights than you have here in the US,
Speaker 1: and that if you do get go to travelers conviction
Speaker 1: level something crazy like that. So does he have some
Speaker 1: legs to stand on here? His argument about it was
Speaker 1: an unfair conspiracy. Ah, he Well, that's two different issues.
Speaker 1: One one is how how do the Japanese treat people
Speaker 1: that they put in prison? The answer is they call
Speaker 1: it hostage They don't call it hostage justice for no reason.
Speaker 1: I mean, the idea is that they're going to extract
Speaker 1: the confession out of you one way or the other.
Speaker 1: They make your life completely miserable. They put you in
Speaker 1: solitary confinement, lights around all the time, eight hours of
Speaker 1: interrogation a day, they can re arrest you and re
Speaker 1: arrest you. And that's what happened to him. So on
Speaker 1: that count absolutely, On the conspiracy count, we don't really no.
Speaker 1: I mean, his view is that Nissan wanted to get
Speaker 1: rid of them, and the way they did it was
Speaker 1: they went to the prosecutors and conspired with them to
Speaker 1: to gin up a bunch of phony allegations. That's what
Speaker 1: he says. Is that true? We don't no. But I
Speaker 1: think one of the things that's gonna happen is we're
Speaker 1: gonna find out because he's gonna put his facts out there,
Speaker 1: Nissan is gonna put and it's gonna be a war
Speaker 1: of words for the next six months to a year.
Speaker 1: Why did Nissan do it this way? I mean, honestly,
Speaker 1: couldn't they have just paid him to go away? That's
Speaker 1: what I don't understand. It's that that's the nuttiest thing
Speaker 1: of all. It's like there are a lot of See,
Speaker 1: there are a lot of CEOs and chairman their companies
Speaker 1: want to get rid of They get rid of them.
Speaker 1: And by the way, if they think they have misappropriated money,
Speaker 1: they clawback money or they sue them or whatever. They
Speaker 1: don't throw them in jail for a hundred and thirty
Speaker 1: days in salt theiry confinements. So what do you think
Speaker 1: his next step are is? Is this gonna be a
Speaker 1: just to hit every TV network, give all kinds of
Speaker 1: interviews to get his story out there? Is that? How
Speaker 1: do you think this might play out? Yes? I do,
Speaker 1: And I also think he's gonna I also think he's
Speaker 1: going to show some people some somewhere where he can
Speaker 1: get some authority. He's gonna really lay out his case.
Speaker 1: He's gonna show that the paperwork, and he's gonna he's
Speaker 1: gonna dare Nissan to come up with counter facts. Uh
Speaker 1: and and it's going to be this war of paper
Speaker 1: It's gonna be a war of paperwork. You know, there's
Speaker 1: a larger question here if I find fascinating the role
Speaker 1: of the CEO as an entertainer, as a presenter and
Speaker 1: as sort of an actor showman, because we've seen that
Speaker 1: with you know, with a host of CEO is something
Speaker 1: must thank you the late Steve Steve jobs. Um. You know, honestly,
Speaker 1: even Alibaba's founder Jack Ma has come out in different
Speaker 1: kinds of outfits and tried to entertain. How important is
Speaker 1: that the sort of charisma of one of these sort
Speaker 1: of larger than life personalities leading companies. I think in
Speaker 1: a lot of companies it's really important. And look at
Speaker 1: Carlos Gone, he held he was like Marshall Peito. He