US, China Tensions Grow Over Balloons

of geopolitical tensions. We talked a little bit about a Chinese invasion of Taiwan, what it would mean for just a possible scenario in terms of ships to the UK. Specifically, we had the President talk about objects in the sky. But getting ready to hopefully meet with President g a lot going on. We've seen China the US go back

and forth with saying actions. So we wanted to check in um and get a view on this and we have a perfect guest to do that, and especially when it comes to concerns about you know, possible escalating military tensions. So let's head to Colorado Springs and that's where we find retired US Air Force Lieutenant General David dep Deptula excuse me, he's now advisory board member at Academy Securities

and he with he's with us via zoom from Colorado Springs. Um, General, thank you so much for being with us here at Bloomberg. There is a lot going on us China. How do you kind of gauge the tensions that are out there and where it could possibly go? Well, first, thanks very much for um having me on. UM. What I'd tell

you is very uncertain period of time right now. UM, if you take a look of what's happened with respect to the Chinese spycraft that entered the United States and was eventually shot down, Uh, in the elopment of the US government's understanding of the Chinese military goals and some of the new details they're coming out, they really reveal some misreadings of the U S's reaction by Chinese officials, and that indicates just how difficult it is for the

United States and China to discern each other's intentions. And quite frankly, the challenge there is that gap could lead to greater mistrust in our miscalculation. So we're still trying to figure out what's going on UM. You know, there's some people that believe that in all actuality, the balloon went off course. But then again, the Chinese officials and balloon operators appeared to make a series of bad decisions.

So there's still a lot going on that the US government still doesn't understand, and we've got to figure it out before we move. But the other thing that's all points to, UM is we've got to have better communication at the senior most levels between our two countries. Well, I will say I think I thought the most notable thing President Biden's comments UM earlier were that he does plan to reach out to President g So it wasn't like that was was a stop. What in terms of

that Chinese balloon? What is it that, as the President said, they're still kind of figuring stuff out, uh, And what it was all about? What development or what known information could come out that would make you a little concerned. Well, I'll be frank with you, of more concern than whatever the balloon might have collected. Um. It's the uncertainty, if you will, and the indecision that emanated from the Pentagon and the White House that was evidenced as the Chinese

balloon entered the United States airspace. Um, it was pretty clear that the administration didn't have any answer for that kind of a problem. Uh. And we still don't know if the Secretary of Defense actually notified the President when the spycraft originally entered Alaskan airspace or not until it entered the continentally United States. Now last week, to their credit, at the Pentagon and the White House acted more rapidly um and clearly they were more prepared. Uh. And the

President was notified in the time the matter. But the point that I would like to make with you or leave with you, is the issue was not necessarily whatever intelligence could have been extracted by the balloon, it's the policy decision not to have shot it down once it was in US airspace well, and also potentially the lack

of information about what's already in our airspace. When President Biden was speaking, he mentioned three action items, and the first one was just to establish about our inventory of what's going on in our own aerospace. Does that concern you at all us kind of not having enough knowledge about our what's already up there? Or and do you buy a recalibration of the radars? An absolutely wonderful question.

Let me offer if I may, and I know times of essence here, but sometimes these things are a bit complicated. But the North American Air Air Defense Command or nora AD, was originally designed to detect and then defend North America from a catastrophic attack from the Soviet Union, and then back after nine eleven, they had an additional role UH to intercept and identify and redirect any unknown aircraft or

unidentified aircraft heading towards restricted airspace. So then nora AD radars are tuned to detect aircraft or missiles that meet that criteria, and balloons, at least until recently, generally don't fit that category. So in order to track both will require modernization of nora AD's cur radars as well as additional radars, and quite frankly, a reversal in the decline of the resources that have been allocated in nora AD. Look.

NORAD gets its aircraft from the Air Force, but our air Force today is the oldest and the smallest it's ever been in its history. So just like the Air Force, nora AD has been underfunded and allowed to atrophy over the past thirty years. It's still employing cold war air technology. Just to give you in your audience an example, in nineteen sixty nora Ad had about two thousand aircraft under its command, and today they've got about thirty at any one time. So these intrusions ought to be a wake

up call to rebuild our air and space defenses. So your perspective is that basically what this revealed is that our air and space defenses have some major holes. No pun intended, but that's the bottom line, at least from your perspective. Absolutely, so, okay, So having said that, that's one issue, and then of course there is though the way it kind of played out and just was a reminder of kind of the tensions that already existed between

the United States and China. How do you see that relationship that has been a complicated one from the get go. How do you see it where businesses still want that exposure. We know that, and yet we know it's a very tricky one. Well, I think you know, to the President's credit, he made the point that, look, we want to compete with China, we don't want to engage in a conflict

with China. And I think what you'll see is a redoubling of efforts out of the State Department, the Department of Defense in the White House to assure that there is greater connectivity at the senior most levels to be able to rapidly discuss and put some of these issues that may result in misinterpretation or miscommunication to BED and

and so. While there lots of different avenues to explore with respect to what happened here, UM, I think this has been a wake up call for both the leadership of the United States as well as China, UM that we we can't allow misunderstandings to get out of hand, if in fact it might be a little bit. But we've been lists the interesting point that he's been making, Carol, We've been talking to retired US Air Force Lieutenant General

David Deptula. He is on the advisory board UH, and he is an advisory board member over at Academy Securities,

and he's been talking with us from Colorado Springs. But it's interesting, um, obviously a military perspective, but talking about the potential, at least in his view, that there wasn't the correct spending or upgrading, if you will, in terms of the protections UH and the defense systems that are needing to protect our our space basically in our aerospace, which is really interesting and in some ways alarming given some of the geopolitical tensions that we're facing globally right now.

I was really curious to get his thoughts on a look ahead because we know that B. Lincoln potentially meeting with Wangi and Munich later this week. I wonder what someone like him, UM General Lieutenant General David Deptula would be looking for out of that meeting. What would a clue be to indicate where U S. China relations are heading? General Deptula, I know we've gotten our connection back. We've got about a minute or so left here. So there are said to be meetings UM with the Secretary of

the United States. UM State Secretary should say, Uh, Anthony Blincoln coming up between he and Chinese officials. What is it that you kind of keep on your radar when it comes to those kinds of meetings. Well, I apologize that the connection dropped off there, But UM, what I was about to say, or was in the midst of staying, is that if anything good comes out of this particular incident, it's the fact that at senior levels at the UM Secretary of State level secretary to fence level H in

discussions with their counterparts in China. UM, they've got to develop more rapid means of being able to communicate UH, to dampen down UH and explain different perspectives when these kinds of situations arise. UM. Furthermore, I think that President was spot on when he articulated UH the message to the Chinese that they're gonna need to stop these kinds of intrusions UM with respect to blatant UH disregard for US airspace, whether it be over Alaska, the continental United States, Guam,

or Hawaii. So those are a couple of issues that I think UH could move US towards an era where there's greater communication and understanding, not less. All right, we're gonna leave it on that and hopefully we can catch up with you real soon. David Toolah, he is of course UH US Air Force Lutunant general retired. He's an advisory board member over at cat Amy Security Securities. I am tongue twisted on this Thursday, joining s VA Zoom

from Colorado Springs. But I do feel like anything US China really pivotal and obviously one of our main geopolitical issues going forward. Absolutely, it's it's critical to watch. All right. You are listening in watching Bloomberg Business Week. This is Bloomberg Radio. You're listening to the Bloomberg Business Week podcast. Catch Just Live weekdays from two to five pm Easter on Bloomberg Radio, the Bloomberg Business Band. You too. You can also listen live to our flagship New York station,

Just Say Alexa, Play Bloomberg, E Loove and Dirty. Alright, folks, another day, another concern when it comes to a shooting here in the United States. Uh, this time yesterday at a mall in l Passa that killed one person injured three others. It comes on the heels of the Monday night shooting and Michigan State University that killed three students and critically wounded five others. There are truly no words at this point about this national crisis in the US.

So let's get to it with someone who has been studying this. Joshua Horritz is co director of the Center for Gun Violence Solutions at the Johns Hopkins Bloomberg School of Public Health. As you know, supported by Michael R. Bloomberg, founder of Bloomberg LP and Bloomberg philanthropies. Mike also co founder and supporter of every Town for Guns Safety. Josh on the phone from Baltimore. Josh, Um, good to have you here. I wish we kind of didn't have to

have you here because it means we've had more shootings. Um, they have become so much the norm. How do you look at it and how do we change the narrative? How do we change the reality? Well, first of all, thanks for having me. I'm very appreciative of that. And um, you know, in the wake of the toe to terrible tragedies, I say this almost every time on the radio, but I'm just so sorry to the families and the survivors

who have had to go through yet another, um terrible incident. So, you know, I think there's a couple of things for the listeners to keep in mind. Number One, this is not inevitable. This is not always been what this country is about. But in the last several years, we've seen an incredible increase in people killed by guns, which includes homicide and suicides and police violence as well. But that's only almost forty nine people were killed. That's up eight

percent from UH and GO. Homicides in general have increased about between two thousand nineteen and two one, and it seems like we have a mass shooting. If it seems like we have a mass shooting every day in America, it's because we actually have to UM. Already, in this year, there's been seventy two mass shootings UM, and there's lots we can do about it. So I'm happy to jump in if that's what you want me to keep going on right now. Yeah, I mean solutions, Yeah, help us

have some hope here. So I think number one, you know, we've seen a proliferation of assault weapons and high capacity magazines, and that's you know, these shooters often use this. Not in the not in the ms U shooting, but just think about all the other shootings, you know from UM, from the Marjorie Storm and Douglas and some of the shootings, the last shooting in El Paso, right in the shooting the Tree of Life Synagogue, all these things that are

fueled by hate UM. Assault weapons are often the weapons of choice, and certainly high capacity guns with high capacity magazines and those used to be banned, uh, you know for between two thousand five and that made a difference and from a policy perspective, but a moral perspective as well. We should not have weapons of war running around our streets for anybody over eighteen who sometimes but even without a background check, can purchase these weapons. So that's something

that we really need to focus on. And there's some good policy levers that we have as well. UM we have laws that we know work, like licensing the purchase of firearms. We've seen dramatic results in states that have enacted purchasing laws and then then the worse results that for instance, Missouri government of their their permanent law, we saw a dramatic increase in homicide and suicides. So we know that there are laws out there that work. Other things that we want to see are our better firearm

domestic firearm violence, fire and removal laws. We know that domestic violence is often a threat in some of these mass shoutings, so there's a link between domestic violence and mass shootings, and we know we need to do a better job removing firearms from people who are under protective

order or have a domestic violence conviction. Can I can I just jump in for a second, and if you saw yesterday West Virginia lawmakers UM voting to advance a bill that would allow people with concealed carry permits to bring firearms unto state college and university campuses. That's despite overwhelming opposition from frustrated students who came to the capital there to testify against it. I mean, I feel like the trend is going in the other direction unfortunately. So

it depends what state you're in. There are certainly states like West Virginia, and you can think about, you know, the southern states like Alabama and Missouri and Mississippi and Missouri where the with a with the trend is going

the wrong way. There are other states that have made a big past a lot of great laws and saved a lot of license You can think of places like Massachusetts and Connecticut and New York, and you know California where there were a number of horrible shootings a couple of weeks ago, But if you look at their average numbers over the years, they've enacted a strong suite of gun violence prevention laws and on average their gun violence has gone down dramatically and is well below the national average.

So we don't have to accept this, and bringing in our research at the Center is very clear more guns, more concealed carry weapons, the more the more violent crime. That's just a given. And so the idea that we're now going to introduce that into a college environment, you know, in with with UM people who are who are you know, using alcohol which is a risk factor, and people who are just starting their undult lives and might not have enough emotional regulation. This is a horrible idea and it

goes against all of the evidence that we have. Well, I also can stop thinking about this CDC report from earlier this week. We haven't had a chance to talk about it yet, Carol, but it really showed this increase in mental health concerns among teenagers, showing nearly thirty of teen girls have reported considering suicide. I wonder, Josh, if you can talk about to what extent is the guns issue in our country impacting mental health for for kids

and just got about thirty seconds. So look, when when you have a mental health problem and then you have easy access to firems, that's when that's when these things become lethal. And it's not surprising that we are seeing a rise, especially in the black community of UM. We've seen a unpresident rise of FIM suicide among black youth and that's actually I think there's more access to farms now, and we have to really focus on this across the board.

But we're seeing some unpresident rises among young people and farms violence, and that's something we need to be really addressing. Well. So glad we did get some time for you. Like I said, I love, we love talking with you, but we hope we wish the trend was going in a different direction. Josh Horowitz over John Hopkins at Bloomberg School of Public Health, co director of the Center for Gun Violence Solutions. You're listening to the Bloomberg Business Week podcast.

Catch us live week days from two to five pm Eastern on Bloomberg Radio, The Bloomberg Business and You too. You can also listen live to our flagship New York station, Just Say Alexa play Bloomberg e Love and Dirty amid all the talk about rolling recessions, soft landings and the new one no Landings. This week, our Business Week team took the time to note the upcoming one year mark one week from tomorrow since that Russian invasion of Ukraine,

kind of hard to believe it's still going on. While several stories in this special double issue on the destruction in Eastern Europe, including the cover story and how it's becoming clear that the cost to both sides will turn out to be intolerably high. For more, we turned to Bloomberg News automation editor and opinion columnist Leonid Burschitski, along with the editor of Bloomberg Business Week magazine Joel Webber.

In absolute numbers, Russia has actually lost more than Ukraine because the Russian economy was so much bigger to start with before the war. So even though Russia is not economically devastated, it's not about to go bankrupt, it's not depending on external aid the way Ukraine is. But it's lost an enormous amount of money. It's lost more than

a hundred billion dollars in GDP terms um. And and that is before we start factoring in the loss of life, the immigration, the you know, all of these factors that are also war related. Leon It and of course the war continues. You talk about loss, and you're right, you talk about the impact on economic activity, you name it. But the law us of life in terms of people who have actually you know, died as a result of this war, but also people who are leaving the countries,

whether it's Russia or Ukraine. You do think about the lasting impact of that that when we get fingers crossed on the other side of this, what it ultimately means. Yeah, Well, here in Berlin, ware I live. UM. Also as a Russian emigrant, basic way, who who left Russia on the war actually began into thousand and fourteen, Um, we see a lot of huge influx of people from both Ukraine and Russia. And a year's a year after the war began. Um, some of these families have settled in and you know,

the kids are in school. Uh, people have found jobs, they've learned the beginnings of the language. UH. And a lot of these people, a lot of the Ukrainian refugees too, are not going to go back. The German Migration Office recently held a poll that showed about of the Ukrainian refugees are not planning on going back to Ukraine after the war is over. The actual percentage is probably higher.

So uh, even apart from the the actual killing and the you know, the actual war damage, the actual casualties, the loss of the brain drain, the loss of talent, the loss of active people, and it is active people who leave under such circumstances in Ukraine. Is overwhelmingly women, and they've taken their kids with them, so that there's going to be extended fallout even once the you know, the battlefield action is over. Uh uh, you know, the

human losses for both economies will be substantial. Imagine a world where the battlefield we finally might have a version of the truce or something. Um, what would it look like on both sides when this conflict eventually does end, because even any outcome, these sanctions have been so successful, but you know, it does not seem like, you know, easing these sanctions um eventually will end in in any sort of um resolution where this is instant in the

recovery is instantaneous, right, we're looking at years here. Yeah, yeah, we're definitely looking at the will. The worst parts of this is that it's almost impossible to imagine and ending to the military action at this point because there's really no common ground. There's no way that the sides can agree on anything until um, one of them is satisfied that it's one and you know, victory for both sides

seems pretty remote at this point. But even just imagining something has happened and the war has ended, the sanctions against Russia will not be lifted a game, even even with Russia loses. They can only be lifted if the puts in regime falls uh and the successors are more pro Western and willing to uh, you know, to to to take pretty unimaginable steps um uh in terms of rejoining the Western world. So these the sanctions are going

to be around for many years. The devastation in Ukraine requires hundreds of billions of dollars of investment just to rebuild what was destroyed. UM. It's not clear where that kind of money would come from. Um. From Russian reparations. Uh. It's not clear how much in terms of reparations Russia would actually be able to pay. UM. Whether it's possible to confiscate any of the frozen Russian international reserves to

fund the rebuilding of Ukraine. UM. It's not clear how interested Western governments will be in providing more money once the war is over, especially the enormous amounts that are required because the entire cities have been wiped off the face of the earth. All right, That, of course is Bloomberg News Automation editor and opinion column mist Leon need Burschitski, along with our Bloomberg Business Week editor Joel Webber, who joins us in studio right now. I'm so glad we

were able to catch up with him. Yeah. UM, and obviously there's gonna be a lot more written about the one year mark between from Russia's invasion of Ukraine. UM. We felt like, we, you know, absolutely needed to talk about this because of the devastating economic implications on on

both sides of the border. UM. And you know, another one that really caught my eye, UM was from our colleague Natalia DRSDIAC And when she she happened to be in New York and like kind of whispered this one to me, and I was like, wait, what which is Um, there's a shortage of Ammu Emma around the world And UM, that is just one of those fascinating stories that UM. I asked her to kind of like turn her reporting too.

And there's more to do there too. I gotta say, there's a great photo essay and there's one photo in particular of two young girls. I'm not going to tell you more about it. You've got to go to the website or check out the magazine. Jill Weber, thank you so much. This is the cover story of the special double issue of Bloomberg Business Week. It is out now. This is Bloomberg Radio. You're listening to the Bloomberg Business

Week podcast. Catch us live weekdays from two to five pm Easter on Bloomberg Radio, the Bloomberg Business app band You too. You can also listen live to our flagship New York station, Just Say Alexa, play Bloomberg, e Loove and Dirty Mac Journal. But you let me drive? No, no, no, he's home, honey, Please, I'll do good Bride Rebels. Let me. I don't want to drive, it's good question. Drive. This is good. Drive to the clothes music, well, dri jog

down on Bloomberg Radio. All right, everybody, we've got just about twelve minutes left, a little bit under more like eleven mixx left in today's session. A lot going on watching the trade here. Just a quick update for you, because stock is pretty much at their loads of the session. What does that mean? The S and P is down one point two percent the Dow Jones industrial average. We're looking at a decline of one percent in NASDAC taking the biggest hit on a percentage basis down about one

and a half percent. Quick check on the Treasury trade because we've seen yield certainly popping up on some of that hot economic news UH tenure note with the yeld of three eight six UH and it is just off its highs of the day's two year note most sensitive to FED policy, with the yield of four point sixty four off its highs of the days. So let's get to it. Our market guest, Ken van Lewin, CEO and founder of the wealth management firm Van Lewin and Company,

joining us via zoom from Princeton, New Jersey. Um, Ken, good to have you back with us. How are you well, Thank you, thanks for having me. Nice to be here. Well, a lot going on this week, Maddie and I try to keep on top of it, a lot of economic news and a lot of FED speak. Give us your macro take on this environment and what it means for

investment plays right now. Well, it's really interesting, Carol, because what we're seeing, of course is that, of course today's comment about p p I indicates we think that the economy is stronger than what was anticipated. You know, we've gotten some pretty um strong economic numbers the last two weeks, especially Tuesday's number and employment number, So we think the Fed um and that's what's kind of pushing the market

down today, right. Uh. Bullard came out and said that basically he thinks in March that we're going to have to raise again by another half a point rather than these quarter point hikes that we just went through. So again, Um, the FED has its mandate to control inflation, and it looks like they're going to be doing that. So that's what's pushing rates up, of course, in the markets down today. Ken, I want to ask you a totally wild and random

question here. I know that you just wrote a little piece about how meeting with prospective clients can be like a blind date. Can you give me some of your advice? What would you tell clients to ask you if they were on a blind date with you? Well, first of all, I want them to ask me about my experience, right like, what have you done? Um? How long have you been doing this? Of course I have some gray hair, so they can tell I've been doing this a while. Um,

So I'd ask him about that. I'd ask him about that. I'd ask me have they ever you know, I'd want to to explain their situation a little bit and say, have you ever worked with individuals like ourselves myself, and can you give me some solutions to solve that? And then I'd want to say, you know, how are you qualified? I mean, what kind of designations do you have? What makes you so special? Why are you? Um good at what you do? You know? I would also want to ask how do I get paid? I mean, which is

the ultimate question? Sure? So, yeah, but it's a great thing going on these dates. Actually it's alway, it's one of the best parts of my business that I really enjoyed. Well, it's important, especially because retail investors obviously we know by now they're here to stay. What is your single biggest piece of advice for retail investors today, given the macroeconomic headwinds we're facing, what would you tell a retail investor

to watch out for. Well, a couple of things, Um, to watch out for is that I worry about, you know, chasing a trend. Okay, Like I think one of the things is that, of course, earlier in the week we all about AI, everybody was piling into Microsoft and shunning Google. Um. While I think that Microsoft is a great company, did it deserve the price increases that it got earlier in the week. Um, I'm not sure of that, right? Why is that? Can I stick with you on that for

a second. Why why is that with Microsoft? Well, what's happening there a little bit. I think what you're just saying is that's because that's the next revolution, and I think investors still want the next best thing. They're still chasing that illusion. Well it's not an illusion, but they're still chasing, you know, a big winner because you know, we had big winners in last year, not so much we and but people still want that big growth stock

that's going to go up five ten times. So is Microsoft, I'm sorry, is Microsoft something you would commit some new money to because of the AI play and the chat GPT play. Um, we would actually we own it currently so we would continue to hold it, but we wouldn't chase it right now because I think there was a news report actually today that it was creating some kind of unseemly conversations when people would put requests into into being. So you know, that's kind of it still has to

be perfected. I think it's a long way from being there, all right, Intel, when we let's say, with the tech space for you, well, we know we've got a Matt reporting in the semi space after the closing bell. What is it about Intel specifically, which feels like gets been struggling for some time to kind of make some headway and kind of get itself on a new trajectory. See. One of the things that I think an overall theme of what we like is strong dividend payers. Intel with

a dividend yield over five percent. And you know, clearly they've struggled lately. UM, they've lost actually UM ground positioning to a m D, but there's still a tremendous brand UM and you know, long term in our belief is that brands win out UM. That's why we like that Intel. You know, they've got a lot of work to do UM. They're building these new factories in Ohio. But that's the dividend is really what goes. Let me follow on that

can because UM. Our story in the Bloomberg by ur Ian King and Ryan Blastelica talks about how Intel is among those that the street seems to be saying is prime for a dividend cut because I think at the current rate Morgan has put out there and some other analysts, at the current right, Intel's dividend projected to cost within six billion dollars this year, and that you know, the company has got to focus on heavy spending needed to re kind of regain its manufacturing leadership, and that as

a result, they'll have to cut shareholder payouts. So does that still make it interesting for you? It still makes it interesting because what we've seen in the past, right, because I think it's the overall health of the company for Intel. Um. Yes, the dividend right now at this rate could potentially be cut, but I'd still a buyer here, and it's at its low valuation. Remember it's only selling at ten times, which is a historically low valuation for Intel,

to be sure. And that's kind of your view on selective tech names. I want to go over to the consumer discretionary side because that's the fun side for my persuasive Yes, talk to me about let's go to Alter Beauty because they've got a big competitor with Sephora and obviously a lot of other big players in the beauty space. Why do you like Alter? Well, first of all, you know, we like Alta because it's a tremendously well managed um

store chain. Um, they've got many great things. Now. I think they're introducing where you can even get your hairs done, your nails done, things that that nature. They're in the different stores. UM Also, I think their long term goals of expanding in China is something that's very, very very appealing to us. And frankly, the CEO, we think is one of the best retailing CEOs UM in the country right now. Can I ask why why? Just look at the what the growth that she has delivered UM to

her shareholders. So I think that in a tough environment right when we saw basically she came through covid UM, she performed well last year and is continuing to show us this year what they can do. UM just got

about thirty seconds left here. In terms of the semi space, you do since a mats reporting just quickly thirty seconds on semi you like why that name on because that's the semis in terms of the the digital experience and the ability to UM, it's the semiconductor chip that basically can follow you around basically and with all that you

know basically in cameras and all those different things. Right now, that semiconductor space is one of the few areas that's growing round now and ON is one of the leaders and they're a US based company, so and they manufacture here in the US. UM so that's why we like that one. This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcast. Listen live each weekday starting at two pm Eastern on Bloomberg dot com, the I Heart Radio app, tune In,

and the Bloomberg Business Happen. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal level