Speaker 1: Brought you by Bank of America Mary Lynch. Investing in
Speaker 1: local communities, economies and a sustainable future. That's the power
Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated
Speaker 1: member s I p C. Welcome to the Bloomberg Surveillance Podcast.
Speaker 1: I'm Tom Keene with David Gura. Daily we bring you
Speaker 1: insight from the best in economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and
Speaker 1: of course on the Bloomberg WI Kick things off though,
Speaker 1: with Brian Belski, the chief investment Strategies at BMO Capital Markets.
Speaker 1: And Brian, let's start with the news. How is the
Speaker 1: market interpreting what we've seen here? I guess it's just
Speaker 1: another layer of uncertainty out of Washington. You know what is?
Speaker 1: The hits just keep coming here on the radio, by
Speaker 1: the way, so glad to be on. Yeah, thank you. Um.
Speaker 1: You know we are set into this reactive uh type
Speaker 1: of mood where we're only looking at short term things.
Speaker 1: I mean, we would continue to tell investors three words.
Speaker 1: Be an investor, you can only control what you can control,
Speaker 1: and I think what you can control in this environment clearly,
Speaker 1: clearly has to be what you own as an investor.
Speaker 1: And so at the end of the day, you want
Speaker 1: to continue to own good assets. And the market goes down,
Speaker 1: you buy a little bit. More market goes up, you
Speaker 1: you sell a little bit. So I think we've entered
Speaker 1: an air of fundamental investing again. We're picking stocks, were
Speaker 1: playing themes, were owning management. We're buying earnings and sales
Speaker 1: and cash flow, and we are trying as best we
Speaker 1: can to ignore all the noise. And today is just
Speaker 1: another day of noise. It's noisy. My ears are hurting,
Speaker 1: My ears are hurting, my my fingers are hurting. In
Speaker 1: terms of trying to type out it's with respect to
Speaker 1: my BlackBerry. Yes, I work for Canadian banks have standard
Speaker 1: issues and so you know, at the end of the day,
Speaker 1: I think we're entering into this old guy market. We're
Speaker 1: a bunch of old guys were we actually understand the
Speaker 1: cycles of the seventies and eighties. Uh, And I think
Speaker 1: we're going back to good old fashioned investing. You talk
Speaker 1: about themes and stocks, what what in specific are you
Speaker 1: looking at right now? Well, you know, you think about
Speaker 1: looking at stocks from a from a broader perspective on
Speaker 1: think about this. We want you to own stocks within industries,
Speaker 1: industries and sectors. I think sector positioning is gonna be
Speaker 1: less important. It's gonna be more about picking stocks and
Speaker 1: playing specific themes. So, for instance, within financials, we love
Speaker 1: scalable business models like the big banks in Canada, the
Speaker 1: big banks in the US, those areas that have several
Speaker 1: different types of divisions that are able to grow through time,
Speaker 1: and not just the regional banks are not just the
Speaker 1: insurance companies. Clearly you should own some regional banks with
Speaker 1: respect to your financial portfolio, but we think the major
Speaker 1: play with respect of the secular drive and de regulation
Speaker 1: of the financial services industry, it's gonna be all about
Speaker 1: the big banks. Brianski with this, Female Capital Markets will
Speaker 1: ask him about the falcons here in a moment. So
Speaker 1: I look, Ryan, within your bullmarket, call Dana her out
Speaker 1: today with ours. I'm just picking on DHR. You know,
Speaker 1: great company. We all know that over the last ten
Speaker 1: years they've made twelve point eight percent per year, which
Speaker 1: you can't you can't make money in stocks. But but
Speaker 1: within that, in down the income statement, help our audience
Speaker 1: revenues Trump operating income, Trump the fact is it's about
Speaker 1: making cash flow. What part of the dynamic of cash
Speaker 1: flow generation are you most focused on now? Free cash
Speaker 1: flow yields are are and will continue to be. We
Speaker 1: think the key, the key key metric in terms of
Speaker 1: how companies are going to grow and you know the
Speaker 1: management of cash and what they do with that cash,
Speaker 1: whether or not they're going to spend that on on capex.
Speaker 1: We've seen so much cash flow go into things like
Speaker 1: paying an increasing dividend ends. We think that's a major
Speaker 1: major secular trend in terms of dividend growth on the
Speaker 1: equity side. But cash flow, remember, generates earnings tom and
Speaker 1: at the end of the day, we're entering a period
Speaker 1: where the denominator is going to be the most important
Speaker 1: part of of valuation, going to way too much math thing.
Speaker 1: And you've got a price and and earnings. You know,
Speaker 1: the cash earning, sales, cash flow book value, that's what matters.
Speaker 1: I'm impressed you're having a coffee and a diamon mountain
Speaker 1: diamond near the Gods. Before I go to Europe, which
Speaker 1: I was two weeks ago. I literally before I jump
Speaker 1: on the plane, grabbed like three or four diamonntain news
Speaker 1: and import them, import them. I'm glad you bring up Europe.
Speaker 1: You've just been there, as you said, and in your
Speaker 1: most recent note, you write, most investors in Europe believe
Speaker 1: little or nothing in terms of legislation will get done.
Speaker 1: If you're in Washington, help us understand that perspective. Should
Speaker 1: we be more in tune with it? No? No, you
Speaker 1: think you think we will see some developments? Yeah, we do.
Speaker 1: You know, at the end of the day, UH, much
Speaker 1: of the get nothing done mantras. What's happened to government
Speaker 1: the last fifteen to twenty years where you've had split
Speaker 1: governments and you hear this whole notion gridlock is good
Speaker 1: and things like that. You know, at the UH, the
Speaker 1: European Investor and we have been seeing and visiting our
Speaker 1: European clients on the institutional site for almost twenty years.
Speaker 1: And the takeaway that I would give you over all,
Speaker 1: the overarching takeaway is that disillusioned. I mean, this is
Speaker 1: the most negative I've ever heard them and seeing them
Speaker 1: in interactions with respective meetings in almost twenty years. They
Speaker 1: don't like America, they don't like our policies, they don't
Speaker 1: like our president. And we think that they are basing
Speaker 1: their investment decisions more on a motion versus analysis, and
Speaker 1: they're gonna miss the boat again. They're gonna miss the
Speaker 1: boat again. John Michols wait, will be in conversation with
Speaker 1: Jeffrey mL tomorrow. That's good. Is a much bigger dinner
Speaker 1: if you would a hundred eighty billion ge capital a
Speaker 1: million years ago, they're now down to a much lesser revenue.
Speaker 1: They go from one eight billion down to a hundred
Speaker 1: and fifteen billion. That's a big drop in revenue over
Speaker 1: five six seven years. Operating income didn't drop nearly as much.
Speaker 1: And again this goes back to free cash flow generation. Yeah,
Speaker 1: I mean full disclosure. We own both dana Her and
Speaker 1: g and the products that we manage for a great
Speaker 1: demo brokers up in Canada. But at the end of
Speaker 1: the day, GEES is reinventing themselves as an industrial machine.
Speaker 1: I mean, it was a big conglomerate. We know what
Speaker 1: happened in the eighties and nineties with respect to what
Speaker 1: their strategy was. Now Mr Emilt is clearly redefining the country.
Speaker 1: And when I talked to people about think about the
Speaker 1: turbines and things like that. They've got single digit high
Speaker 1: single digit divdend growth five year divd and growth with
Speaker 1: all the turmoil up nine. I believe that's four hundred
Speaker 1: basis points above nominal g d P. I mean, that's
Speaker 1: what Mr Emilt is supposed to do right correct. He's
Speaker 1: doing his job. He's doing his job, and we think
Speaker 1: that's the mantra for corporate America. I mean, Jeff's Mr
Speaker 1: Emil has been a survivor through what we've seen a
Speaker 1: lot of turnover on the CEO side and from a
Speaker 1: corporate perspective in terms of how he's trying to grow
Speaker 1: this company and how he's trying to redefine the company.
Speaker 1: That's that's fundamental investing. That's the kind of management that
Speaker 1: you want to see. In back with respect to an
Speaker 1: investment longer term, what is what you see tell you
Speaker 1: or what could portend for industrials as a whole. It's
Speaker 1: a great question. You know, we've been bullish industrial work.
Speaker 1: I never have a great question. That's because I like
Speaker 1: the Patriots. Yeah, I gotta anyway, we'll talk about that hopefully. Um.
Speaker 1: You know, at the end of the day, you want
Speaker 1: you want to buy industrials when when the operating performance
Speaker 1: of the sector is beginning to accelerate, and that's what
Speaker 1: we're seeing with respective return on assets, free cash flow yields,
Speaker 1: return on equity, and so if you look at the
Speaker 1: industrial sector from a longer term perspective like fifty years,
Speaker 1: it's exactly a neutral sector. You want to try to
Speaker 1: buy on a relative performance basis. You want to try
Speaker 1: to buy the sector when fundamentals are accelerating, and where
Speaker 1: the fundamentals are accelerating most are those areas that are
Speaker 1: more focused on domestic domestic issues, domestic girl so those
Speaker 1: companies with tht or less avenue from international sources is
Speaker 1: where we're seeing a massive acceleration and return on next
Speaker 1: where you return on assets PEG ratios are much more
Speaker 1: attractive as the Super Bowl. Now town, I'm ignorant about
Speaker 1: the ATLANTAFL. They have a chance. You're you're one of
Speaker 1: our big football guys. I would tell you that every
Speaker 1: game you know, they suffered, they suffered. Falcon suffered last
Speaker 1: year through a lot of of of injuries and things
Speaker 1: like that. They're very well coached. Um Matt Ryan had
Speaker 1: a wonderful year at the quarterback side. You know, uh,
Speaker 1: my my team member that works for me here in
Speaker 1: New York City huge Jets fans. So I'm sorry he's
Speaker 1: a contrarian investor. No, um, you know, I think you know,
Speaker 1: at the end of the day, if Tom Brady and
Speaker 1: Belichick win the Super Bowl, let's kind of push it
Speaker 1: all aside, saying they are the greatest team that we've
Speaker 1: seen in the history of the NFL. Let's just move
Speaker 1: past that and find another team. After David Harrows in
Speaker 1: Chicago medicated over the Packers, thank you for that Super
Speaker 1: Bowl update. We'll do a little bit of fun with
Speaker 1: the folks into the game this week. If you ordered
Speaker 1: your platter yet, David, girl, you did some klaced holistic
Speaker 1: artisanal platter and Brooklyn free range chicken wing Buffalo. Why
Speaker 1: did I know that? Darnm are with us with it,
Speaker 1: just to see darl Let's rip up the script here.
Speaker 1: Let's define for our audience. I'll get it out. What
Speaker 1: is a currency manipulator? And is exploitation different than manipulation? Uh?
Speaker 1: Not very different. I mean I think the easiest way
Speaker 1: to think of a currency manipulator is someone who's actively
Speaker 1: changing the price of their currency to extract some kind
Speaker 1: of economic advantage. Print generally to be honest. Of course,
Speaker 1: the expectation is is to get your currency weaker, have
Speaker 1: to to get extra competitiveness. But you know, we've had
Speaker 1: other types of manipulation. Plenty of central banks intervened to
Speaker 1: reduce volatility in their currency to prevent excessive depreciations you've
Speaker 1: seen in Mexico. So there's lots of forms. But obviously
Speaker 1: the one that the Trump administration is fixated on is
Speaker 1: the idea that there is this underlying miss pricing of
Speaker 1: some of the big currencies in the world that is
Speaker 1: putting the US at a disadvantage because it's making the
Speaker 1: stronger or the dollar too strong, as he said, Trump said,
Speaker 1: it's killing us. I mean, that's his characterization, at least
Speaker 1: on that note, Tom alludes to this interview with Peter
Speaker 1: Navarro in the FT. Peter Navar the head of the
Speaker 1: New Trade Council, Donald Trump's Trade Council. There's a line
Speaker 1: at the end of that article in the FT he
Speaker 1: says he's not concerned about the possibility of a stronger
Speaker 1: dollar and its impact on US exports. I worry about
Speaker 1: the actual impact America's trade deficit and goods is having
Speaker 1: on our rates of economic growth and income growth. How
Speaker 1: do you navigate the lack of unanimity in this administration?
Speaker 1: You have Stephen Manuchon on Capitol Hill saying that he
Speaker 1: doesn't share Donald Trump's concern with the strong dollar, Donald
Speaker 1: Trump saying he wants a weaker dollar. Now you have
Speaker 1: Peer Navari making this commentary on the strong dollar as well.
Speaker 1: Is the lack of unanimity problematic to you in the
Speaker 1: f X space? It is in a way because well,
Speaker 1: it's it's fostering. Is in a world of a headline
Speaker 1: reaction kind of mentality is well, who speaks next? Because
Speaker 1: really that's what's going to color your reaction. You know that,
Speaker 1: you know Tom described this is a relatively small move
Speaker 1: when you're a dollar, but of course you're obliged to
Speaker 1: react to the latest headline. And the difficulty you have
Speaker 1: is do you want to hold that position? Do you
Speaker 1: have any conviction and being long euro dollar? No, you've
Speaker 1: absolutely known because you don't know the next guy is
Speaker 1: going to stand up and say the very opposite kind
Speaker 1: of sentiments. So this is a difficulty. And also to
Speaker 1: be honest to say that you know, we're worried about
Speaker 1: what the existing trade deficit means for growth, growth is
Speaker 1: determined by the shift in the trade deficit. You know,
Speaker 1: is it a drag? Is that change gonna be a
Speaker 1: drag or a boost? But look, it is a talking point.
Speaker 1: And what's unusual about this administration is the president is
Speaker 1: talking about the dollar. Used to be the treasuries game,
Speaker 1: stream about everything, but you know, you know, for it
Speaker 1: to come in on the doll alright, that's pretty unprecedent.
Speaker 1: Obama talked about it reportedly, very briefly. I remember the
Speaker 1: summit back in France, and then the White House has commands.
Speaker 1: I know, he didn't talk about the dollar. He's talking
Speaker 1: about something entirely different. You said you could see recovering
Speaker 1: the euro in the second quarter. What leads you to
Speaker 1: that conclusion, Well, that is a function of European politics,
Speaker 1: which of course slightly sidelined at the moment amid all
Speaker 1: the US politics. But I think it will get renew
Speaker 1: traction if you get through the Dutch election, if the
Speaker 1: French elections as well again in the in in that
Speaker 1: second quarter, if they deliver mainstream results, which I think
Speaker 1: is still the most likely outcome, then some of the
Speaker 1: political discount I think it's going to creep into the
Speaker 1: price over the next couple of months, we'll have to
Speaker 1: come back at im and we can go as low
Speaker 1: as your dollar one oh one, you know, before we
Speaker 1: get the true revival higher than euro dollar. Politics still
Speaker 1: the driver very much. So it sounds like in Europe
Speaker 1: walks through what happened at the Bank of Japan last
Speaker 1: night and an expected outcome here. Yeah, but what is that?
Speaker 1: What is that portend? Well, they must be pretty happy,
Speaker 1: I would say, on on some levels, because you know,
Speaker 1: this time last year it was a fight for their
Speaker 1: credibility in terms of are they impotent in terms of
Speaker 1: policy delivery? Are they making the right choices and move
Speaker 1: to negative interest rates? This time around it's like, well, okay,
Speaker 1: the yield curvet stills seems to be working. Last week
Speaker 1: they up their bond purchases to try and reinforce the
Speaker 1: idea they want to cup yells on the tenure. So
Speaker 1: you know they've arrived today. Reason me happy about credibility,
Speaker 1: of course, what they're not happy about his inflation, which
Speaker 1: still remains very far off target. And I remember seeing
Speaker 1: a report last week that said, what little inflation there
Speaker 1: is is the wrong type, you know, not even getting
Speaker 1: the right type of inflation. That's a concern. Twenty seconds
Speaker 1: is all we got. We'll get you back there. Do
Speaker 1: you still reaffirm a weaker pound sterling? Yeah, we actually
Speaker 1: just put a trade on yesterday to sell okay, but
Speaker 1: we've got a short term target one twenty and we've
Speaker 1: got a year end target of one ten, so you're
Speaker 1: in one ten two thousand seventy. That, Folks, is one
Speaker 1: of the great outlier cause I think are Anthony from
Speaker 1: spar To, I think he just loaded up on that trade.
Speaker 1: He did it like in the triple He's got a
Speaker 1: triple LEVERAGEX fund with his farroh wink. I think he
Speaker 1: just loaded the dark go out you think you know,
Speaker 1: get out of here. That's an outlier called darwiner where
Speaker 1: HSBC thank you so much. Brought you by Bank of America,
Speaker 1: Mary Lynch. Dedicated to bringing our clients insights and solutions
Speaker 1: to meet the challenges of a transforming world. That's the
Speaker 1: power of global connections. Mary Lynch, Pierce Federan Smith Incorporated
Speaker 1: Member s I P C. James Travitiz, who's appeared with
Speaker 1: this uh many times, Admiral, good morning. How are you
Speaker 1: doing today? Job? Well, I think I'm Okay, Mike Allen
Speaker 1: as a must read note out of Washington, and it's
Speaker 1: the first reporting I've seen. Secretary Tillerson is baffled and
Speaker 1: General Maddie is quote unquote incensed over what we've observed.
Speaker 1: Tell me how an admiral or a general steamed in
Speaker 1: the academic path of stravitas or Maddest responds to mere
Speaker 1: civilians playing at government. Well, you know, when I was
Speaker 1: the Supreme Alley Commander at NATO, Tom occasionally things would
Speaker 1: happen back in Washington that would kind of light you up,
Speaker 1: and you would go back and discuss it and push
Speaker 1: back a little bit. But I'll tell you the general
Speaker 1: I'm really concerned about is General John Kelly. Is that
Speaker 1: Department of Homeland Security because he was evidently cut out
Speaker 1: of the pattern on this executive order. It came out
Speaker 1: with almost no notice to his department. It's his responsibility
Speaker 1: to implement it. Those are his Border and t s
Speaker 1: A agents who are dealing with the public and no
Speaker 1: early consultation, no voice in the process. If I were
Speaker 1: General Kelly, I'd be calling the Chief of Staff in
Speaker 1: the White House and saying, if you ever do that again,
Speaker 1: I'm out of here. General Maddis is incensed because of
Speaker 1: the impact it has on brave Iraqi translators who are
Speaker 1: now banned from coming to this country, as well as
Speaker 1: the effect it has on jihadis. So I think kind
Speaker 1: of the same reaction out of General Maddis. Yeah. Fascinating
Speaker 1: story by Damian Pelletta in the Wall Street Journal today
Speaker 1: looking at that tension between the White House and John
Speaker 1: Kelly at the Department of Homeland Security. Just want to
Speaker 1: read one line from that piece if I could. This
Speaker 1: is all centering on the pick of who is going
Speaker 1: to be his deputy. The White House pushing for Chris Koback,
Speaker 1: who's the Secretary of State. I believe in Kansas. Ultimately
Speaker 1: they picked a Lane Duke. But an incredible line here.
Speaker 1: The White House tried to persuade Mr Kelly to accept
Speaker 1: Mr Koback is his deputy secretary, but Mr Kelly wanted
Speaker 1: to go a different route, picking someone with a background
Speaker 1: in Homeland security. People's what I thought. It begs a
Speaker 1: question here, Admiral, that being what's happening here with picking
Speaker 1: deputies in these departments. We look at the State Department,
Speaker 1: it's so many vacancies. This has got to be worrisome
Speaker 1: for a guy like you, it's totally worrisome. And I am,
Speaker 1: as I've said before, I'm encouraged by the high level
Speaker 1: PIS General Kelly, General Maddis, Rex Tillerson, Dan Senator Dan
Speaker 1: Coates at d NA. These are good choices, but the
Speaker 1: second and third tier is where the rubber meets the road,
Speaker 1: and so far we're not getting good visibility. And I
Speaker 1: suspect there's a lot of what you saw at DHS,
Speaker 1: which is a political filter being put on these folks.
Speaker 1: And that's understandable up to a point. But in these
Speaker 1: departments that deal with their national security, we have got
Speaker 1: to choose competence over political bonafides. We've talked to you
Speaker 1: about the State Department job. By all accounts, you talked
Speaker 1: to the President about the State Department job if you
Speaker 1: were Rex Taylorson right now, watching all of this unfold,
Speaker 1: the retirement of these career civil servants, forced retirements of
Speaker 1: these these career civil servants, you see this disarray. What's
Speaker 1: the thing At this point, I got to imagine that
Speaker 1: a guy who had a huge multinational corporation probably wanted
Speaker 1: to come in and make changes of his own accord.
Speaker 1: What's happening here exactly that he is going to want
Speaker 1: to select uh deputy and under secretaries the next tier
Speaker 1: down who have serious diplomatic experience. I think he'd be
Speaker 1: very well served to select a career diplomat as his
Speaker 1: deputy and not simply take whatever the White House is
Speaker 1: pushing on him at this point. And I would suggest
Speaker 1: someone like Ambassador Bill Burns, Ambassador Nick Burns. We've got
Speaker 1: a a raft of these outstanding folks who could come
Speaker 1: in and help Secretary Tillerson learn this new culture. Um Admiral,
Speaker 1: there's there's General Languel, General Goldfine, some lightweight admiral named Richardson,
Speaker 1: General Kneller, General Milley, General Selva, and a guy named
Speaker 1: Dunford on top of the food chain and joint chiefs
Speaker 1: of staff. You and I go back to eighties six
Speaker 1: and the monum mental Goldwater Nichols reorganization of the competency
Speaker 1: of our military. How do you take Dunford and what
Speaker 1: he represents with Selva, Millie, Kneller, Richardson, Goldfine, et cetera.
Speaker 1: How do you take him off the NSC. It's inconceivable
Speaker 1: to me. And by the way, I have to point
Speaker 1: out for you, Tom, since you love the academic pedigrees,
Speaker 1: the chairman of the Joint Chiefs, General Joe Dunford, is
Speaker 1: a graduate of the Fletcher School of Law Diplomacy. Take
Speaker 1: a lap while you're making note he's down to midshipment. Okay,
Speaker 1: that he would be taken off the Principles Committee or
Speaker 1: not invited all the meetings. I suspect that General Maddis,
Speaker 1: the Secretary of Defense, had a very short and sharp
Speaker 1: conversation with the White House Chief of Staff after that
Speaker 1: announcement and said General Dunford will be attending all Principal
Speaker 1: Committee meetings with me. And you might have noticed Sean
Speaker 1: Spicer at the podium yesterday saying, oh, of course, General
Speaker 1: Dunford is invited to every meeting. Madis will make sure
Speaker 1: he comes. He's got to be there. You need that
Speaker 1: voice of unbiased, unpolitical experience in that Principle's Committee. A
Speaker 1: question that didn't come up in that press briefing yesterday
Speaker 1: was a basic one, that is, why is Steve Bannon
Speaker 1: going to be at these meetings? And maybe you can
Speaker 1: help us understand what these meetings. Therefore, we look back
Speaker 1: on George W. Bush's presidency. He would not allow Karl
Speaker 1: Rove in the room. Exactly what these meetings are not
Speaker 1: about is, gee, let's think about this decision through the
Speaker 1: prism of domestic politics, and so to bring folks with
Speaker 1: that bent into the room, Uh kind of shapes the
Speaker 1: discussion in ways that I think are deleterious to our
Speaker 1: national security. These are to be meetings of experts to
Speaker 1: lay out options in front of the president and have
Speaker 1: a discussion without fear or favor as to the politics
Speaker 1: of the day. So I don't think it's appropriate to
Speaker 1: have someone like Steve Bannon uh in that room. I'm
Speaker 1: like to switch gears here and we're gonna we're very
Speaker 1: generous of the arable will be with us for two
Speaker 1: blocks today. It is a small number, five thousand, eight
Speaker 1: hundred nineties six self identified Muslims out of two point
Speaker 1: two million active and reserve duty members. It's a minority.
Speaker 1: How did you as a command officer in the Middle
Speaker 1: East with NATO and with your other duties including the
Speaker 1: you know the tug about your first commission out of Annapolis?
Speaker 1: How how do you deal with religion on a day
Speaker 1: to day basis in the Navy? Well, first and foremost,
Speaker 1: you have to look at those Muslims who are serving
Speaker 1: on active duty as assets. They have a feel for
Speaker 1: the culture, they have a feel often for the languages
Speaker 1: given their individual backgrounds, and you have to be not
Speaker 1: only respectful of their religious freedom, because that's part of
Speaker 1: what we're fighting for, but also you have to think
Speaker 1: about how can I leverage their connectivity. And I'll tell
Speaker 1: you where we did this very effectively under my command
Speaker 1: in Afghanistan was with UH Turkish NATO troops who are
Speaker 1: obviously overwhelmingly Muslim. We found that they were capable of
Speaker 1: moving and operating in that Afghan Muslim society very effectively.
Speaker 1: We can do the same with our US Muslim population,
Speaker 1: but we can't do it if we alienate them through
Speaker 1: ill thought out travel bands like we saw brought forward
Speaker 1: over the last couple of days. Now. I know a
Speaker 1: lot of people have spoken out about this, reporters as
Speaker 1: well as folks in the Armed Service, that this has
Speaker 1: taken a long time to get translators visas to come
Speaker 1: to to the U S. Are you disappointed with that
Speaker 1: how long it's taken? I am. We have not kept
Speaker 1: faith with the terrific people, and every time I went
Speaker 1: both to Iraq and Afghanistan. I had outstanding translators and
Speaker 1: they had been promised at the end of the day
Speaker 1: that they would come to the United States, and I
Speaker 1: think some have, but it's been a long uh bureacratic process. Hey,
Speaker 1: Having said all that, I want to stipulate, we want
Speaker 1: to protect the country. We want to conduct serious fetting.
Speaker 1: On the other hand, we don't want to just slam
Speaker 1: the door arbitrarily. And that's how this travel band felt.
Speaker 1: We'll come back here, but I have a quick question
Speaker 1: for you here. I learned that the the pick to
Speaker 1: be Navy Secretary is a former Army captain. You've got
Speaker 1: to react to that. Well, maybe it'll help West Point
Speaker 1: in the football games. I know, uh, I know Secretary
Speaker 1: Desert Nit Philip Building very well. He's an excellent choice,
Speaker 1: deep experience in Asia, understands the world business. And by
Speaker 1: the way, he has two sons who are at the
Speaker 1: US Naval Academy. For that, I thought you were gonna
Speaker 1: say the Fletchers School. Another busy day at the White
Speaker 1: House here the second week in the White House for
Speaker 1: President Trump. Admiral and at twelve thirty pm today in
Speaker 1: the Presidential dining room, the President will sit down with
Speaker 1: Mayor Rudy Giuliani his cyber security advice. Right now, you've
Speaker 1: thought a lot about care, a lot about cyber security.
Speaker 1: What do you suggest should be at the top of
Speaker 1: the agenda for these two gentlemen today. I'll give you
Speaker 1: three things they should try and focus on immediately. One
Speaker 1: is UH dividing US Cyber Security Command from the National
Speaker 1: Security Agency. Those two are combined at the moment, so
Speaker 1: you have the military need intel function together. That's inefficient,
Speaker 1: it's a quick win and it ought to happen. Number Two,
Speaker 1: we are to work on the inter agency and bring
Speaker 1: together all the disparate cyber voices today, DHS, FBI, D O, J, D, O, D,
Speaker 1: it's a soup of acronyms. Are all working at cross
Speaker 1: purposes on cyber And Number three, and most importantly, they
Speaker 1: are to sketch out a plan. And here's a businessman
Speaker 1: UH there to sketch out a plan for business private
Speaker 1: public cooperation. Government will not solve this. So there's a
Speaker 1: tactical and operational and a strategic thing they should think
Speaker 1: about today. How hard is it going to be for
Speaker 1: this administration to move forward on cybersecurity, while there's still
Speaker 1: the whirl of activity surrounding what happened in the election
Speaker 1: on Capitol Hill going to be very, very difficult and
Speaker 1: cyber broadly, this is the classic case of building the
Speaker 1: airplane while you're flying it. You don't want to do
Speaker 1: anything that crashes the system. But at the same time
Speaker 1: you've got to deal with this political overlay that came
Speaker 1: into it because of the Russian activity there frankly their
Speaker 1: attack on our democratic process. So somehow we've got to
Speaker 1: separate that issue investigated, understand it, from the larger strategic
Speaker 1: imperative of securing our networks. Atmost, see to the tour
Speaker 1: in Miami. You're ahead of an US Southern Command. You
Speaker 1: know the border. Well, we've had this conversation, uh, much
Speaker 1: more loudly over the past week than we have in
Speaker 1: the past. By building a wall on the US Mexico border.
Speaker 1: How much of a difference would a fortification like that make.
Speaker 1: It will not change the general flow of migration, which,
Speaker 1: by the way, as I'm sure you know, these days,
Speaker 1: more people are going south than are coming north to Mexico.
Speaker 1: Um that look, does that include graduates of the Liberal
Speaker 1: University of Boston right, they're all moving, you know, they're
Speaker 1: mostly time. They're going to Canada, but at that going
Speaker 1: to Mexico. Um, listen, here's a news flash. You can
Speaker 1: build a hundred foot wall, and you look at it
Speaker 1: from Mexico and right to the left of it, I'm
Speaker 1: an admiral, there's an ocean. So if people really want
Speaker 1: to go, they'll go around it. At see, they'll tunnel
Speaker 1: under it the way that cartels are doing, or they'll
Speaker 1: fly drones over it to move products. So, yes, we
Speaker 1: have to control our border. But a simple solution like
Speaker 1: build a big wall is not it. It's got to
Speaker 1: be a combination. There are portions where you do need
Speaker 1: a wall. Other places fences are fine, other places surveillance
Speaker 1: is good, can be on foot, can be drone. You
Speaker 1: need a combination of things to secure the border, and
Speaker 1: then long term, you need a strong relationship with Mexico.
Speaker 1: That's in the end how we'll secure that border. So
Speaker 1: simply building a wall, both symbolically, tactically and strategically, I
Speaker 1: don't think we'll succeed. We're running out of time. Would
Speaker 1: you please explain the stravitas approach that this administration should
Speaker 1: take With Mr Putin of Russia. I was flabbergasted in
Speaker 1: the phone call Saturday. I don't believe Ukraine came up,
Speaker 1: which should I be shocking. I think they defaulted to
Speaker 1: the lowest common denominator of cooperation, which I guess is
Speaker 1: okay for an initial call, and that is the fight
Speaker 1: against the Islamic State. We can both agree on that.
Speaker 1: Broadly speaking, Tom, what we should say to Mr Putin is, look,
Speaker 1: we're gonna have areas of significant disagreement with you where
Speaker 1: we will confront you. Ukraine is one of them, Syria,
Speaker 1: where he supports a war criminal is another. Cyber attacks
Speaker 1: is a third. But we ought to also say to Putin,
Speaker 1: will confront you where we must. But let it find
Speaker 1: some zone where we can cooperate, and there are plenty,
Speaker 1: so it's got to be a mixed message. Dian and Aari, Well,
Speaker 1: thank you so much, greatly appreciated than most venus, of course,
Speaker 1: decades of service with the United States. Maybe David Gurr
Speaker 1: and Tim Keen, New York not joining us. A gentleman
Speaker 1: who has had a profound influence on the immigration dialogue
Speaker 1: over the last ten days, David Beer of Cato Institute.
Speaker 1: David Beer I want David Gurr to speak to you,
Speaker 1: but very quickly here. What will you presume to see
Speaker 1: in the appeals court process, the appeals court process, um,
Speaker 1: after these lesser courts act, Well, you're gonna see it
Speaker 1: probably uh split decision on some of these issues, but
Speaker 1: a lot of them are now mute because of the
Speaker 1: releases and the changes in policy that we've seen from
Speaker 1: the Trump administration. UM, so you know, we might might
Speaker 1: have all of these cases resolved by the time h
Speaker 1: uh an appeals court gets to hear them. What do
Speaker 1: you think is is the strongest legal argument against what
Speaker 1: we saw put in place here over the weekend? You
Speaker 1: cite the Immigration Act of nineteen sixty five. Is that
Speaker 1: the strongest case? Does it rest on that? I think so?
Speaker 1: I think the constitutional challenges are going to be very
Speaker 1: difficult because the uh state of constitutional law. The Supreme
Speaker 1: Court has held that really the Bill of Rights does
Speaker 1: not apply to most immigration decisions, and so the question
Speaker 1: will really depend on whether the president has the legal
Speaker 1: authority to carry out these actions via executive order. And
Speaker 1: like you said, I I cite the Immigration Act of
Speaker 1: nineteen sixty five, which amended the nineteen fifty two law
Speaker 1: that gives the present discretion to ban certain groups of
Speaker 1: foreign born people, and that law says pretty equivocally that
Speaker 1: you cannot discriminate based on national origin against immigrants who
Speaker 1: are coming to the Hind States to live in it permanently.
Speaker 1: It's been interesting to watch the fallout from this executive action,
Speaker 1: the protests at the airports over the weekend, the response UH,
Speaker 1: slowly but surely from from members of Congress. What's this
Speaker 1: say broadly about immigration reform in Washington? D see? A
Speaker 1: couple of years back, there was a robust conversation about
Speaker 1: what immigration reform would look like it was being driven
Speaker 1: by the Congress. Here you have the executive branch taking
Speaker 1: the lead, rightly or wrongly in the courts. I guess
Speaker 1: we'll we'll weigh in on that shortly. What does it
Speaker 1: say about where immigration reform is head? Where that conversation
Speaker 1: is headed? You know, I think it really shows even
Speaker 1: broader than just uh, immigration reform, that we're seeing this
Speaker 1: trend towards executive power that is just so expansive that
Speaker 1: it's making Congress almost irrelevant. All of these dramatic policy
Speaker 1: changes being implemented both by President Obama. What he attempted
Speaker 1: to do, of course, and shut him down on that,
Speaker 1: which was a positive development in my from my view.
Speaker 1: But now we're seeing the Trump administration go the same direction,
Speaker 1: and uh, you know, we've seen it in almost every
Speaker 1: other area. President Obama and President Trump both doing expansive
Speaker 1: executive orders in action. David, My amateur take and please
Speaker 1: inform us, is that this reads like history. There were
Speaker 1: previous immigration themes. There was nineteen fifty two or whatever
Speaker 1: it was. Then there was nineteen sixty five was Senator
Speaker 1: Heart and Representative Emmanuel Seller, and basically they said, excluding
Speaker 1: Asia and Africa is not the calculus we're going to
Speaker 1: use in immigration. So then we moved forward this this well,
Speaker 1: it's two thousand seventeen. Do you presume that a legislature
Speaker 1: can move immigration back to nineteen fifty two? A legislature
Speaker 1: meaning Congress. Congress could certainly do that if they if
Speaker 1: they wanted to go back to that type of discriminatory system,
Speaker 1: they could. Um. But I contend that it's it's illegal
Speaker 1: for the president to override that ninety five Act, which
Speaker 1: was all about it was full it's only intent was
Speaker 1: to create an unbiased immigration system where every country has
Speaker 1: an equal shot at the immigration This is a critical question.
Speaker 1: Do you see any indication from a Republican Senate and
Speaker 1: a Republican House that what they would like to turn
Speaker 1: the clock from nineteen back to nineteen fifty two. There
Speaker 1: have been disturbing signs that a significant portion of the
Speaker 1: Republican conference is on board with this band. Now, the
Speaker 1: ban itself is uh is stated to be at least
Speaker 1: ninety days long. Now, if that remains true and he
Speaker 1: reopens immigration to these countries after ninety days, then it
Speaker 1: will not be seen as as big of a deal.
Speaker 1: But you have to understand that this executive order also
Speaker 1: claims the authority to make this permanent, and so we'll
Speaker 1: see what happens after ninety days, but it certainly would
Speaker 1: be turning the clock back if it remains in effect. Davier,
Speaker 1: thanks so much for joining. I appreciate he is an
Speaker 1: immigration policy analyst at the Cato Institute and Thomas will
Speaker 1: be just fascinating to see play out of their protest
Speaker 1: last night. I mean, it shows no signs of stopping
Speaker 1: here people who were opposed to this measure by by
Speaker 1: the President. I'm in the gird time out chair. I
Speaker 1: cut in there with that final question. But I thought
Speaker 1: it was really I mean, that's he framed that beautifully. Yeah,
Speaker 1: it's like LBJ and do you want to go back
Speaker 1: to Eisenhower? Two are almost Truman. I don't. I don't
Speaker 1: have any wisdom on this. That was great. Yeah, I
Speaker 1: learned a lot and we'll do this sure. Thanks for
Speaker 1: listening to the Bloomberg Surveillance Podcast. Subscribe and listen to
Speaker 1: interviews on iTunes, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm out on Twitter at Tom Keene. David Gura is
Speaker 1: at David Gura. Before the podcast, you can always catch
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