WEBVTT - "Goldilocks" Era Will End For The U.S. Next Year: Bill Rhodes 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.800 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg P M L 0:00:20.840 --> 0:00:27.280 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. US 0:00:27.320 --> 0:00:31.880 President Donald Trump and Chinese leader Paying Day will meet 0:00:31.960 --> 0:00:36.440 on Saturday in Argentina on the sidelines of a G 0:00:36.880 --> 0:00:41.440 twenty summit taking place in Buenos rs. Joining us now 0:00:41.479 --> 0:00:45.040 to tell us more about that meeting and other world 0:00:45.040 --> 0:00:49.200 events is Bill Rhodes is commonly known as the Banker 0:00:49.240 --> 0:00:51.120 to the World. He is the author of the book 0:00:51.159 --> 0:00:55.000 Banker to the World, Leadership Lessons from the front Lines 0:00:55.160 --> 0:00:59.279 of a Global Finance and the book I Understand is 0:00:59.400 --> 0:01:03.720 currently in a second English edition. It has been published 0:01:03.720 --> 0:01:08.240 in Mandarin, Korean, Japanese, Portuguese, Do This for a Reason, 0:01:08.760 --> 0:01:13.600 and most recently two editions in Spanish. Tell us what 0:01:13.680 --> 0:01:17.360 you believe will happen at the G twenty meeting in 0:01:17.400 --> 0:01:21.240 Buenos Aires. Well, I think, Pim, there are great expectations 0:01:21.400 --> 0:01:26.280 that President Hi Jim Ping of China and our President 0:01:26.280 --> 0:01:29.960 Trump will be able to cut a deal on trade. 0:01:30.480 --> 0:01:33.039 As you know, at this point in time, we have 0:01:33.200 --> 0:01:37.160 tariffs on ten percent on two hundred going to come 0:01:37.160 --> 0:01:43.000 into effect in January UH billion dollars worth of Chinese 0:01:43.640 --> 0:01:48.320 exports to the United States, and UH President Trump is 0:01:48.360 --> 0:01:53.560 threatening to increase that amount to from ten percent on 0:01:53.600 --> 0:01:57.000 that two billion, but also saying that if he doesn't 0:01:57.040 --> 0:01:59.960 get some indication of positive movement on the part of 0:02:00.080 --> 0:02:03.840 China next year, he could put a similar tariff on 0:02:03.920 --> 0:02:08.200 the remaining two sixty seven billion UH vis a vis 0:02:08.320 --> 0:02:12.320 the trade balance between the two countries. UH. There's great 0:02:12.400 --> 0:02:14.800 hype over this, not clear what will come out. I 0:02:14.840 --> 0:02:17.520 think the good point is they're gonna be talking face 0:02:17.600 --> 0:02:19.880 to face. The real work will be done by the 0:02:19.919 --> 0:02:23.120 people under them. But there's something else going on at 0:02:23.120 --> 0:02:26.120 that G twenty the people have sort of forgotten. You 0:02:26.160 --> 0:02:29.440 will have the three largest producers of oil in the 0:02:29.480 --> 0:02:33.720 world sitting down. They're together. In other words, the United 0:02:33.720 --> 0:02:38.400 States was with President Trump putin of Russia and also 0:02:39.200 --> 0:02:43.919 UH the head of Saudi Arabia, UH, either the king 0:02:44.160 --> 0:02:47.160 or someone the king will send. And as you know, 0:02:47.800 --> 0:02:51.840 one of the chief disturbers or let's say, in the 0:02:51.919 --> 0:02:56.679 marketplace today the chief sources of volatility is oil, and 0:02:56.760 --> 0:02:59.680 so one side light could be that there could be 0:02:59.720 --> 0:03:03.240 some discussion on oil. Also because there's a meeting on 0:03:03.280 --> 0:03:08.480 the fifth of December OPEC, and the feeling is Saudi 0:03:08.560 --> 0:03:12.440 always is a mover there and will Saudi go along 0:03:12.480 --> 0:03:15.600 with President Trump who wants to keep prices low or 0:03:15.800 --> 0:03:18.040 for their own income, will they move on it? So 0:03:19.000 --> 0:03:21.160 this is sort of a side light which could come 0:03:21.160 --> 0:03:24.519 out of there, as well as the discussion between Trump 0:03:24.560 --> 0:03:26.600 and she jumping. Yeah, because a lot of people expect 0:03:26.720 --> 0:03:30.280 a supply cut at that OPEQUE meeting, It'll be interesting 0:03:30.280 --> 0:03:33.040 to see whether Saudi Arabia's view is tipped in their 0:03:33.080 --> 0:03:35.280 connections with President Trump. I do want a home And 0:03:35.320 --> 0:03:38.640 though on trade and the discussion between Ji jimping and Trump, 0:03:38.840 --> 0:03:41.520 just because this really has been a huge main driver 0:03:41.720 --> 0:03:45.440 of recent market volatility, I'm wondering do you view the 0:03:45.520 --> 0:03:49.080 threat as additional tariffs that President Trump just came out 0:03:49.080 --> 0:03:52.240 with as a negotiating tactic, or does this indicate that 0:03:52.280 --> 0:03:55.320 President Trump is serious about trying to completely rejigg or 0:03:55.360 --> 0:03:59.240 supply chains. Most people think it's a threat On the 0:03:59.280 --> 0:04:04.000 other hand, I never underestimate what he might do having 0:04:04.040 --> 0:04:09.280 known him since I think the real issue here is 0:04:09.320 --> 0:04:12.600 I've said on your show before and on Bloomberg Television, 0:04:13.360 --> 0:04:16.680 is I think not so much trade but intellectual property 0:04:16.760 --> 0:04:20.000 because if you go take the long view, which is 0:04:20.240 --> 0:04:22.560 so called Chinese view, but we have to take the 0:04:22.600 --> 0:04:25.839 long view. Two, we've always been dominant in this area 0:04:25.960 --> 0:04:29.960 Silicon Valley, et cetera. And Uh, I think one of 0:04:30.000 --> 0:04:32.200 the issues that really has to be threshed out here, 0:04:32.279 --> 0:04:36.560 apart from the trade situation, is what's going to happen 0:04:36.560 --> 0:04:39.000 on intellectual property. To me, that's the most difficult thing 0:04:39.040 --> 0:04:42.599 to work on. Bill Rhodes, do you see a possibility 0:04:42.680 --> 0:04:46.000 that at the last moment, Ping of China will not 0:04:46.200 --> 0:04:49.760 go to the G twenty meeting and send someone else? No, 0:04:50.040 --> 0:04:53.679 he he actually glories in these meetings. You will note 0:04:53.680 --> 0:04:56.440 that he never misses any regional meeting, whether it be 0:04:56.480 --> 0:05:00.359 in Asia or any uh, you know, any brick meeting 0:05:00.520 --> 0:05:04.160 or whatever it is. Uh. So there's no doubt that 0:05:04.200 --> 0:05:07.840 he will go, barring some illness or something. The real 0:05:07.920 --> 0:05:12.080 question is, uh, is anything going to come out of it? Uh? 0:05:12.120 --> 0:05:16.920 And he has said very little recently except to talk 0:05:16.960 --> 0:05:20.680 about the need to have balanced and free trade in 0:05:20.720 --> 0:05:24.440 the world and all of this. But President Trump has 0:05:24.480 --> 0:05:27.920 been very vocal almost daily on Twitter and and and 0:05:28.040 --> 0:05:31.240 he views himself as as a great deal maker. So 0:05:31.880 --> 0:05:34.159 we'll have to see whether there's just an airing of 0:05:34.240 --> 0:05:36.720 views or something comes out of it. I think it's 0:05:36.720 --> 0:05:40.919 about fifty fifty whether something specific will come out of it, 0:05:41.000 --> 0:05:43.880 or we'll just go on to another phase. Bill Rhodes, 0:05:44.200 --> 0:05:47.520 I'm hoping he can understand and translate for us how 0:05:47.560 --> 0:05:51.800 andres Manuel Lopez Orador or am Low, the new president 0:05:51.960 --> 0:05:54.679 of Mexico who is taking the home in the next 0:05:54.760 --> 0:05:58.520 few days, how he is going to treat markets because 0:05:58.560 --> 0:06:01.520 so far the sig knowlls have been very bad, and 0:06:01.600 --> 0:06:05.120 we've seen stocks plunge in Mexico, the pesos testing uh 0:06:05.200 --> 0:06:07.760 the year lows, and you're seeing bond yields searched to 0:06:07.800 --> 0:06:10.479 the highest in at least seven years. Well, I think 0:06:10.480 --> 0:06:13.520 one of the reasons for that, Liza is that, uh, 0:06:13.760 --> 0:06:17.159 he was insistent that the that the government go through 0:06:17.839 --> 0:06:20.920 with some sort of a referendum on the new airport, 0:06:21.240 --> 0:06:27.440 which was already thirty five complete billion dollar airport. Yeah. 0:06:27.600 --> 0:06:30.800 Actually more than that. I think the final run was 0:06:30.800 --> 0:06:33.839 supposed to be between thirty five and thirty eight billion dollars. 0:06:34.480 --> 0:06:37.400 And of course very a very few number of people 0:06:37.440 --> 0:06:40.360 showed up for this referendum or plebicite and was turned down, 0:06:40.400 --> 0:06:43.840 and he says that based on that, he's not going 0:06:43.880 --> 0:06:46.440 to go ahead with it, and that shook up the 0:06:46.520 --> 0:06:49.640 Mexican markets because a lot of that paper, the bonds 0:06:49.680 --> 0:06:51.839 that we used to finance it, are held by Mexicans. 0:06:52.120 --> 0:06:54.320 Of course, a lot of held by Americans do, but 0:06:54.640 --> 0:06:59.040 a lot by by the Mexican business community. UH So 0:06:59.080 --> 0:07:01.160 there was a lot of con tarned there as to 0:07:01.240 --> 0:07:03.040 what will happen. I was with one of the lead 0:07:03.279 --> 0:07:07.400 Mexican business people the other day will go unnamed, and 0:07:07.480 --> 0:07:11.840 he's more optimistic because he's got as his chief advisor 0:07:11.880 --> 0:07:14.880 of Puncho Romo, who is one of the leading business 0:07:14.920 --> 0:07:18.920 people of northern Mexico, as his advisor, will be his 0:07:19.000 --> 0:07:22.040 chief of staff. And the last time I was with 0:07:22.360 --> 0:07:25.680 UH with Almo, which a little over a year ago, 0:07:26.640 --> 0:07:29.680 I co hosted a small dinner for him here. Council 0:07:29.680 --> 0:07:33.720 in America's UH He and UH Puncha Romo were very 0:07:33.720 --> 0:07:35.480 positive on some of the things they wanted to do. 0:07:35.880 --> 0:07:37.800 One of the concerns is what he's also going to 0:07:37.880 --> 0:07:40.000 do in the oil business. UH. Is he going to 0:07:40.120 --> 0:07:42.400 cut out the contracts going forward? Is he going to 0:07:42.480 --> 0:07:47.080 seek to modify them? There's concerned there also. And of course, 0:07:47.120 --> 0:07:52.120 the immediate crisis he faces on his border, of course, 0:07:52.240 --> 0:07:57.320 is the migrant uh immigration problem with the caravans coming 0:07:57.360 --> 0:08:01.400 up from Central America, and it's a very difficult situation 0:08:01.480 --> 0:08:03.680 for him because his predecessors haven't done a very good 0:08:03.760 --> 0:08:07.680 job with it, and our President Trump is talking about 0:08:07.960 --> 0:08:11.760 closing the border completely. I think what Trump is looking 0:08:11.800 --> 0:08:15.920 for is something like Merkel negotiated with Turkey, which is 0:08:16.200 --> 0:08:20.280 you keep them over there on your side of the border. 0:08:21.080 --> 0:08:25.040 Uh and UH we will from time to time let 0:08:25.160 --> 0:08:27.600 some of them go through the normal procedures to come 0:08:27.640 --> 0:08:30.840 in and UH. There's been a lot of talk that 0:08:31.200 --> 0:08:34.559 Almo uh and his government will put forth a program 0:08:34.600 --> 0:08:37.839 to resettle some of these migrants, but it's not clear 0:08:38.120 --> 0:08:41.440 and he doesn't take office until December one, but that's 0:08:41.480 --> 0:08:44.079 the first order of importance. And then the other thing 0:08:44.120 --> 0:08:47.160 that's being watched is before the end of the month 0:08:47.360 --> 0:08:51.280 in December, he he must go to Congress and present 0:08:51.320 --> 0:08:54.200 a budget and people are not sure what that budget 0:08:54.280 --> 0:08:56.520 is gonna say. So because of all these things have 0:08:56.559 --> 0:09:00.720 been very uh, you know, very many doubts in the market. 0:09:00.840 --> 0:09:03.640 You've seen the stress on the Mexican peso. You've seen 0:09:03.640 --> 0:09:06.640 the stress in the stock market in Mexico. So everything 0:09:06.720 --> 0:09:11.120 is sort of on hold until uh, the week after 0:09:11.320 --> 0:09:15.679 December one. On how he handles all these programs. Bill Rhodes, 0:09:16.120 --> 0:09:20.480 just to continue on this oil theme and PEMMICS, which 0:09:20.520 --> 0:09:25.400 is the nationalized the national oil company in Mexico, price 0:09:25.480 --> 0:09:29.400 of oil, and you started the segment earlier talking about 0:09:29.440 --> 0:09:34.319 oil prices from the beginning of October to the current 0:09:34.400 --> 0:09:38.079 let's say fifty barrel on Thenmax oil has declined in 0:09:38.320 --> 0:09:43.800 value in dollars more than thirty three per cent. What 0:09:43.920 --> 0:09:49.240 does that do to the economics of Mexico. Well, certainly, 0:09:49.679 --> 0:09:51.960 uh a low Mexico doesn't produce as much as it 0:09:52.080 --> 0:09:56.440 used to. It is not particularly positive obviously, And it's 0:09:56.480 --> 0:09:59.800 interesting to note that the President of Mexico will be 0:10:00.080 --> 0:10:02.960 this meeting in low He will be attle office on 0:10:03.120 --> 0:10:07.439 December one, and also the president of Nigeria, which is 0:10:07.480 --> 0:10:09.560 a major producer. They're all members of the Group of 0:10:09.600 --> 0:10:12.280 thirty excuse me of the group of twenty and so 0:10:12.440 --> 0:10:15.120 I think that what you're going to have here is 0:10:15.160 --> 0:10:18.520 some discussions on the sidelines of this conference about it. 0:10:18.920 --> 0:10:22.480 I think what has happened is the US has every 0:10:22.559 --> 0:10:25.520 day has been reaching higher production levels with the shale 0:10:25.559 --> 0:10:28.320 oil boom that we see. But if the price of 0:10:28.360 --> 0:10:35.920 oil drops substantially below fifty dollars, a lot of those 0:10:35.960 --> 0:10:40.400 operations are not viable. Uh. But the Saudis are peak 0:10:40.480 --> 0:10:45.440 production at this point. Uh. Many think trying to a 0:10:45.480 --> 0:10:48.400 suage and gain the favor of President Trump, but they 0:10:48.480 --> 0:10:50.560 can't continue to do that because they don't have the income. 0:10:50.600 --> 0:10:53.720 And the Russians are at peak production too. So if 0:10:53.760 --> 0:10:56.920 you're advising a company right now in the United States, 0:10:57.480 --> 0:11:00.480 with respect to their relationship in Mexico, which you advised 0:11:00.520 --> 0:11:03.120 that they would go and make an acquisition because things 0:11:03.120 --> 0:11:05.520 are so cheap right now, or would you recommend that 0:11:05.559 --> 0:11:09.400 they stay away you're talking about a new oil business 0:11:09.400 --> 0:11:11.480 in the oil business were beyond just in general, just 0:11:11.520 --> 0:11:14.439 taking a look at the background backdrop here politically as 0:11:14.480 --> 0:11:18.360 well as economically well as you know, because I've said 0:11:18.360 --> 0:11:20.640 it on the show several times. I think here in 0:11:20.679 --> 0:11:23.520 the United States we're in a goldilocks period. I think 0:11:23.559 --> 0:11:25.640 for a year from now we will not be I 0:11:25.679 --> 0:11:30.200 think next year is problematic because the FED I think 0:11:30.280 --> 0:11:33.160 will definitely raise in December, and I think we're going 0:11:33.240 --> 0:11:37.400 to see a couple more increases next year, and then 0:11:37.440 --> 0:11:40.360 we'll have to see what the economy does. But China 0:11:40.440 --> 0:11:43.440 is slowing down big time, there's no doubt about it. 0:11:44.600 --> 0:11:46.319 I think they're going to really have a fight to 0:11:46.400 --> 0:11:49.760 keep six percent growth. It could dip next year below that. 0:11:50.440 --> 0:11:54.680 And Europe is slowing down also with the doubts on Brexit, 0:11:54.760 --> 0:11:59.400 the problems in Italy, even Germany, automobile production slowing. So 0:11:59.520 --> 0:12:02.560 what you is the United States is a star in 0:12:02.600 --> 0:12:05.560 the sense of economic growth for the moment, but we're 0:12:05.600 --> 0:12:08.480 in an intertwined world. And this is why this whole 0:12:08.960 --> 0:12:13.200 situation about trade, the trade wars, particularly with China, but 0:12:13.280 --> 0:12:16.080 also what's going on between the United States and Europe 0:12:16.200 --> 0:12:19.360 on automobiles. I think all of this is very very important, 0:12:19.760 --> 0:12:23.160 and so I think we're in for even more volatility 0:12:23.280 --> 0:12:26.200 uh in both the markets, in the sense of the 0:12:26.200 --> 0:12:29.600 stock markets, the bond markets, but also in the commodities markets. 0:12:30.640 --> 0:12:34.320 Over the next twelve months, Bill, just quickly, because you've 0:12:34.360 --> 0:12:38.160 written in the past and proved impression when it comes 0:12:38.240 --> 0:12:41.040 to stock prices. You're not a stock picker. I understand that, 0:12:41.640 --> 0:12:44.959 But that same period beginning of October to the current 0:12:45.040 --> 0:12:49.200 level of stock prices down more than nine per cent, 0:12:49.679 --> 0:12:52.440 you kind of telegraph that in a lot of your writing. 0:12:52.520 --> 0:12:56.120 What do you see next? Well, I think what the 0:12:56.120 --> 0:12:58.480 people on the floor of the Stock Exchange of hoping 0:12:58.480 --> 0:13:01.600 the trade is. We're gonna get to fame Santa Claus rally. 0:13:01.679 --> 0:13:03.679 But that's going to be very much tied in with 0:13:03.720 --> 0:13:06.600 what we've been discussing on the G twenty Because if 0:13:06.600 --> 0:13:09.439 we don't see some progress between China and the United States, 0:13:09.960 --> 0:13:13.200 and you want to take the radical view the President 0:13:13.200 --> 0:13:17.560 Trump will go ahead and increase the tariffs on China 0:13:18.160 --> 0:13:21.440 and uh, we don't have any resolution on oil, then 0:13:21.559 --> 0:13:24.240 I think we could be in a difficult situation. Thank 0:13:24.280 --> 0:13:27.440 you very much, Bill Rhodes. As always bankers to the world, 0:13:27.440 --> 0:13:32.600 Bill Rhodes, President and chief executive of William Rhodes Global Advisors. 0:13:36.240 --> 0:13:40.360 US Ambassador to the United Nations Nikki Haley said in 0:13:40.440 --> 0:13:45.960 the Security Council meeting earlier that Russia's shooting and seizing 0:13:46.040 --> 0:13:51.840 of Ukrainian vessels is quote outrageous violation of sovereign Ukrainian 0:13:52.080 --> 0:13:58.319 territory and marks yet another reckless Russian escalation. Here to 0:13:58.440 --> 0:14:01.400 tell us more about what is going on in geopolitics, 0:14:01.400 --> 0:14:06.280 including Russia and the United States, is retired Admiral James Stavridis. 0:14:06.360 --> 0:14:09.800 He is a calmist for Bloomberg Opinion. He is, of 0:14:09.840 --> 0:14:14.319 course a retired US Navy admiral, former military commander of NATO, 0:14:14.520 --> 0:14:18.760 and dean emeritus of the Fletcher School of Law and 0:14:18.800 --> 0:14:23.920 Diplomacy at Tufts University. Admiral Stavridas, thank you for being 0:14:24.160 --> 0:14:28.280 with us, give us your thoughts, your reaction to the 0:14:28.360 --> 0:14:34.040 Russian shooting and seizure of those Ukrainian vessels that were 0:14:34.120 --> 0:14:38.400 transitting to the Sea of Azof from the Black Sea. Well, 0:14:38.520 --> 0:14:42.080 first of all, having spent my life at sea, even 0:14:42.200 --> 0:14:45.400 I had to take a moment to recall where the 0:14:45.440 --> 0:14:48.720 Sea of Azov is. It's tucked away in a little 0:14:48.760 --> 0:14:52.200 corner of the Black Sea. It's very shallow, it's smaller 0:14:52.240 --> 0:14:55.840 than the US Great Lakes. But it has now become 0:14:55.840 --> 0:14:59.200 a flashpoint. And you know, m I would say whoever 0:14:59.240 --> 0:15:03.960 heard the Gulf Tonkin before Vietnam. So a, there is 0:15:04.000 --> 0:15:07.080 a potential for this to grow into something much bigger. 0:15:07.600 --> 0:15:11.680 Be Nikki Haley as usual is completely right. This is 0:15:11.720 --> 0:15:16.880 an outrageous seizure of sovereign warships on the high seas. 0:15:16.920 --> 0:15:20.520 That's a big deal in international law. And see, the 0:15:20.640 --> 0:15:24.760 question is how far is Putin willing to go. He's 0:15:24.800 --> 0:15:28.840 a risk taker. He's clearly probing here, and I am 0:15:29.000 --> 0:15:33.200 very concerned that this could escalate into something very dangerous, 0:15:33.280 --> 0:15:35.800 not only for Russian Ukraine, but for NATO in the west. 0:15:36.120 --> 0:15:40.400 So can you just extrapolate, extrapolate out what would happen 0:15:40.880 --> 0:15:44.920 in an escalation like that? I can, Lisa, what I 0:15:44.920 --> 0:15:49.000 would see happening if there is not an immediate strong 0:15:49.360 --> 0:15:53.480 pushback in response to this event. Uh Putin will continue 0:15:53.520 --> 0:15:56.720 to probe, and his real objective here is not simply 0:15:56.760 --> 0:15:59.880 to control the Strait of Kersh which is what connects 0:15:59.880 --> 0:16:02.440 the Black Sea and the Sea of Azov, but he 0:16:02.640 --> 0:16:08.520 also wants a land bridge from Russia through to Crimea, 0:16:08.680 --> 0:16:12.960 and that requires him to consolidate real control over southeast Ukraine, 0:16:13.320 --> 0:16:16.680 notably the city of Mario Pool. So I could see 0:16:16.680 --> 0:16:20.120 a kind of Christmas surprise where we're all very distracted. 0:16:20.160 --> 0:16:22.960 There hasn't been a lot of pushback, and Putin decides 0:16:23.000 --> 0:16:25.280 now is the time to really consolidate a strip of 0:16:25.400 --> 0:16:28.960 land between Crimea, which he's already seized, and the mainland 0:16:28.960 --> 0:16:30.880 of Russia. And you say that there hasn't been a 0:16:30.920 --> 0:16:34.080 lot of pushback, you're talking about President Trump and his response. Correct, 0:16:35.000 --> 0:16:38.640 I am, and uh. Otherwise, we have seen a great 0:16:38.640 --> 0:16:43.640 deal of pushback from European nations, from NATO as an alliance. 0:16:43.640 --> 0:16:46.800 We saw the Secretary General. We saw fortunately our u 0:16:46.880 --> 0:16:49.400 S Ambassador to the United Nations, NICKI Haley. I think 0:16:49.400 --> 0:16:52.120 we're gonna miss her in a few months, Uh, pushing 0:16:52.160 --> 0:16:55.320 back hard. We haven't seen the White House step up 0:16:55.400 --> 0:16:57.880 and go at this. And the big thing, as you've 0:16:57.920 --> 0:17:00.960 been talking about, is the G twenty down in Argentina. 0:17:01.360 --> 0:17:04.359 President Trump will be their face to face with President Putin. 0:17:04.680 --> 0:17:08.959 I hope he raises this both privately and publicly. Admiral 0:17:09.000 --> 0:17:15.560 ste Frida's Russia has already built a bridge connecting Crimea 0:17:15.640 --> 0:17:18.919 to the Russian mainland. It's a twelve mile bridge, I believe, 0:17:19.160 --> 0:17:25.520 and it is so low that it prevents Panamax vessels 0:17:25.720 --> 0:17:31.680 from actually docking in the Ukraine city of Mario Pole. 0:17:32.240 --> 0:17:35.200 So is this just another extension of what we see 0:17:35.200 --> 0:17:39.760 more things like that? Unfortunately, I think we will, given 0:17:39.800 --> 0:17:43.920 the state in general of Russian infrastructure and their construction abilities. 0:17:43.960 --> 0:17:47.080 I think no less than six bridges have collapsed in 0:17:47.160 --> 0:17:50.880 Russia in the last twelve months. Perhaps the Ukrainian shouldn't 0:17:50.920 --> 0:17:54.400 overly worry about that. But in all seriousness, yes, Tim, 0:17:54.480 --> 0:17:57.919 this is part of what is sometimes called hybrid warfare. 0:17:58.080 --> 0:18:01.880 This is what Russia uses without actively going to war 0:18:01.960 --> 0:18:04.879 with the nation. But it's this combination of using the 0:18:04.960 --> 0:18:08.800 social networks, using propaganda, troops that are not marked in 0:18:08.840 --> 0:18:14.399 their uniforms, special forces, seizing points, supporting the rebels in 0:18:14.480 --> 0:18:19.879 southeastern Ukraine, building bridges that block ships. All of that 0:18:20.080 --> 0:18:22.840 is part of what I would call hybrid warfare. Putin 0:18:22.960 --> 0:18:26.520 plays that very well, and it's a dangerous game. Admiral. 0:18:26.560 --> 0:18:28.480 I want to shift gears a little bit to the 0:18:28.600 --> 0:18:32.800 southern border. Here in the northern hemisphere. The US has 0:18:32.800 --> 0:18:36.680 had an increasingly tense relationship with Mexico over immigration. President 0:18:36.680 --> 0:18:40.200 Trump threatening to close all ports of entry from Mexico. 0:18:40.320 --> 0:18:44.280 Incidented states as a result of illegal immigration. Can I 0:18:44.320 --> 0:18:47.399 just get your sense of how feasible that would be 0:18:47.720 --> 0:18:51.280 and what's been going on down there in the southern border. Well, 0:18:51.320 --> 0:18:54.639 first of all, we could, certainly, we the United States 0:18:54.640 --> 0:18:58.639 could certainly build a quote big beautiful wall, and Lisa, 0:18:58.720 --> 0:19:01.040 it could stretch for eighteen hundred miles, it could be 0:19:01.160 --> 0:19:05.320 thirty five ft high. Um. It would cost billions and 0:19:05.359 --> 0:19:08.199 billions of dollars. But here's a news flash, and I 0:19:08.280 --> 0:19:10.879 know this is true because I'm an admiral. Right to 0:19:10.960 --> 0:19:13.719 the left of the wall is an ocean. People are 0:19:13.720 --> 0:19:16.040 going to find ways to get here. So do we 0:19:16.080 --> 0:19:19.080 need to control our border? Absolutely? What we need is 0:19:19.119 --> 0:19:22.680 a smart wall, if you will, That is a big 0:19:22.720 --> 0:19:27.359 physical structure in some places, is unmanned vehicles patrolling in 0:19:27.440 --> 0:19:30.600 other places. We need to plus up the border patrol 0:19:30.680 --> 0:19:33.199 and give them the resources to do their job on 0:19:33.240 --> 0:19:35.919 the border. We ought to get our troops off the border. 0:19:35.960 --> 0:19:39.960 That's not their job. That could lead to dangerous confrontation. 0:19:40.520 --> 0:19:43.600 And so we need to control the southern border, certainly, 0:19:43.960 --> 0:19:47.000 but we need to do it in a more constructive fashion, 0:19:47.160 --> 0:19:49.760 and above all, to conclude, we need to do it 0:19:49.880 --> 0:19:55.320 in cooperation with Mexico not in an antagonistic relationship. Threats 0:19:55.320 --> 0:19:58.680 of simply closing the border are untenable and would hurt 0:19:58.760 --> 0:20:03.280 both nations. Adams Stevita's in your most recent books see Power, 0:20:03.440 --> 0:20:07.760 The History and Geopolitics of the World's Oceans. You underscore 0:20:08.000 --> 0:20:13.159 what you just described. But is Mexico and the migrants, 0:20:13.840 --> 0:20:16.200 or the asylum seekers or the people on the border, 0:20:16.320 --> 0:20:18.840 is that really a security threat to the United States. 0:20:19.680 --> 0:20:22.280 It is not, in the sense that they are not 0:20:22.440 --> 0:20:27.000 invading the United States. There is a diminimous, a tiny 0:20:27.080 --> 0:20:31.320 percentage of truly bad actors. Most of these people are 0:20:31.760 --> 0:20:36.040 economic refugees. They have a legitimate case, both economically and 0:20:36.080 --> 0:20:39.080 because of violence in Central America, to plead their case 0:20:39.119 --> 0:20:42.199 for asylum. We can either grant it or not, but 0:20:42.320 --> 0:20:45.359 we are to respect that process. I do like the 0:20:45.440 --> 0:20:52.840 idea of working with Mexico to do this on Mexican soil, culturally, linguistically, geographically, 0:20:53.080 --> 0:20:56.240 that makes sense. I hope we can cut that deal. 0:20:56.359 --> 0:20:59.280 But as I said before, Pim, what we need is 0:20:59.280 --> 0:21:03.920 a coopera relationship with Mexico to deal jointly with this challenge. 0:21:04.119 --> 0:21:06.960 Admiral just ten seconds. I'm curious do you think that 0:21:07.040 --> 0:21:10.400 we have a greater degree of geopolitical risk today than 0:21:10.440 --> 0:21:14.320 a year ago or a lower one. It is higher 0:21:14.560 --> 0:21:17.600 because of the things we've discussed, but principally because of 0:21:18.000 --> 0:21:22.320 ongoing confrontation between the United States and China economically and 0:21:22.400 --> 0:21:27.200 the South China Sea. We are steaming into dangerous waters. 0:21:27.240 --> 0:21:28.680 As we would say in the Navy, it's going to 0:21:28.760 --> 0:21:32.840 require international cooperation to solve these problems. Admiral, we so 0:21:32.960 --> 0:21:35.080 appreciate your time. Thank you so much for being with US. 0:21:35.280 --> 0:21:39.320 Admiral James Stavridi's columnist for Bloomberg Opinion, retired US Navy 0:21:39.359 --> 0:21:43.440 admiral and former military commando of NATO. Always wonderful to 0:21:43.640 --> 0:21:48.159 get his thoughts. This is Bloomberg Markets with Pim Fox 0:21:48.240 --> 0:21:52.080 and Lisa Abramowitz on Bloomberg Radio. We are broadcasting live 0:21:52.119 --> 0:21:55.200 from the Bloomberg Interactive Broker's studios. A lot of people 0:21:55.200 --> 0:21:59.199 are sitting around and thinking what we hold well. If 0:21:59.240 --> 0:22:03.119 you listen to Emily Rowland, perhaps you might be getting 0:22:03.160 --> 0:22:06.320 a little concerned. Perhaps Emily Rowland, head of Capital markets 0:22:06.320 --> 0:22:09.359 research for John Hancock Investments based in Boston, bejoining us 0:22:09.359 --> 0:22:11.720 here in our eleven three studios. I was reading the 0:22:11.760 --> 0:22:15.000 outlook for that you put together. You said you see 0:22:15.000 --> 0:22:19.280 a market peak after the yield curve inverts, and advised 0:22:19.359 --> 0:22:23.040 against taking on too much risk and perhaps even advised 0:22:23.080 --> 0:22:26.640 shedding some Please explain, well, I can see you read 0:22:26.680 --> 0:22:28.800 all the way to the end of the outlook there. 0:22:28.840 --> 0:22:31.320 The first part of it actually states that we are 0:22:31.480 --> 0:22:35.119 still positive on risk assets. We do still think that 0:22:35.160 --> 0:22:38.200 there's room left to go in this cycle. The yield 0:22:38.200 --> 0:22:42.480 curve hasn't inverted yet. The leading economic indicators are still 0:22:42.480 --> 0:22:46.320 coming in in positive territory. But to us, the time 0:22:46.400 --> 0:22:48.920 to repair the roof is when the sun is shining 0:22:49.119 --> 0:22:53.560 right looking ahead into You know, we're going into a 0:22:53.680 --> 0:22:57.399 very very different macro regime here right. The Fed is 0:22:58.040 --> 0:23:02.080 continuing down this path of rate normalization, quantitative tightening is 0:23:02.080 --> 0:23:05.199 going to increase meaningfully. We shed four hundred billion dollars 0:23:05.200 --> 0:23:07.720 from the balance sheet this year. That goes to six 0:23:07.800 --> 0:23:11.199 hundred billion next year. That's a very different environment for 0:23:11.240 --> 0:23:15.000 investors who are used to plentiful liquidity, used to low rates. 0:23:15.000 --> 0:23:17.800 The Fed buying up fixed income, and we think that 0:23:17.800 --> 0:23:19.760 that should lead us to a point where potentially we 0:23:19.840 --> 0:23:22.679 do see a yield curban version and then potentially a 0:23:22.720 --> 0:23:25.520 market peak down the road. Not there yet, but again 0:23:25.720 --> 0:23:29.360 preparing to become more defensive. Is the world over leveraged? 0:23:30.840 --> 0:23:33.080 That's a great question, and I think that's certainly a 0:23:33.160 --> 0:23:37.320 concern as we head into into and it's a it's 0:23:37.359 --> 0:23:39.760 a risk that we're watching, um, you know, and I 0:23:39.760 --> 0:23:43.560 think as credit conditions tighten, as liquidity as withdrawn from 0:23:43.560 --> 0:23:46.120 the system, you know, you could see that put real 0:23:46.160 --> 0:23:49.560 pressure on markets globally. Do you think that emerging markets 0:23:49.680 --> 0:23:52.760 to haven right now? That's an interesting question too. And 0:23:52.800 --> 0:23:55.920 we've seen you know, a bid for emerging markets over 0:23:55.920 --> 0:23:58.480 the last few weeks here. We were down more than 0:23:58.560 --> 0:24:02.120 twenty at one point this year through October, and we're 0:24:02.160 --> 0:24:04.159 starting to sort of carve out a bit of a 0:24:04.200 --> 0:24:07.239 bottom here, you know, I think investors are pricing in 0:24:07.280 --> 0:24:10.920 a somewhat you know, better resolution to trade and terroriffs. 0:24:11.000 --> 0:24:13.159 We'll have to see what happens after the G twenty 0:24:13.240 --> 0:24:16.000 meeting this weekend, you know, But for us, we're not 0:24:16.119 --> 0:24:19.400 ready to go to really go in uh to emerging 0:24:19.440 --> 0:24:22.320 markets yet until we see some of the fundamentals start 0:24:22.359 --> 0:24:24.880 to turn around. So we look at things like earnings 0:24:25.000 --> 0:24:28.280 estimates where you're really continuing to move sideways and emerging 0:24:28.320 --> 0:24:31.080