1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene. Daily 2 00:00:13,960 --> 00:00:17,560 Speaker 1: we bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,400 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. This 5 00:00:27,520 --> 00:00:30,080 Speaker 1: was to be a book interview, a book of five 6 00:00:31,000 --> 00:00:35,000 Speaker 1: pages on his four fifty plus days at the White House. 7 00:00:35,360 --> 00:00:38,320 Speaker 1: John Bolton, it was going to be a normal interview. 8 00:00:38,720 --> 00:00:41,839 Speaker 1: It is not. Ambassador Bolton joins us this morning in 9 00:00:41,920 --> 00:00:46,279 Speaker 1: the uproar of the current events. Ambassador, I look at 10 00:00:46,479 --> 00:00:49,599 Speaker 1: the room where it happened, and I've got to get 11 00:00:49,640 --> 00:00:52,600 Speaker 1: to a room on the first Tuesday of November and 12 00:00:52,680 --> 00:00:57,760 Speaker 1: that Wednesday following where we may confront a President Biden. 13 00:00:58,280 --> 00:01:02,120 Speaker 1: You've made clear you do not support President Trump. But 14 00:01:02,200 --> 00:01:05,400 Speaker 1: as you look at President Biden, how does he take 15 00:01:05,640 --> 00:01:10,280 Speaker 1: his very left Democratic Party, his Liberal party, and how 16 00:01:10,319 --> 00:01:13,800 Speaker 1: does he pull them back towards not you, but to 17 00:01:13,880 --> 00:01:17,680 Speaker 1: the center, to the time of Scoop Jackson and John Kennedy. 18 00:01:17,720 --> 00:01:21,720 Speaker 1: How does he execute that? I don't know. I'm very 19 00:01:21,760 --> 00:01:23,720 Speaker 1: worried about it. It's one reason I'm not going to 20 00:01:23,880 --> 00:01:27,200 Speaker 1: vote for Joe Biden. Unlike some of my conservative and 21 00:01:27,240 --> 00:01:30,679 Speaker 1: Republican friends who have made that decision, I just philosophically 22 00:01:31,440 --> 00:01:35,319 Speaker 1: can't do it. I think it's a very unhappy election 23 00:01:35,920 --> 00:01:40,560 Speaker 1: prospect for real conservative Republicans who understand. So I try 24 00:01:40,560 --> 00:01:42,960 Speaker 1: and lay out in the book the room where it happened. 25 00:01:43,280 --> 00:01:46,319 Speaker 1: Who has no real philosophy. I'm not saying because he's 26 00:01:46,360 --> 00:01:49,600 Speaker 1: not a conservative, he's actually a liberal. He's nothing. He 27 00:01:49,680 --> 00:01:53,960 Speaker 1: doesn't think in philosophical or policy terms. Uh So, the 28 00:01:54,040 --> 00:01:58,680 Speaker 1: day after the election, if Biden wins, I think for 29 00:01:58,760 --> 00:02:01,720 Speaker 1: the country, it's going to be a real test of 30 00:02:02,560 --> 00:02:06,240 Speaker 1: whether a lot of this campaign rhetoric turns into action. 31 00:02:06,320 --> 00:02:10,960 Speaker 1: Let's just take the Russia case as an example. Four years. 32 00:02:11,080 --> 00:02:15,800 Speaker 1: For decades, the Democratic Party pursued policies visa vie the 33 00:02:15,840 --> 00:02:19,320 Speaker 1: Soviet Union and then Russia that I thought were inadequate 34 00:02:19,360 --> 00:02:22,800 Speaker 1: for the protection of American national security. I've I've always 35 00:02:22,840 --> 00:02:26,959 Speaker 1: favored the Barry Goldwood or Ronald Reagan approach. Now now 36 00:02:27,000 --> 00:02:31,000 Speaker 1: the Democrats are tough on Russia. Well, better late than never, 37 00:02:31,080 --> 00:02:33,600 Speaker 1: I suppose, is the answer? Will will they be tough 38 00:02:33,680 --> 00:02:36,960 Speaker 1: on Russia if Biden wins. I don't think we know 39 00:02:38,880 --> 00:02:41,880 Speaker 1: Inbassador Bold, and we can all agree that President Trump 40 00:02:42,000 --> 00:02:45,200 Speaker 1: is not Barry Goldwater or Ronald Reagan. What we need 41 00:02:45,240 --> 00:02:47,600 Speaker 1: to focus on in my first of two questions on 42 00:02:47,680 --> 00:02:51,480 Speaker 1: Russia before I go to my colleague Jonathan Pharaoh, is 43 00:02:51,520 --> 00:02:54,760 Speaker 1: a simple idea of the back pages of your book. 44 00:02:55,280 --> 00:02:58,800 Speaker 1: The heated debate this morning is where you involved in 45 00:02:58,880 --> 00:03:03,560 Speaker 1: briefing the President or discussing with other intelligence community members 46 00:03:03,639 --> 00:03:08,240 Speaker 1: or indeed the Pentagon about the Russians paying bounty hunters 47 00:03:08,680 --> 00:03:12,360 Speaker 1: in Afghanistan to kill marines. Now you've stated to the 48 00:03:12,400 --> 00:03:15,600 Speaker 1: Associated Press that's not the case. I needed you to 49 00:03:15,639 --> 00:03:19,919 Speaker 1: recapitulate that right now. Did you, late in your term 50 00:03:19,960 --> 00:03:22,639 Speaker 1: at the White House, did you speak to the President 51 00:03:22,919 --> 00:03:26,720 Speaker 1: about these matters? Well, what I said to the Associated 52 00:03:26,720 --> 00:03:30,640 Speaker 1: Press when that question was asked was no comment. Uh, 53 00:03:30,760 --> 00:03:32,880 Speaker 1: And that's the same thing I'm going to say today. 54 00:03:32,919 --> 00:03:37,920 Speaker 1: You know that we're embroiled in litigation now over whether 55 00:03:37,960 --> 00:03:41,560 Speaker 1: I complied with the requirements of the pre publication review process, 56 00:03:41,560 --> 00:03:44,160 Speaker 1: which I think I did. I didn't write this book 57 00:03:44,160 --> 00:03:47,600 Speaker 1: with any intention of putting classified information in it, and 58 00:03:47,640 --> 00:03:50,080 Speaker 1: I don't think Donald Trump wants to suppress the book 59 00:03:50,400 --> 00:03:53,600 Speaker 1: because he's worried about foreign government's reading and he doesn't 60 00:03:53,600 --> 00:03:55,680 Speaker 1: want the American people to read it. Now look with 61 00:03:55,720 --> 00:03:59,200 Speaker 1: respect to Russia and what they're up to in Afghanistan 62 00:03:59,320 --> 00:04:03,000 Speaker 1: and arrange of places around the world. Honestly, this current 63 00:04:03,040 --> 00:04:05,360 Speaker 1: controversy I could have I could have written about in 64 00:04:05,400 --> 00:04:09,000 Speaker 1: the book if if I didn't face these other difficulties. 65 00:04:09,280 --> 00:04:15,440 Speaker 1: Susan Rice uh, the second Obama National Security advisor, rights 66 00:04:15,960 --> 00:04:19,039 Speaker 1: today in The New York Times that if she had 67 00:04:19,120 --> 00:04:24,680 Speaker 1: information like that being reported in the papers, whether it 68 00:04:24,760 --> 00:04:27,400 Speaker 1: was totally verified or not, she would have gone into 69 00:04:27,440 --> 00:04:30,960 Speaker 1: the Oval Office to tell President Obama. So without getting 70 00:04:30,960 --> 00:04:33,320 Speaker 1: into what I knew or didn't know, I just want 71 00:04:33,360 --> 00:04:35,719 Speaker 1: to say I agree with Susan Rice on that point. 72 00:04:35,760 --> 00:04:38,960 Speaker 1: I think that's what the National Security Advisor should do. 73 00:04:39,000 --> 00:04:41,320 Speaker 1: And I mean, it's make one more point quickly that 74 00:04:41,480 --> 00:04:45,880 Speaker 1: there are not two categories of intelligence verified over here 75 00:04:45,960 --> 00:04:51,640 Speaker 1: and not verified over there. Intelligence invariably is placed along 76 00:04:51,680 --> 00:04:55,080 Speaker 1: a spectrum, and the intelligence community understands this. They say 77 00:04:55,080 --> 00:04:59,760 Speaker 1: they have high confidence, in some medium confidence low confidence. 78 00:05:00,320 --> 00:05:03,280 Speaker 1: People are gonna have to judge in different agencies will disagree. 79 00:05:03,320 --> 00:05:06,440 Speaker 1: There's not some block of granted that you carry around 80 00:05:06,480 --> 00:05:10,600 Speaker 1: to show to the president. That's called verified intelligence. There's 81 00:05:10,640 --> 00:05:13,720 Speaker 1: a range, and you deal with uncertainty. That's that's Uh, 82 00:05:13,880 --> 00:05:17,240 Speaker 1: that's part of the job. I look John Bolton at 83 00:05:17,279 --> 00:05:20,920 Speaker 1: the Susan Rice essay and also the essay by Leon Panetta. 84 00:05:21,360 --> 00:05:25,600 Speaker 1: I found them extraordinary in their heat. How would you 85 00:05:25,680 --> 00:05:30,200 Speaker 1: recommend that President Trump extricate himself from this now and 86 00:05:30,360 --> 00:05:34,760 Speaker 1: particularly how he dresses the military at the Pentagon. Well, 87 00:05:34,800 --> 00:05:37,280 Speaker 1: I can't offer advice on how to get out of 88 00:05:37,320 --> 00:05:40,359 Speaker 1: a mess. In effect, he's created. I by my camp, 89 00:05:40,440 --> 00:05:43,440 Speaker 1: in the last four or five days, he's told three 90 00:05:43,520 --> 00:05:46,839 Speaker 1: different stories on whether he was briefed, whether he was 91 00:05:46,880 --> 00:05:49,960 Speaker 1: told it was fake, whether it's fake news by the 92 00:05:49,960 --> 00:05:52,680 Speaker 1: New York Times, our whole whole range of things. And 93 00:05:52,800 --> 00:05:56,640 Speaker 1: his advisors are now contradicting themselves as well. How do 94 00:05:56,680 --> 00:05:59,360 Speaker 1: I view that in terms of the Trump presidency. Look, 95 00:05:59,400 --> 00:06:01,359 Speaker 1: it's just an their day at the office. That's the 96 00:06:01,360 --> 00:06:03,679 Speaker 1: way it works. Every day is a new day, Every 97 00:06:03,720 --> 00:06:06,279 Speaker 1: story is a new story. What you said yesterday is 98 00:06:06,400 --> 00:06:09,680 Speaker 1: interesting but doesn't necessarily dictate what you say today. What 99 00:06:09,760 --> 00:06:13,560 Speaker 1: it tells the Russians is we are in disarray. Uh 100 00:06:13,600 --> 00:06:16,640 Speaker 1: and uh and ripe for this kind of provocation, not 101 00:06:16,760 --> 00:06:20,400 Speaker 1: just in Afghanistan, but in many, many other places around 102 00:06:20,440 --> 00:06:24,200 Speaker 1: the world, Ambassada on this particular intelligence. Is there any 103 00:06:24,240 --> 00:06:26,240 Speaker 1: reason why intelligence like this would be put in the 104 00:06:26,279 --> 00:06:29,320 Speaker 1: president's daily briefing and it wouldn't be followed up in 105 00:06:29,360 --> 00:06:33,880 Speaker 1: person directly with the president himself. Well, I don't. I 106 00:06:33,920 --> 00:06:38,360 Speaker 1: don't want to comment on uh, this specific story and 107 00:06:38,400 --> 00:06:41,640 Speaker 1: it's intelligent simplications for the reasons I said a minute ago, 108 00:06:42,360 --> 00:06:44,320 Speaker 1: I will say this, which I do say in the book. 109 00:06:44,360 --> 00:06:48,560 Speaker 1: Donald Trump doesn't consume intelligence the way uh you expect 110 00:06:48,680 --> 00:06:53,320 Speaker 1: presidents to do so. Uh. Everybody's entitled to gather information 111 00:06:53,360 --> 00:06:56,360 Speaker 1: in their own personal style. Ronald Reagan had his style, 112 00:06:56,680 --> 00:06:59,840 Speaker 1: George H. W. Bush had his. I'm not saying that 113 00:07:00,080 --> 00:07:02,640 Speaker 1: is any one that's right or wrong, And I think 114 00:07:02,720 --> 00:07:06,600 Speaker 1: the presentation of intelligence to the president has to take 115 00:07:06,640 --> 00:07:10,160 Speaker 1: that style into account. So what I'm talking about here 116 00:07:10,440 --> 00:07:14,880 Speaker 1: is not does the president read lengthy briefing papers, does 117 00:07:14,960 --> 00:07:18,360 Speaker 1: he get it via movies and and that sort of thing. 118 00:07:18,600 --> 00:07:20,800 Speaker 1: The question for Donald Trump is whether he gets it 119 00:07:20,840 --> 00:07:24,880 Speaker 1: at all? Uh. And I think he's uninterested in learning. 120 00:07:25,720 --> 00:07:29,280 Speaker 1: I think that that facts that are inconvenient for him 121 00:07:29,360 --> 00:07:35,160 Speaker 1: often don't stick despite repeated tellings. So can he say 122 00:07:35,200 --> 00:07:37,840 Speaker 1: that he was never briefed on it or that he 123 00:07:37,880 --> 00:07:40,320 Speaker 1: thinks it's fake and get away with it. We'll see, 124 00:07:40,400 --> 00:07:44,040 Speaker 1: Maybe maybe he will. But this is a serious problem 125 00:07:44,120 --> 00:07:46,520 Speaker 1: for the United States. You can say what you want 126 00:07:46,560 --> 00:07:51,120 Speaker 1: about Joe Biden in policy terms. I think he receives 127 00:07:51,280 --> 00:07:55,600 Speaker 1: processes and retains information. I think, uh, I think with 128 00:07:55,640 --> 00:07:58,600 Speaker 1: Trump it's much more questionable. And I said it's something 129 00:07:58,640 --> 00:08:00,720 Speaker 1: that's questionable for a lot of people listening and watching 130 00:08:00,720 --> 00:08:02,480 Speaker 1: this interview right now. Is what you chose to put 131 00:08:02,520 --> 00:08:05,320 Speaker 1: in the book and what you choose not to talk about. 132 00:08:05,560 --> 00:08:07,840 Speaker 1: So in Russia, no comment. But when it comes to 133 00:08:07,920 --> 00:08:10,800 Speaker 1: leaning on a foreign leader to help an election coming 134 00:08:10,840 --> 00:08:13,040 Speaker 1: up in November, you seem to have no problem putting 135 00:08:13,040 --> 00:08:14,600 Speaker 1: that in the book. Can you walk us through the 136 00:08:14,600 --> 00:08:17,200 Speaker 1: process through which you decided what to talk about and 137 00:08:17,240 --> 00:08:20,559 Speaker 1: what you don't want to talk about? Now, Well, look, 138 00:08:20,720 --> 00:08:24,640 Speaker 1: I had I have a continuing obligation not to reveal 139 00:08:24,680 --> 00:08:27,440 Speaker 1: classified information, so I'm not going to talk about it. 140 00:08:28,080 --> 00:08:30,200 Speaker 1: I didn't talk to the press about it during my 141 00:08:30,320 --> 00:08:33,040 Speaker 1: time in office, and when I wrote the manuscript, I 142 00:08:33,040 --> 00:08:37,120 Speaker 1: didn't intend to start. Then I went through a very lengthy, 143 00:08:37,160 --> 00:08:42,400 Speaker 1: four month long, page by page, line by line prepublication review, 144 00:08:42,400 --> 00:08:45,360 Speaker 1: at the end of which the government official conducting the 145 00:08:45,400 --> 00:08:49,880 Speaker 1: review concluded, as the government itself has said in court filings, 146 00:08:49,880 --> 00:08:53,319 Speaker 1: that there is no classified information in the document, so 147 00:08:53,600 --> 00:08:56,640 Speaker 1: that that's what guides me in terms of classified versus 148 00:08:56,960 --> 00:09:01,800 Speaker 1: unclassified information in terms of substance. And you know, Simon 149 00:09:01,800 --> 00:09:05,960 Speaker 1: and Schuster basically said, okay, you can have five pages. 150 00:09:06,800 --> 00:09:08,920 Speaker 1: If they had said you can have a thousand pages, 151 00:09:08,960 --> 00:09:11,160 Speaker 1: I probably could have filled that to the Some of 152 00:09:11,200 --> 00:09:13,400 Speaker 1: the book reviews that I've read complained that there are 153 00:09:13,400 --> 00:09:16,560 Speaker 1: too many details. I think that's the stuff of history. 154 00:09:17,000 --> 00:09:20,000 Speaker 1: Fortunate to have Ambassador Bolton with us live on Bloomberg Surveillance, 155 00:09:20,000 --> 00:09:23,040 Speaker 1: both on Bloomberg Radio and on Bloomberg TV and Bastt Bolton. 156 00:09:23,080 --> 00:09:24,640 Speaker 1: This was in the Wall Street Journal. It came from you. 157 00:09:24,840 --> 00:09:27,280 Speaker 1: I want to quote it for you. Trump then stunningly 158 00:09:27,360 --> 00:09:30,920 Speaker 1: turned the conversation to the coming US presidential election, alluding 159 00:09:30,960 --> 00:09:34,680 Speaker 1: to China's economic capability and pleading with g to ensure 160 00:09:34,800 --> 00:09:37,280 Speaker 1: he'd win. I would print Trump's exact words, but the 161 00:09:37,320 --> 00:09:43,120 Speaker 1: government's republication prepublication review process has decided otherwise. Is this 162 00:09:43,240 --> 00:09:45,920 Speaker 1: first hand knowledge. Was that you in the room that 163 00:09:46,000 --> 00:09:49,160 Speaker 1: overheard the President of the United States do that? Or 164 00:09:49,240 --> 00:09:53,560 Speaker 1: was that also through an interpreter? Which one was it? No? 165 00:09:53,760 --> 00:09:56,760 Speaker 1: That was that was Donald Trump speaking in English. Actually 166 00:09:56,760 --> 00:09:58,960 Speaker 1: he didn't. He didn't speak in Chinese, and it wasn't 167 00:09:58,960 --> 00:10:03,080 Speaker 1: interpreted back to us. Uh. The the sentence that you 168 00:10:03,160 --> 00:10:07,439 Speaker 1: read was what I agreed in in the process of 169 00:10:06,960 --> 00:10:13,200 Speaker 1: the prepublication review to describe the the exact words that 170 00:10:13,240 --> 00:10:17,040 Speaker 1: the president used. Yeah, so, John, help me out with this. 171 00:10:17,080 --> 00:10:19,560 Speaker 1: What did you do in the days and weeks after that? 172 00:10:19,559 --> 00:10:22,080 Speaker 1: How did you follow up after you overheard the presidents 173 00:10:22,080 --> 00:10:25,840 Speaker 1: say that. Look, there there are a lot of things 174 00:10:25,880 --> 00:10:29,640 Speaker 1: that that are done in an effort to keep policy 175 00:10:29,720 --> 00:10:34,360 Speaker 1: on track. In in that case, there were extensive negotiations 176 00:10:34,440 --> 00:10:37,800 Speaker 1: under way for what turned out to be a partial 177 00:10:37,920 --> 00:10:42,360 Speaker 1: trade deal. Um, there wasn't any way to take those 178 00:10:42,400 --> 00:10:45,960 Speaker 1: words back. Uh. And I believe in the records of 179 00:10:46,000 --> 00:10:49,920 Speaker 1: the Chinese government fifty years from now when they're when 180 00:10:49,960 --> 00:10:54,319 Speaker 1: they're probably released, you'll see their notes as to what 181 00:10:54,360 --> 00:10:56,720 Speaker 1: the president said in that meaning, there wasn't any doubt 182 00:10:56,720 --> 00:10:59,840 Speaker 1: in my mind on the Chinese side they understood what 183 00:10:59,880 --> 00:11:02,960 Speaker 1: was going on. It was not the only occasion where 184 00:11:03,440 --> 00:11:09,000 Speaker 1: this comment out about buying agricultural products was made. Uh, 185 00:11:09,040 --> 00:11:12,439 Speaker 1: you know, you have to go on doing the job 186 00:11:12,600 --> 00:11:16,120 Speaker 1: that you're assigned to do on a variety of fronts, 187 00:11:16,200 --> 00:11:19,040 Speaker 1: not just how many story beans China advised in the 188 00:11:19,120 --> 00:11:24,240 Speaker 1: next year to try and keep policy on track. And 189 00:11:24,320 --> 00:11:27,040 Speaker 1: but Sola, this is the big issue though, that undermines 190 00:11:27,080 --> 00:11:31,000 Speaker 1: pretty much everything in this book. You were an advisor 191 00:11:31,080 --> 00:11:34,240 Speaker 1: to this president. You overheard him lead on a foreign 192 00:11:34,360 --> 00:11:39,079 Speaker 1: leader to help him win an election. You've served several administrations, 193 00:11:39,200 --> 00:11:42,120 Speaker 1: you have served your country again and again and again. 194 00:11:42,840 --> 00:11:46,640 Speaker 1: Yet you chose to wait to put this information in 195 00:11:46,679 --> 00:11:50,120 Speaker 1: a book instead of doing something about it at the time. 196 00:11:50,480 --> 00:11:56,160 Speaker 1: And I still don't understand why. Why. Well, I think 197 00:11:56,200 --> 00:11:59,360 Speaker 1: it's very straightforward. I have done something about it. I've 198 00:11:59,360 --> 00:12:01,679 Speaker 1: given it to the American people, who are the ultimate 199 00:12:01,760 --> 00:12:06,640 Speaker 1: judges of Donald Trump's performance. Because of the way the 200 00:12:06,679 --> 00:12:10,800 Speaker 1: Democrat advocates of impeachment in the House structured their effort, 201 00:12:11,520 --> 00:12:18,040 Speaker 1: they basically made it impossible for Republicans to participate in 202 00:12:18,080 --> 00:12:21,760 Speaker 1: an impeachment process that might have led to a different outcome. 203 00:12:21,800 --> 00:12:23,760 Speaker 1: We have a model for that. This is not some 204 00:12:23,880 --> 00:12:30,840 Speaker 1: hypothesis in the Watergate crisis of the Nixon administration, Democrats 205 00:12:30,880 --> 00:12:33,880 Speaker 1: and Republicans did work together, and while Nixon didn't go 206 00:12:34,000 --> 00:12:36,599 Speaker 1: through a trial in the Senate, he did conclude he 207 00:12:36,640 --> 00:12:40,319 Speaker 1: had no choice but to resign. Uh. I don't march 208 00:12:40,360 --> 00:12:43,880 Speaker 1: to Nancy Pelosi's drum. I did what I thought was 209 00:12:44,040 --> 00:12:48,200 Speaker 1: ultimately in the best interests of the country because I 210 00:12:48,240 --> 00:12:52,200 Speaker 1: wasn't going to participate in a completely bumped up in 211 00:12:52,320 --> 00:12:54,080 Speaker 1: I have to jump in, why was it in the 212 00:12:54,120 --> 00:12:57,080 Speaker 1: best interest of the United States of America to wait 213 00:12:57,160 --> 00:13:00,840 Speaker 1: to put this information in a book? Thank you for 214 00:13:00,880 --> 00:13:04,480 Speaker 1: allowing me to speak the The fact was that the 215 00:13:04,520 --> 00:13:10,360 Speaker 1: Democratic leadership, the advocates of impeachment, had had built a 216 00:13:10,400 --> 00:13:12,920 Speaker 1: cliff and they and a lot of other lemmings were 217 00:13:12,920 --> 00:13:17,600 Speaker 1: heading toward it. I think it's very clear that uh, 218 00:13:18,040 --> 00:13:21,720 Speaker 1: that had I participated in that because of the uh 219 00:13:22,000 --> 00:13:25,400 Speaker 1: malpractice that they were committed, that my testimony would have 220 00:13:25,440 --> 00:13:29,440 Speaker 1: made no difference. And it's not just my uh, my belief. 221 00:13:29,480 --> 00:13:31,880 Speaker 1: I think this is something that as you saw in 222 00:13:31,920 --> 00:13:35,760 Speaker 1: the debate in the Senate, many many Republicans bought the 223 00:13:35,800 --> 00:13:38,599 Speaker 1: White House argument that even if you believed in the 224 00:13:38,679 --> 00:13:43,040 Speaker 1: quid pro quo the famous phrase that reverberated through the hearings. 225 00:13:43,120 --> 00:13:46,720 Speaker 1: Even if you believed on the testimony that was given 226 00:13:46,880 --> 00:13:49,840 Speaker 1: that a quid pro quo had taken place, that that 227 00:13:50,040 --> 00:13:53,400 Speaker 1: conduct by Donald Trump did not rise to the level 228 00:13:53,440 --> 00:13:55,800 Speaker 1: of an impeachable offense. That is to say, even if 229 00:13:55,840 --> 00:13:59,320 Speaker 1: he did it, that's not a ground to impeach and convicting. 230 00:13:59,400 --> 00:14:02,320 Speaker 1: That's a lead. The argument and the way that that 231 00:14:02,320 --> 00:14:07,160 Speaker 1: that came up was entirely based on the democratic strategy, 232 00:14:07,240 --> 00:14:10,720 Speaker 1: go on a narrow basis, just Ukraine and rush it through. 233 00:14:10,840 --> 00:14:13,480 Speaker 1: It turned out that was not only the strategy of 234 00:14:13,520 --> 00:14:17,160 Speaker 1: the advocates of impeachment, that was Donald Trump's strategy too. 235 00:14:17,200 --> 00:14:20,720 Speaker 1: And what's the result of the failed strategy. What's the result? 236 00:14:21,040 --> 00:14:24,840 Speaker 1: The result is not that Donald Trump is deterred from 237 00:14:24,840 --> 00:14:27,760 Speaker 1: this kind of conduct because he was impeached by the House. 238 00:14:28,160 --> 00:14:30,840 Speaker 1: He is enabled to do more of this kind of 239 00:14:30,880 --> 00:14:34,000 Speaker 1: conduct because he was acquitted by the Senate because of 240 00:14:34,040 --> 00:14:37,400 Speaker 1: the failed impeachment strategy. So now we are left with 241 00:14:37,440 --> 00:14:41,000 Speaker 1: what I think the framers of the Constitution really intended 242 00:14:41,080 --> 00:14:46,480 Speaker 1: as the judge of presidential conduct, and that's the American voter. Ambassador, 243 00:14:46,720 --> 00:14:49,400 Speaker 1: You've been very critical of President Trump. You've been critical 244 00:14:49,440 --> 00:14:52,600 Speaker 1: of the Democrats and how they've conducted the impeachment proceedings. 245 00:14:52,920 --> 00:14:56,280 Speaker 1: What about Republican leadership. Have they done a good job 246 00:14:56,640 --> 00:15:00,360 Speaker 1: offering up a check on the President? Well, I think 247 00:15:00,360 --> 00:15:05,120 Speaker 1: it's very difficult the way uh, these past three and 248 00:15:05,160 --> 00:15:08,440 Speaker 1: a half four years have evolved for them to be 249 00:15:08,480 --> 00:15:11,480 Speaker 1: as independent as I think many of them want. A 250 00:15:11,520 --> 00:15:14,400 Speaker 1: lot of people who are never Trumpers say that the 251 00:15:14,440 --> 00:15:18,440 Speaker 1: Republican House and Senate leadership is complicit. I don't agree 252 00:15:18,520 --> 00:15:21,880 Speaker 1: with that. The fact is, nobody wants to be the 253 00:15:21,960 --> 00:15:25,840 Speaker 1: subject of a Donald Trump two minutes. Hate to use 254 00:15:25,880 --> 00:15:31,800 Speaker 1: George Orwell's uh uh idea on Twitter. I think we're 255 00:15:31,800 --> 00:15:35,000 Speaker 1: gonna have to have within the Republican Party a very 256 00:15:35,080 --> 00:15:40,120 Speaker 1: significant conversation after November three, especially if Trump loses, which 257 00:15:40,200 --> 00:15:42,680 Speaker 1: is at least a fifty fifty possibility at this point, 258 00:15:42,680 --> 00:15:46,520 Speaker 1: about the future of the party. That's one of the 259 00:15:46,600 --> 00:15:49,680 Speaker 1: subsidiary purposes of the book. In my mind, I want 260 00:15:49,680 --> 00:15:52,840 Speaker 1: to make it clear that Donald Trump does not represent 261 00:15:53,240 --> 00:15:57,240 Speaker 1: conservative philosophy, He does not represent the Republican Party. He 262 00:15:57,320 --> 00:16:00,280 Speaker 1: is an anomaly, uh, And I'm not going to vote 263 00:16:00,280 --> 00:16:02,320 Speaker 1: for him for the first time in my adult life. 264 00:16:02,360 --> 00:16:05,640 Speaker 1: I'm not going to vote for the Republican presidential nominee 265 00:16:05,680 --> 00:16:08,560 Speaker 1: because I don't think he's really true to our philosophy. 266 00:16:08,560 --> 00:16:12,760 Speaker 1: I think he's true to Donald Trump and Donald Trump alone. Uh, well, 267 00:16:13,040 --> 00:16:14,880 Speaker 1: I think a lot of Ambassador. I want to break 268 00:16:14,880 --> 00:16:17,880 Speaker 1: in here because the polls actually contradict that. The polls 269 00:16:17,880 --> 00:16:21,640 Speaker 1: actually show that the Republican Party by a large has 270 00:16:21,800 --> 00:16:25,440 Speaker 1: overwhelming support for President Trump. And that's the reason why 271 00:16:25,520 --> 00:16:29,800 Speaker 1: Republican leadership has more often than not huge President Trump's 272 00:16:29,840 --> 00:16:33,640 Speaker 1: ideas and goals. What makes you think that the Republican 273 00:16:33,680 --> 00:16:36,320 Speaker 1: Party is different than what President Trump has put out 274 00:16:36,360 --> 00:16:39,720 Speaker 1: there in the polls are saying because public opinion polls 275 00:16:39,800 --> 00:16:43,360 Speaker 1: take a limited picture based on a limited a limited 276 00:16:43,440 --> 00:16:47,600 Speaker 1: question by the poster, do you support Donald Trump over 277 00:16:47,960 --> 00:16:51,720 Speaker 1: the Democrats? What I'm talking about is the larger issue 278 00:16:51,720 --> 00:16:55,080 Speaker 1: of what the party actually believes in. Uh And in 279 00:16:55,160 --> 00:16:59,280 Speaker 1: my conversations really across the country for an extended period 280 00:16:59,320 --> 00:17:03,840 Speaker 1: of time, I don't doubt that in this debate, I 281 00:17:03,880 --> 00:17:08,480 Speaker 1: think the Trump view will be rejected. I think it's 282 00:17:08,560 --> 00:17:13,280 Speaker 1: part it's an unfortunate part of our political dialogue today 283 00:17:13,400 --> 00:17:16,920 Speaker 1: that it's all torqued around Donald Trump. Do you support 284 00:17:16,920 --> 00:17:19,080 Speaker 1: Trump or do you oppose Trump? And there's really nothing 285 00:17:19,119 --> 00:17:22,320 Speaker 1: else to discuss. That's that's bad for the country as 286 00:17:22,320 --> 00:17:24,400 Speaker 1: a whole, and it's one of the things we need 287 00:17:24,440 --> 00:17:27,440 Speaker 1: to correct. We'll have to correct it sooner or later. 288 00:17:27,480 --> 00:17:29,600 Speaker 1: We we may be able to correct it shortly after 289 00:17:29,640 --> 00:17:32,720 Speaker 1: the November election. It may take another four years after that, 290 00:17:32,960 --> 00:17:35,359 Speaker 1: but we are going to have to correct it. John Bolton, 291 00:17:35,440 --> 00:17:39,080 Speaker 1: two more questions about the room and about your interesting book. 292 00:17:39,119 --> 00:17:41,679 Speaker 1: I love what Freed Zakaria said about it, that the 293 00:17:41,760 --> 00:17:45,199 Speaker 1: details were damning. Would any of this have happened? Of 294 00:17:45,320 --> 00:17:50,520 Speaker 1: Russians and bounty to the Taliban to go after Marines? 295 00:17:50,920 --> 00:17:54,080 Speaker 1: Would any of this have happened if Mr Trump had 296 00:17:54,119 --> 00:17:57,080 Speaker 1: had his three generals in the same room. Was a 297 00:17:57,119 --> 00:18:01,080 Speaker 1: great tipping point for the administration when those three generals 298 00:18:01,240 --> 00:18:03,520 Speaker 1: walked out the door. No, no, I don't. I don't 299 00:18:03,560 --> 00:18:05,840 Speaker 1: think so at all. And I was in the room 300 00:18:05,840 --> 00:18:10,160 Speaker 1: with him a lot of times as well. He doesn't listen. Uh, well, 301 00:18:10,280 --> 00:18:13,720 Speaker 1: he doesn't absorb things, you know. Uh. Former Secretary of 302 00:18:13,760 --> 00:18:18,320 Speaker 1: State George Schultz one said the importance of listening is 303 00:18:18,359 --> 00:18:22,080 Speaker 1: always underestimated, and even Lyndon Johnson said you know when 304 00:18:22,119 --> 00:18:25,600 Speaker 1: I'm talking, I don't learn anything. Uh those are points 305 00:18:25,680 --> 00:18:29,720 Speaker 1: Donald Trump doesn't understand. And uh, we all made our mistakes. 306 00:18:30,240 --> 00:18:32,960 Speaker 1: I certainly made my share. I try and lay out 307 00:18:33,000 --> 00:18:36,040 Speaker 1: some of them in the book. I think things maybe 308 00:18:36,119 --> 00:18:38,520 Speaker 1: could have been done better. I make that argument in 309 00:18:38,560 --> 00:18:41,040 Speaker 1: the book. But ultimately Trump is Trump. That's what the 310 00:18:41,040 --> 00:18:45,159 Speaker 1: problem is. This is not somebody who sent policy terms, 311 00:18:45,200 --> 00:18:48,960 Speaker 1: so a strategy in Afghanistan, it's we We haven't had 312 00:18:49,000 --> 00:18:51,960 Speaker 1: a strategy in Afghanistan. Or by the way, with respect 313 00:18:51,960 --> 00:18:54,679 Speaker 1: to Russia, with respect to China, with respect on with 314 00:18:54,760 --> 00:18:58,359 Speaker 1: respect to North Korea. The list is long, ambassadable. In 315 00:18:58,440 --> 00:19:00,800 Speaker 1: one final question, if I may, you were very kind 316 00:19:00,800 --> 00:19:04,680 Speaker 1: in your comments to Susan Rice earlier in this interview, 317 00:19:05,160 --> 00:19:08,720 Speaker 1: if we have a democratic presidency, So much of this 318 00:19:08,840 --> 00:19:11,760 Speaker 1: is a structure of the time of your hero Barry 319 00:19:11,800 --> 00:19:17,480 Speaker 1: Goldwater and conservative democratic theology for another time ago, and 320 00:19:17,480 --> 00:19:20,639 Speaker 1: then we had a small matter happened Vietnam, and the 321 00:19:20,680 --> 00:19:25,080 Speaker 1: Democratic Party, many would say, has had a different foreign policy. 322 00:19:25,600 --> 00:19:29,800 Speaker 1: Can Joe Biden, within the arc of his career, dragged 323 00:19:29,880 --> 00:19:34,720 Speaker 1: the Democrats back to some form of centrist tendency. Well, 324 00:19:34,840 --> 00:19:37,440 Speaker 1: my my comment about Susan Rice will probably get both 325 00:19:37,440 --> 00:19:40,359 Speaker 1: of us in trouble, so so I better apologize to 326 00:19:40,400 --> 00:19:43,280 Speaker 1: her in advance for that. I don't know what the uh, 327 00:19:43,880 --> 00:19:45,879 Speaker 1: what the fate of the Democratic Party is going to be. 328 00:19:45,920 --> 00:19:47,840 Speaker 1: I don't think there is a Scoop Jackson wing of 329 00:19:47,920 --> 00:19:50,800 Speaker 1: the party anymore. Uh. There there isn't even a Joe 330 00:19:50,840 --> 00:19:54,040 Speaker 1: Lieberman wing of the party anymore. And that that's one 331 00:19:54,119 --> 00:19:57,639 Speaker 1: reason why I worry about Donald Trump. If the Republican 332 00:19:57,720 --> 00:20:00,760 Speaker 1: Party doesn't remain the party of a strong piece through 333 00:20:00,840 --> 00:20:03,920 Speaker 1: strength Reagan Esque policy, I don't know who's going to 334 00:20:04,000 --> 00:20:05,760 Speaker 1: do it, and I think that will leave the country 335 00:20:05,760 --> 00:20:08,720 Speaker 1: in jeopardy. Ambassador Bolton, thank you so much for joining 336 00:20:08,720 --> 00:20:17,560 Speaker 1: Bloomberg Surveillance this morning. Right now vasilious gnacas with us 337 00:20:17,600 --> 00:20:21,280 Speaker 1: as back, Lombard, vasilious. As we readjust for Q three, 338 00:20:21,359 --> 00:20:27,920 Speaker 1: we readjust to a resilient dollar? Will the dollars stay resilient? Hello? Tom? 339 00:20:28,040 --> 00:20:32,520 Speaker 1: And Hi Jonathan H No lague is that I think 340 00:20:32,520 --> 00:20:37,480 Speaker 1: the ingredients for for a dollar downside finally falling into place. 341 00:20:38,480 --> 00:20:41,600 Speaker 1: Look the way we see it is that basically there 342 00:20:41,600 --> 00:20:45,119 Speaker 1: has been a significantly coupling of the dollar relative to 343 00:20:45,160 --> 00:20:48,240 Speaker 1: fundamental whether you want to look at long term sentimentals 344 00:20:48,400 --> 00:20:50,960 Speaker 1: or whether you want to look at the things like 345 00:20:51,040 --> 00:20:55,120 Speaker 1: interest rate differentials, and the dollar resulted in being quite 346 00:20:55,160 --> 00:20:58,520 Speaker 1: substantially overvalued. Now there was a reason why state of 347 00:20:58,560 --> 00:21:00,880 Speaker 1: a value that was the pricing of we're s premier 348 00:21:01,160 --> 00:21:04,879 Speaker 1: initially the trade war than the virals. But the thing 349 00:21:04,880 --> 00:21:07,920 Speaker 1: is that we're now moving into an environment where things 350 00:21:08,080 --> 00:21:12,119 Speaker 1: are improving on a trend basis. In Europe, we have 351 00:21:12,320 --> 00:21:17,600 Speaker 1: definitely quite improved to virus numbers. It seems that you're 352 00:21:17,720 --> 00:21:21,120 Speaker 1: easy getting attacked together in terms of the policy response. 353 00:21:21,160 --> 00:21:24,040 Speaker 1: So we are getting the ingredients for for a rebound 354 00:21:24,080 --> 00:21:26,760 Speaker 1: in the second half of the year. So I think 355 00:21:26,560 --> 00:21:29,680 Speaker 1: that s premier that supported the dollar are gradually being 356 00:21:29,720 --> 00:21:33,560 Speaker 1: priced out and they're going to lead to depreciation the 357 00:21:33,600 --> 00:21:36,159 Speaker 1: development second half of this year. I just wonder how 358 00:21:36,200 --> 00:21:38,919 Speaker 1: many conversations with clients right now and up with you 359 00:21:38,960 --> 00:21:41,600 Speaker 1: guys talking about gold. What are your thoughts and what's 360 00:21:41,600 --> 00:21:46,080 Speaker 1: happened with gold? That I think very cricule and I 361 00:21:46,160 --> 00:21:49,359 Speaker 1: think very interesting. One look the way we see I 362 00:21:49,359 --> 00:21:51,280 Speaker 1: mean you have to look gold the vote from a 363 00:21:51,359 --> 00:21:54,960 Speaker 1: structural as well as from a sickler perspective. The reality 364 00:21:55,000 --> 00:21:56,600 Speaker 1: of the matter is that we're living in a world 365 00:21:56,640 --> 00:22:00,720 Speaker 1: of zero interest rates, and when you turned say payments 366 00:22:01,000 --> 00:22:05,240 Speaker 1: for example sovereign borns in the US or sovereign borns 367 00:22:05,240 --> 00:22:09,640 Speaker 1: in Germany, you're not getting any yield um worksoever. So 368 00:22:09,880 --> 00:22:13,480 Speaker 1: when you're living in such a zero interest rate environment, 369 00:22:13,480 --> 00:22:15,560 Speaker 1: you would like to have in your portfolio from a 370 00:22:15,600 --> 00:22:21,720 Speaker 1: structural perspective, something that can actually benefit materially from riskup 371 00:22:21,800 --> 00:22:25,840 Speaker 1: of episodes, and that is actually our goal. Goal has 372 00:22:25,880 --> 00:22:29,800 Speaker 1: actually proven to be um a verifiting heads against the 373 00:22:31,040 --> 00:22:34,960 Speaker 1: resurgence in in risk conversion, so that from that respect 374 00:22:35,000 --> 00:22:38,119 Speaker 1: we think that there it's technically a malolement of structural 375 00:22:38,240 --> 00:22:41,600 Speaker 1: location in goal. In terms of the city gold thing, yes, 376 00:22:41,640 --> 00:22:44,560 Speaker 1: allowed me that. Right now we're approaching een hundred, so 377 00:22:44,920 --> 00:22:49,480 Speaker 1: it feels a bit stretched and it potentially come revert 378 00:22:49,560 --> 00:22:52,159 Speaker 1: a bit close at seventeen hunger or even just below. 379 00:22:52,200 --> 00:22:55,480 Speaker 1: But you know, at the famous time, the main driver 380 00:22:55,720 --> 00:22:58,480 Speaker 1: for gold is basically what's happened in US real rates, 381 00:22:58,520 --> 00:23:01,840 Speaker 1: and we've used were raging where they are pensioning in 382 00:23:01,880 --> 00:23:05,680 Speaker 1: a significant downside of goals is really a difficult thing 383 00:23:05,720 --> 00:23:08,560 Speaker 1: to imagine. Mozilius, we are done with half the two 384 00:23:08,600 --> 00:23:12,320 Speaker 1: year half of heading into the second half. How much 385 00:23:12,320 --> 00:23:17,200 Speaker 1: conviction do you have behind your convictions. Well, look, first 386 00:23:17,200 --> 00:23:20,919 Speaker 1: of all, there is a thing that definitely relates to 387 00:23:20,960 --> 00:23:23,040 Speaker 1: the virus, and that's one thing that no one can 388 00:23:23,080 --> 00:23:26,399 Speaker 1: actually predict. No one can really predict whether we're going 389 00:23:26,440 --> 00:23:29,679 Speaker 1: to get a second strong wave. The reality of the 390 00:23:29,680 --> 00:23:33,200 Speaker 1: matter is that now at least most of the government 391 00:23:33,800 --> 00:23:36,359 Speaker 1: and say the wings do have the tools and do 392 00:23:36,520 --> 00:23:42,359 Speaker 1: have the knowledge to contain pockets or plasters or for 393 00:23:42,560 --> 00:23:46,360 Speaker 1: virus resurgence. So I would treat it this way relative 394 00:23:46,400 --> 00:23:51,600 Speaker 1: two months ago, our conviction to dollar downside is definitely increased. 395 00:23:52,000 --> 00:23:55,520 Speaker 1: Of course, if we get a significant virus research and 396 00:23:55,600 --> 00:23:59,080 Speaker 1: the second wave, we get the pocket of lockdowns here 397 00:23:59,080 --> 00:24:01,720 Speaker 1: and there, I previo sure the market he's going to 398 00:24:02,800 --> 00:24:05,320 Speaker 1: the Katie of the dollar. But Asn't said, our conviction 399 00:24:05,359 --> 00:24:09,280 Speaker 1: has increase of the last months. Seals always loved enjoy 400 00:24:09,440 --> 00:24:11,800 Speaker 1: catching up with you on this FX market. Las Nakis 401 00:24:11,920 --> 00:24:18,480 Speaker 1: that jointing us on foreign exchange worldwide right now the 402 00:24:18,560 --> 00:24:21,520 Speaker 1: bounty is out on jan Lewis. He is a JP Morgan. 403 00:24:22,000 --> 00:24:25,760 Speaker 1: As I said, he wrote without question my research paper 404 00:24:25,840 --> 00:24:29,880 Speaker 1: of last summer. It was just brilliant on modeling towards 405 00:24:29,960 --> 00:24:33,159 Speaker 1: low interest rates. He has been dead on on that 406 00:24:33,560 --> 00:24:36,000 Speaker 1: and of course has new work to speak up as well. 407 00:24:36,160 --> 00:24:38,800 Speaker 1: Dr Lewis, thank you so much for joining us. Do 408 00:24:38,920 --> 00:24:41,760 Speaker 1: you enjoy changing your team? Do you still believe in 409 00:24:41,800 --> 00:24:47,520 Speaker 1: a persistency towards a shockingly low tenure yield? We're almost 410 00:24:47,600 --> 00:24:52,440 Speaker 1: there at the forces that we've seen in Japan and Europe. 411 00:24:52,600 --> 00:24:56,080 Speaker 1: Boom basically said, the moment you get there, it's very 412 00:24:56,200 --> 00:25:00,760 Speaker 1: hard to get out, and it's basically because the term 413 00:25:00,920 --> 00:25:04,320 Speaker 1: as you lower interest rate, the saver needs to save more. 414 00:25:04,520 --> 00:25:07,920 Speaker 1: You see big increases in savings rates in those countries. 415 00:25:08,119 --> 00:25:11,760 Speaker 1: In addition, your lower interest rates initially have a positive 416 00:25:11,800 --> 00:25:16,000 Speaker 1: impact by getting people to borrow more, but then comes 417 00:25:16,800 --> 00:25:20,280 Speaker 1: the astermat the hangover. You get too much debt and 418 00:25:20,359 --> 00:25:23,160 Speaker 1: you're thinking about the levering. That's what's holding you there 419 00:25:23,240 --> 00:25:25,880 Speaker 1: for years. That's why Europe and Japan is still there, 420 00:25:26,200 --> 00:25:28,840 Speaker 1: and that's the future looking for the US also. So yeah, 421 00:25:28,840 --> 00:25:30,640 Speaker 1: I'm walk me through what you expect from the treasury 422 00:25:30,720 --> 00:25:32,680 Speaker 1: market for this year because a lot of people have 423 00:25:32,760 --> 00:25:34,480 Speaker 1: done it to put that statement on the belief that 424 00:25:34,560 --> 00:25:36,920 Speaker 1: yields to the long end will start to drift higher 425 00:25:36,920 --> 00:25:39,560 Speaker 1: as the recovery grows a little bit older. What's your 426 00:25:39,600 --> 00:25:42,439 Speaker 1: take on that you're pushing back against that view? Um, 427 00:25:42,920 --> 00:25:47,320 Speaker 1: I am. I'm basically staying long duration until we hit zero. 428 00:25:48,000 --> 00:25:50,040 Speaker 1: There will be movements up and down that is possible 429 00:25:50,200 --> 00:25:52,680 Speaker 1: short term. At the moment, I think we have to 430 00:25:52,760 --> 00:25:55,600 Speaker 1: think a bit more downside risk. UM. I think the 431 00:25:55,920 --> 00:25:59,560 Speaker 1: fellows are where I'm not explicitly targeting bond yields. UM 432 00:26:00,160 --> 00:26:03,679 Speaker 1: will basically say, as long as I'm always afraid of inflation, UM, 433 00:26:03,880 --> 00:26:06,520 Speaker 1: more is better than less. So I will be thinking 434 00:26:06,600 --> 00:26:11,080 Speaker 1: about basically staying around these levels too lower, but there's 435 00:26:11,119 --> 00:26:14,560 Speaker 1: volativity around it. Obviously, zero percent on a tenure. Let's 436 00:26:14,560 --> 00:26:17,960 Speaker 1: talk about the economic assumptions that underpin that view. What's 437 00:26:18,000 --> 00:26:20,320 Speaker 1: your base case? What underpends that view of zero percent? 438 00:26:20,920 --> 00:26:28,359 Speaker 1: Basically caution and delivering. Everybody's borrowed a lot. Afterwards, you 439 00:26:28,520 --> 00:26:33,159 Speaker 1: basically slowly and not constantly, as we've seen in Eurovenger 440 00:26:33,440 --> 00:26:36,920 Speaker 1: hand Um, you tend to save more and to cut 441 00:26:37,680 --> 00:26:43,440 Speaker 1: your debtload. Corporate sort of causes. In this environment, I'm 442 00:26:43,440 --> 00:26:45,359 Speaker 1: not going to be doing a lot of borrowing, and 443 00:26:45,359 --> 00:26:48,040 Speaker 1: I think governments actually yeah, they'll do a lot. Now, 444 00:26:48,680 --> 00:26:50,919 Speaker 1: we'll look about it in the future. That these are 445 00:26:51,000 --> 00:26:54,360 Speaker 1: your drivers. It's not about economic growth, per see, there's 446 00:26:54,359 --> 00:26:57,840 Speaker 1: about savings behavior and borrowing behavior. Yeah, And this is 447 00:26:57,920 --> 00:27:01,320 Speaker 1: the paradox of the moment. We're in zero rate environment 448 00:27:01,480 --> 00:27:05,400 Speaker 1: implies a very slow growth economy, and yet investment strategists 449 00:27:05,440 --> 00:27:09,560 Speaker 1: are increasingly pushing investors into riskier assets. And I think 450 00:27:09,560 --> 00:27:14,359 Speaker 1: about your latest call on rejiggering the sixty forty investment model. 451 00:27:14,400 --> 00:27:17,120 Speaker 1: Can you talk about that impair this idea of going 452 00:27:17,240 --> 00:27:20,359 Speaker 1: further into risk, going out of government bonds at a 453 00:27:20,440 --> 00:27:25,600 Speaker 1: time of slowing growth. Well, the purpose of government bonds 454 00:27:25,800 --> 00:27:28,480 Speaker 1: is to help you when you need them, when you're 455 00:27:28,560 --> 00:27:32,119 Speaker 1: down in the equity market. Then you your governments can 456 00:27:32,280 --> 00:27:36,600 Speaker 1: rally and give your upsetting of full support when you're 457 00:27:36,640 --> 00:27:39,280 Speaker 1: losing on equities. At the moment you're at these low rates, 458 00:27:39,400 --> 00:27:44,280 Speaker 1: governments country do that much anymore low volatility there they 459 00:27:44,359 --> 00:27:47,600 Speaker 1: can rarely attend twenty basins points, but does not do 460 00:27:47,840 --> 00:27:50,760 Speaker 1: much more. So you know from here on you're not 461 00:27:51,040 --> 00:27:56,960 Speaker 1: getting much return a USAG which in concludes your mortgages 462 00:27:57,240 --> 00:28:02,480 Speaker 1: and your high grade pretty guaranteed. The next decade, we're 463 00:28:02,560 --> 00:28:05,840 Speaker 1: getting one percent return give or take thirty forty basis 464 00:28:05,920 --> 00:28:08,520 Speaker 1: points on that, so it doesn't do the job anymore. 465 00:28:08,840 --> 00:28:11,399 Speaker 1: Where do you go now? You can stay there and 466 00:28:11,560 --> 00:28:13,440 Speaker 1: see a hack of a lot more because you're not 467 00:28:13,560 --> 00:28:16,520 Speaker 1: getting any return, or you need to go into what 468 00:28:16,680 --> 00:28:20,880 Speaker 1: we call whiskey assets. Two options one is equities um 469 00:28:21,000 --> 00:28:23,600 Speaker 1: and equities will give you a better return than bounds, 470 00:28:23,960 --> 00:28:27,560 Speaker 1: but most of its wild agree about five over the 471 00:28:27,680 --> 00:28:31,119 Speaker 1: next decade, so a lot less than before, and it 472 00:28:31,320 --> 00:28:34,399 Speaker 1: remains very volatile. It can go down to any dirty 473 00:28:34,520 --> 00:28:38,400 Speaker 1: as we've seen home in a few months ago. The 474 00:28:38,480 --> 00:28:41,600 Speaker 1: as the class I'm recommending is the one that is 475 00:28:41,800 --> 00:28:46,240 Speaker 1: volatile short term year to year, but that nicely mean 476 00:28:46,320 --> 00:28:49,680 Speaker 1: reversion goes up and down like the sign way anything 477 00:28:49,840 --> 00:28:53,760 Speaker 1: or between bounds and equities, your I yield um, your 478 00:28:53,920 --> 00:28:59,760 Speaker 1: preferred your utilities, that your real estate, mortgages to seebs, 479 00:28:59,840 --> 00:29:02,840 Speaker 1: all the stuff around that. It goes up and down. 480 00:29:03,440 --> 00:29:07,240 Speaker 1: Volatile short term, but half has volatile the moment you 481 00:29:07,240 --> 00:29:09,520 Speaker 1: go hold on five to ten years out, so you 482 00:29:09,600 --> 00:29:12,080 Speaker 1: need a bit of patients. It can't be first too 483 00:29:12,200 --> 00:29:14,720 Speaker 1: much about the short term. Think where you're going to 484 00:29:14,760 --> 00:29:17,480 Speaker 1: be ending up in ten years time. Five to ten years. 485 00:29:17,800 --> 00:29:20,200 Speaker 1: That means you need to be sitting in between bonds 486 00:29:20,240 --> 00:29:23,400 Speaker 1: and equities. I call it the hybrid world. And yeah, 487 00:29:23,480 --> 00:29:25,080 Speaker 1: a lot of people may scoff at the idea of 488 00:29:25,160 --> 00:29:27,240 Speaker 1: taking more risk at a time of slowing growth. But 489 00:29:27,320 --> 00:29:30,160 Speaker 1: Tom has raised this again and again, this idea the pensions, 490 00:29:30,200 --> 00:29:32,880 Speaker 1: the insurance companies, the retirees that need to earn income. 491 00:29:33,160 --> 00:29:35,880 Speaker 1: The sixty forty split has given ten percent returns for 492 00:29:35,960 --> 00:29:39,239 Speaker 1: forty fifty years. You expect them to deliver through three 493 00:29:39,280 --> 00:29:42,320 Speaker 1: and a half percent in future decades based on where 494 00:29:42,440 --> 00:29:46,240 Speaker 1: current government bond yields are. How do bankruptcies factor into this? 495 00:29:46,440 --> 00:29:49,720 Speaker 1: And how much does your assumption and recommendation now bank 496 00:29:49,840 --> 00:29:52,719 Speaker 1: on the idea that the federal Reserve and the fiscal 497 00:29:53,160 --> 00:29:56,560 Speaker 1: the fiscal policies will support risk your companies and risk 498 00:29:56,640 --> 00:29:59,960 Speaker 1: your assets going forward. I'm not suing much. I don't 499 00:30:00,000 --> 00:30:02,920 Speaker 1: ready to lie much from the fact for the longer run. 500 00:30:03,040 --> 00:30:06,960 Speaker 1: I know it as surprises are today issues will they avoid, 501 00:30:07,120 --> 00:30:13,000 Speaker 1: say a great depression with steadily moving down earnings growth, 502 00:30:13,120 --> 00:30:16,240 Speaker 1: in which case you're not going to even the positive 503 00:30:16,280 --> 00:30:20,520 Speaker 1: return on equities. But equities can deal link from the 504 00:30:20,600 --> 00:30:23,480 Speaker 1: overall economy. They have done on the last thirty four years, 505 00:30:23,960 --> 00:30:26,440 Speaker 1: much better return than the overall economy. So you have 506 00:30:26,520 --> 00:30:30,880 Speaker 1: to think about corporate earnings and evaluation. The economy is 507 00:30:30,960 --> 00:30:37,280 Speaker 1: something separate over here from pension plans. They're already been 508 00:30:37,440 --> 00:30:41,160 Speaker 1: moving away from pure government. They don't have much left, 509 00:30:41,480 --> 00:30:43,760 Speaker 1: but they're sitting in mortgages, are sitting in a high grade. 510 00:30:44,000 --> 00:30:47,360 Speaker 1: But you're not doing a lot more. They have private debt. 511 00:30:47,680 --> 00:30:50,400 Speaker 1: Of yes, I think they've already moved a bit up 512 00:30:50,480 --> 00:30:54,360 Speaker 1: to the risk spectrum. They reduced risk by being in 513 00:30:54,480 --> 00:30:57,120 Speaker 1: private asset because they don't get market markets on a 514 00:30:57,240 --> 00:30:59,720 Speaker 1: day to day basis, And I'm trying to get them 515 00:31:00,080 --> 00:31:03,840 Speaker 1: to think more in between. Yes, long run growth stops 516 00:31:04,480 --> 00:31:09,320 Speaker 1: look like the most attractive hasses, but extremely volatile even 517 00:31:09,440 --> 00:31:12,200 Speaker 1: over a ten year basis. Best to kind of notch 518 00:31:12,320 --> 00:31:16,040 Speaker 1: down a little bit um you get much better returns 519 00:31:16,120 --> 00:31:18,920 Speaker 1: to risk if you're really piled in between the bomb 520 00:31:19,000 --> 00:31:22,560 Speaker 1: and the equity market. Yeah, really appreciate time. Brilliant to 521 00:31:22,600 --> 00:31:24,240 Speaker 1: get you on the program this morning, and love me 522 00:31:24,320 --> 00:31:27,400 Speaker 1: that of JP Morgan, the long Term Investment Strategy Senior 523 00:31:27,560 --> 00:31:34,440 Speaker 1: advised Right now, this is a really wonderful interview. It's 524 00:31:34,560 --> 00:31:36,680 Speaker 1: far too sure we can spend an hour with Stacy 525 00:31:36,720 --> 00:31:41,440 Speaker 1: Woodlett's really interesting starting out as a buyer and department stores, uh, 526 00:31:41,560 --> 00:31:44,400 Speaker 1: and then going to real Torture is a legit security 527 00:31:44,480 --> 00:31:47,400 Speaker 1: and analyst on the street and now running a really 528 00:31:47,480 --> 00:31:51,760 Speaker 1: wonderful consultancy out of London and New York on retail trends. Stacy, 529 00:31:51,880 --> 00:31:54,000 Speaker 1: let me ask you an open question to get started. 530 00:31:54,280 --> 00:31:56,320 Speaker 1: Where are we going to be in six months? Where 531 00:31:56,320 --> 00:31:58,520 Speaker 1: are we going to be going into the holiday season? 532 00:31:59,120 --> 00:32:01,440 Speaker 1: Moren camp in six months? I think we're going to 533 00:32:01,520 --> 00:32:05,720 Speaker 1: be floating in discounts still, and that is really the 534 00:32:05,760 --> 00:32:08,360 Speaker 1: big issue going to the second half of the year. Um, 535 00:32:08,520 --> 00:32:12,120 Speaker 1: you saw you know today Capri reported maybe he's reported, 536 00:32:12,320 --> 00:32:16,440 Speaker 1: and margins are way down. Everybody's taking inventors charges, everybody's 537 00:32:16,440 --> 00:32:19,080 Speaker 1: trying to clear and get clean for the second half 538 00:32:19,120 --> 00:32:21,320 Speaker 1: of the year, and it just can't happen fast enough. 539 00:32:21,760 --> 00:32:25,040 Speaker 1: And the other thing you're going to see that sorry, 540 00:32:25,080 --> 00:32:28,080 Speaker 1: go ahead, no, go ahead, finish please, Stacy. I was 541 00:32:28,160 --> 00:32:30,640 Speaker 1: just gonna say that retailers also can only have a 542 00:32:30,720 --> 00:32:33,160 Speaker 1: certain amount of traffic in the stores for the second 543 00:32:33,160 --> 00:32:34,920 Speaker 1: half of the year. So are we going to have 544 00:32:35,040 --> 00:32:37,760 Speaker 1: Black Friday? Are we going to have these huge traffic 545 00:32:37,840 --> 00:32:40,920 Speaker 1: driving events or are all the promotions going to move 546 00:32:41,080 --> 00:32:45,400 Speaker 1: online and push the consumer even more so online? What 547 00:32:45,720 --> 00:32:50,320 Speaker 1: does digital online demand due to bricks and mortars? I mean, 548 00:32:50,440 --> 00:32:54,120 Speaker 1: for you, I think of Oliver Oliver over incow when 549 00:32:54,200 --> 00:32:57,920 Speaker 1: I think of Richard Burke, Robert Burke rather running bird Orf, 550 00:32:58,200 --> 00:33:02,280 Speaker 1: Steve sad Off. For you, as a retail industry, what 551 00:33:02,760 --> 00:33:06,600 Speaker 1: does brick and mortar actually do? What is their action 552 00:33:07,040 --> 00:33:11,200 Speaker 1: in the next six months? So it's interesting. So because 553 00:33:11,320 --> 00:33:15,320 Speaker 1: so many brands have seen their online penetrations double overnight. 554 00:33:15,480 --> 00:33:18,280 Speaker 1: I mean, nig you said, you know their expectations. They 555 00:33:18,360 --> 00:33:19,840 Speaker 1: did in three months what they were supposed to do 556 00:33:19,920 --> 00:33:22,320 Speaker 1: in two years. So that does a couple of things. 557 00:33:22,520 --> 00:33:26,080 Speaker 1: It makes the stores have to fulfill from store people 558 00:33:26,080 --> 00:33:29,320 Speaker 1: are doing curbside pick up, so the stores are becoming 559 00:33:29,360 --> 00:33:33,160 Speaker 1: almost pick up points or warehouses. And for the amount 560 00:33:33,280 --> 00:33:36,080 Speaker 1: you pay for that real estate, it's a huge amount 561 00:33:36,120 --> 00:33:38,320 Speaker 1: of money. The other thing is that we're seeing a 562 00:33:38,400 --> 00:33:40,680 Speaker 1: lot of appointment only. You know it's going to be 563 00:33:40,760 --> 00:33:43,400 Speaker 1: that eight twenty rule again. You're going to serve your 564 00:33:43,440 --> 00:33:47,680 Speaker 1: customers by appointment only. That that makes eight percent of 565 00:33:47,680 --> 00:33:50,760 Speaker 1: your business happen and the rest of it flows online 566 00:33:51,000 --> 00:33:53,640 Speaker 1: at a lower margin, and by the way, it increases 567 00:33:53,680 --> 00:33:57,480 Speaker 1: return when you move online, so then the stores get flooded. 568 00:33:57,840 --> 00:34:00,840 Speaker 1: I've accelerating into your end at least, I think we're 569 00:34:00,920 --> 00:34:03,560 Speaker 1: just getting started on that end. And that is because 570 00:34:03,840 --> 00:34:07,880 Speaker 1: of course, now that everything is fully open again, we're 571 00:34:07,880 --> 00:34:10,120 Speaker 1: allowed Now we can actually look at the inventory, we 572 00:34:10,200 --> 00:34:11,880 Speaker 1: can look at the real estate, we can look at 573 00:34:11,920 --> 00:34:15,880 Speaker 1: the brands and say what are they worth, what's what's forward? Um, 574 00:34:15,960 --> 00:34:18,000 Speaker 1: we couldn't do that in the last the last few 575 00:34:18,040 --> 00:34:20,160 Speaker 1: months because everything was closed and all the stock was 576 00:34:20,200 --> 00:34:22,520 Speaker 1: stuck on a boat or locked in the store. So 577 00:34:22,719 --> 00:34:25,080 Speaker 1: now this is just starting to open and it's at 578 00:34:25,120 --> 00:34:28,759 Speaker 1: a really interesting time because we're going into holiday, so 579 00:34:29,320 --> 00:34:32,560 Speaker 1: it's it's unprecedented what is happening right now. And I 580 00:34:32,680 --> 00:34:36,440 Speaker 1: think into next year, we're we're just getting warmed up here, 581 00:34:37,040 --> 00:34:38,880 Speaker 1: all right. So what do you expect in terms of 582 00:34:39,400 --> 00:34:42,239 Speaker 1: which might be the next one stacy going forward, which 583 00:34:42,320 --> 00:34:45,360 Speaker 1: is the next big retailer that's the shooter drop that 584 00:34:45,480 --> 00:34:49,040 Speaker 1: might mark the wave of the next bankruptcies. Well, I 585 00:34:49,120 --> 00:34:52,560 Speaker 1: think in the near term, um, you're going to see 586 00:34:52,640 --> 00:34:55,240 Speaker 1: the drip drip drip of store clothings, and we've already 587 00:34:55,280 --> 00:34:59,080 Speaker 1: heard that. So North Drum has announced temper centclosures Macy. 588 00:35:00,440 --> 00:35:03,320 Speaker 1: I think Mazie's looks looks more like half the size 589 00:35:03,360 --> 00:35:06,200 Speaker 1: it is today in a couple of years. So I 590 00:35:06,320 --> 00:35:08,719 Speaker 1: think that's that's the first thing. I think we're going 591 00:35:08,840 --> 00:35:11,200 Speaker 1: to see. You look at malls. You know, we may 592 00:35:11,280 --> 00:35:15,560 Speaker 1: see fewer malls in the US. I think that really 593 00:35:15,719 --> 00:35:18,320 Speaker 1: the real estate prices, the rent the battle between the 594 00:35:18,400 --> 00:35:21,960 Speaker 1: landlords and the retailers is crazy. The lack of collaboration. 595 00:35:22,400 --> 00:35:25,920 Speaker 1: Rents must come down if you're doing pure of your 596 00:35:26,000 --> 00:35:30,160 Speaker 1: sales by nature in store. So I think that the 597 00:35:30,400 --> 00:35:34,680 Speaker 1: entire nature of retails changes over the next year. Stacy, 598 00:35:34,719 --> 00:35:36,160 Speaker 1: We're lucky to get you on the show this morning. 599 00:35:36,200 --> 00:35:37,719 Speaker 1: I appreciate your time, so thank you for you want 600 00:35:37,719 --> 00:35:41,520 Speaker 1: to get Stacey Whittlet's that s s SW Retail Advices President. 601 00:35:41,760 --> 00:35:45,840 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 602 00:35:46,040 --> 00:35:51,280 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 603 00:35:51,400 --> 00:35:55,600 Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before 604 00:35:55,640 --> 00:35:59,480 Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg 605 00:35:59,560 --> 00:35:59,840 Speaker 1: Radio