1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's the power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:27,400 Speaker 1: member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,840 --> 00:00:31,520 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:31,560 --> 00:00:36,600 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:37,000 --> 00:00:41,600 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 8 00:00:41,680 --> 00:00:48,879 Speaker 1: of course on the Bloomberg WI Kick things off though, 9 00:00:48,880 --> 00:00:52,440 Speaker 1: with Brian Belski, the chief investment Strategies at BMO Capital Markets. 10 00:00:52,479 --> 00:00:55,400 Speaker 1: And Brian, let's start with the news. How is the 11 00:00:55,400 --> 00:00:57,400 Speaker 1: market interpreting what we've seen here? I guess it's just 12 00:00:57,440 --> 00:01:00,760 Speaker 1: another layer of uncertainty out of Washington. You know what is? 13 00:01:01,160 --> 00:01:02,840 Speaker 1: The hits just keep coming here on the radio, by 14 00:01:02,880 --> 00:01:07,240 Speaker 1: the way, so glad to be on. Yeah, thank you. Um. 15 00:01:07,280 --> 00:01:13,679 Speaker 1: You know we are set into this reactive uh type 16 00:01:13,760 --> 00:01:17,080 Speaker 1: of mood where we're only looking at short term things. 17 00:01:17,080 --> 00:01:20,080 Speaker 1: I mean, we would continue to tell investors three words. 18 00:01:20,240 --> 00:01:23,080 Speaker 1: Be an investor, you can only control what you can control, 19 00:01:23,800 --> 00:01:26,640 Speaker 1: and I think what you can control in this environment clearly, 20 00:01:27,160 --> 00:01:29,319 Speaker 1: clearly has to be what you own as an investor. 21 00:01:29,920 --> 00:01:31,399 Speaker 1: And so at the end of the day, you want 22 00:01:31,400 --> 00:01:33,880 Speaker 1: to continue to own good assets. And the market goes down, 23 00:01:33,920 --> 00:01:36,120 Speaker 1: you buy a little bit. More market goes up, you 24 00:01:36,120 --> 00:01:38,400 Speaker 1: you sell a little bit. So I think we've entered 25 00:01:38,400 --> 00:01:42,200 Speaker 1: an air of fundamental investing again. We're picking stocks, were 26 00:01:42,200 --> 00:01:45,600 Speaker 1: playing themes, were owning management. We're buying earnings and sales 27 00:01:45,640 --> 00:01:48,800 Speaker 1: and cash flow, and we are trying as best we 28 00:01:48,880 --> 00:01:50,960 Speaker 1: can to ignore all the noise. And today is just 29 00:01:51,000 --> 00:01:55,520 Speaker 1: another day of noise. It's noisy. My ears are hurting, 30 00:01:55,760 --> 00:01:58,160 Speaker 1: My ears are hurting, my my fingers are hurting. In 31 00:01:58,240 --> 00:02:01,280 Speaker 1: terms of trying to type out it's with respect to 32 00:02:01,760 --> 00:02:04,600 Speaker 1: my BlackBerry. Yes, I work for Canadian banks have standard 33 00:02:04,640 --> 00:02:07,080 Speaker 1: issues and so you know, at the end of the day, 34 00:02:07,120 --> 00:02:09,240 Speaker 1: I think we're entering into this old guy market. We're 35 00:02:09,240 --> 00:02:11,680 Speaker 1: a bunch of old guys were we actually understand the 36 00:02:11,720 --> 00:02:17,320 Speaker 1: cycles of the seventies and eighties. Uh, And I think 37 00:02:17,320 --> 00:02:19,880 Speaker 1: we're going back to good old fashioned investing. You talk 38 00:02:19,919 --> 00:02:22,320 Speaker 1: about themes and stocks, what what in specific are you 39 00:02:22,400 --> 00:02:25,520 Speaker 1: looking at right now? Well, you know, you think about 40 00:02:25,560 --> 00:02:28,440 Speaker 1: looking at stocks from a from a broader perspective on 41 00:02:29,120 --> 00:02:32,079 Speaker 1: think about this. We want you to own stocks within industries, 42 00:02:32,120 --> 00:02:35,320 Speaker 1: industries and sectors. I think sector positioning is gonna be 43 00:02:35,440 --> 00:02:38,440 Speaker 1: less important. It's gonna be more about picking stocks and 44 00:02:38,480 --> 00:02:41,880 Speaker 1: playing specific themes. So, for instance, within financials, we love 45 00:02:42,040 --> 00:02:44,480 Speaker 1: scalable business models like the big banks in Canada, the 46 00:02:44,480 --> 00:02:46,840 Speaker 1: big banks in the US, those areas that have several 47 00:02:46,840 --> 00:02:50,200 Speaker 1: different types of divisions that are able to grow through time, 48 00:02:50,240 --> 00:02:52,000 Speaker 1: and not just the regional banks are not just the 49 00:02:52,000 --> 00:02:54,760 Speaker 1: insurance companies. Clearly you should own some regional banks with 50 00:02:54,760 --> 00:02:58,079 Speaker 1: respect to your financial portfolio, but we think the major 51 00:02:58,160 --> 00:03:01,000 Speaker 1: play with respect of the secular drive and de regulation 52 00:03:01,040 --> 00:03:03,360 Speaker 1: of the financial services industry, it's gonna be all about 53 00:03:03,360 --> 00:03:06,000 Speaker 1: the big banks. Brianski with this, Female Capital Markets will 54 00:03:06,000 --> 00:03:08,200 Speaker 1: ask him about the falcons here in a moment. So 55 00:03:08,360 --> 00:03:12,079 Speaker 1: I look, Ryan, within your bullmarket, call Dana her out 56 00:03:12,080 --> 00:03:14,760 Speaker 1: today with ours. I'm just picking on DHR. You know, 57 00:03:14,800 --> 00:03:17,240 Speaker 1: great company. We all know that over the last ten 58 00:03:17,320 --> 00:03:20,119 Speaker 1: years they've made twelve point eight percent per year, which 59 00:03:20,840 --> 00:03:24,440 Speaker 1: you can't you can't make money in stocks. But but 60 00:03:24,680 --> 00:03:28,560 Speaker 1: within that, in down the income statement, help our audience 61 00:03:28,960 --> 00:03:33,760 Speaker 1: revenues Trump operating income, Trump the fact is it's about 62 00:03:33,800 --> 00:03:37,920 Speaker 1: making cash flow. What part of the dynamic of cash 63 00:03:37,920 --> 00:03:41,120 Speaker 1: flow generation are you most focused on now? Free cash 64 00:03:41,160 --> 00:03:43,800 Speaker 1: flow yields are are and will continue to be. We 65 00:03:43,840 --> 00:03:47,000 Speaker 1: think the key, the key key metric in terms of 66 00:03:47,200 --> 00:03:48,880 Speaker 1: how companies are going to grow and you know the 67 00:03:48,920 --> 00:03:50,800 Speaker 1: management of cash and what they do with that cash, 68 00:03:50,800 --> 00:03:54,880 Speaker 1: whether or not they're going to spend that on on capex. 69 00:03:55,200 --> 00:03:57,880 Speaker 1: We've seen so much cash flow go into things like 70 00:03:58,760 --> 00:04:01,560 Speaker 1: paying an increasing dividend ends. We think that's a major 71 00:04:01,680 --> 00:04:04,080 Speaker 1: major secular trend in terms of dividend growth on the 72 00:04:04,080 --> 00:04:07,120 Speaker 1: equity side. But cash flow, remember, generates earnings tom and 73 00:04:07,160 --> 00:04:09,520 Speaker 1: at the end of the day, we're entering a period 74 00:04:09,840 --> 00:04:13,040 Speaker 1: where the denominator is going to be the most important 75 00:04:13,080 --> 00:04:18,760 Speaker 1: part of of valuation, going to way too much math thing. 76 00:04:18,800 --> 00:04:21,080 Speaker 1: And you've got a price and and earnings. You know, 77 00:04:21,400 --> 00:04:26,599 Speaker 1: the cash earning, sales, cash flow book value, that's what matters. 78 00:04:27,760 --> 00:04:30,000 Speaker 1: I'm impressed you're having a coffee and a diamon mountain 79 00:04:31,640 --> 00:04:34,200 Speaker 1: diamond near the Gods. Before I go to Europe, which 80 00:04:34,320 --> 00:04:37,479 Speaker 1: I was two weeks ago. I literally before I jump 81 00:04:37,520 --> 00:04:40,560 Speaker 1: on the plane, grabbed like three or four diamonntain news 82 00:04:40,600 --> 00:04:43,640 Speaker 1: and import them, import them. I'm glad you bring up Europe. 83 00:04:43,640 --> 00:04:45,360 Speaker 1: You've just been there, as you said, and in your 84 00:04:45,400 --> 00:04:47,479 Speaker 1: most recent note, you write, most investors in Europe believe 85 00:04:47,520 --> 00:04:50,160 Speaker 1: little or nothing in terms of legislation will get done. 86 00:04:50,200 --> 00:04:53,400 Speaker 1: If you're in Washington, help us understand that perspective. Should 87 00:04:53,440 --> 00:04:55,960 Speaker 1: we be more in tune with it? No? No, you 88 00:04:56,000 --> 00:04:58,160 Speaker 1: think you think we will see some developments? Yeah, we do. 89 00:04:58,600 --> 00:05:00,800 Speaker 1: You know, at the end of the day, UH, much 90 00:05:00,839 --> 00:05:04,160 Speaker 1: of the get nothing done mantras. What's happened to government 91 00:05:04,200 --> 00:05:06,479 Speaker 1: the last fifteen to twenty years where you've had split 92 00:05:06,520 --> 00:05:09,160 Speaker 1: governments and you hear this whole notion gridlock is good 93 00:05:09,160 --> 00:05:11,640 Speaker 1: and things like that. You know, at the UH, the 94 00:05:11,680 --> 00:05:14,960 Speaker 1: European Investor and we have been seeing and visiting our 95 00:05:15,000 --> 00:05:17,919 Speaker 1: European clients on the institutional site for almost twenty years. 96 00:05:18,160 --> 00:05:20,040 Speaker 1: And the takeaway that I would give you over all, 97 00:05:20,080 --> 00:05:23,839 Speaker 1: the overarching takeaway is that disillusioned. I mean, this is 98 00:05:23,880 --> 00:05:27,240 Speaker 1: the most negative I've ever heard them and seeing them 99 00:05:27,279 --> 00:05:30,479 Speaker 1: in interactions with respective meetings in almost twenty years. They 100 00:05:30,480 --> 00:05:33,440 Speaker 1: don't like America, they don't like our policies, they don't 101 00:05:33,440 --> 00:05:36,479 Speaker 1: like our president. And we think that they are basing 102 00:05:36,560 --> 00:05:41,120 Speaker 1: their investment decisions more on a motion versus analysis, and 103 00:05:41,200 --> 00:05:42,920 Speaker 1: they're gonna miss the boat again. They're gonna miss the 104 00:05:42,920 --> 00:05:45,440 Speaker 1: boat again. John Michols wait, will be in conversation with 105 00:05:45,520 --> 00:05:48,520 Speaker 1: Jeffrey mL tomorrow. That's good. Is a much bigger dinner 106 00:05:49,120 --> 00:05:51,560 Speaker 1: if you would a hundred eighty billion ge capital a 107 00:05:51,600 --> 00:05:55,000 Speaker 1: million years ago, they're now down to a much lesser revenue. 108 00:05:55,000 --> 00:05:57,400 Speaker 1: They go from one eight billion down to a hundred 109 00:05:57,360 --> 00:06:00,160 Speaker 1: and fifteen billion. That's a big drop in revenue over 110 00:06:00,240 --> 00:06:05,800 Speaker 1: five six seven years. Operating income didn't drop nearly as much. 111 00:06:05,960 --> 00:06:10,320 Speaker 1: And again this goes back to free cash flow generation. Yeah, 112 00:06:10,320 --> 00:06:12,760 Speaker 1: I mean full disclosure. We own both dana Her and 113 00:06:12,800 --> 00:06:15,120 Speaker 1: g and the products that we manage for a great 114 00:06:15,200 --> 00:06:18,960 Speaker 1: demo brokers up in Canada. But at the end of 115 00:06:18,960 --> 00:06:22,520 Speaker 1: the day, GEES is reinventing themselves as an industrial machine. 116 00:06:22,560 --> 00:06:24,200 Speaker 1: I mean, it was a big conglomerate. We know what 117 00:06:24,279 --> 00:06:26,520 Speaker 1: happened in the eighties and nineties with respect to what 118 00:06:26,640 --> 00:06:31,080 Speaker 1: their strategy was. Now Mr Emilt is clearly redefining the country. 119 00:06:31,120 --> 00:06:33,760 Speaker 1: And when I talked to people about think about the 120 00:06:33,800 --> 00:06:36,720 Speaker 1: turbines and things like that. They've got single digit high 121 00:06:36,760 --> 00:06:39,400 Speaker 1: single digit divdend growth five year divd and growth with 122 00:06:39,440 --> 00:06:44,679 Speaker 1: all the turmoil up nine. I believe that's four hundred 123 00:06:44,720 --> 00:06:48,920 Speaker 1: basis points above nominal g d P. I mean, that's 124 00:06:48,960 --> 00:06:51,760 Speaker 1: what Mr Emilt is supposed to do right correct. He's 125 00:06:51,800 --> 00:06:54,280 Speaker 1: doing his job. He's doing his job, and we think 126 00:06:54,320 --> 00:06:57,599 Speaker 1: that's the mantra for corporate America. I mean, Jeff's Mr 127 00:06:57,640 --> 00:07:00,640 Speaker 1: Emil has been a survivor through what we've seen a 128 00:07:00,680 --> 00:07:03,279 Speaker 1: lot of turnover on the CEO side and from a 129 00:07:03,320 --> 00:07:05,480 Speaker 1: corporate perspective in terms of how he's trying to grow 130 00:07:05,520 --> 00:07:08,080 Speaker 1: this company and how he's trying to redefine the company. 131 00:07:08,400 --> 00:07:11,600 Speaker 1: That's that's fundamental investing. That's the kind of management that 132 00:07:11,640 --> 00:07:13,400 Speaker 1: you want to see. In back with respect to an 133 00:07:13,400 --> 00:07:16,120 Speaker 1: investment longer term, what is what you see tell you 134 00:07:16,200 --> 00:07:19,080 Speaker 1: or what could portend for industrials as a whole. It's 135 00:07:19,080 --> 00:07:21,720 Speaker 1: a great question. You know, we've been bullish industrial work. 136 00:07:21,880 --> 00:07:24,240 Speaker 1: I never have a great question. That's because I like 137 00:07:24,360 --> 00:07:28,200 Speaker 1: the Patriots. Yeah, I gotta anyway, we'll talk about that hopefully. Um. 138 00:07:28,400 --> 00:07:29,400 Speaker 1: You know, at the end of the day, you want 139 00:07:29,400 --> 00:07:32,000 Speaker 1: you want to buy industrials when when the operating performance 140 00:07:32,040 --> 00:07:34,920 Speaker 1: of the sector is beginning to accelerate, and that's what 141 00:07:34,920 --> 00:07:37,920 Speaker 1: we're seeing with respective return on assets, free cash flow yields, 142 00:07:37,960 --> 00:07:40,280 Speaker 1: return on equity, and so if you look at the 143 00:07:40,320 --> 00:07:43,080 Speaker 1: industrial sector from a longer term perspective like fifty years, 144 00:07:43,120 --> 00:07:46,200 Speaker 1: it's exactly a neutral sector. You want to try to 145 00:07:46,320 --> 00:07:48,800 Speaker 1: buy on a relative performance basis. You want to try 146 00:07:48,840 --> 00:07:52,240 Speaker 1: to buy the sector when fundamentals are accelerating, and where 147 00:07:52,240 --> 00:07:54,800 Speaker 1: the fundamentals are accelerating most are those areas that are 148 00:07:54,800 --> 00:07:58,360 Speaker 1: more focused on domestic domestic issues, domestic girl so those 149 00:07:58,400 --> 00:08:02,200 Speaker 1: companies with tht or less avenue from international sources is 150 00:08:02,240 --> 00:08:05,000 Speaker 1: where we're seeing a massive acceleration and return on next 151 00:08:05,000 --> 00:08:07,320 Speaker 1: where you return on assets PEG ratios are much more 152 00:08:07,360 --> 00:08:11,680 Speaker 1: attractive as the Super Bowl. Now town, I'm ignorant about 153 00:08:11,680 --> 00:08:14,480 Speaker 1: the ATLANTAFL. They have a chance. You're you're one of 154 00:08:14,480 --> 00:08:17,040 Speaker 1: our big football guys. I would tell you that every 155 00:08:17,040 --> 00:08:20,120 Speaker 1: game you know, they suffered, they suffered. Falcon suffered last 156 00:08:20,160 --> 00:08:23,640 Speaker 1: year through a lot of of of injuries and things 157 00:08:23,720 --> 00:08:27,320 Speaker 1: like that. They're very well coached. Um Matt Ryan had 158 00:08:27,320 --> 00:08:31,800 Speaker 1: a wonderful year at the quarterback side. You know, uh, 159 00:08:31,840 --> 00:08:34,360 Speaker 1: my my team member that works for me here in 160 00:08:34,400 --> 00:08:40,800 Speaker 1: New York City huge Jets fans. So I'm sorry he's 161 00:08:40,800 --> 00:08:44,600 Speaker 1: a contrarian investor. No, um, you know, I think you know, 162 00:08:44,720 --> 00:08:46,360 Speaker 1: at the end of the day, if Tom Brady and 163 00:08:46,400 --> 00:08:48,320 Speaker 1: Belichick win the Super Bowl, let's kind of push it 164 00:08:48,320 --> 00:08:50,439 Speaker 1: all aside, saying they are the greatest team that we've 165 00:08:50,440 --> 00:08:52,679 Speaker 1: seen in the history of the NFL. Let's just move 166 00:08:52,720 --> 00:08:56,360 Speaker 1: past that and find another team. After David Harrows in 167 00:08:56,440 --> 00:09:01,079 Speaker 1: Chicago medicated over the Packers, thank you for that Super 168 00:09:01,080 --> 00:09:03,120 Speaker 1: Bowl update. We'll do a little bit of fun with 169 00:09:03,160 --> 00:09:05,920 Speaker 1: the folks into the game this week. If you ordered 170 00:09:05,920 --> 00:09:09,760 Speaker 1: your platter yet, David, girl, you did some klaced holistic 171 00:09:09,880 --> 00:09:15,440 Speaker 1: artisanal platter and Brooklyn free range chicken wing Buffalo. Why 172 00:09:15,480 --> 00:09:30,360 Speaker 1: did I know that? Darnm are with us with it, 173 00:09:30,480 --> 00:09:32,600 Speaker 1: just to see darl Let's rip up the script here. 174 00:09:33,000 --> 00:09:37,240 Speaker 1: Let's define for our audience. I'll get it out. What 175 00:09:37,480 --> 00:09:45,720 Speaker 1: is a currency manipulator? And is exploitation different than manipulation? Uh? 176 00:09:46,400 --> 00:09:48,839 Speaker 1: Not very different. I mean I think the easiest way 177 00:09:48,840 --> 00:09:52,200 Speaker 1: to think of a currency manipulator is someone who's actively 178 00:09:52,360 --> 00:09:55,360 Speaker 1: changing the price of their currency to extract some kind 179 00:09:55,360 --> 00:09:58,640 Speaker 1: of economic advantage. Print generally to be honest. Of course, 180 00:09:58,640 --> 00:10:01,400 Speaker 1: the expectation is is to get your currency weaker, have 181 00:10:01,600 --> 00:10:04,160 Speaker 1: to to get extra competitiveness. But you know, we've had 182 00:10:04,200 --> 00:10:07,559 Speaker 1: other types of manipulation. Plenty of central banks intervened to 183 00:10:07,600 --> 00:10:12,640 Speaker 1: reduce volatility in their currency to prevent excessive depreciations you've 184 00:10:12,640 --> 00:10:15,520 Speaker 1: seen in Mexico. So there's lots of forms. But obviously 185 00:10:15,559 --> 00:10:18,120 Speaker 1: the one that the Trump administration is fixated on is 186 00:10:18,160 --> 00:10:21,080 Speaker 1: the idea that there is this underlying miss pricing of 187 00:10:21,160 --> 00:10:23,240 Speaker 1: some of the big currencies in the world that is 188 00:10:23,280 --> 00:10:25,439 Speaker 1: putting the US at a disadvantage because it's making the 189 00:10:25,520 --> 00:10:28,920 Speaker 1: stronger or the dollar too strong, as he said, Trump said, 190 00:10:29,080 --> 00:10:31,360 Speaker 1: it's killing us. I mean, that's his characterization, at least 191 00:10:31,480 --> 00:10:33,640 Speaker 1: on that note, Tom alludes to this interview with Peter 192 00:10:33,679 --> 00:10:35,319 Speaker 1: Navarro in the FT. Peter Navar the head of the 193 00:10:35,360 --> 00:10:37,920 Speaker 1: New Trade Council, Donald Trump's Trade Council. There's a line 194 00:10:37,960 --> 00:10:39,560 Speaker 1: at the end of that article in the FT he 195 00:10:39,600 --> 00:10:42,160 Speaker 1: says he's not concerned about the possibility of a stronger 196 00:10:42,200 --> 00:10:44,640 Speaker 1: dollar and its impact on US exports. I worry about 197 00:10:44,640 --> 00:10:46,920 Speaker 1: the actual impact America's trade deficit and goods is having 198 00:10:46,920 --> 00:10:49,559 Speaker 1: on our rates of economic growth and income growth. How 199 00:10:49,559 --> 00:10:52,280 Speaker 1: do you navigate the lack of unanimity in this administration? 200 00:10:52,280 --> 00:10:55,199 Speaker 1: You have Stephen Manuchon on Capitol Hill saying that he 201 00:10:55,240 --> 00:10:57,840 Speaker 1: doesn't share Donald Trump's concern with the strong dollar, Donald 202 00:10:57,840 --> 00:10:59,400 Speaker 1: Trump saying he wants a weaker dollar. Now you have 203 00:10:59,440 --> 00:11:02,200 Speaker 1: Peer Navari making this commentary on the strong dollar as well. 204 00:11:02,520 --> 00:11:04,560 Speaker 1: Is the lack of unanimity problematic to you in the 205 00:11:04,559 --> 00:11:07,840 Speaker 1: f X space? It is in a way because well, 206 00:11:07,880 --> 00:11:10,800 Speaker 1: it's it's fostering. Is in a world of a headline 207 00:11:10,800 --> 00:11:15,080 Speaker 1: reaction kind of mentality is well, who speaks next? Because 208 00:11:15,160 --> 00:11:17,599 Speaker 1: really that's what's going to color your reaction. You know that, 209 00:11:17,679 --> 00:11:20,240 Speaker 1: you know Tom described this is a relatively small move 210 00:11:20,240 --> 00:11:22,080 Speaker 1: when you're a dollar, but of course you're obliged to 211 00:11:22,080 --> 00:11:24,960 Speaker 1: react to the latest headline. And the difficulty you have 212 00:11:25,160 --> 00:11:27,520 Speaker 1: is do you want to hold that position? Do you 213 00:11:27,520 --> 00:11:29,920 Speaker 1: have any conviction and being long euro dollar? No, you've 214 00:11:29,920 --> 00:11:31,520 Speaker 1: absolutely known because you don't know the next guy is 215 00:11:31,520 --> 00:11:33,920 Speaker 1: going to stand up and say the very opposite kind 216 00:11:33,960 --> 00:11:36,880 Speaker 1: of sentiments. So this is a difficulty. And also to 217 00:11:36,920 --> 00:11:38,880 Speaker 1: be honest to say that you know, we're worried about 218 00:11:38,880 --> 00:11:41,960 Speaker 1: what the existing trade deficit means for growth, growth is 219 00:11:41,960 --> 00:11:43,960 Speaker 1: determined by the shift in the trade deficit. You know, 220 00:11:44,080 --> 00:11:46,160 Speaker 1: is it a drag? Is that change gonna be a 221 00:11:46,200 --> 00:11:49,120 Speaker 1: drag or a boost? But look, it is a talking point. 222 00:11:49,400 --> 00:11:52,319 Speaker 1: And what's unusual about this administration is the president is 223 00:11:52,320 --> 00:11:54,560 Speaker 1: talking about the dollar. Used to be the treasuries game, 224 00:11:56,720 --> 00:11:59,120 Speaker 1: stream about everything, but you know, you know, for it 225 00:11:59,200 --> 00:12:01,440 Speaker 1: to come in on the doll alright, that's pretty unprecedent. 226 00:12:01,480 --> 00:12:04,640 Speaker 1: Obama talked about it reportedly, very briefly. I remember the 227 00:12:04,679 --> 00:12:06,760 Speaker 1: summit back in France, and then the White House has commands. 228 00:12:06,800 --> 00:12:08,040 Speaker 1: I know, he didn't talk about the dollar. He's talking 229 00:12:08,040 --> 00:12:11,000 Speaker 1: about something entirely different. You said you could see recovering 230 00:12:11,040 --> 00:12:12,800 Speaker 1: the euro in the second quarter. What leads you to 231 00:12:12,840 --> 00:12:17,360 Speaker 1: that conclusion, Well, that is a function of European politics, 232 00:12:17,600 --> 00:12:20,679 Speaker 1: which of course slightly sidelined at the moment amid all 233 00:12:20,679 --> 00:12:22,600 Speaker 1: the US politics. But I think it will get renew 234 00:12:22,679 --> 00:12:25,080 Speaker 1: traction if you get through the Dutch election, if the 235 00:12:25,120 --> 00:12:28,000 Speaker 1: French elections as well again in the in in that 236 00:12:28,120 --> 00:12:32,679 Speaker 1: second quarter, if they deliver mainstream results, which I think 237 00:12:32,720 --> 00:12:35,480 Speaker 1: is still the most likely outcome, then some of the 238 00:12:35,520 --> 00:12:37,400 Speaker 1: political discount I think it's going to creep into the 239 00:12:37,440 --> 00:12:39,440 Speaker 1: price over the next couple of months, we'll have to 240 00:12:39,440 --> 00:12:40,720 Speaker 1: come back at im and we can go as low 241 00:12:40,760 --> 00:12:43,280 Speaker 1: as your dollar one oh one, you know, before we 242 00:12:43,360 --> 00:12:47,200 Speaker 1: get the true revival higher than euro dollar. Politics still 243 00:12:47,200 --> 00:12:49,439 Speaker 1: the driver very much. So it sounds like in Europe 244 00:12:49,840 --> 00:12:51,600 Speaker 1: walks through what happened at the Bank of Japan last 245 00:12:51,640 --> 00:12:55,600 Speaker 1: night and an expected outcome here. Yeah, but what is that? 246 00:12:55,600 --> 00:12:57,720 Speaker 1: What is that portend? Well, they must be pretty happy, 247 00:12:57,760 --> 00:13:00,760 Speaker 1: I would say, on on some levels, because you know, 248 00:13:01,440 --> 00:13:03,400 Speaker 1: this time last year it was a fight for their 249 00:13:03,440 --> 00:13:06,880 Speaker 1: credibility in terms of are they impotent in terms of 250 00:13:06,920 --> 00:13:09,600 Speaker 1: policy delivery? Are they making the right choices and move 251 00:13:09,640 --> 00:13:12,720 Speaker 1: to negative interest rates? This time around it's like, well, okay, 252 00:13:12,760 --> 00:13:15,120 Speaker 1: the yield curvet stills seems to be working. Last week 253 00:13:15,160 --> 00:13:17,920 Speaker 1: they up their bond purchases to try and reinforce the 254 00:13:17,960 --> 00:13:21,480 Speaker 1: idea they want to cup yells on the tenure. So 255 00:13:21,679 --> 00:13:24,559 Speaker 1: you know they've arrived today. Reason me happy about credibility, 256 00:13:24,600 --> 00:13:26,800 Speaker 1: of course, what they're not happy about his inflation, which 257 00:13:26,800 --> 00:13:30,200 Speaker 1: still remains very far off target. And I remember seeing 258 00:13:30,240 --> 00:13:32,400 Speaker 1: a report last week that said, what little inflation there 259 00:13:32,480 --> 00:13:34,560 Speaker 1: is is the wrong type, you know, not even getting 260 00:13:34,559 --> 00:13:37,600 Speaker 1: the right type of inflation. That's a concern. Twenty seconds 261 00:13:37,640 --> 00:13:39,480 Speaker 1: is all we got. We'll get you back there. Do 262 00:13:39,480 --> 00:13:44,520 Speaker 1: you still reaffirm a weaker pound sterling? Yeah, we actually 263 00:13:44,559 --> 00:13:46,280 Speaker 1: just put a trade on yesterday to sell okay, but 264 00:13:46,320 --> 00:13:48,800 Speaker 1: we've got a short term target one twenty and we've 265 00:13:48,800 --> 00:13:51,080 Speaker 1: got a year end target of one ten, so you're 266 00:13:51,200 --> 00:13:55,840 Speaker 1: in one ten two thousand seventy. That, Folks, is one 267 00:13:55,840 --> 00:13:59,560 Speaker 1: of the great outlier cause I think are Anthony from 268 00:13:59,640 --> 00:14:02,600 Speaker 1: spar To, I think he just loaded up on that trade. 269 00:14:02,640 --> 00:14:05,240 Speaker 1: He did it like in the triple He's got a 270 00:14:05,240 --> 00:14:08,599 Speaker 1: triple LEVERAGEX fund with his farroh wink. I think he 271 00:14:08,760 --> 00:14:12,920 Speaker 1: just loaded the dark go out you think you know, 272 00:14:13,040 --> 00:14:16,080 Speaker 1: get out of here. That's an outlier called darwiner where 273 00:14:16,240 --> 00:14:27,400 Speaker 1: HSBC thank you so much. Brought you by Bank of America, 274 00:14:27,480 --> 00:14:31,720 Speaker 1: Mary Lynch. Dedicated to bringing our clients insights and solutions 275 00:14:32,000 --> 00:14:35,320 Speaker 1: to meet the challenges of a transforming world. That's the 276 00:14:35,400 --> 00:14:40,520 Speaker 1: power of global connections. Mary Lynch, Pierce Federan Smith Incorporated 277 00:14:40,680 --> 00:14:47,520 Speaker 1: Member s I P C. James Travitiz, who's appeared with 278 00:14:47,560 --> 00:14:51,240 Speaker 1: this uh many times, Admiral, good morning. How are you 279 00:14:51,280 --> 00:14:54,160 Speaker 1: doing today? Job? Well, I think I'm Okay, Mike Allen 280 00:14:54,280 --> 00:14:57,360 Speaker 1: as a must read note out of Washington, and it's 281 00:14:57,360 --> 00:15:03,360 Speaker 1: the first reporting I've seen. Secretary Tillerson is baffled and 282 00:15:03,440 --> 00:15:08,240 Speaker 1: General Maddie is quote unquote incensed over what we've observed. 283 00:15:08,760 --> 00:15:13,040 Speaker 1: Tell me how an admiral or a general steamed in 284 00:15:13,120 --> 00:15:18,560 Speaker 1: the academic path of stravitas or Maddest responds to mere 285 00:15:18,680 --> 00:15:22,480 Speaker 1: civilians playing at government. Well, you know, when I was 286 00:15:22,520 --> 00:15:26,200 Speaker 1: the Supreme Alley Commander at NATO, Tom occasionally things would 287 00:15:26,200 --> 00:15:29,600 Speaker 1: happen back in Washington that would kind of light you up, 288 00:15:29,720 --> 00:15:33,120 Speaker 1: and you would go back and discuss it and push 289 00:15:33,200 --> 00:15:36,600 Speaker 1: back a little bit. But I'll tell you the general 290 00:15:36,680 --> 00:15:39,640 Speaker 1: I'm really concerned about is General John Kelly. Is that 291 00:15:39,800 --> 00:15:44,120 Speaker 1: Department of Homeland Security because he was evidently cut out 292 00:15:44,120 --> 00:15:47,200 Speaker 1: of the pattern on this executive order. It came out 293 00:15:47,280 --> 00:15:51,280 Speaker 1: with almost no notice to his department. It's his responsibility 294 00:15:51,320 --> 00:15:54,360 Speaker 1: to implement it. Those are his Border and t s 295 00:15:54,400 --> 00:15:58,040 Speaker 1: A agents who are dealing with the public and no 296 00:15:58,240 --> 00:16:01,680 Speaker 1: early consultation, no voice in the process. If I were 297 00:16:02,120 --> 00:16:04,400 Speaker 1: General Kelly, I'd be calling the Chief of Staff in 298 00:16:04,400 --> 00:16:07,440 Speaker 1: the White House and saying, if you ever do that again, 299 00:16:07,560 --> 00:16:11,880 Speaker 1: I'm out of here. General Maddis is incensed because of 300 00:16:11,880 --> 00:16:16,040 Speaker 1: the impact it has on brave Iraqi translators who are 301 00:16:16,080 --> 00:16:18,560 Speaker 1: now banned from coming to this country, as well as 302 00:16:18,560 --> 00:16:21,360 Speaker 1: the effect it has on jihadis. So I think kind 303 00:16:21,360 --> 00:16:24,960 Speaker 1: of the same reaction out of General Maddis. Yeah. Fascinating 304 00:16:24,960 --> 00:16:27,160 Speaker 1: story by Damian Pelletta in the Wall Street Journal today 305 00:16:27,160 --> 00:16:29,800 Speaker 1: looking at that tension between the White House and John 306 00:16:29,840 --> 00:16:31,920 Speaker 1: Kelly at the Department of Homeland Security. Just want to 307 00:16:31,960 --> 00:16:35,000 Speaker 1: read one line from that piece if I could. This 308 00:16:35,040 --> 00:16:36,600 Speaker 1: is all centering on the pick of who is going 309 00:16:36,640 --> 00:16:38,840 Speaker 1: to be his deputy. The White House pushing for Chris Koback, 310 00:16:38,880 --> 00:16:41,720 Speaker 1: who's the Secretary of State. I believe in Kansas. Ultimately 311 00:16:41,720 --> 00:16:44,400 Speaker 1: they picked a Lane Duke. But an incredible line here. 312 00:16:44,640 --> 00:16:47,040 Speaker 1: The White House tried to persuade Mr Kelly to accept 313 00:16:47,160 --> 00:16:50,360 Speaker 1: Mr Koback is his deputy secretary, but Mr Kelly wanted 314 00:16:50,400 --> 00:16:52,680 Speaker 1: to go a different route, picking someone with a background 315 00:16:53,000 --> 00:16:59,240 Speaker 1: in Homeland security. People's what I thought. It begs a 316 00:16:59,320 --> 00:17:02,880 Speaker 1: question here, Admiral, that being what's happening here with picking 317 00:17:02,880 --> 00:17:05,360 Speaker 1: deputies in these departments. We look at the State Department, 318 00:17:05,359 --> 00:17:07,800 Speaker 1: it's so many vacancies. This has got to be worrisome 319 00:17:07,840 --> 00:17:11,200 Speaker 1: for a guy like you, it's totally worrisome. And I am, 320 00:17:11,400 --> 00:17:13,600 Speaker 1: as I've said before, I'm encouraged by the high level 321 00:17:13,640 --> 00:17:17,680 Speaker 1: PIS General Kelly, General Maddis, Rex Tillerson, Dan Senator Dan 322 00:17:17,720 --> 00:17:20,240 Speaker 1: Coates at d NA. These are good choices, but the 323 00:17:20,280 --> 00:17:23,360 Speaker 1: second and third tier is where the rubber meets the road, 324 00:17:23,440 --> 00:17:26,359 Speaker 1: and so far we're not getting good visibility. And I 325 00:17:26,480 --> 00:17:29,600 Speaker 1: suspect there's a lot of what you saw at DHS, 326 00:17:29,720 --> 00:17:33,479 Speaker 1: which is a political filter being put on these folks. 327 00:17:33,480 --> 00:17:36,680 Speaker 1: And that's understandable up to a point. But in these 328 00:17:36,680 --> 00:17:39,360 Speaker 1: departments that deal with their national security, we have got 329 00:17:39,400 --> 00:17:43,800 Speaker 1: to choose competence over political bonafides. We've talked to you 330 00:17:43,840 --> 00:17:46,200 Speaker 1: about the State Department job. By all accounts, you talked 331 00:17:46,240 --> 00:17:48,520 Speaker 1: to the President about the State Department job if you 332 00:17:48,560 --> 00:17:52,160 Speaker 1: were Rex Taylorson right now, watching all of this unfold, 333 00:17:52,160 --> 00:17:56,159 Speaker 1: the retirement of these career civil servants, forced retirements of 334 00:17:56,160 --> 00:17:58,880 Speaker 1: these these career civil servants, you see this disarray. What's 335 00:17:58,880 --> 00:18:00,720 Speaker 1: the thing At this point, I got to imagine that 336 00:18:00,720 --> 00:18:03,400 Speaker 1: a guy who had a huge multinational corporation probably wanted 337 00:18:03,440 --> 00:18:05,560 Speaker 1: to come in and make changes of his own accord. 338 00:18:05,600 --> 00:18:09,440 Speaker 1: What's happening here exactly that he is going to want 339 00:18:09,480 --> 00:18:14,080 Speaker 1: to select uh deputy and under secretaries the next tier 340 00:18:14,119 --> 00:18:18,240 Speaker 1: down who have serious diplomatic experience. I think he'd be 341 00:18:18,359 --> 00:18:22,119 Speaker 1: very well served to select a career diplomat as his 342 00:18:22,240 --> 00:18:25,159 Speaker 1: deputy and not simply take whatever the White House is 343 00:18:25,200 --> 00:18:28,400 Speaker 1: pushing on him at this point. And I would suggest 344 00:18:28,400 --> 00:18:32,080 Speaker 1: someone like Ambassador Bill Burns, Ambassador Nick Burns. We've got 345 00:18:32,080 --> 00:18:36,159 Speaker 1: a a raft of these outstanding folks who could come 346 00:18:36,200 --> 00:18:41,600 Speaker 1: in and help Secretary Tillerson learn this new culture. Um Admiral, 347 00:18:41,880 --> 00:18:47,920 Speaker 1: there's there's General Languel, General Goldfine, some lightweight admiral named Richardson, 348 00:18:48,240 --> 00:18:53,000 Speaker 1: General Kneller, General Milley, General Selva, and a guy named 349 00:18:53,040 --> 00:18:56,280 Speaker 1: Dunford on top of the food chain and joint chiefs 350 00:18:56,280 --> 00:18:59,000 Speaker 1: of staff. You and I go back to eighties six 351 00:18:59,000 --> 00:19:04,680 Speaker 1: and the monum mental Goldwater Nichols reorganization of the competency 352 00:19:04,760 --> 00:19:08,280 Speaker 1: of our military. How do you take Dunford and what 353 00:19:08,359 --> 00:19:12,639 Speaker 1: he represents with Selva, Millie, Kneller, Richardson, Goldfine, et cetera. 354 00:19:13,200 --> 00:19:17,560 Speaker 1: How do you take him off the NSC. It's inconceivable 355 00:19:17,640 --> 00:19:19,600 Speaker 1: to me. And by the way, I have to point 356 00:19:19,640 --> 00:19:22,760 Speaker 1: out for you, Tom, since you love the academic pedigrees, 357 00:19:22,840 --> 00:19:25,159 Speaker 1: the chairman of the Joint Chiefs, General Joe Dunford, is 358 00:19:25,200 --> 00:19:29,920 Speaker 1: a graduate of the Fletcher School of Law Diplomacy. Take 359 00:19:29,920 --> 00:19:34,840 Speaker 1: a lap while you're making note he's down to midshipment. Okay, 360 00:19:35,080 --> 00:19:37,720 Speaker 1: that he would be taken off the Principles Committee or 361 00:19:37,720 --> 00:19:41,879 Speaker 1: not invited all the meetings. I suspect that General Maddis, 362 00:19:41,960 --> 00:19:44,359 Speaker 1: the Secretary of Defense, had a very short and sharp 363 00:19:44,440 --> 00:19:47,159 Speaker 1: conversation with the White House Chief of Staff after that 364 00:19:47,200 --> 00:19:50,640 Speaker 1: announcement and said General Dunford will be attending all Principal 365 00:19:50,680 --> 00:19:53,760 Speaker 1: Committee meetings with me. And you might have noticed Sean 366 00:19:53,840 --> 00:19:57,160 Speaker 1: Spicer at the podium yesterday saying, oh, of course, General 367 00:19:57,240 --> 00:20:00,280 Speaker 1: Dunford is invited to every meeting. Madis will make sure 368 00:20:00,359 --> 00:20:02,760 Speaker 1: he comes. He's got to be there. You need that 369 00:20:02,880 --> 00:20:08,440 Speaker 1: voice of unbiased, unpolitical experience in that Principle's Committee. A 370 00:20:08,480 --> 00:20:10,479 Speaker 1: question that didn't come up in that press briefing yesterday 371 00:20:10,520 --> 00:20:12,440 Speaker 1: was a basic one, that is, why is Steve Bannon 372 00:20:12,520 --> 00:20:14,879 Speaker 1: going to be at these meetings? And maybe you can 373 00:20:14,920 --> 00:20:16,960 Speaker 1: help us understand what these meetings. Therefore, we look back 374 00:20:16,960 --> 00:20:19,440 Speaker 1: on George W. Bush's presidency. He would not allow Karl 375 00:20:19,520 --> 00:20:23,359 Speaker 1: Rove in the room. Exactly what these meetings are not 376 00:20:23,520 --> 00:20:27,200 Speaker 1: about is, gee, let's think about this decision through the 377 00:20:27,359 --> 00:20:31,880 Speaker 1: prism of domestic politics, and so to bring folks with 378 00:20:32,040 --> 00:20:35,320 Speaker 1: that bent into the room, Uh kind of shapes the 379 00:20:35,400 --> 00:20:37,840 Speaker 1: discussion in ways that I think are deleterious to our 380 00:20:37,920 --> 00:20:41,359 Speaker 1: national security. These are to be meetings of experts to 381 00:20:41,560 --> 00:20:43,919 Speaker 1: lay out options in front of the president and have 382 00:20:44,000 --> 00:20:48,040 Speaker 1: a discussion without fear or favor as to the politics 383 00:20:48,040 --> 00:20:50,919 Speaker 1: of the day. So I don't think it's appropriate to 384 00:20:51,000 --> 00:20:55,640 Speaker 1: have someone like Steve Bannon uh in that room. I'm 385 00:20:55,840 --> 00:20:58,240 Speaker 1: like to switch gears here and we're gonna we're very 386 00:20:58,280 --> 00:21:00,160 Speaker 1: generous of the arable will be with us for two 387 00:21:00,160 --> 00:21:04,880 Speaker 1: blocks today. It is a small number, five thousand, eight 388 00:21:04,920 --> 00:21:09,119 Speaker 1: hundred nineties six self identified Muslims out of two point 389 00:21:09,160 --> 00:21:13,760 Speaker 1: two million active and reserve duty members. It's a minority. 390 00:21:13,800 --> 00:21:17,119 Speaker 1: How did you as a command officer in the Middle 391 00:21:17,160 --> 00:21:20,879 Speaker 1: East with NATO and with your other duties including the 392 00:21:20,960 --> 00:21:25,240 Speaker 1: you know the tug about your first commission out of Annapolis? 393 00:21:25,240 --> 00:21:29,520 Speaker 1: How how do you deal with religion on a day 394 00:21:29,560 --> 00:21:33,680 Speaker 1: to day basis in the Navy? Well, first and foremost, 395 00:21:33,760 --> 00:21:36,240 Speaker 1: you have to look at those Muslims who are serving 396 00:21:36,240 --> 00:21:40,959 Speaker 1: on active duty as assets. They have a feel for 397 00:21:41,000 --> 00:21:44,399 Speaker 1: the culture, they have a feel often for the languages 398 00:21:44,560 --> 00:21:47,919 Speaker 1: given their individual backgrounds, and you have to be not 399 00:21:48,040 --> 00:21:52,040 Speaker 1: only respectful of their religious freedom, because that's part of 400 00:21:52,040 --> 00:21:55,040 Speaker 1: what we're fighting for, but also you have to think 401 00:21:55,040 --> 00:21:58,720 Speaker 1: about how can I leverage their connectivity. And I'll tell 402 00:21:58,720 --> 00:22:00,760 Speaker 1: you where we did this very effectively under my command 403 00:22:00,760 --> 00:22:04,400 Speaker 1: in Afghanistan was with UH Turkish NATO troops who are 404 00:22:04,680 --> 00:22:09,000 Speaker 1: obviously overwhelmingly Muslim. We found that they were capable of 405 00:22:09,119 --> 00:22:13,560 Speaker 1: moving and operating in that Afghan Muslim society very effectively. 406 00:22:13,800 --> 00:22:16,560 Speaker 1: We can do the same with our US Muslim population, 407 00:22:16,880 --> 00:22:19,480 Speaker 1: but we can't do it if we alienate them through 408 00:22:19,600 --> 00:22:24,199 Speaker 1: ill thought out travel bands like we saw brought forward 409 00:22:24,200 --> 00:22:26,679 Speaker 1: over the last couple of days. Now. I know a 410 00:22:26,720 --> 00:22:29,239 Speaker 1: lot of people have spoken out about this, reporters as 411 00:22:29,240 --> 00:22:30,800 Speaker 1: well as folks in the Armed Service, that this has 412 00:22:30,840 --> 00:22:33,480 Speaker 1: taken a long time to get translators visas to come 413 00:22:33,480 --> 00:22:35,000 Speaker 1: to to the U S. Are you disappointed with that 414 00:22:35,040 --> 00:22:38,240 Speaker 1: how long it's taken? I am. We have not kept 415 00:22:38,240 --> 00:22:41,080 Speaker 1: faith with the terrific people, and every time I went 416 00:22:41,160 --> 00:22:44,720 Speaker 1: both to Iraq and Afghanistan. I had outstanding translators and 417 00:22:44,760 --> 00:22:47,000 Speaker 1: they had been promised at the end of the day 418 00:22:47,040 --> 00:22:49,359 Speaker 1: that they would come to the United States, and I 419 00:22:49,400 --> 00:22:53,440 Speaker 1: think some have, but it's been a long uh bureacratic process. Hey, 420 00:22:53,480 --> 00:22:56,320 Speaker 1: Having said all that, I want to stipulate, we want 421 00:22:56,359 --> 00:22:59,840 Speaker 1: to protect the country. We want to conduct serious fetting. 422 00:23:00,160 --> 00:23:02,359 Speaker 1: On the other hand, we don't want to just slam 423 00:23:02,440 --> 00:23:06,119 Speaker 1: the door arbitrarily. And that's how this travel band felt. 424 00:23:06,280 --> 00:23:07,919 Speaker 1: We'll come back here, but I have a quick question 425 00:23:07,960 --> 00:23:10,359 Speaker 1: for you here. I learned that the the pick to 426 00:23:10,440 --> 00:23:13,040 Speaker 1: be Navy Secretary is a former Army captain. You've got 427 00:23:13,040 --> 00:23:16,240 Speaker 1: to react to that. Well, maybe it'll help West Point 428 00:23:16,240 --> 00:23:20,480 Speaker 1: in the football games. I know, uh, I know Secretary 429 00:23:20,520 --> 00:23:23,879 Speaker 1: Desert Nit Philip Building very well. He's an excellent choice, 430 00:23:24,200 --> 00:23:28,439 Speaker 1: deep experience in Asia, understands the world business. And by 431 00:23:28,440 --> 00:23:31,000 Speaker 1: the way, he has two sons who are at the 432 00:23:31,119 --> 00:23:34,720 Speaker 1: US Naval Academy. For that, I thought you were gonna 433 00:23:34,760 --> 00:23:37,480 Speaker 1: say the Fletchers School. Another busy day at the White 434 00:23:37,480 --> 00:23:39,399 Speaker 1: House here the second week in the White House for 435 00:23:39,480 --> 00:23:43,040 Speaker 1: President Trump. Admiral and at twelve thirty pm today in 436 00:23:43,080 --> 00:23:45,480 Speaker 1: the Presidential dining room, the President will sit down with 437 00:23:45,560 --> 00:23:48,560 Speaker 1: Mayor Rudy Giuliani his cyber security advice. Right now, you've 438 00:23:48,560 --> 00:23:51,240 Speaker 1: thought a lot about care, a lot about cyber security. 439 00:23:51,240 --> 00:23:52,639 Speaker 1: What do you suggest should be at the top of 440 00:23:52,640 --> 00:23:55,280 Speaker 1: the agenda for these two gentlemen today. I'll give you 441 00:23:55,400 --> 00:23:59,680 Speaker 1: three things they should try and focus on immediately. One 442 00:24:00,119 --> 00:24:06,320 Speaker 1: is UH dividing US Cyber Security Command from the National 443 00:24:06,400 --> 00:24:09,520 Speaker 1: Security Agency. Those two are combined at the moment, so 444 00:24:09,560 --> 00:24:14,200 Speaker 1: you have the military need intel function together. That's inefficient, 445 00:24:14,600 --> 00:24:17,200 Speaker 1: it's a quick win and it ought to happen. Number Two, 446 00:24:17,680 --> 00:24:20,879 Speaker 1: we are to work on the inter agency and bring 447 00:24:20,960 --> 00:24:28,119 Speaker 1: together all the disparate cyber voices today, DHS, FBI, D O, J, D, O, D, 448 00:24:28,280 --> 00:24:31,600 Speaker 1: it's a soup of acronyms. Are all working at cross 449 00:24:31,640 --> 00:24:34,719 Speaker 1: purposes on cyber And Number three, and most importantly, they 450 00:24:34,720 --> 00:24:37,920 Speaker 1: are to sketch out a plan. And here's a businessman 451 00:24:38,640 --> 00:24:41,920 Speaker 1: UH there to sketch out a plan for business private 452 00:24:42,000 --> 00:24:45,560 Speaker 1: public cooperation. Government will not solve this. So there's a 453 00:24:45,720 --> 00:24:49,520 Speaker 1: tactical and operational and a strategic thing they should think 454 00:24:49,560 --> 00:24:51,159 Speaker 1: about today. How hard is it going to be for 455 00:24:51,160 --> 00:24:54,400 Speaker 1: this administration to move forward on cybersecurity, while there's still 456 00:24:54,440 --> 00:24:57,159 Speaker 1: the whirl of activity surrounding what happened in the election 457 00:24:57,160 --> 00:25:01,040 Speaker 1: on Capitol Hill going to be very, very difficult and 458 00:25:01,240 --> 00:25:04,199 Speaker 1: cyber broadly, this is the classic case of building the 459 00:25:04,240 --> 00:25:07,439 Speaker 1: airplane while you're flying it. You don't want to do 460 00:25:07,520 --> 00:25:11,760 Speaker 1: anything that crashes the system. But at the same time 461 00:25:11,800 --> 00:25:14,440 Speaker 1: you've got to deal with this political overlay that came 462 00:25:14,480 --> 00:25:18,040 Speaker 1: into it because of the Russian activity there frankly their 463 00:25:18,080 --> 00:25:21,760 Speaker 1: attack on our democratic process. So somehow we've got to 464 00:25:21,760 --> 00:25:26,959 Speaker 1: separate that issue investigated, understand it, from the larger strategic 465 00:25:27,000 --> 00:25:30,480 Speaker 1: imperative of securing our networks. Atmost, see to the tour 466 00:25:30,520 --> 00:25:32,760 Speaker 1: in Miami. You're ahead of an US Southern Command. You 467 00:25:32,800 --> 00:25:37,040 Speaker 1: know the border. Well, we've had this conversation, uh, much 468 00:25:37,080 --> 00:25:38,720 Speaker 1: more loudly over the past week than we have in 469 00:25:38,720 --> 00:25:41,159 Speaker 1: the past. By building a wall on the US Mexico border. 470 00:25:41,520 --> 00:25:44,440 Speaker 1: How much of a difference would a fortification like that make. 471 00:25:45,680 --> 00:25:49,880 Speaker 1: It will not change the general flow of migration, which, 472 00:25:49,880 --> 00:25:51,960 Speaker 1: by the way, as I'm sure you know, these days, 473 00:25:52,000 --> 00:25:55,760 Speaker 1: more people are going south than are coming north to Mexico. 474 00:25:56,440 --> 00:25:59,800 Speaker 1: Um that look, does that include graduates of the Liberal 475 00:26:00,200 --> 00:26:04,080 Speaker 1: University of Boston right, they're all moving, you know, they're 476 00:26:04,119 --> 00:26:06,720 Speaker 1: mostly time. They're going to Canada, but at that going 477 00:26:06,800 --> 00:26:10,679 Speaker 1: to Mexico. Um, listen, here's a news flash. You can 478 00:26:10,720 --> 00:26:13,919 Speaker 1: build a hundred foot wall, and you look at it 479 00:26:13,960 --> 00:26:16,119 Speaker 1: from Mexico and right to the left of it, I'm 480 00:26:16,160 --> 00:26:19,600 Speaker 1: an admiral, there's an ocean. So if people really want 481 00:26:19,600 --> 00:26:22,400 Speaker 1: to go, they'll go around it. At see, they'll tunnel 482 00:26:22,520 --> 00:26:25,080 Speaker 1: under it the way that cartels are doing, or they'll 483 00:26:25,080 --> 00:26:29,040 Speaker 1: fly drones over it to move products. So, yes, we 484 00:26:29,080 --> 00:26:31,879 Speaker 1: have to control our border. But a simple solution like 485 00:26:32,000 --> 00:26:34,119 Speaker 1: build a big wall is not it. It's got to 486 00:26:34,160 --> 00:26:36,880 Speaker 1: be a combination. There are portions where you do need 487 00:26:36,880 --> 00:26:41,160 Speaker 1: a wall. Other places fences are fine, other places surveillance 488 00:26:41,320 --> 00:26:44,439 Speaker 1: is good, can be on foot, can be drone. You 489 00:26:44,520 --> 00:26:48,119 Speaker 1: need a combination of things to secure the border, and 490 00:26:48,160 --> 00:26:51,800 Speaker 1: then long term, you need a strong relationship with Mexico. 491 00:26:52,000 --> 00:26:54,720 Speaker 1: That's in the end how we'll secure that border. So 492 00:26:55,440 --> 00:26:59,720 Speaker 1: simply building a wall, both symbolically, tactically and strategically, I 493 00:26:59,720 --> 00:27:02,240 Speaker 1: don't think we'll succeed. We're running out of time. Would 494 00:27:02,240 --> 00:27:06,240 Speaker 1: you please explain the stravitas approach that this administration should 495 00:27:06,280 --> 00:27:10,639 Speaker 1: take With Mr Putin of Russia. I was flabbergasted in 496 00:27:10,720 --> 00:27:13,600 Speaker 1: the phone call Saturday. I don't believe Ukraine came up, 497 00:27:14,240 --> 00:27:17,840 Speaker 1: which should I be shocking. I think they defaulted to 498 00:27:17,960 --> 00:27:21,639 Speaker 1: the lowest common denominator of cooperation, which I guess is 499 00:27:21,680 --> 00:27:24,320 Speaker 1: okay for an initial call, and that is the fight 500 00:27:24,359 --> 00:27:26,840 Speaker 1: against the Islamic State. We can both agree on that. 501 00:27:27,440 --> 00:27:30,840 Speaker 1: Broadly speaking, Tom, what we should say to Mr Putin is, look, 502 00:27:30,880 --> 00:27:34,200 Speaker 1: we're gonna have areas of significant disagreement with you where 503 00:27:34,200 --> 00:27:37,800 Speaker 1: we will confront you. Ukraine is one of them, Syria, 504 00:27:37,880 --> 00:27:40,920 Speaker 1: where he supports a war criminal is another. Cyber attacks 505 00:27:41,359 --> 00:27:43,879 Speaker 1: is a third. But we ought to also say to Putin, 506 00:27:44,200 --> 00:27:46,680 Speaker 1: will confront you where we must. But let it find 507 00:27:46,720 --> 00:27:50,320 Speaker 1: some zone where we can cooperate, and there are plenty, 508 00:27:50,359 --> 00:27:52,640 Speaker 1: so it's got to be a mixed message. Dian and Aari, Well, 509 00:27:52,680 --> 00:27:56,600 Speaker 1: thank you so much, greatly appreciated than most venus, of course, 510 00:27:56,680 --> 00:28:12,560 Speaker 1: decades of service with the United States. Maybe David Gurr 511 00:28:12,600 --> 00:28:15,840 Speaker 1: and Tim Keen, New York not joining us. A gentleman 512 00:28:15,880 --> 00:28:18,680 Speaker 1: who has had a profound influence on the immigration dialogue 513 00:28:18,720 --> 00:28:21,800 Speaker 1: over the last ten days, David Beer of Cato Institute. 514 00:28:22,160 --> 00:28:24,080 Speaker 1: David Beer I want David Gurr to speak to you, 515 00:28:24,119 --> 00:28:26,920 Speaker 1: but very quickly here. What will you presume to see 516 00:28:27,280 --> 00:28:31,639 Speaker 1: in the appeals court process, the appeals court process, um, 517 00:28:31,680 --> 00:28:37,199 Speaker 1: after these lesser courts act, Well, you're gonna see it 518 00:28:37,320 --> 00:28:41,080 Speaker 1: probably uh split decision on some of these issues, but 519 00:28:41,520 --> 00:28:46,160 Speaker 1: a lot of them are now mute because of the 520 00:28:46,280 --> 00:28:50,360 Speaker 1: releases and the changes in policy that we've seen from 521 00:28:50,600 --> 00:28:56,160 Speaker 1: the Trump administration. UM, so you know, we might might 522 00:28:56,360 --> 00:29:00,080 Speaker 1: have all of these cases resolved by the time h 523 00:29:00,960 --> 00:29:04,040 Speaker 1: uh an appeals court gets to hear them. What do 524 00:29:04,040 --> 00:29:06,800 Speaker 1: you think is is the strongest legal argument against what 525 00:29:06,840 --> 00:29:09,360 Speaker 1: we saw put in place here over the weekend? You 526 00:29:09,440 --> 00:29:12,440 Speaker 1: cite the Immigration Act of nineteen sixty five. Is that 527 00:29:12,480 --> 00:29:16,640 Speaker 1: the strongest case? Does it rest on that? I think so? 528 00:29:17,360 --> 00:29:19,840 Speaker 1: I think the constitutional challenges are going to be very 529 00:29:19,880 --> 00:29:25,840 Speaker 1: difficult because the uh state of constitutional law. The Supreme 530 00:29:25,920 --> 00:29:28,120 Speaker 1: Court has held that really the Bill of Rights does 531 00:29:28,160 --> 00:29:33,360 Speaker 1: not apply to most immigration decisions, and so the question 532 00:29:33,400 --> 00:29:37,040 Speaker 1: will really depend on whether the president has the legal 533 00:29:37,080 --> 00:29:42,160 Speaker 1: authority to carry out these actions via executive order. And 534 00:29:42,240 --> 00:29:45,400 Speaker 1: like you said, I I cite the Immigration Act of 535 00:29:45,480 --> 00:29:50,400 Speaker 1: nineteen sixty five, which amended the nineteen fifty two law 536 00:29:50,520 --> 00:29:55,479 Speaker 1: that gives the present discretion to ban certain groups of 537 00:29:56,040 --> 00:30:01,000 Speaker 1: foreign born people, and that law says pretty equivocally that 538 00:30:01,080 --> 00:30:06,320 Speaker 1: you cannot discriminate based on national origin against immigrants who 539 00:30:06,360 --> 00:30:09,040 Speaker 1: are coming to the Hind States to live in it permanently. 540 00:30:09,360 --> 00:30:12,760 Speaker 1: It's been interesting to watch the fallout from this executive action, 541 00:30:12,800 --> 00:30:15,959 Speaker 1: the protests at the airports over the weekend, the response UH, 542 00:30:16,080 --> 00:30:19,200 Speaker 1: slowly but surely from from members of Congress. What's this 543 00:30:19,320 --> 00:30:22,920 Speaker 1: say broadly about immigration reform in Washington? D see? A 544 00:30:22,920 --> 00:30:25,320 Speaker 1: couple of years back, there was a robust conversation about 545 00:30:25,320 --> 00:30:27,560 Speaker 1: what immigration reform would look like it was being driven 546 00:30:27,960 --> 00:30:31,040 Speaker 1: by the Congress. Here you have the executive branch taking 547 00:30:31,080 --> 00:30:34,000 Speaker 1: the lead, rightly or wrongly in the courts. I guess 548 00:30:34,040 --> 00:30:36,960 Speaker 1: we'll we'll weigh in on that shortly. What does it 549 00:30:37,000 --> 00:30:39,960 Speaker 1: say about where immigration reform is head? Where that conversation 550 00:30:40,080 --> 00:30:43,560 Speaker 1: is headed? You know, I think it really shows even 551 00:30:43,760 --> 00:30:48,360 Speaker 1: broader than just uh, immigration reform, that we're seeing this 552 00:30:48,560 --> 00:30:54,640 Speaker 1: trend towards executive power that is just so expansive that 553 00:30:55,120 --> 00:30:59,840 Speaker 1: it's making Congress almost irrelevant. All of these dramatic policy 554 00:31:00,080 --> 00:31:04,640 Speaker 1: changes being implemented both by President Obama. What he attempted 555 00:31:04,680 --> 00:31:06,479 Speaker 1: to do, of course, and shut him down on that, 556 00:31:07,440 --> 00:31:10,920 Speaker 1: which was a positive development in my from my view. 557 00:31:11,520 --> 00:31:16,880 Speaker 1: But now we're seeing the Trump administration go the same direction, 558 00:31:17,520 --> 00:31:20,080 Speaker 1: and uh, you know, we've seen it in almost every 559 00:31:20,080 --> 00:31:24,360 Speaker 1: other area. President Obama and President Trump both doing expansive 560 00:31:24,360 --> 00:31:28,200 Speaker 1: executive orders in action. David, My amateur take and please 561 00:31:28,680 --> 00:31:32,000 Speaker 1: inform us, is that this reads like history. There were 562 00:31:32,040 --> 00:31:35,160 Speaker 1: previous immigration themes. There was nineteen fifty two or whatever 563 00:31:35,200 --> 00:31:38,040 Speaker 1: it was. Then there was nineteen sixty five was Senator 564 00:31:38,080 --> 00:31:44,080 Speaker 1: Heart and Representative Emmanuel Seller, and basically they said, excluding 565 00:31:44,200 --> 00:31:47,160 Speaker 1: Asia and Africa is not the calculus we're going to 566 00:31:47,360 --> 00:31:52,640 Speaker 1: use in immigration. So then we moved forward this this well, 567 00:31:52,640 --> 00:31:57,280 Speaker 1: it's two thousand seventeen. Do you presume that a legislature 568 00:31:58,200 --> 00:32:04,960 Speaker 1: can move immigration back to nineteen fifty two? A legislature 569 00:32:05,520 --> 00:32:09,120 Speaker 1: meaning Congress. Congress could certainly do that if they if 570 00:32:09,120 --> 00:32:14,120 Speaker 1: they wanted to go back to that type of discriminatory system, 571 00:32:14,240 --> 00:32:18,520 Speaker 1: they could. Um. But I contend that it's it's illegal 572 00:32:18,880 --> 00:32:22,680 Speaker 1: for the president to override that ninety five Act, which 573 00:32:22,720 --> 00:32:27,240 Speaker 1: was all about it was full it's only intent was 574 00:32:27,320 --> 00:32:31,520 Speaker 1: to create an unbiased immigration system where every country has 575 00:32:31,560 --> 00:32:36,480 Speaker 1: an equal shot at the immigration This is a critical question. 576 00:32:36,520 --> 00:32:40,040 Speaker 1: Do you see any indication from a Republican Senate and 577 00:32:40,040 --> 00:32:42,720 Speaker 1: a Republican House that what they would like to turn 578 00:32:42,760 --> 00:32:49,160 Speaker 1: the clock from nineteen back to nineteen fifty two. There 579 00:32:49,200 --> 00:32:53,240 Speaker 1: have been disturbing signs that a significant portion of the 580 00:32:53,280 --> 00:33:00,480 Speaker 1: Republican conference is on board with this band. Now, the 581 00:33:00,520 --> 00:33:06,440 Speaker 1: ban itself is uh is stated to be at least 582 00:33:06,520 --> 00:33:11,680 Speaker 1: ninety days long. Now, if that remains true and he 583 00:33:12,000 --> 00:33:17,440 Speaker 1: reopens immigration to these countries after ninety days, then it 584 00:33:17,480 --> 00:33:20,120 Speaker 1: will not be seen as as big of a deal. 585 00:33:20,200 --> 00:33:22,880 Speaker 1: But you have to understand that this executive order also 586 00:33:23,040 --> 00:33:28,080 Speaker 1: claims the authority to make this permanent, and so we'll 587 00:33:28,120 --> 00:33:32,720 Speaker 1: see what happens after ninety days, but it certainly would 588 00:33:32,720 --> 00:33:38,200 Speaker 1: be turning the clock back if it remains in effect. Davier, 589 00:33:38,200 --> 00:33:39,680 Speaker 1: thanks so much for joining. I appreciate he is an 590 00:33:39,720 --> 00:33:42,560 Speaker 1: immigration policy analyst at the Cato Institute and Thomas will 591 00:33:42,560 --> 00:33:44,880 Speaker 1: be just fascinating to see play out of their protest 592 00:33:44,920 --> 00:33:46,920 Speaker 1: last night. I mean, it shows no signs of stopping 593 00:33:46,920 --> 00:33:48,719 Speaker 1: here people who were opposed to this measure by by 594 00:33:48,720 --> 00:33:50,440 Speaker 1: the President. I'm in the gird time out chair. I 595 00:33:50,480 --> 00:33:52,600 Speaker 1: cut in there with that final question. But I thought 596 00:33:52,600 --> 00:33:56,280 Speaker 1: it was really I mean, that's he framed that beautifully. Yeah, 597 00:33:56,360 --> 00:34:00,640 Speaker 1: it's like LBJ and do you want to go back 598 00:34:00,680 --> 00:34:04,560 Speaker 1: to Eisenhower? Two are almost Truman. I don't. I don't 599 00:34:04,600 --> 00:34:06,680 Speaker 1: have any wisdom on this. That was great. Yeah, I 600 00:34:06,800 --> 00:34:18,600 Speaker 1: learned a lot and we'll do this sure. Thanks for 601 00:34:18,640 --> 00:34:23,120 Speaker 1: listening to the Bloomberg Surveillance Podcast. Subscribe and listen to 602 00:34:23,280 --> 00:34:28,360 Speaker 1: interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. 603 00:34:29,080 --> 00:34:32,000 Speaker 1: I'm out on Twitter at Tom Keene. David Gura is 604 00:34:32,080 --> 00:34:35,879 Speaker 1: at David Gura. Before the podcast, you can always catch 605 00:34:35,960 --> 00:34:52,000 Speaker 1: us worldwide. I'm Bloomberg Radio, brought you by Bank of 606 00:34:52,040 --> 00:34:56,080 Speaker 1: America Mary Lynch. Dedicated to bringing our clients insights and 607 00:34:56,160 --> 00:35:00,359 Speaker 1: solutions to meet the challenges of a transforming world. That's 608 00:35:00,360 --> 00:35:03,960 Speaker 1: the power of global connections. 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