1 00:00:00,040 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,040 Speaker 2: Terminal and the Bloomberg Business app. We begin this out 10 00:00:37,080 --> 00:00:40,120 Speaker 2: we're stock sliding following yesterday's chip route. Stephen Uth the 11 00:00:40,159 --> 00:00:42,680 Speaker 2: Federated luring as year end price target on the S 12 00:00:42,720 --> 00:00:44,760 Speaker 2: and P to seventy five hundred and write in this 13 00:00:45,159 --> 00:00:47,960 Speaker 2: the South was overdue given the violence of the last 14 00:00:47,960 --> 00:00:51,040 Speaker 2: few weeks. We remain cautious on software names, as many 15 00:00:51,440 --> 00:00:54,840 Speaker 2: are potential value traps. Steve joins us now from More. Steve, 16 00:00:54,880 --> 00:00:57,200 Speaker 2: Welcome to the program. I've been looking forward to catching up. This, sir, 17 00:00:57,320 --> 00:00:59,400 Speaker 2: really interesting. No, I think we should start from this. 18 00:00:59,440 --> 00:00:59,760 Speaker 3: You are not? 19 00:01:00,640 --> 00:01:02,400 Speaker 2: You still think huntings are going to be okay? This 20 00:01:02,480 --> 00:01:04,600 Speaker 2: seems to be a call on valuation. Steve, just share 21 00:01:04,600 --> 00:01:07,520 Speaker 2: with this your thoughts about how your thoughts on valuations 22 00:01:07,520 --> 00:01:10,320 Speaker 2: aren't developing and comparing now to maybe where we were 23 00:01:10,360 --> 00:01:11,680 Speaker 2: a few decades ago. 24 00:01:12,480 --> 00:01:15,520 Speaker 4: Yeah, John that actually the piece you sited was really 25 00:01:15,600 --> 00:01:19,160 Speaker 4: inspired by a conversation you all were having on surveillance 26 00:01:19,360 --> 00:01:22,280 Speaker 4: a couple of weeks ago about the confusion around the 27 00:01:22,319 --> 00:01:26,240 Speaker 4: macros seem to be pretty good, yet the market is 28 00:01:26,400 --> 00:01:30,600 Speaker 4: having trouble, and I think what we're saying is the 29 00:01:30,680 --> 00:01:34,440 Speaker 4: reason the macros are pretty good. But the problem with 30 00:01:34,520 --> 00:01:37,240 Speaker 4: the market right now is that there's a whole hunk 31 00:01:37,319 --> 00:01:42,200 Speaker 4: of it that was dependent on two different arguments for 32 00:01:42,280 --> 00:01:45,800 Speaker 4: why it should have a higher valuation. One is the 33 00:01:45,880 --> 00:01:50,360 Speaker 4: MAC seven were giant free cash flow generators with big 34 00:01:50,400 --> 00:01:54,560 Speaker 4: motes around them, and free cash flow is worth more 35 00:01:54,680 --> 00:01:57,560 Speaker 4: in terms of a dollar earnings than an asset heavy 36 00:01:57,600 --> 00:02:01,160 Speaker 4: company because the dollars that come right back to the 37 00:02:01,200 --> 00:02:03,480 Speaker 4: shareholders it's supposed to have to be reinvested in the 38 00:02:03,480 --> 00:02:05,680 Speaker 4: ground or a big piece of a big asset. And 39 00:02:05,800 --> 00:02:08,640 Speaker 4: the MAC seven are no longer free cash flow genertors, 40 00:02:08,680 --> 00:02:12,440 Speaker 4: at least for the present, because they're spending eighty percent 41 00:02:12,480 --> 00:02:15,320 Speaker 4: of it ninety percent of it on AI, and the 42 00:02:15,440 --> 00:02:18,800 Speaker 4: debate around in Nvidia versus the Max seven the rest 43 00:02:19,040 --> 00:02:20,920 Speaker 4: of the Max seven is is this going to go 44 00:02:20,919 --> 00:02:22,760 Speaker 4: on forever or is this a one off? And that 45 00:02:22,800 --> 00:02:26,200 Speaker 4: debate is really not settled. So you've lost the free 46 00:02:26,200 --> 00:02:28,880 Speaker 4: cash flow. And then on top of that, you've got 47 00:02:28,960 --> 00:02:31,560 Speaker 4: all these asset like businesses blocked. 48 00:02:31,600 --> 00:02:33,520 Speaker 5: Being a perfect example. 49 00:02:33,840 --> 00:02:36,800 Speaker 4: That you know a couple guys in a garage coding 50 00:02:36,880 --> 00:02:39,880 Speaker 4: software and that they were all the rate for the 51 00:02:40,000 --> 00:02:43,200 Speaker 4: last ten years because you didn't need any assets at 52 00:02:43,240 --> 00:02:48,079 Speaker 4: all to generate earnings. It's all intellectual capital that you're 53 00:02:48,120 --> 00:02:51,959 Speaker 4: selling at very high margins. And the question is can 54 00:02:52,120 --> 00:02:56,519 Speaker 4: those margins hold up in a world where your competitors 55 00:02:56,639 --> 00:03:00,919 Speaker 4: now AI not a software engineer, And so those businesses 56 00:03:00,919 --> 00:03:04,240 Speaker 4: are under pressure, and the valuation is a question mark. 57 00:03:04,919 --> 00:03:07,760 Speaker 4: And so when you put the two together, the valuation 58 00:03:08,200 --> 00:03:10,600 Speaker 4: I give a fair valuation on the SMP we think 59 00:03:10,800 --> 00:03:14,720 Speaker 4: is lower than it was six months ago. So we've 60 00:03:14,760 --> 00:03:17,760 Speaker 4: cut you know, we've increased our earnings work as actually 61 00:03:18,000 --> 00:03:21,440 Speaker 4: we're at four ten three years out now on earnings, 62 00:03:21,440 --> 00:03:23,680 Speaker 4: which is ahead of the street a little bit because 63 00:03:23,680 --> 00:03:26,360 Speaker 4: the macros look good. But a lot of that acceleration 64 00:03:26,440 --> 00:03:29,880 Speaker 4: and earnings is coming outside of the set of stocks 65 00:03:29,880 --> 00:03:33,400 Speaker 4: I just talked about, it's coming in loan. Behold the 66 00:03:33,440 --> 00:03:37,520 Speaker 4: acid heavy businesses you know that are actually doing pretty well, 67 00:03:37,560 --> 00:03:42,040 Speaker 4: which by the way includes Europe and Japan and Asia 68 00:03:42,120 --> 00:03:44,360 Speaker 4: and Korea, which I know you guys will also have 69 00:03:44,400 --> 00:03:47,520 Speaker 4: been talking about. But a lot of those businesses are 70 00:03:47,600 --> 00:03:50,240 Speaker 4: the very businesses that are enjoying part of this pickup 71 00:03:50,360 --> 00:03:54,560 Speaker 4: their beneficiaries of AI, and they're less prone to being 72 00:03:54,600 --> 00:03:55,720 Speaker 4: cannibalized by AI. 73 00:03:55,920 --> 00:03:57,600 Speaker 2: So stave. As you know, for a long time, for 74 00:03:57,680 --> 00:04:00,720 Speaker 2: much of the last decade, the US secretary market has 75 00:04:00,760 --> 00:04:04,280 Speaker 2: demanded a great evaluation, a higher premium compared to the 76 00:04:04,320 --> 00:04:07,480 Speaker 2: rest of the world. Is that eroding before our eyes? 77 00:04:07,680 --> 00:04:09,680 Speaker 2: Is that something that's not repaarable given the shifts that 78 00:04:09,680 --> 00:04:13,000 Speaker 2: you describe, well, I. 79 00:04:12,960 --> 00:04:16,040 Speaker 4: Think it's still going to probably attain a premium for 80 00:04:16,080 --> 00:04:19,120 Speaker 4: what it's worth. We've cut our long term estimate on 81 00:04:19,160 --> 00:04:21,719 Speaker 4: the multiple for the market from twenty two to twenty, 82 00:04:22,800 --> 00:04:26,440 Speaker 4: whereas everything else we'd still say, roughly you call it eighteen. 83 00:04:26,640 --> 00:04:29,119 Speaker 4: So we think it's still a premium for one because 84 00:04:29,160 --> 00:04:33,360 Speaker 4: it's got a more fullsome capital market, more flexible et cetera. 85 00:04:34,080 --> 00:04:37,080 Speaker 4: And you know, we've kind of exaggerated to make a 86 00:04:37,120 --> 00:04:40,960 Speaker 4: point on asset light high free cash flow. Sooner or later, 87 00:04:41,760 --> 00:04:45,200 Speaker 4: the big mag seven companies will start generating cash flow 88 00:04:45,279 --> 00:04:48,520 Speaker 4: either AI again free cash flow. Either AI is going 89 00:04:48,600 --> 00:04:51,479 Speaker 4: to work and they're going to have a lot more profits, 90 00:04:52,120 --> 00:04:53,680 Speaker 4: or it's not gonna work and they're going to pull 91 00:04:53,760 --> 00:04:56,960 Speaker 4: back and generate free cash flow that way. So one 92 00:04:56,960 --> 00:04:59,840 Speaker 4: of the things that's I think attractive about the mags 93 00:05:00,120 --> 00:05:02,479 Speaker 4: in here, and we think you can sort of pick 94 00:05:02,760 --> 00:05:05,400 Speaker 4: within those. We'd like Amazon as an example right now. 95 00:05:06,040 --> 00:05:09,360 Speaker 4: But you know, one thing that's attractive about is at 96 00:05:09,400 --> 00:05:13,600 Speaker 4: some point that they still are their base businesses are 97 00:05:13,640 --> 00:05:16,919 Speaker 4: still very, very profitable and they can just return to 98 00:05:17,000 --> 00:05:19,920 Speaker 4: that if they have to. So you're not dealing with 99 00:05:19,960 --> 00:05:23,120 Speaker 4: a mirage in terms of what you've got here, and 100 00:05:23,160 --> 00:05:24,600 Speaker 4: no one else really has that. 101 00:05:24,800 --> 00:05:27,040 Speaker 5: So yeah, I think you're right. 102 00:05:27,200 --> 00:05:30,320 Speaker 4: The premium's probably lower than it was, but it's we 103 00:05:30,360 --> 00:05:32,800 Speaker 4: still think there's a reason to have a premium there. 104 00:05:32,800 --> 00:05:35,040 Speaker 5: We just have cut it back. And really what we're 105 00:05:35,080 --> 00:05:36,000 Speaker 5: trying to signal. 106 00:05:35,720 --> 00:05:38,560 Speaker 4: To our clients is we're probably in a kind of 107 00:05:38,600 --> 00:05:42,679 Speaker 4: single digit return market here, not a double digit return market, 108 00:05:43,279 --> 00:05:46,560 Speaker 4: and if that's the case, that changes how you what 109 00:05:46,640 --> 00:05:48,880 Speaker 4: kind of stocks you want to own. You know, as 110 00:05:48,880 --> 00:05:51,440 Speaker 4: an example, dividend stocks. If you're a big hunk of 111 00:05:51,480 --> 00:05:54,360 Speaker 4: the value in disease, you can get half your return 112 00:05:54,400 --> 00:05:56,520 Speaker 4: in cash basically, or at least a third of it. 113 00:05:57,240 --> 00:05:59,400 Speaker 4: And you know that starts to look a lot more 114 00:05:59,400 --> 00:06:02,480 Speaker 4: attractive a three or four percent given in yield against 115 00:06:02,640 --> 00:06:05,360 Speaker 4: an eight or nine percent market as opposed to against 116 00:06:05,400 --> 00:06:07,160 Speaker 4: a fifteen or twenty percent market. 117 00:06:07,680 --> 00:06:11,200 Speaker 6: The story you're saying, you're telling Steve, seems to benefit 118 00:06:11,440 --> 00:06:15,480 Speaker 6: companies that are harder to disrupt. I don't understand why 119 00:06:15,560 --> 00:06:18,920 Speaker 6: Nvidia isn't among those. I don't understand what happened yesterday 120 00:06:18,960 --> 00:06:21,760 Speaker 6: why the shares are down five and a half percent 121 00:06:21,880 --> 00:06:26,000 Speaker 6: after delivering earnings that beat expectations with seventy five percent 122 00:06:26,120 --> 00:06:30,200 Speaker 6: margins and talking about you know, ongoing pipeline that's really significant. 123 00:06:30,400 --> 00:06:33,839 Speaker 6: What's the tell for markets in terms of this response 124 00:06:34,120 --> 00:06:35,880 Speaker 6: to earnings that otherwise are pretty. 125 00:06:35,640 --> 00:06:37,560 Speaker 5: Good, right, Lisa. 126 00:06:37,600 --> 00:06:40,080 Speaker 4: One of the issues is there's not one narrative here, 127 00:06:41,279 --> 00:06:44,919 Speaker 4: So the harder to disrupt narrative that's really kind of 128 00:06:44,960 --> 00:06:49,479 Speaker 4: the software name's high intellectual capital names in Vidia is 129 00:06:49,560 --> 00:06:52,600 Speaker 4: not a completely acid light business. It's a high free 130 00:06:52,680 --> 00:06:56,800 Speaker 4: cash flow generator and it falls into that ILK. In 131 00:06:56,920 --> 00:07:01,560 Speaker 4: Vidia is in some ways the primary beneficiary of the 132 00:07:01,640 --> 00:07:05,120 Speaker 4: AI buildout, right, I mean, everyone needs their chips and 133 00:07:05,120 --> 00:07:07,720 Speaker 4: it's a pretty powerful story. That's why the stock has 134 00:07:07,760 --> 00:07:11,080 Speaker 4: done so well in the last five years. But the 135 00:07:11,160 --> 00:07:15,840 Speaker 4: debate around AI kind of centers on Nvidia in a way. Right, 136 00:07:15,960 --> 00:07:19,040 Speaker 4: either of these MAC seven companies, they would say, hey, 137 00:07:19,200 --> 00:07:21,680 Speaker 4: we're kind of in a one off spending cycle here. 138 00:07:21,760 --> 00:07:24,800 Speaker 4: Once we get to Nirvana, we'll be back to being 139 00:07:24,920 --> 00:07:26,560 Speaker 4: high free cash flow generators. 140 00:07:27,200 --> 00:07:30,400 Speaker 5: If that's the case, where's in Video going to sell. 141 00:07:30,240 --> 00:07:34,440 Speaker 4: To, right, because they've got to replace last year's sale 142 00:07:34,560 --> 00:07:36,800 Speaker 4: first before they even start next year's sales. 143 00:07:36,880 --> 00:07:39,320 Speaker 5: So on the other hand, if this is. 144 00:07:39,280 --> 00:07:41,400 Speaker 4: Going to go on forever, and if you listen to Wang, 145 00:07:41,400 --> 00:07:44,080 Speaker 4: he would say it's going to last ten years, well, 146 00:07:44,080 --> 00:07:48,680 Speaker 4: then Video is a screaming buy here because it's the 147 00:07:48,680 --> 00:07:51,560 Speaker 4: only player in town. Maybe you could say AMD. So 148 00:07:52,320 --> 00:07:55,160 Speaker 4: there's a real debate around in Video right now. It's 149 00:07:55,200 --> 00:07:57,400 Speaker 4: not a stock we hate. Frankly, we would still be 150 00:07:57,520 --> 00:08:02,560 Speaker 4: involved with that stock for that reason. It's not going 151 00:08:02,640 --> 00:08:04,800 Speaker 4: to get cannibalized here. That's not going to happen. The 152 00:08:04,880 --> 00:08:06,880 Speaker 4: question is are is AI going to work? 153 00:08:07,280 --> 00:08:07,600 Speaker 6: Yeah? 154 00:08:07,640 --> 00:08:10,040 Speaker 4: And is it going to keep growing out? And if 155 00:08:10,080 --> 00:08:12,520 Speaker 4: it does? In videos a screaming buyer. 156 00:08:12,480 --> 00:08:14,080 Speaker 6: Steve, I just want to finish up. I know you're 157 00:08:14,080 --> 00:08:16,400 Speaker 6: a really deep thinker, and I'm sure you've been following 158 00:08:16,440 --> 00:08:18,320 Speaker 6: some of these sub stacks and some of the arguments 159 00:08:18,640 --> 00:08:21,960 Speaker 6: and discussions around the future of the labor market and 160 00:08:22,080 --> 00:08:25,480 Speaker 6: humanity in the wake of AI. What's been your response 161 00:08:25,520 --> 00:08:27,840 Speaker 6: to this week and sort of the increasing flory that 162 00:08:27,960 --> 00:08:31,920 Speaker 6: kicked off Sunday evening with Sutrini's research and then spurred 163 00:08:31,960 --> 00:08:33,640 Speaker 6: all of the rebuttals and then the pileon. 164 00:08:35,160 --> 00:08:38,839 Speaker 4: Well, one reason we've been signaling to our investors, look, 165 00:08:38,880 --> 00:08:41,560 Speaker 4: there's a violent rotation we're in the middle of mores 166 00:08:41,640 --> 00:08:43,920 Speaker 4: to come, is we don't want people to panic when 167 00:08:43,920 --> 00:08:46,719 Speaker 4: that happens. So frankly, we're not in a panic, as 168 00:08:46,720 --> 00:08:50,120 Speaker 4: you might might guess, because we're probably mostly tilted where 169 00:08:50,160 --> 00:08:53,559 Speaker 4: we want to be in terms of Satrini research. It's 170 00:08:53,640 --> 00:08:56,440 Speaker 4: very interesting, but frankly, I may be a deep thinker, 171 00:08:56,480 --> 00:08:59,080 Speaker 4: but I don't know that I have the imagination fully 172 00:08:59,800 --> 00:09:03,480 Speaker 4: to I guess where this economy is going to go. 173 00:09:03,960 --> 00:09:07,760 Speaker 4: But all I know from watching the history of economic 174 00:09:07,800 --> 00:09:09,239 Speaker 4: development over the last. 175 00:09:08,960 --> 00:09:09,960 Speaker 5: Five hundred years. 176 00:09:10,920 --> 00:09:14,560 Speaker 4: Every time there's a major invention that disrupts the current 177 00:09:14,600 --> 00:09:18,120 Speaker 4: status quo, and the economy grows as a result of 178 00:09:18,160 --> 00:09:21,200 Speaker 4: the efficiencies and productivity enhancements that happen. 179 00:09:21,320 --> 00:09:24,920 Speaker 5: And this is huge this time around for sure. Somehow 180 00:09:25,040 --> 00:09:26,320 Speaker 5: or other, those. 181 00:09:26,360 --> 00:09:31,560 Speaker 4: XX personnel, if you will, get redeployed even a higher 182 00:09:31,640 --> 00:09:34,720 Speaker 4: value added activity and the economy grows even more. And 183 00:09:35,360 --> 00:09:37,280 Speaker 4: I just got to believe that there's a lot of 184 00:09:37,400 --> 00:09:40,120 Speaker 4: entrepreneurs out there that are going to figure out a 185 00:09:40,160 --> 00:09:44,160 Speaker 4: way to use those very high talented, you know, white 186 00:09:44,160 --> 00:09:46,520 Speaker 4: collar workers to do even more. 187 00:09:46,679 --> 00:09:48,959 Speaker 5: And I know within our own business we're. 188 00:09:48,760 --> 00:09:51,520 Speaker 4: Seeing that at Federated Hermes, and I think a lot 189 00:09:51,520 --> 00:09:53,920 Speaker 4: of other businesses are seeing the same thing. So it's 190 00:09:53,960 --> 00:09:57,720 Speaker 4: not necessarily the case. I think it's the folks that 191 00:09:57,800 --> 00:10:01,600 Speaker 4: don't have the imagination that are left expecting, you know, 192 00:10:01,640 --> 00:10:03,120 Speaker 4: the doomsday scenario. 193 00:10:03,200 --> 00:10:05,600 Speaker 5: I just don't see this. It's never happened before, and 194 00:10:05,640 --> 00:10:06,880 Speaker 5: I don't think it's going to happen now. 195 00:10:07,679 --> 00:10:11,199 Speaker 2: Stay with us. More Bloomberg surveillance coming up after this 196 00:10:20,559 --> 00:10:23,920 Speaker 2: AI in full focus this morning. The standoff between Anthropic 197 00:10:24,200 --> 00:10:27,079 Speaker 2: and the Pentagon over military safeguard is ramping up. The 198 00:10:27,080 --> 00:10:29,920 Speaker 2: tech giant facing a deadline today to accept conditions or 199 00:10:29,960 --> 00:10:33,960 Speaker 2: be blacklisted. The Anthropic CEO Dario Amodi saying in a statement, 200 00:10:34,080 --> 00:10:36,960 Speaker 2: quote these threats do not change our position. We cannot 201 00:10:36,960 --> 00:10:39,400 Speaker 2: in good conscience to see to their request. The US 202 00:10:39,480 --> 00:10:42,480 Speaker 2: under Secretary of Defense and mil Michael, responding to the statement, 203 00:10:42,520 --> 00:10:46,040 Speaker 2: calling Emodi a liar with a god complex. The Under 204 00:10:46,040 --> 00:10:49,000 Speaker 2: Secretary joins US now for more. Under Secretary Michael, Welcome 205 00:10:49,040 --> 00:10:51,439 Speaker 2: to the program, Sir. Calling someone a liar is pretty 206 00:10:51,440 --> 00:10:53,120 Speaker 2: strong language. What's he like about? 207 00:10:55,000 --> 00:10:59,360 Speaker 7: Well, what happened is we've been negotiating in good faith 208 00:11:00,080 --> 00:11:03,640 Speaker 7: on the Department of Warside for about three months, and 209 00:11:03,800 --> 00:11:07,880 Speaker 7: we're working pretty diligently, and we sent over a proposal 210 00:11:08,040 --> 00:11:11,520 Speaker 7: that we thought made a lot of concessions to the 211 00:11:11,640 --> 00:11:15,640 Speaker 7: language that Anthropic wanted, and then, you know, without any notice, 212 00:11:16,040 --> 00:11:19,640 Speaker 7: they published an article where we thought we were getting close, 213 00:11:20,160 --> 00:11:23,400 Speaker 7: saying that they were breaking off talks well before the deadline, 214 00:11:23,440 --> 00:11:27,160 Speaker 7: which is generally not good partner oriented practice. 215 00:11:27,200 --> 00:11:28,120 Speaker 3: If you will, so. 216 00:11:28,200 --> 00:11:29,800 Speaker 2: Mail, this is what they're asking for. As far as 217 00:11:29,800 --> 00:11:32,040 Speaker 2: we understand, and let me share this with the audience. 218 00:11:32,280 --> 00:11:34,480 Speaker 2: It doesn't want HISS technology use for surveillments of US 219 00:11:34,559 --> 00:11:37,960 Speaker 2: citizens or for autonomous lethal strikes without a human in 220 00:11:38,000 --> 00:11:38,360 Speaker 2: the loop. 221 00:11:38,840 --> 00:11:39,520 Speaker 5: That's the ask. 222 00:11:39,679 --> 00:11:40,760 Speaker 2: What were the concessions. 223 00:11:42,200 --> 00:11:46,280 Speaker 7: Yeah, the concessions are pretty simple. We agreed in writing 224 00:11:47,040 --> 00:11:51,640 Speaker 7: to ensure that the Department of War was following all 225 00:11:51,720 --> 00:11:55,480 Speaker 7: laws and regulations, including the National Security Act of nineteen 226 00:11:55,559 --> 00:11:59,079 Speaker 7: forty seven, the FIZ Act, and all other applicable laws 227 00:11:59,080 --> 00:12:02,960 Speaker 7: and regulations, because mass surveillance of Americans is already illegal, 228 00:12:03,360 --> 00:12:07,040 Speaker 7: so we were offering to put all of that language 229 00:12:07,040 --> 00:12:10,040 Speaker 7: and affirm that we were following all laws in the contract. 230 00:12:10,400 --> 00:12:13,360 Speaker 7: When it comes to autonomous weapons, similarly, we said we'll 231 00:12:13,400 --> 00:12:17,200 Speaker 7: follow all laws, including a DoD Directive that's been in 232 00:12:17,200 --> 00:12:21,040 Speaker 7: place for years that governs how we would use any 233 00:12:21,080 --> 00:12:24,000 Speaker 7: such weapons. And then we affirmed that there would be 234 00:12:24,120 --> 00:12:29,360 Speaker 7: human oversight over all kinds of every kind of part 235 00:12:29,440 --> 00:12:32,480 Speaker 7: of the development process or engagement process or use of 236 00:12:32,559 --> 00:12:35,640 Speaker 7: autonomous weapons. And he didn't like the word I guess 237 00:12:35,920 --> 00:12:39,679 Speaker 7: as appropriate at the end of that sentence, But we 238 00:12:39,720 --> 00:12:44,040 Speaker 7: believe we've we conceded to all their substantive demands, So 239 00:12:44,080 --> 00:12:47,840 Speaker 7: it was surprising that out of nowhere they'd cut off negotiations. 240 00:12:47,920 --> 00:12:50,960 Speaker 8: So it appears that your differences are actually minor. Would 241 00:12:50,960 --> 00:12:51,720 Speaker 8: that be accurate. 242 00:12:53,280 --> 00:12:56,200 Speaker 7: Yeah, That's what was surprising is usually if your differences 243 00:12:56,240 --> 00:12:57,800 Speaker 7: are minor, you get in a room, you try to 244 00:12:57,840 --> 00:13:02,360 Speaker 7: hash them out, and instead, without any notice, you publishes 245 00:13:02,920 --> 00:13:06,480 Speaker 7: something about his conscience and then doesn't engage. 246 00:13:06,600 --> 00:13:07,959 Speaker 3: And it was difficult to. 247 00:13:07,960 --> 00:13:11,160 Speaker 7: Understand why because we were working pretty diligently on this 248 00:13:11,880 --> 00:13:14,800 Speaker 7: and we're at the final stages of a few words 249 00:13:14,840 --> 00:13:17,400 Speaker 7: here or there where we agreed to what they wanted 250 00:13:17,600 --> 00:13:20,959 Speaker 7: so in substance. So it was very surprising given that 251 00:13:21,200 --> 00:13:24,760 Speaker 7: we negotiate with hundreds of technology companies and this is 252 00:13:24,800 --> 00:13:26,840 Speaker 7: the only one we've ever had that behavior from. 253 00:13:27,080 --> 00:13:29,560 Speaker 8: Are you still weighing using the Defense Production Act to 254 00:13:29,640 --> 00:13:32,840 Speaker 8: compel Anthropic to basically have to use its product, or 255 00:13:32,880 --> 00:13:36,160 Speaker 8: potentially you're weighing still making it a supply chain risk, 256 00:13:36,559 --> 00:13:39,600 Speaker 8: which we heard from anthropics say that this is almost 257 00:13:39,760 --> 00:13:41,080 Speaker 8: contradictory proposals. 258 00:13:43,000 --> 00:13:47,040 Speaker 7: They're two different things, and I think depending on how 259 00:13:47,080 --> 00:13:51,400 Speaker 7: today goes, at five o'clock, the Secretary of warpete Hexeth 260 00:13:51,440 --> 00:13:54,280 Speaker 7: gets to make the decision on how to reply. I've 261 00:13:54,480 --> 00:13:58,960 Speaker 7: maintained my openness to continue dialogue through that deadline. But 262 00:13:59,040 --> 00:14:01,400 Speaker 7: they've seemed to have launch sort of a pr campaign 263 00:14:01,480 --> 00:14:05,680 Speaker 7: that was planned well before these negotiations sort of restarted 264 00:14:05,720 --> 00:14:10,000 Speaker 7: on Tuesday. So I don't know. It's their behavior is 265 00:14:10,000 --> 00:14:12,320 Speaker 7: frankly unpredictable. I'm not sure what to expect. 266 00:14:12,679 --> 00:14:15,560 Speaker 8: So do you plan them on having more talks today 267 00:14:15,800 --> 00:14:17,960 Speaker 8: or is a decision just need to be made by today. 268 00:14:19,120 --> 00:14:23,520 Speaker 7: I offered more talks if so long as they're in 269 00:14:23,520 --> 00:14:27,800 Speaker 7: good faith. We're always open to talks. And we set 270 00:14:27,960 --> 00:14:31,360 Speaker 7: a deadline, and we meant the deadline, and up until 271 00:14:31,400 --> 00:14:33,480 Speaker 7: that deadline, I'm open to more talks, and I told 272 00:14:33,520 --> 00:14:34,040 Speaker 7: them so. 273 00:14:34,040 --> 00:14:36,400 Speaker 8: So what does happen at five to oho one today 274 00:14:36,480 --> 00:14:39,280 Speaker 8: if there's no agreement between the DoD and Anthropic. 275 00:14:41,040 --> 00:14:44,280 Speaker 7: That's a secretary heg Seth. We have some courses of 276 00:14:44,320 --> 00:14:48,880 Speaker 7: action that he's considering. And ultimately this comes down to 277 00:14:48,960 --> 00:14:52,440 Speaker 7: the war fighter, right. It comes down to for any 278 00:14:52,480 --> 00:14:56,600 Speaker 7: AI system we might use, are we using it to 279 00:14:56,680 --> 00:15:00,440 Speaker 7: protect our war fighters in the right way? Using it 280 00:15:00,520 --> 00:15:02,880 Speaker 7: to sort of give them the best tools to be 281 00:15:02,920 --> 00:15:05,280 Speaker 7: efficient and to be lethal when they have to be 282 00:15:05,400 --> 00:15:09,680 Speaker 7: lethal and that's the primary thing in Secretary hegsas head, 283 00:15:10,160 --> 00:15:12,960 Speaker 7: and we told them that ultimately, at the end of 284 00:15:13,000 --> 00:15:17,200 Speaker 7: the day, we follow the law, all laws, but we 285 00:15:17,280 --> 00:15:21,040 Speaker 7: can't let any one company stand between us and the 286 00:15:21,080 --> 00:15:24,720 Speaker 7: war fighter because they don't make the rules. Congress makes 287 00:15:24,720 --> 00:15:27,680 Speaker 7: the rules, the presidents signed them, We execute them, and 288 00:15:27,680 --> 00:15:28,560 Speaker 7: we do so safely. 289 00:15:28,640 --> 00:15:30,560 Speaker 8: Well, speaking of the President, has he weighed in on 290 00:15:30,640 --> 00:15:34,160 Speaker 8: this specifically? Has there been discussions with him? And Secretary 291 00:15:34,240 --> 00:15:35,840 Speaker 8: Hegseth and yourself as well? 292 00:15:37,920 --> 00:15:40,360 Speaker 7: This has all been internal to the Department of War so. 293 00:15:40,360 --> 00:15:41,320 Speaker 5: Far, okay? 294 00:15:41,400 --> 00:15:44,160 Speaker 8: And then when it comes to potentially the other AI 295 00:15:44,240 --> 00:15:48,000 Speaker 8: negotiations underway, what is going on right now with XAI 296 00:15:48,440 --> 00:15:51,360 Speaker 8: and to get GROK on classified networks. 297 00:15:52,480 --> 00:15:57,120 Speaker 7: Well, I think the smart approach when I came in 298 00:15:57,360 --> 00:16:00,120 Speaker 7: at the Department of War about nine months ago and 299 00:16:00,160 --> 00:16:02,160 Speaker 7: looked at what we were using AI for, and it 300 00:16:02,200 --> 00:16:05,400 Speaker 7: was some pretty minimal use cases. And given the power 301 00:16:05,440 --> 00:16:08,920 Speaker 7: of the technology, the potential power to do good for 302 00:16:09,040 --> 00:16:11,920 Speaker 7: the US military both from an efficiency standpoint and a 303 00:16:11,960 --> 00:16:14,360 Speaker 7: strength standpoint, I wanted to make sure we had a 304 00:16:14,400 --> 00:16:17,000 Speaker 7: lot of options. So we went around and we've launched 305 00:16:17,000 --> 00:16:23,120 Speaker 7: Google for unclassified networks we've signed XAI for classified and 306 00:16:23,240 --> 00:16:26,120 Speaker 7: non classified networks, and we want to continue to provide 307 00:16:26,160 --> 00:16:30,000 Speaker 7: options to all of our components here at DOOW, and 308 00:16:30,040 --> 00:16:32,320 Speaker 7: that's what we'll continue to do. And it's just smart 309 00:16:32,640 --> 00:16:34,560 Speaker 7: to have more than one option so that we can 310 00:16:34,600 --> 00:16:37,040 Speaker 7: see the strengths and weaknesses of each model and learn 311 00:16:37,080 --> 00:16:40,400 Speaker 7: from them as the AI revolution begins. 312 00:16:40,080 --> 00:16:44,160 Speaker 6: Here under Secretary Michael is lethal autonomy really so critical 313 00:16:44,600 --> 00:16:46,560 Speaker 6: for future national security? 314 00:16:48,760 --> 00:16:49,120 Speaker 3: It is. 315 00:16:49,160 --> 00:16:52,000 Speaker 7: I mean, if you think about it from a defense standpoint, 316 00:16:52,120 --> 00:16:55,680 Speaker 7: whether it's a drone swarm that's coming out a military base, 317 00:16:56,320 --> 00:17:00,359 Speaker 7: whether it's a hybersonic missile coming at the United States, 318 00:17:00,440 --> 00:17:04,359 Speaker 7: where the reaction time against the sort of you know 319 00:17:04,560 --> 00:17:07,840 Speaker 7: how many weapons are coming at you, you want to 320 00:17:07,880 --> 00:17:10,760 Speaker 7: take them, be able to take them down potentially faster 321 00:17:10,840 --> 00:17:12,240 Speaker 7: than a human could alone. 322 00:17:12,880 --> 00:17:14,879 Speaker 3: If if that's how. 323 00:17:14,760 --> 00:17:17,240 Speaker 7: It's done, and we're learning from the Russian Ukraine War 324 00:17:17,280 --> 00:17:19,800 Speaker 7: with the drone swarms and so on, and with the 325 00:17:19,840 --> 00:17:22,560 Speaker 7: new weapons that have been developed all over the world 326 00:17:22,680 --> 00:17:25,000 Speaker 7: that change the name of war, the game of warfare, 327 00:17:25,880 --> 00:17:28,640 Speaker 7: that we've got to respond and defend ourselves in. 328 00:17:28,560 --> 00:17:29,480 Speaker 3: Any way we can. 329 00:17:29,920 --> 00:17:31,560 Speaker 7: The question is, do you have a human on a 330 00:17:31,640 --> 00:17:35,480 Speaker 7: loop to make sure that we're monitoring these systems, and 331 00:17:35,520 --> 00:17:38,040 Speaker 7: that's what we proposed in writing in language that we 332 00:17:38,200 --> 00:17:41,680 Speaker 7: always have human oversight over these things, but they're necessary 333 00:17:41,800 --> 00:17:43,280 Speaker 7: given what's happening in the world, and. 334 00:17:43,320 --> 00:17:48,920 Speaker 2: Now clearly the technology these companies are producing is tremendously powerful. Yeah, 335 00:17:49,000 --> 00:17:51,640 Speaker 2: you believe this individual is both a liar and has 336 00:17:51,640 --> 00:17:54,520 Speaker 2: a god complex. How concerned should the American public be 337 00:17:55,400 --> 00:17:58,200 Speaker 2: about individuals like this running companies like this if that's 338 00:17:58,200 --> 00:17:59,919 Speaker 2: what you believe this person is. 339 00:18:01,440 --> 00:18:04,760 Speaker 7: Yeah, I think there's some concern that you know, when 340 00:18:04,800 --> 00:18:09,480 Speaker 7: you have leaders of some of these companies talking about 341 00:18:09,720 --> 00:18:14,280 Speaker 7: unemploying seventy million Americans, the lawsuits they're under for sort 342 00:18:14,320 --> 00:18:19,000 Speaker 7: of scraping content from content publishers and having billion dollar 343 00:18:19,119 --> 00:18:23,560 Speaker 7: lawsuits against them using that content to make profits. And 344 00:18:23,600 --> 00:18:28,080 Speaker 7: then really what's concerning is making their own policies that 345 00:18:28,240 --> 00:18:32,840 Speaker 7: sort of and could sit on top of democratic policies 346 00:18:32,840 --> 00:18:35,280 Speaker 7: that are voted on by the people, passed by Congress, 347 00:18:35,320 --> 00:18:38,000 Speaker 7: signed by the President. You do have to worry about 348 00:18:38,359 --> 00:18:40,639 Speaker 7: are they taking it too far? Are they trying to 349 00:18:40,720 --> 00:18:44,719 Speaker 7: do and impose their own views on the American people 350 00:18:44,920 --> 00:18:47,520 Speaker 7: in an undemocratic way? So I think those things are 351 00:18:47,560 --> 00:18:50,280 Speaker 7: going to be things we're grappling with in society for 352 00:18:50,320 --> 00:18:52,879 Speaker 7: the next several years as these companies get bigger and bigger. 353 00:18:53,359 --> 00:19:06,359 Speaker 2: Stay with US. Multilemberg Survanance coming up after this. Let's 354 00:19:06,359 --> 00:19:08,360 Speaker 2: turn to this story. US and a round in officials 355 00:19:08,400 --> 00:19:11,359 Speaker 2: agreeing to another round of nuclear talks next week in 356 00:19:11,440 --> 00:19:15,000 Speaker 2: Vienna after wrapping up negotiations in Geneva, a person familiar 357 00:19:15,040 --> 00:19:18,399 Speaker 2: with the US position saying Americans were disappointed with the 358 00:19:18,440 --> 00:19:22,040 Speaker 2: progressive talks. Amos Hoksting, the managing partner at TWG Global 359 00:19:22,080 --> 00:19:25,920 Speaker 2: and former senior White House senior advisor, joins US now 360 00:19:25,960 --> 00:19:27,280 Speaker 2: for more. Halo cervis, good to see you. 361 00:19:27,359 --> 00:19:28,159 Speaker 3: It's great to be with you. 362 00:19:28,320 --> 00:19:31,200 Speaker 2: Amus. What moment are we end right now? How tense 363 00:19:31,560 --> 00:19:32,720 Speaker 2: are these negotiations? 364 00:19:34,800 --> 00:19:37,000 Speaker 1: Well, the moment that we're in is very seriously, as 365 00:19:37,000 --> 00:19:41,399 Speaker 1: a president said, because I think that we're gearing and 366 00:19:41,880 --> 00:19:44,960 Speaker 1: rolling towards a war that I'm not even sure the 367 00:19:45,000 --> 00:19:49,520 Speaker 1: President wants to do, but yet the momentum is in 368 00:19:49,520 --> 00:19:54,600 Speaker 1: that direction. As far as the negotiations, I'm still not 369 00:19:54,640 --> 00:19:56,800 Speaker 1: sure if these negotiations are for real. I think they 370 00:19:56,840 --> 00:20:01,199 Speaker 1: began as a sham negotiation, meaning we weren't ready. The 371 00:20:01,240 --> 00:20:04,919 Speaker 1: president went off script and promised action and Iran and 372 00:20:04,960 --> 00:20:07,040 Speaker 1: got himself stuck in a am I going to be like 373 00:20:07,080 --> 00:20:10,320 Speaker 1: Obama with a red line or not with the protesters? 374 00:20:10,920 --> 00:20:13,760 Speaker 1: And so suddenly there was this momentum towards go to war. 375 00:20:13,840 --> 00:20:15,760 Speaker 1: But you then realize, well, I don't have the forces 376 00:20:15,760 --> 00:20:18,000 Speaker 1: actually on the ground in the region to do anything 377 00:20:18,800 --> 00:20:21,200 Speaker 1: because I moved them all out to go to Venezuela. 378 00:20:22,000 --> 00:20:24,000 Speaker 1: So now I got to get more forces, and I 379 00:20:24,040 --> 00:20:24,760 Speaker 1: need more time. 380 00:20:25,480 --> 00:20:27,400 Speaker 3: The golf is split between. 381 00:20:27,080 --> 00:20:29,080 Speaker 1: Those who really want to go to war and those 382 00:20:29,080 --> 00:20:31,640 Speaker 1: who are very, very concerned about it because they think 383 00:20:31,640 --> 00:20:33,639 Speaker 1: it's not going to go well. So he gets the 384 00:20:33,680 --> 00:20:36,800 Speaker 1: mixed messaging from the Gulf. The Israelis are pushing him 385 00:20:36,800 --> 00:20:40,080 Speaker 1: to do it, obviously, and so the build up starts 386 00:20:40,160 --> 00:20:41,920 Speaker 1: and he needs to be able to tell the Europeans 387 00:20:42,000 --> 00:20:43,919 Speaker 1: and the Middle East folks, look, I tried to do 388 00:20:43,920 --> 00:20:45,760 Speaker 1: a negotiation. If we go to war. He has to 389 00:20:45,760 --> 00:20:47,760 Speaker 1: be able to check a box. It says I didn't. 390 00:20:47,880 --> 00:20:48,879 Speaker 1: It wasn't my first option. 391 00:20:49,040 --> 00:20:50,479 Speaker 3: I tried. The Iranians screwed up. 392 00:20:51,000 --> 00:20:54,000 Speaker 1: He's aided by the fact that Iranians always rise to 393 00:20:54,040 --> 00:20:57,040 Speaker 1: the moment to screw up every situation that you're in. 394 00:20:57,160 --> 00:20:59,879 Speaker 1: They literally mess everything up. They have no idea what 395 00:21:00,080 --> 00:21:03,800 Speaker 1: world is like. They live in some wacko bubble of 396 00:21:03,880 --> 00:21:06,800 Speaker 1: threatening US forces when they're trying to do a negotiating. 397 00:21:06,320 --> 00:21:08,480 Speaker 2: How difficult is it to negotiate with the Iranians. 398 00:21:08,760 --> 00:21:12,119 Speaker 1: Well, it's not even direct negotiations. They have this ridiculous 399 00:21:12,200 --> 00:21:15,080 Speaker 1: theater of we can't sit face to face and we 400 00:21:15,160 --> 00:21:17,760 Speaker 1: do it through the Omanis, despite the fact ten years 401 00:21:17,800 --> 00:21:19,160 Speaker 1: ago they sat face to face. 402 00:21:18,960 --> 00:21:23,640 Speaker 3: For months with Wendy Sherman and John Kerry and so on. 403 00:21:23,760 --> 00:21:25,560 Speaker 1: And it's the same people. By the way, it's Aachi 404 00:21:25,560 --> 00:21:29,280 Speaker 1: who is then the deputy. So it's very complicated. I 405 00:21:29,320 --> 00:21:33,280 Speaker 1: think the Iranian system is going through a moment where 406 00:21:33,600 --> 00:21:36,399 Speaker 1: the supreme leader is the crazy old man who throws 407 00:21:36,440 --> 00:21:38,840 Speaker 1: out tweets that mess up what everybody else in the 408 00:21:38,880 --> 00:21:42,359 Speaker 1: Iranian system is doing because he's disconnected from the system. 409 00:21:42,520 --> 00:21:45,280 Speaker 8: Well, it's existential for the Iranian regime, which is why 410 00:21:45,320 --> 00:21:47,600 Speaker 8: the question for them is would it be better to 411 00:21:47,680 --> 00:21:50,639 Speaker 8: have a deal at the negotiating table or to shore 412 00:21:50,720 --> 00:21:54,480 Speaker 8: up their place in Iranian society? Is it better almost 413 00:21:54,480 --> 00:21:56,080 Speaker 8: for the US to strike them. 414 00:21:56,600 --> 00:22:00,159 Speaker 1: Look, the distance between the Iran society Iranian society in 415 00:22:00,200 --> 00:22:02,080 Speaker 1: the government has never been bigger. I mean, these people 416 00:22:02,200 --> 00:22:04,199 Speaker 1: just massacred. I don't know if the numbers, you know, 417 00:22:04,200 --> 00:22:06,600 Speaker 1: the numbers are floating around, but thousands of people were 418 00:22:06,720 --> 00:22:11,240 Speaker 1: killed by their own government, which is not missiles, not nuclear. 419 00:22:11,359 --> 00:22:12,840 Speaker 3: That's the impetus for this war. Right. 420 00:22:12,880 --> 00:22:16,320 Speaker 1: Remember, we did not talk about missiles or nuclear as 421 00:22:16,359 --> 00:22:18,639 Speaker 1: the reason to go to this conflict because there is 422 00:22:18,680 --> 00:22:20,480 Speaker 1: no real imminent threat from. 423 00:22:20,400 --> 00:22:21,680 Speaker 3: Those two issues. Right. 424 00:22:21,800 --> 00:22:25,520 Speaker 1: They were quote unquote obliterated the nuclear program six months. 425 00:22:25,359 --> 00:22:26,960 Speaker 8: Ago, but they still have a goal to make a 426 00:22:27,000 --> 00:22:30,040 Speaker 8: nuclear weapon. The oir DNI assessment says they are barreling 427 00:22:30,040 --> 00:22:33,080 Speaker 8: towards intercontinental ballistic missiles, and they're still funding the proxies 428 00:22:33,119 --> 00:22:34,639 Speaker 8: around the region. Those are the three red lines of 429 00:22:34,640 --> 00:22:35,280 Speaker 8: the administration. 430 00:22:35,600 --> 00:22:38,760 Speaker 1: There's no doubt the Iranian threat to the region in 431 00:22:38,880 --> 00:22:41,040 Speaker 1: December and today are the same. 432 00:22:41,920 --> 00:22:42,879 Speaker 3: From that perspective. 433 00:22:43,960 --> 00:22:46,919 Speaker 1: As the President said, the nuclear program was set back years, 434 00:22:47,480 --> 00:22:50,800 Speaker 1: not months, and the missile program is the one that 435 00:22:50,920 --> 00:22:55,200 Speaker 1: is really of concern. But that wasn't what led us here, Henrie. 436 00:22:55,320 --> 00:22:58,720 Speaker 1: It was the protesters. Help is on the way, and 437 00:22:58,800 --> 00:23:01,600 Speaker 1: so now that this is is what kind of war 438 00:23:01,640 --> 00:23:02,680 Speaker 1: do you go to? And I think this is a 439 00:23:02,720 --> 00:23:05,359 Speaker 1: critical point that people are missing. There are three basic 440 00:23:05,400 --> 00:23:09,080 Speaker 1: options here on this war, only three. One is a 441 00:23:09,119 --> 00:23:12,560 Speaker 1: slightly more limited strike that takes out missile depots, missile 442 00:23:12,600 --> 00:23:16,800 Speaker 1: storage launchers, and maybe another strike at the nuclear for 443 00:23:17,240 --> 00:23:21,240 Speaker 1: symbolic purposes, but you leave the regime intact but weakened, 444 00:23:21,840 --> 00:23:25,720 Speaker 1: very weakened. Most of the golfees prefer this option. The 445 00:23:25,760 --> 00:23:29,439 Speaker 1: other one is a much more significant attack which they 446 00:23:29,480 --> 00:23:33,280 Speaker 1: have the preparation for at sen Common Central Command, which 447 00:23:33,320 --> 00:23:36,159 Speaker 1: is a regime collapse or change. And that's where the 448 00:23:36,160 --> 00:23:39,239 Speaker 1: two options are. You don't know in advance if you're 449 00:23:39,280 --> 00:23:42,680 Speaker 1: going to get regime collapse or regime change. Regime changes 450 00:23:42,680 --> 00:23:44,320 Speaker 1: when you know who comes next and you know that 451 00:23:44,359 --> 00:23:47,679 Speaker 1: you can figure this out, think Venezuela and Delsi. You 452 00:23:47,800 --> 00:23:52,639 Speaker 1: know who's coming. Regime collapses, you have no idea. And 453 00:23:52,680 --> 00:23:56,320 Speaker 1: as one major Golf country said to me at the 454 00:23:56,400 --> 00:23:58,320 Speaker 1: leadership level, if they're. 455 00:23:58,080 --> 00:23:59,480 Speaker 3: Going to we'd hate their audience. 456 00:23:59,800 --> 00:24:02,639 Speaker 1: But if they end up with Libya, they leave us 457 00:24:02,680 --> 00:24:05,520 Speaker 1: with Libya next door, that's a real problem for all 458 00:24:05,560 --> 00:24:05,800 Speaker 1: of us. 459 00:24:05,840 --> 00:24:07,600 Speaker 8: Isn't there a third option and not to put you 460 00:24:07,680 --> 00:24:09,520 Speaker 8: on the spot. But the Biden administration did nothing when 461 00:24:09,520 --> 00:24:11,439 Speaker 8: it came to Iran and just dragged on talks for 462 00:24:11,480 --> 00:24:12,080 Speaker 8: four years. 463 00:24:13,960 --> 00:24:17,600 Speaker 1: The Biden administration said, we're willing to renegotiate going. 464 00:24:17,440 --> 00:24:19,159 Speaker 3: Back into the JCPOA that. 465 00:24:19,359 --> 00:24:21,840 Speaker 1: The Trumpan administration had left, but we're not going to 466 00:24:21,920 --> 00:24:25,240 Speaker 1: go in as just resigning the same document. The Iranians 467 00:24:25,240 --> 00:24:28,720 Speaker 1: did not want to negotiate. Then October seven happened, and 468 00:24:28,760 --> 00:24:31,399 Speaker 1: remember we were doing the normalization with Saudi Arabia. We 469 00:24:31,400 --> 00:24:35,280 Speaker 1: were really weeks away from that. When October seven happened. 470 00:24:35,400 --> 00:24:39,040 Speaker 1: The Iranians then chose to do a three hundred projectile 471 00:24:39,200 --> 00:24:41,800 Speaker 1: attack on Israel from its sovereign territory with the one 472 00:24:41,880 --> 00:24:44,520 Speaker 1: hundred ballistic missiles and two hundred UAVs, and they did 473 00:24:44,520 --> 00:24:47,200 Speaker 1: that attack twice in April and October of twenty twenty four. 474 00:24:47,640 --> 00:24:50,600 Speaker 1: The United States then the green light and talked with 475 00:24:50,640 --> 00:24:55,200 Speaker 1: the Israelis about taking out the missile defense and weakening 476 00:24:55,240 --> 00:24:58,480 Speaker 1: the Iranians. The Iranian proxies are weakened across the board. 477 00:25:00,040 --> 00:25:03,439 Speaker 1: Can say do nothing, but in reality was continuing the 478 00:25:03,480 --> 00:25:08,800 Speaker 1: sanctions pressure and not getting into the JCPOA was a 479 00:25:08,840 --> 00:25:11,320 Speaker 1: major decision. If you go back to the elections of 480 00:25:11,359 --> 00:25:14,800 Speaker 1: twenty twenty, everybody said, every exper Middle East expert said, 481 00:25:14,960 --> 00:25:16,320 Speaker 1: Joe Biden's going to get elected. 482 00:25:16,040 --> 00:25:17,440 Speaker 3: And go right back into the JCPOA. 483 00:25:17,920 --> 00:25:19,960 Speaker 8: And it did not happen because you put Bob Malley 484 00:25:19,960 --> 00:25:21,400 Speaker 8: and had have the heir, honey and affairs. 485 00:25:22,240 --> 00:25:24,320 Speaker 1: Maybe, but the person who makes the decision is not. 486 00:25:24,440 --> 00:25:26,800 Speaker 1: Rob Malley was a president and he said no, I. 487 00:25:26,720 --> 00:25:28,879 Speaker 6: Just want to fit this in because we're talking about 488 00:25:28,880 --> 00:25:31,520 Speaker 6: this and talking about ballistic missiles and a lot of 489 00:25:31,560 --> 00:25:34,560 Speaker 6: the weaponry of the past, at least as this is 490 00:25:34,640 --> 00:25:38,159 Speaker 6: very quickly moving and we're talking about new weapons of 491 00:25:38,240 --> 00:25:43,439 Speaker 6: war which include a lot of technologically fused instruments. How 492 00:25:43,480 --> 00:25:47,240 Speaker 6: does the use of artificial intelligence and the US is 493 00:25:47,320 --> 00:25:51,520 Speaker 6: preeminence in that sphere change this discussion and frankly change 494 00:25:51,600 --> 00:25:55,800 Speaker 6: all discussions going forward when it comes to some military negotiations. 495 00:25:56,480 --> 00:25:59,120 Speaker 1: So I think this is a key point when memory's 496 00:25:59,160 --> 00:26:01,240 Speaker 1: talking about sort of the they're building out their missile 497 00:26:01,240 --> 00:26:02,200 Speaker 1: capacity and so on. 498 00:26:02,520 --> 00:26:05,840 Speaker 3: Iran is a relic, It's literally a relic. 499 00:26:06,840 --> 00:26:09,439 Speaker 1: So what if it has a bunch of missiles that 500 00:26:09,480 --> 00:26:11,800 Speaker 1: we can put some use. We don't want them to 501 00:26:11,800 --> 00:26:13,320 Speaker 1: have it for sure, we don't want them to give. 502 00:26:13,240 --> 00:26:15,680 Speaker 3: Them to the who he's into Fazvala and so on. 503 00:26:16,119 --> 00:26:20,040 Speaker 1: But when you talk about advanced weaponry, the capability of 504 00:26:20,440 --> 00:26:26,520 Speaker 1: fusing intelligence superiority, with satellite superiority, with AI and drones, 505 00:26:27,160 --> 00:26:30,080 Speaker 1: the Iranians can do the drones for Russia, but the 506 00:26:30,160 --> 00:26:34,080 Speaker 1: Russia Ukraine war is also a relic the advantages that 507 00:26:34,119 --> 00:26:36,480 Speaker 1: the United States has, the advantages that Israel has in 508 00:26:36,520 --> 00:26:42,399 Speaker 1: the region, including total air superiority from Israel all the 509 00:26:42,400 --> 00:26:48,520 Speaker 1: way to Tehran. This is not really a threat of 510 00:26:48,960 --> 00:26:53,280 Speaker 1: It's a menace, it's a nuisance, it's dangerous, but it's 511 00:26:53,320 --> 00:26:57,639 Speaker 1: not existential threat. It's nuclear program would be and every 512 00:26:57,680 --> 00:27:00,840 Speaker 1: president of the United States, every single one current Republican, 513 00:27:01,119 --> 00:27:03,760 Speaker 1: has said we will not allow them to have a 514 00:27:03,840 --> 00:27:06,760 Speaker 1: nuclear program, which is why I supported or President Trump 515 00:27:06,840 --> 00:27:09,479 Speaker 1: did by attacking those sites. If you're going to keep 516 00:27:09,520 --> 00:27:13,919 Speaker 1: doing those those programs, that's a real threat. But the 517 00:27:13,960 --> 00:27:17,240 Speaker 1: rest we're going to an era of such technological advancement, 518 00:27:17,640 --> 00:27:19,280 Speaker 1: whether or not the Pentagon can get out of its 519 00:27:19,280 --> 00:27:20,520 Speaker 1: own way with AI. 520 00:27:21,520 --> 00:27:24,160 Speaker 3: So I we should be able. I did it. I'm sorry, 521 00:27:24,240 --> 00:27:24,919 Speaker 3: what are your thoughts? 522 00:27:27,440 --> 00:27:30,800 Speaker 1: I really hope that both the company and the Pentagon 523 00:27:31,520 --> 00:27:34,959 Speaker 1: can go back to having this conversation in classified settings 524 00:27:35,000 --> 00:27:38,320 Speaker 1: and in private and not in front of the whole world. 525 00:27:38,600 --> 00:27:42,320 Speaker 1: And I also really hope that this is not corporate 526 00:27:43,320 --> 00:27:47,639 Speaker 1: against corporate playing out in government contracts. 527 00:27:47,680 --> 00:27:48,440 Speaker 2: What are you implying. 528 00:27:48,760 --> 00:27:51,280 Speaker 1: I'm implying that there's another AI company that may not 529 00:27:51,359 --> 00:27:56,320 Speaker 1: be so happy with Anthropic getting there this kind of 530 00:27:56,520 --> 00:27:57,440 Speaker 1: advantage by. 531 00:27:57,440 --> 00:27:59,920 Speaker 2: Being had some influence to bring us to this, my mient. 532 00:28:00,760 --> 00:28:02,760 Speaker 1: I think twelve months ago I would have said, no way. 533 00:28:03,000 --> 00:28:03,680 Speaker 3: I think that. 534 00:28:03,920 --> 00:28:09,600 Speaker 1: Watching the last twelve months where the government decides m 535 00:28:09,640 --> 00:28:14,080 Speaker 1: and as decides corporate activity, it's not a big leap. 536 00:28:15,400 --> 00:28:16,680 Speaker 3: And it's understandable. 537 00:28:16,800 --> 00:28:19,159 Speaker 1: I also understand why corporations would have this kind of 538 00:28:19,200 --> 00:28:22,040 Speaker 1: a fight at depending on because the government is the 539 00:28:22,119 --> 00:28:26,879 Speaker 1: ultimate arbiter now in major corporate decisions right, not on everyone, 540 00:28:26,920 --> 00:28:28,680 Speaker 1: but I'm major ones. If you're going to buy a 541 00:28:28,720 --> 00:28:31,280 Speaker 1: news channel or not, it's the White House that decides 542 00:28:31,280 --> 00:28:32,399 Speaker 1: who gets to own it or not. 543 00:28:32,840 --> 00:28:34,440 Speaker 3: So why it's not. 544 00:28:34,480 --> 00:28:37,480 Speaker 1: That big of a leap to say, if the president 545 00:28:37,560 --> 00:28:41,240 Speaker 1: and the White House decides who does major M and A, 546 00:28:41,520 --> 00:28:43,160 Speaker 1: why is it such a big leap to think This 547 00:28:43,240 --> 00:28:48,920 Speaker 1: is not exactly about Pentagon versus Anthropic Andthropic and the 548 00:28:48,960 --> 00:28:51,520 Speaker 1: government seem not to be that far when it comes 549 00:28:51,520 --> 00:28:55,560 Speaker 1: to what their requirements are, so they should have been 550 00:28:55,560 --> 00:28:56,320 Speaker 1: able to reach a deal. 551 00:28:56,480 --> 00:28:58,840 Speaker 3: It's just a weird kind of a I don't understand 552 00:28:58,840 --> 00:28:59,200 Speaker 3: this about. 553 00:29:00,000 --> 00:29:03,480 Speaker 2: This is the Bloomberg Surveillance podcast, bringing you the best 554 00:29:03,480 --> 00:29:06,560 Speaker 2: in markets, economics, and geo politics. 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