WEBVTT - Putin to Come Prepared, Will Trump?, Kaplan Asks 0:00:00.080 --> 0:00:12.960 Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane 0:00:13.480 --> 0:00:17.560 Jay Ley. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:34.559 Bloomberg dot com, and of course, on the Bloomberg Douglas 0:00:34.560 --> 0:00:38.520 Cast with Sea Breeze. Now on caution in the market, Doug, 0:00:38.520 --> 0:00:41.000 where are you in your training right now? Are you 0:00:41.000 --> 0:00:44.440 you know, dooming bloom short? Are you doing something different now? 0:00:44.479 --> 0:00:47.120 I'm doing something different. I'm still carrying a small, knit, 0:00:47.200 --> 0:00:50.200 long exposure with a plan. Tom and John too short 0:00:50.240 --> 0:00:54.160 strengths as the SMP rises to what I believe to 0:00:54.520 --> 0:00:56.360 be the top end of the range, which is, you know, 0:00:56.400 --> 0:01:01.880 another fifty SMP points or so. Look, my forward looking 0:01:01.880 --> 0:01:05.600 concerns are plentiful. Trade war is the message of the 0:01:05.640 --> 0:01:07.720 bond market, as well as the message of the bank 0:01:07.840 --> 0:01:12.000 stock market, the rising ambiguity of global economic growth, the 0:01:12.080 --> 0:01:17.760 possible repudiation of the so called synchronized global economic recovery UM, 0:01:17.840 --> 0:01:22.600 the rising geopolitical risk, particularly in Europe with the immigration 0:01:22.640 --> 0:01:27.000 issues dividing the EU and splintering some of the entrenched parties, 0:01:27.000 --> 0:01:30.800 and also most importantly, the possibility of policy mistakes at 0:01:30.800 --> 0:01:34.240 both the White House and said as the latter what 0:01:34.240 --> 0:01:36.280 what what I want to talk about is the wall 0:01:36.319 --> 0:01:38.880 of dooming gloom literature that's out right now. The world's 0:01:38.880 --> 0:01:40.920 coming to it end. You read it like I read it. 0:01:40.959 --> 0:01:42.840 We both try to ignore it as we try to 0:01:42.880 --> 0:01:46.440 think about what we're gonna do with investment. My major 0:01:46.600 --> 0:01:51.720 thesis is corporations adapt like a Boeing doing a JV 0:01:51.920 --> 0:01:55.160 with you know, a dominant manufacturer in Brazil. Do you 0:01:55.240 --> 0:02:00.760 still see corporations adapting to the different economic and finance 0:02:00.800 --> 0:02:04.640 its out there? Are they adapting in a constructive way? 0:02:04.800 --> 0:02:10.919 I think they're adapting. UM, But UM policy remains foremost 0:02:11.000 --> 0:02:14.200 in my concern on the front front burner. You know, 0:02:14.320 --> 0:02:19.600 history has proven that one trade parish gets another than another. 0:02:19.680 --> 0:02:22.079 Until you get a full blown trade war, no one 0:02:22.120 --> 0:02:25.359 ever wins. In the consumer seems to always get screwed. 0:02:26.160 --> 0:02:28.880 Currency wars offered lead to trade wars and vice versa, 0:02:28.919 --> 0:02:32.200 which in turn can devolve into hot wars. So that 0:02:32.280 --> 0:02:37.919 cooperation which you described maybe UM in my view, rather 0:02:38.000 --> 0:02:41.680 short lived. UM. I told you in the past, and 0:02:41.680 --> 0:02:44.040 I've told John and Pin in the past that that 0:02:44.160 --> 0:02:47.360 I approach each day asking three important questions. As it 0:02:47.440 --> 0:02:52.320 relates to your example of boeing, we live in a paperless, 0:02:52.320 --> 0:02:55.400 in cloudy world. Are investors and citizens as safe as 0:02:55.400 --> 0:02:59.280 the markets assume we are? And my answer is no. Secondly, 0:02:59.440 --> 0:03:02.280 we're in a lab and interconnected world. Is it even 0:03:02.320 --> 0:03:06.120 possible for America to be an oasis of prosperity in 0:03:06.160 --> 0:03:08.480 the driver or a vengeon of global economic growth? And 0:03:08.520 --> 0:03:11.160 I don't believe so. And finally, most important, as it 0:03:11.200 --> 0:03:14.959 relates to Trump in the administration with the G eight 0:03:15.360 --> 0:03:18.239 political coordination at an all time low, getting back to 0:03:18.280 --> 0:03:21.520 what Kaplan was talking about in the last segment, how 0:03:21.639 --> 0:03:24.040 slow and the nept will the reaction be if the 0:03:24.080 --> 0:03:26.080 wheels do come off? And what does it mean for 0:03:26.160 --> 0:03:29.880 global trade and economic growth? Doug is something that the 0:03:29.919 --> 0:03:32.520 United States economy could be insulated from. And I'm just 0:03:32.520 --> 0:03:35.680 wondering if you become more defensive, just in terms of 0:03:35.680 --> 0:03:39.200 your investments, what is the most the optimal way of 0:03:39.280 --> 0:03:42.360 being defensive? And can you keep along on the SMP 0:03:42.520 --> 0:03:45.080 five given that over the last couple of months it 0:03:45.160 --> 0:03:48.760 has been somewhat resilient. Yeah, I understand, but we're to 0:03:48.880 --> 0:03:53.560 me we're in this vortex of uncertainty and certainly in 0:03:53.640 --> 0:03:58.600 a new regime of volatility. Um Monetary policy around the 0:03:58.600 --> 0:04:02.800 world has suppressed volatility, and that's that's changing. We're gonna 0:04:02.880 --> 0:04:05.400 soon see the end of UH. The E C B 0:04:05.560 --> 0:04:08.360 S QUI by your end with with it being cut 0:04:08.400 --> 0:04:11.120 half in half and three months. This is a really 0:04:11.200 --> 0:04:13.960 big deal, John, as liquidity becomes a train both here 0:04:14.000 --> 0:04:17.440 and over there. So I think the summarize last year, 0:04:17.640 --> 0:04:21.000 two thousand seventeen was a year of hope in which 0:04:21.120 --> 0:04:25.960 the SMPS index valuation experienced almost a three handle valuation 0:04:26.040 --> 0:04:30.440 increase and basically Wall Street triumph over Main Street. And 0:04:30.520 --> 0:04:32.400 this year is a year of reality in which we're 0:04:32.400 --> 0:04:37.240 seeing contraction, compression and multiples. Main Street is triumphing over 0:04:37.279 --> 0:04:40.840 Wall Street. It's what happens, you know. Charlie Munger had 0:04:40.880 --> 0:04:43.560 a great quote. He says, it's not supposed to be easy. 0:04:43.640 --> 0:04:46.680 Anyone who finds it easiest stupid. And I think a 0:04:46.720 --> 0:04:51.040 lot of people that are looking UH and saying there's 0:04:51.080 --> 0:04:54.480 an absence of uncertainty are really applying first level thinking 0:04:54.480 --> 0:04:57.440 and not second level thinking. Where this Douglas cast of 0:04:57.520 --> 0:05:00.680 Sea Breeze with a short term perspective most of us 0:05:00.920 --> 0:05:03.159 and are you know in our lives we're not trading 0:05:03.279 --> 0:05:07.080 or positioning? Is maybe Mr Casses, but it's always interesting 0:05:07.120 --> 0:05:09.240 to get the whims out there. Doug, what is your 0:05:09.279 --> 0:05:15.599 interpretation of the media event Fox Disney Comcast? How do 0:05:15.640 --> 0:05:19.320 you interpret that? How do you screen that? Well? I 0:05:19.360 --> 0:05:23.279 have two exposures. I've been shot at Disney, UM, but 0:05:23.440 --> 0:05:28.080 not because of that event, um, not because the possible 0:05:28.520 --> 0:05:31.440 acquisition of Fox by Disney. I have been shot Disney 0:05:31.480 --> 0:05:36.760 because I thought that the company's secular growth rate was 0:05:37.000 --> 0:05:43.039 probably half of the eight percent historical rate when Wall 0:05:43.080 --> 0:05:46.400 Street consensus was still looking from the mid teens sort 0:05:46.440 --> 0:05:51.480 of annual growth. UM. And I'm long Comcast, and I 0:05:51.520 --> 0:05:55.040 bought it after Comcasts fell from about forty three to 0:05:55.160 --> 0:05:58.920 thirty one on the basis that Roberts has you know, 0:05:59.000 --> 0:06:01.640 who has all of his family's net worth and comcurse. 0:06:01.880 --> 0:06:05.520 Comcast is not going to totally shoot himself in the foot. Yeah, 0:06:05.560 --> 0:06:07.640 but if he goes out, Doug, what's so interesting here 0:06:08.000 --> 0:06:10.120 on a net present value? And folks, I hate to 0:06:10.160 --> 0:06:11.960 say this, but Cast is really good at moving the 0:06:12.040 --> 0:06:14.880 numbers around. He'll never admit including the red Sox one 0:06:14.920 --> 0:06:18.119 game ahead of the Yankees. But Doug, what I would 0:06:18.120 --> 0:06:22.520 point out here is the private equity slash sovereign wealth 0:06:22.720 --> 0:06:27.920 plug that Mr Roberts may get is essentially free money, 0:06:28.120 --> 0:06:30.880 isn't it. Yes, it is. I mean it's like a 0:06:30.920 --> 0:06:34.159 plug in, John, This is really important in the Newtonian 0:06:34.200 --> 0:06:38.240 mechanics of this game. It's like a slug or plug 0:06:38.320 --> 0:06:42.240 in of just cash, right, Doug. Yes, And I do 0:06:42.320 --> 0:06:46.719 think that the that the incremental free cash flow whether 0:06:46.880 --> 0:06:53.239 Comcast or Disney gets Fox is enough that Um, while 0:06:53.680 --> 0:06:58.520 the near term UH debt to enterprise value that they're 0:06:58.560 --> 0:07:01.400 paying is large, it will be paid off in a 0:07:01.480 --> 0:07:05.120 reasonably short time. And remember Roberts is using he's not 0:07:05.200 --> 0:07:08.560 using a forever perspective like Warren Buffet, but he's you know, 0:07:08.600 --> 0:07:12.720 he's thinking intermediate John, He's not day trading Fox exactly. 0:07:12.760 --> 0:07:15.320 But John, what's so important here is Mr Roberts may 0:07:15.400 --> 0:07:20.240 have forever money, which is what sovereign wealth funds are like. Yeah, maybe, 0:07:20.280 --> 0:07:23.520 but the short term date traders so to speak, or 0:07:23.520 --> 0:07:25.520 the investors in the stock right now. Every time this 0:07:25.600 --> 0:07:30.720 deal looks less likely, um, Comcast rallies. What does that say? 0:07:31.120 --> 0:07:33.880 I don't think that I, as as I said before, John, 0:07:33.920 --> 0:07:36.160 I don't think they're robbers. Is going to shoot himself 0:07:36.160 --> 0:07:38.280 on the foot and pay a ridiculous price. I think 0:07:38.320 --> 0:07:41.880 that that Comcast ends up with Sky, Disney ends up 0:07:41.880 --> 0:07:45.480 with Fox, Comcast shares trade back up to the high thirties, 0:07:46.120 --> 0:07:53.080 and Comcast initiates, reinitiates, UM re establishes it's buy back program. 0:07:53.280 --> 0:07:56.440 So that's why I'm in Comcast. That's spout out quite clearly, 0:07:56.440 --> 0:07:58.600 Thank you, Dusk. And just going forward, you see more 0:07:58.720 --> 0:08:01.560 companies like what we're seeing in media at the moment, 0:08:01.640 --> 0:08:03.400 leverage the balance sheet. And do you think now is 0:08:03.400 --> 0:08:06.840 a good time to do that? Yeah? I think they were, John. 0:08:06.880 --> 0:08:10.400 There are two industries that have to be rationalized, the 0:08:10.480 --> 0:08:14.520 media business and the consumer package good business. And you 0:08:14.600 --> 0:08:18.360 see it in Nelson Pell's going after Procter and Gamble. 0:08:18.880 --> 0:08:22.760 You see it in Dan Loebe uh and others attracted 0:08:22.800 --> 0:08:25.360 to Campbell Soup, which I mentioned in the past to 0:08:25.480 --> 0:08:29.480 Tom as one of my holdings. UM and UM. All 0:08:29.520 --> 0:08:33.400 these businesses have to be rationalized. Uh. You need synergies, 0:08:33.440 --> 0:08:36.800 you need cut in cuts in the fixed cost structure 0:08:37.320 --> 0:08:40.920 in order to survive the secular change in the case 0:08:40.960 --> 0:08:43.360 of media, you know what the changes are the court cutting. 0:08:43.360 --> 0:08:46.920 In the case of consumer package goods, Um, it's just 0:08:47.520 --> 0:08:52.000 moved towards healthy products and generic competition and Amazon. You 0:08:52.120 --> 0:08:54.480 dug out one final question, and you've always been very 0:08:54.520 --> 0:08:57.200 collegial about the battle of you know, the struggle of 0:08:57.240 --> 0:09:00.400 making and losing money. Mr Einhor in The Great Fun 0:09:00.800 --> 0:09:03.319 Investors really had a tough goal of it. Is it 0:09:03.480 --> 0:09:06.679 just simply non diversification, you know, like on a c 0:09:06.920 --> 0:09:10.839 F a kind of chat, most hedge funds are just underdiversified. 0:09:13.280 --> 0:09:17.640 I think, Um, yes, I think that's partially the case. UM. 0:09:17.679 --> 0:09:23.959 But in in a world tom of suppressed volatility UM, 0:09:24.559 --> 0:09:29.920 in which you're being paid management or thereabouts of the 0:09:29.960 --> 0:09:35.400 profit in order to deliver alpha, there's a need, there's 0:09:35.440 --> 0:09:39.120 a need to be non diversified and concentrated making your 0:09:39.160 --> 0:09:44.120 best bets. I'm very fond and friendly with David Einharn 0:09:44.280 --> 0:09:48.000 and I have the absolute most respect for him as 0:09:48.040 --> 0:09:51.160 an investment manager and as a poker player. I am 0:09:51.200 --> 0:09:54.040 both as well, and I think he's currently in the 0:09:54.080 --> 0:09:57.040 World Series of Poker in Las Vegas participating. You can 0:09:57.040 --> 0:10:01.319 watch it on ESPN live tonight. UM and um you 0:10:01.360 --> 0:10:04.360 know he plays the odds. He's very, very smart, and 0:10:04.440 --> 0:10:08.680 I'm totally confident, even though he faced the performance problems 0:10:08.720 --> 0:10:13.120 which we get redemption problems, that he will be a survival, 0:10:13.320 --> 0:10:17.240 as will Um, as will the others that have faced pressure, 0:10:17.320 --> 0:10:19.720 like Acman Duck Cast. Thank you so much for a 0:10:19.720 --> 0:10:23.080 Thursday brief and greatly appreciated. Doug Cast, of course always 0:10:23.120 --> 0:10:40.360 supporting the dreaded Yankees. A major shout out to all 0:10:40.400 --> 0:10:43.680 of you the huge response we got two days ago 0:10:43.880 --> 0:10:46.480 in our interview with Russell Shorto and his new book 0:10:46.520 --> 0:10:50.559 Revolution Song on six people in the Revolutionary Ward, including 0:10:50.640 --> 0:10:54.199 Mr Washington, and also with Gordon would of Brown University. 0:10:54.240 --> 0:10:56.960 That was a real special moment, and we thank you 0:10:57.000 --> 0:10:59.599 for your comments. We drive that conversation forward now with 0:10:59.720 --> 0:11:02.440 Robert Kaplan with my book of the Summer, the Return 0:11:02.440 --> 0:11:06.800 of Marco Polo's World, Thin Gorgeous twelve or so essays 0:11:07.160 --> 0:11:10.360 that will make you brighter about the cacophony we're living in. 0:11:10.679 --> 0:11:13.440 And Robert Camplan. I want to dovetail these two books together. 0:11:13.880 --> 0:11:18.920 There's the moment in Shorto's book where Washington meets Lafayette. 0:11:19.200 --> 0:11:21.720 I had no idea for starters at Lafayette was twenty 0:11:21.800 --> 0:11:25.040 years old went or twenty three rather when they met, 0:11:25.600 --> 0:11:29.720 and we forget about the relationship of the United States 0:11:29.760 --> 0:11:32.839 with England and France. Now that's away from what you've 0:11:32.880 --> 0:11:36.200 been doing recently. But the president's gonna vault over to 0:11:36.360 --> 0:11:39.800 John Farrell's United Kingdom. How's he going to be greeted 0:11:40.000 --> 0:11:44.720 or critically, how should he be greeted by the British Normally, 0:11:45.200 --> 0:11:48.640 uh an American president going to the United Kingdom would 0:11:48.640 --> 0:11:51.400 be greeted as an ally, as a tried and true, 0:11:51.480 --> 0:11:55.680 trusted ally, going back to the late nineteenth century, because 0:11:55.960 --> 0:11:58.920 it was when the British Navy went downhill that weet 0:11:59.000 --> 0:12:02.760 Britain slowly started to hand off global responsibilities to the 0:12:02.840 --> 0:12:08.080 United States. So there's no greater historical relationship united by 0:12:08.240 --> 0:12:10.840 language culture in the world. But now we're in a 0:12:10.880 --> 0:12:13.760 different world, where in a world where the American president 0:12:14.000 --> 0:12:21.280 has rhetorically disdained Britain and other European allies, and where 0:12:21.320 --> 0:12:26.160 Britain is completely um you know, you know, is completely 0:12:26.200 --> 0:12:29.920 absorbed with its own nightmare over leaving the European Union. 0:12:30.400 --> 0:12:32.840 So this is not going to be a meeting or 0:12:32.880 --> 0:12:35.040 this is not going to be a greeting in a 0:12:35.200 --> 0:12:39.720 in it that makes any sense. Historically, going back about 0:12:39.760 --> 0:12:42.800 a hundred and thirty years, it was in Prime Minster 0:12:42.840 --> 0:12:45.040 Main one of the first, if not the first, to 0:12:45.040 --> 0:12:47.240 to visit the White House. Um. I believe she was, 0:12:47.920 --> 0:12:52.520 and I believe that she and world leaders all over, 0:12:52.640 --> 0:12:58.280 particularly the Chinese, find whereas we may find Trump vulgar 0:12:58.600 --> 0:13:02.720 and and in every a distasteful for leaders who have 0:13:02.880 --> 0:13:04.840 to do world leaders who have to deal with an 0:13:04.880 --> 0:13:09.359 American president, they don't know how to process him, particularly 0:13:09.400 --> 0:13:12.840 the Chinese. Uh, you know, how how to analyze him, 0:13:12.920 --> 0:13:16.360 how to predict him, which is something that world leaders 0:13:16.400 --> 0:13:19.640 do with each other all the time because they're all 0:13:19.760 --> 0:13:23.520 members of the same elite who have been to similar schools, 0:13:23.720 --> 0:13:28.640 have achieved what they have through normal meritocracy. And so when, 0:13:28.720 --> 0:13:32.079 for instance, of Trump says to Uh, Trump says to 0:13:32.200 --> 0:13:35.240 shijin Ping, let's be friends, will make will make a 0:13:35.280 --> 0:13:38.320 deal on the basis of friendship, the Chinese don't know 0:13:38.360 --> 0:13:41.720 how to process that. In their culture, friends don't make deals. 0:13:41.720 --> 0:13:44.920 You make deals with based on your personal interests that 0:13:45.040 --> 0:13:48.440 intersect with another powers personal interest that has nothing to 0:13:48.480 --> 0:13:50.880 do with friendship. But just in terms of the politics. 0:13:50.880 --> 0:13:53.559 They sort of couz a friendship with the global elites. 0:13:53.640 --> 0:13:56.600 Isn't that part of the problem. Well, that's part of 0:13:56.600 --> 0:13:59.280 the problem, but it's nothing new. If you go back 0:13:59.320 --> 0:14:03.440 to the early nineteenth century, the late eighteenth century, you 0:14:03.480 --> 0:14:07.640 look at Metternick, Tallyron Castle, Reay. All of these people 0:14:07.720 --> 0:14:10.560 represented different powers, but they were all members of the 0:14:10.600 --> 0:14:14.520 same elite. In the early modern world, before the modern world, 0:14:14.559 --> 0:14:18.160 which is the world between the Renaissance and the Industrial Revolution, 0:14:18.640 --> 0:14:22.480 everyone was related to each other through royal families, so 0:14:22.720 --> 0:14:26.200 you know, everyone had some relationship to Queen Victoria. So 0:14:26.560 --> 0:14:30.120 so they're the global elite was even more into what 0:14:30.160 --> 0:14:31.760 I'm trying to do. It just got a better understanding 0:14:31.760 --> 0:14:34.080 of the Prime minister's relationship with the president given the 0:14:34.080 --> 0:14:36.920 fact that they given the fact that the Prime Minister 0:14:37.080 --> 0:14:39.720 was the first leader from the West to go into 0:14:40.000 --> 0:14:42.360 the wine house, I don't think it helps her, not 0:14:42.800 --> 0:14:46.160 because he has no loyalty to anything or anybody. Everything 0:14:46.240 --> 0:14:49.360 is a zero sum. Everything is a zero sum issue 0:14:49.400 --> 0:14:51.120 for him. One of the things that changed your Robert 0:14:51.200 --> 0:14:54.640 kaplan is it was Tillerson and now it's POMPEII. Here's 0:14:54.640 --> 0:14:57.120 the first of his class at West Point. I guess 0:14:57.160 --> 0:15:00.480 he's getting high marks from everybody just to rebuild State. 0:15:00.600 --> 0:15:05.920 How's he doing? And will Pompeo make a difference in Helsinki? Uh? Yeah. 0:15:06.040 --> 0:15:09.320 First of all, Pompeo was treated with the suspicion at 0:15:09.360 --> 0:15:12.600 the CIA, but got high marks when he left because 0:15:12.600 --> 0:15:15.640 he has a history of caring for the agency. He leads, 0:15:16.040 --> 0:15:20.120 you know, listening to advice. Uh So, Pompeo left the CIA, 0:15:20.360 --> 0:15:23.720 you know, with a very high reputation and and it's state. 0:15:23.840 --> 0:15:27.360 He's seen as much better than Tillerson. Um so that 0:15:27.480 --> 0:15:31.080 Pompel himself is an improvement over the beginning of the 0:15:31.080 --> 0:15:36.120 Trump administration. But it always comes back to the president decides. 0:15:36.320 --> 0:15:40.080 That's the American system. If the president has an instinct 0:15:40.160 --> 0:15:43.400 for something, the secretary of State has to go with that. 0:15:43.720 --> 0:15:47.200 Because the secretary of State is not like the Secretary 0:15:47.240 --> 0:15:50.560 of Defense. The secretary of Defense has a lot of equities. 0:15:50.600 --> 0:15:53.160 He can have a bad relationship with the White House 0:15:53.160 --> 0:15:56.200 and still be a successful secretary of Defense. It's not 0:15:56.280 --> 0:15:58.720 true at Foggy Bottom. Let's forget the main thing with 0:15:58.760 --> 0:16:02.040 primus to make and the speculation about whether he'll be 0:16:02.120 --> 0:16:04.280 well received or not and get away from that and 0:16:04.320 --> 0:16:08.640 get to the meeting with President Putin. Now, traditionally, as 0:16:08.680 --> 0:16:11.160 you know, when two heads of state meet, it is 0:16:11.200 --> 0:16:14.760 incredibly orchestrated. What they're going to talk about has already 0:16:14.800 --> 0:16:16.840 been decided, The outcome of the meeting has already been 0:16:16.840 --> 0:16:19.680 decided before they have the meeting. We now have reports 0:16:19.680 --> 0:16:22.200 suggesting that we could have in a room just the 0:16:22.200 --> 0:16:25.640 President of the United States and the Russian president and 0:16:25.720 --> 0:16:31.080 nobody else. How unpresidented is this, um, it's unprecedented. Keep 0:16:31.080 --> 0:16:35.040 in mind that Putin is always well prepared, well staffed 0:16:35.080 --> 0:16:37.840 for every meeting he has. C e o s who 0:16:37.840 --> 0:16:39.840 have met with him say they have never met a 0:16:39.920 --> 0:16:44.720 more prepared, impressive person. Whatever the issue you're going to 0:16:44.840 --> 0:16:47.120 talk to him about, he studied it for at least 0:16:47.160 --> 0:16:49.760 a half an hour before meeting with you. All right, 0:16:49.800 --> 0:16:52.520 So Putin is going to come prepare. The question is 0:16:52.560 --> 0:16:56.240 will Trump based on experience, He's not. He's not going 0:16:56.320 --> 0:16:59.640 to be nearly as prepared. And there's a context problem. 0:16:59.840 --> 0:17:03.400 The context is it's fine to have a cordial meeting 0:17:03.680 --> 0:17:06.840 with your adversary, provided your clothes, with your allies. What 0:17:06.880 --> 0:17:10.040 are we going to give away if the president slips up. 0:17:10.080 --> 0:17:11.600 I think we had a good idea of what he 0:17:11.640 --> 0:17:14.600 gives away with North Korea? What do we give away 0:17:14.720 --> 0:17:18.800 with Mr? Putin? At this point, I can't see anything 0:17:19.240 --> 0:17:23.240 because the Russians have interfered to a greater or lesser 0:17:23.320 --> 0:17:29.960 extent in our electoral process allegedly. Um and um you 0:17:30.000 --> 0:17:34.679 know Ukraine, Uh, Syria, Crimea. You know it's it. It 0:17:34.960 --> 0:17:37.359 were in a weak position. We don't have much to 0:17:37.400 --> 0:17:40.240 give away at this point in the time we got left. 0:17:40.320 --> 0:17:43.640 I'm sending four or five books to a student who 0:17:43.680 --> 0:17:47.000 will do international relations at New York University, and it's 0:17:47.160 --> 0:17:50.119 the usual nine, Power and Independence. I threw in in 0:17:50.160 --> 0:17:53.320 a week moment, I threw in a Kaplan book as well. 0:17:53.600 --> 0:17:56.760 Uh into this, I did William Easterly's Great White White 0:17:56.880 --> 0:18:00.480 you know Bill Easterly's classic. Blah blah blah. What's the 0:18:00.560 --> 0:18:04.960 book right now? Are our listeners should get that? You 0:18:05.000 --> 0:18:08.359 just say, is so immediate? What's the book right now? 0:18:08.680 --> 0:18:11.040 Where Robert Cappens has just shut up and read this? 0:18:11.840 --> 0:18:15.000 I said, talking about my own books. Your other people's boss, 0:18:15.000 --> 0:18:17.159 all right, I want to know what's out there that 0:18:17.240 --> 0:18:21.960 needs to be read right now? Um. Henry Kissinger's first book, 0:18:22.040 --> 0:18:25.920 written when he was twenty six years old, A World Restored. 0:18:26.320 --> 0:18:29.679 Fascinating because I've read Diplomacy. Yeah, this is when it 0:18:29.840 --> 0:18:33.879 was a young Kissinger, absolutely brilliant with twenty six with 0:18:33.960 --> 0:18:37.600 the mind of a seventy year old who has no assistance, 0:18:37.760 --> 0:18:40.320 nobody editing him. He does it all in his you know, 0:18:40.400 --> 0:18:44.280 in his dorm room or so. No, that's why it's 0:18:44.440 --> 0:18:48.800 urgent um. And what it's about is how elites from 0:18:48.840 --> 0:18:54.080 different European countries constructed a world order at the end 0:18:54.119 --> 0:18:57.679 of the Napoleonic Wars. And the lessons it teaches about 0:18:57.720 --> 0:19:02.680 conservatism real is him are timeless. This is fast. I mean, 0:19:02.720 --> 0:19:04.240 I mean my book of the Year a couple years 0:19:04.280 --> 0:19:07.600 ago is his on world Order or whatever those essues. Um. 0:19:08.960 --> 0:19:11.320 The thing, this is where you get the real young 0:19:11.560 --> 0:19:15.520 brilliant twenty years without handlers, without handling. This is kissing 0:19:15.520 --> 0:19:21.160 your without handlers, without editors, et cetera. Fascinating. That's great, Jeoffrey. 0:19:21.240 --> 0:19:22.760 I have to read that. Yeah, I want to see 0:19:22.800 --> 0:19:26.479 Tom Kane without handlers. Right. I fall apart, I mean 0:19:26.520 --> 0:19:30.119 I completely fall apart. What do I do? What we asking? 0:19:30.200 --> 0:19:33.639 When the show began, Baby wipes, don't don't want it 0:19:33.760 --> 0:19:37.560 was you know you the turret that we're in. I 0:19:37.640 --> 0:19:40.160 wanted the desk clings. Just Robert Captain, have you seen 0:19:40.240 --> 0:19:42.399 this side at Tom King? Does he not show this 0:19:42.480 --> 0:19:44.520 on Saving? I think it happens when he comes into 0:19:44.920 --> 0:19:49.320 They use Q tips on TV? Is that Robert Capping? 0:19:49.600 --> 0:19:53.399 Thank you so much. Just wonderful book, The Return of 0:19:53.440 --> 0:19:56.760 Marco Polo's World. Really can't say enough about it. Eight 0:19:56.760 --> 0:19:59.879 twelve essays, including too fresh and new ones on the 0:20:00.119 --> 0:20:04.760 ever changing relationship of China and across Eurasia as well, 0:20:04.840 --> 0:20:17.880 Mr capitants with Ian Bremer at the Eurasia Group. Right 0:20:17.880 --> 0:20:20.520 now as we talked to Robert Caplan moments ago with 0:20:20.640 --> 0:20:23.399 Euraise your group, this is a joy to revisit where 0:20:23.440 --> 0:20:27.399 we are with Ben Steele with a Council on Foreign Relations. 0:20:27.720 --> 0:20:30.840 He's their director of International Economics, which means he he 0:20:30.880 --> 0:20:32.960 tells me what to do when I do panels there, 0:20:33.520 --> 0:20:37.280 uh and and and stuff. And right now the panel 0:20:37.320 --> 0:20:40.040 that would be great with the President traveling to Europe 0:20:40.880 --> 0:20:43.680 is the idea of a new martial plan to your 0:20:43.720 --> 0:20:47.040 wonderful book, The Martial Plan Dawn of a Cold War. 0:20:47.640 --> 0:20:49.919 If we needed a martial plan right now. Would this 0:20:50.000 --> 0:20:53.480 president have done it? No, I would go further than 0:20:53.560 --> 0:20:56.040 just looking at the money. Tom. It's not just that 0:20:56.160 --> 0:20:59.800 this president wouldn't play Santa Claus, which is probably how 0:20:59.800 --> 0:21:02.639 he's thinks about the Marshal Plant, but so many of 0:21:02.720 --> 0:21:06.000 the institutions that we take for granted today as pillars 0:21:06.040 --> 0:21:08.879 of the post war liberal order. For example, the World 0:21:08.880 --> 0:21:13.760 Trade Organization UM created seven as as an accompaniment to 0:21:13.800 --> 0:21:17.760 the Marshall Plan. The European Union and NATO were direct 0:21:17.920 --> 0:21:22.280 offshoots of the Marshall Planet's It's actually inconceivable that we 0:21:22.320 --> 0:21:25.000 could have an EU and NATO today without the Marsha 0:21:25.080 --> 0:21:29.480 with within. This is his desire for the Europeans to 0:21:29.520 --> 0:21:32.120 put up their fair share. I saw a bar chart 0:21:32.160 --> 0:21:34.679 that clearly shows most of them are not. How do 0:21:34.720 --> 0:21:38.120 you respond to that? Is a president onto something? Well wait, wait, 0:21:38.160 --> 0:21:41.199 without question, I mean we've we've been pressuring the the 0:21:41.240 --> 0:21:45.080 Europeans from for many years to to boost their UM 0:21:45.160 --> 0:21:50.159 commitments on defense spending. This certainly preceded this president and 0:21:50.200 --> 0:21:52.840 he's right to highlight it, but the way he does 0:21:52.880 --> 0:21:56.960 it is is dangerous because the so called Article five 0:21:57.320 --> 0:22:01.640 security guarantees Um. That so we are extending to our 0:22:01.720 --> 0:22:06.240 NATO allies in Europe are are critical to the effective 0:22:06.240 --> 0:22:08.720 functioning of that alliance, and you should not be undermining. 0:22:08.760 --> 0:22:10.840 But as you, as you point out, Bend, I mean 0:22:10.880 --> 0:22:13.040 we should. Let's maybe not refer to as the Marshall 0:22:13.040 --> 0:22:15.159 Plan just for this conversation and refer to to what 0:22:15.200 --> 0:22:17.560 it was called. It was the European Recovery Plan. It 0:22:17.600 --> 0:22:19.879 was because Europe was on its knees. Um. Europe is 0:22:19.920 --> 0:22:22.800 not on its knees. But to your point, they haven't 0:22:22.800 --> 0:22:25.600 been spending enough on on military spending. So what is 0:22:25.600 --> 0:22:28.160 the right approach to get them to do that? Well, 0:22:29.160 --> 0:22:33.560 it's a it's both a combination of of friendly cajoling 0:22:34.200 --> 0:22:38.640 Um and making clear to the Europeans that their own 0:22:38.720 --> 0:22:44.320 security is at stake here. With Russia clearly UM ratcheting 0:22:44.520 --> 0:22:49.320 up its aggressive actions on NATO's borders, particularly in in 0:22:49.320 --> 0:22:52.960 in the Baltics. UM. I think this can be done 0:22:53.200 --> 0:22:57.560 without undermining the cohesion of the of the alliance. I 0:22:57.600 --> 0:23:00.440 think right now President Trump is really playing being into 0:23:00.480 --> 0:23:02.920 Putin's hands by doing that, so certainly up my job 0:23:02.960 --> 0:23:04.680 to take a position on this. So this is really 0:23:04.720 --> 0:23:07.080 just a question. But The approach that he's taken right 0:23:07.080 --> 0:23:09.440 now is basically saying just that you've taken the Knights 0:23:09.640 --> 0:23:12.880 guarantee for grants it. You haven't spent enough on the military. 0:23:12.920 --> 0:23:15.480 You know that we will um, and therefore you've taken 0:23:15.520 --> 0:23:19.119 the whole institution for granted. UM. Have they? I know? 0:23:19.240 --> 0:23:22.600 I don't think that would be fair. The Article five 0:23:22.680 --> 0:23:27.600 security mutual security guarantees have only been invoked once in 0:23:27.640 --> 0:23:31.240 the Alliance's history, and that was after September eleventh, two 0:23:31.240 --> 0:23:34.920 thousand and one, when this country was attacked in America's 0:23:35.119 --> 0:23:40.560 allies invoked Article five to support US, and they did 0:23:40.800 --> 0:23:44.080 in Afghanistan, so they did step up. It would be 0:23:44.160 --> 0:23:47.920 wrong to see them as free riders. They haven't been 0:23:48.280 --> 0:23:52.240 on trade, have they been? No. If you look at 0:23:52.600 --> 0:23:56.600 raps broadly in the developed world, Canada, the EU, the 0:23:56.720 --> 0:24:01.280 United States, UM, um, they're they're roughly equivalent um. President 0:24:01.320 --> 0:24:07.119 Trump rightly emphasizes that um auto tarraps in the United 0:24:07.240 --> 0:24:09.520 United States for cars coming into the United States are 0:24:09.520 --> 0:24:12.440 considerably lower than those in the EU, But he doesn't 0:24:12.520 --> 0:24:15.359 like to talk about our own taraups on trucks, which 0:24:15.359 --> 0:24:18.639 are massively higher than those which back I believe to 0:24:18.680 --> 0:24:23.160 the Chicken texts exactly. So we're talking about tax there 0:24:23.160 --> 0:24:25.760 and he doesn't want to negotiate that. So there are 0:24:25.800 --> 0:24:29.359 there are good grounds by all means to for revisiting 0:24:29.600 --> 0:24:32.080 these things, and that could have been part of the 0:24:32.440 --> 0:24:36.359 productive discussion on a transatlantic trade treaty. We've been still 0:24:36.400 --> 0:24:38.639