Dangerous Time For U.S. As Trump Guts Defense: Admiral Stavridis

of movement and the senior leadership of the U. S military. Yesterday, Defense Secretary Esper was terminated by President Trump, and today political reporting that the Pentagon's acting policy chief resigned today after falling out of favor with the White House. What

does its mean for our leadership of our military. There's absolutely no one better to have this discussion with than retired Navy Admiral James Tarvitis, former military commander of NATO and a Bloomberg opinion columnists Adam Well, thanks so much for joining us here. Let's start right there. Lots of turnover, starting at the top with our Secretary Defense. What is your take? There's no reason to do this kind of decapitation of the Department of Defense while we're in an

inherently unsettled period of a transition. And let me tell you three things that really worried me. One is that the Secretary of Defense is very tactically involved. He or she is someone who makes the crucial individual decisions about what unit is going to deploy to Afghanistan, and we've

got troops in combat all over the world. Number Two, at the operational level, kind of the theater level, he or she is a person who makes decisions about should the carrier battlegroup go to the Arabian gulfer to the South China Sea. And number three, strategically, the job of the Secretary of Defense is to work with our allies to guard the nuclear code. So what's happened is we've fired the current Secretary of Defense, who by the way, is the fourth one in four years, and they brought

in a retired Army colonel. He's not qualified for the job remotely, and his name is Chris Miller, and he's going to have to try and learn the job and presumably do the job for the next seventy one days.

It's dangerous. Yes, this particular person who resigned wrote a letter of resignation saying, now, as ever, our long term success depends on adhering to the US Constitution, all public servants swear to support and defend political reporting that Anderson had clashed with White House personnel and that there is expected to be several departures in the wake of Esper's firing.

I mean, how how got it out could the Pentagon be by the time we know, you know exactly when President Biden is going to take office, If indeed it is a President Biden, I think we're going to see this kind of bleeding of talent across the entire administration. A lot of people have been hanging on waiting for the election. I think the majority of these folks would be will link to stay and have a reasonable sensible transition. And by the way, I've been personally involved in a

number of these transitions at very high levels in the Pentagon. Normally, um, despite the rank or of an election, the two sides get together because everyone knows, especially in the Pentagon, it's about our national security. It's bigger than Republicans and Democrats. The way that doesn't seem to be how this is trending at the moment, and it is very concerning, Admiral, I'm sure you still have a plenty of contacts with

the in the Pentagon. What is the thought coming out of the Pentagon of what perhaps they perceive President Trump's strategy or endgame here? Does he have one? Um, I don't think you can use the word Trump and strategy in the same sentence, and he would probably be proud of that. He's a transactional player. He's someone who is famously instinctive, operates from his gut, and at the moment, his gut is upset because he lost the allife. Let's be frank about what's happened here. Um, I'll give you

the good news if I can, Paul and Bonnie. It's that the uniformed military will uniformly, uh park this off to the side. They look at this as the civilian leadership is in turmoil. But I assure you, people like General Mark Millie, the Chairman, and the Joint Chiefs, all of the chiefs of Defense, and all the way down to the most junior sailors and airmen and greens and soldiers board deployed, they just parked this off to the side. They keep their eye on the mission in front of us.

They'll keep us safe. But boy, we do them a disservice, and we dishonor their volunteer spirit and their sense of mission when we let things just dissolved like this, it's it's a bad day for our national defense. Yeah. Morell is not going to be buoyed by this. Political is reporting that this potentially paves the way for Anthony Tata to take over the policy shop, so that the policy part of the Pentagon. Let's say, do you know this man? I do. He's a retired one star general. He had

a respectable career in yarmed forces. Um. He is someone who has been a Trump loyalist throughout the campaign of sixteen and has been a Fox News commentator. He's extremely conservative. Um. The administration has been trying to get him confirmed, but that's been very difficult because of the whole series of inflammatory statements he has made over the years. Um. He is not the kind of balanced, uh, centrist that is necessary in a job like that, especially during a transition period.

So unfortunately, I think this is not going to be a healthful choice. He's a partisan. We don't need partisanship right now. Admiral, from your experience, what do you believe our adversaries, whether it be Russia, China, Iran, North Korea. What is their view of what's happening right now? What strictly within the Pentagon. Yeah, I'll give you two words. High fives, UM in Moscow, Uh, Beijing, shun Yang, Kran, Caracas, Havana. This is exactly what our opponents hoped for. Is this

kind of turbulence. They feel as though we're taking our eye off the ball. It opens the door for all kinds of mischievous behavior by Iran and the Arabian Gulf or Kim jong Na and this would be an ideal time for him to launch another long range intercontinental ballistic missile UM. Overall, this is greeted very positively and frankly. Election interference both in and is real, UM, But it was less about doing anything for Donald Trump. It was

all about creating vision in our society. So let us hope, and I know this sounds like an extremely negative interview and it is, but let us hope that UM, as we get through this transition, that the two sides can come together and work through this because these are these are big issues and it is a dangerous moment for America in the world. But our adversaries know that too, Right, Admiral.

I mean, they know that President Trump is potentially on the way out of this point, and so if there were to be an attack launched, it might be a very dangerous time for them to do that because there might be you know, an an unequal retaliation. Um, You've got it right that this kind of uh, destabilizing moment can cut both ways. It makes the calculus harder for our opponents. But what I would argue, Vanni is the dangerous not so much of a massive strategic level attack.

It's that in this period when for apps, opponents would feel as though our military are intelligence services were distracted and somewhat decapitated. And by the way, we are to recognize their rumors that the CIA direct when the FBI director maybe fired, we are to recognize that, um, there is room for quiet, deleterious behavior. That's what concerns me. Admiral. Thank you. It's always illuminating to speak with you. Admiral James Stefrida's US Navy admiral former military commander of NATO.

Oral arguments going on right now at the Supreme Court Court, shaped by President Trump, of course, hearing a challenge to the Affordable Care Act and in the last few minutes we're here in Chief Justice John Roberts and Justice spread Common are both saying they're inclined to leave the rest of the law intact even if Republic and Challenger is succeeded in validating the so called individual mandate. Let's bring

in Bloomberg legal analyst and host of Bloomberg Law, June Grasso. June, I know been keeping an eye on what's going on right now at the Supreme Courtinate. Where are we beyond what I've just outlined. Well, the argument started with a standing question, and this is a legal question as to whether or not the states that are challenging this and the plaintiffs challenging this have what's called a stake in

the outcome, were they injured? And a lot of the justices were questioning whether the states here really had standing to even bring this lawsuit. So that was the first barrier, so to speak. There was very little talk about the merits of it, because a lot of the justices wanted to jump from that right to whether it was severable. And as you said, two of the justices, the Chief Justice and Justice Kavanaugh, came out really strongly saying that

in their opinion this was a severable thing. So that that means that if they can take away that one part of the law, they could leave the rest of the law standing and that would give them that would give him five votes for severability. So June, I think the summary here is are they going to throughout the entire Obamacare or just certain aspects of it? If you can summarize that for us, I'd be helpful, alright, So that's sever ability. The question is whether so they're challenging

this one part of the law. They're saying because Congress zeroed out the tax penalty and left the mandate in with no practical consequences, then they have to strike down the whole law. That's that's the opinion of the Trump administration and the Republican States here. The comeback to that is, no, you don't have to set sever out the whole law. You don't have to throw out the whole law. You could just take out that one provision of the law and leave the law standing. And you know, the Court

in its precedence has done this several times. And you heard, uh, Chief Justice John Roberts really going at one of the Texas Listitor General who is up, still up now, I think, and the Texas Lisitor General and he basically said to him, I took some notes. One second. Let me just get he said the mandate was critical. Now everything is I'm are He said, well, it's hard for me to argue that Congress intended the law to fall and didn't even try to repeal the Act. Why wouldn't Congress have repealed

the Act? So that's the whole thing. If they wanted the law to fall, why wouldn't they just have taken the Act away? Which they didn't. They just took away the individual mandate. Yeah, I mean, Kabo, there was conflicting, you know, messages even from the White House right about allowing existing conditions and then taking away the individual Monday,

and there was so many different messages. But that's the point here, right, if you take away the mandate, if you excise the mandate and the words of Brett Kavanaugh, then the whole law is in trouble anyway, because it sort of depends on everybody paying into it. Right. No, Actually, I mean they didn't really go into it that way. What they look at is right now they're saying, look, the individual mandate doesn't matter. Because the laws working without it,

people are buying insurance. As v really Donald Varili, who was a former Solicitor general, as he argued, he said that you know the mandate it worked without it was a carat and a stick thing initially for Congress to say, you have to pay this text to get this and we have to get this law rolling. But now they found out that they don't need the stick because it's working without it. So what they're saying is you don't

need this mandate to let the law work. And what Justice Kavanan Roberts are saying, yes, we can excise out this, we can take that little part out of the law and the law still stands. And you know, uh, Justice Brier really came on strong with the Texas Solicitor General and he put all these examples forwards. Supposed, you know, in the in the during the war, Congress said by bonds in law, suppose Congress has planned a tree in law or clean up the yar in law in law,

but there's no penalty for doing any of that. Well, a you're gonna say that all of those laws are unconstitutional because there's no penalty attached. And a lot of the justices came out with that also, the Chief Justice and Justice Clarence Thomas and Justice Kavanaugh said, suppose you had your required to have uh American flag flying, but there's no penalty if you don't. Does that mean that, you know, you have to take down the entire law.

So I think that most of the Justices are heading toward the idea that even if there is standing, which there's a question of whether or not they're standing, that still they wouldn't throw the entire law out June. Give us a sense of timing here. This is arguably one of the more important cases in front of the Supreme Court. When should we expect the ruling, Well, I would say around June. You'd expect a ruling in normal times, unless the Justices decide for some reason to speed this up.

But you know, I don't really see any need to speed this up at this point. This case has been challenged so many times. This is the third time that it came up to the Supreme Court, So I don't think there's any harm in holding off on the opinion in this case. Maybe they prefer to hold off on it, actually, so um, I think we'll see it in June. All the big decisions come down at the end of the term. If the term last, when it usually does, we'll see

these big decisions in June. It will be fascinating because you know, it is a court that is more shaped by President Trump, and he has boasted of getting rid of the individual mandate. But you do wonder if there won't be slippage at some point down the line, that if there isn't a penalty, then those who can't afford really to to keep up there there there, there, their insurance premiums and so on, if they won't sort of end up out of the system, and if that won't

push it up for everybody else. Anyway, We'll have to see how it goes. But oral arguments are always fascinating at the Supreme Court, and June Grosso always has a great handle on what's going on. She will be back, of course, hosting Bloomberg Law, so do tune in for that for more of a summary of what happened. It's an eighty minute argument, by the way, so you know

it's quick. And we also know that oral arguments of the Screme Court tend not to have a huge amount of impact over the actual decision at least that's been what's been the case in the past, but always interesting to listen to again. June Grosso, Bloomberg, Lean Land Unless and host of Bloomberg Law. All right, let's got straight to dr Amish Adulteria of Johns Hopkins University. A fantastic conversation always with the doctor Adulgia. Let's begin with the

Eli Lily antibody drug dr Adlgia. After yesterday's five FISER announcement, what do we make of the ramp up of positive announcements. I think this is all a testament to the fact that when we actually start to try and invest in technological solutions to this infectious disease problems, they will bear fruit. And I think this is a lesson for other infectious disease threats, and then we will get through this COVID

nineteen pandemic. It's going to still take some time with the fiser, with the even with the fiser and used with the literally drugs to get through this winter, which is going to be rough in the northern hemisphere. And uh, but but there is sort of a light at the end of the tunnel coming and we are getting getting to a point where we have much many more tools to fight this virus than we did in the beginning.

Dr do give us you talk about this and then President like Biden called it a you know, a long dark winter coming up, and we're seeing the numbers just kind of go through the roof set new records. Unfortunately, um, you know, just from the New York perspective last March in April, it seemed to take you know, a month or so to start to really bend that curve. Do you think there's a simple similar scenario here or is

something different about this second slash third wave. I think there's something different about this third surge because there's a lot of transmission that's going on with people's small gatherings. And I think this definitely has a lot to do with pandemic fatigue, which wasn't there during the first surge because there that was people were scared it was a

new virus. The second thurde was really bars and restaurants and and and that type of activity, which this one, this third surge, is a little bit different epidemiologically, so it's gonna be much harder to control. So I don't know that we'll bend the curve of curve in all of these places around the country that are that are seeing surges. It's just it's very difficult now to get people to to comply that haven't complied. So I really fear for the worst in some places where their hospitals

are already under stressed. You know, the President elect, Joe Biden, he's trying to do something, but he's limited in what he can actually do. Can he have an impact? I mean,

he obviously can't do anything at a federal level. I do think he can have an impact just by bringing the moral authority of the of the presidency, which he's going to assume in in a several weeks, as well as the team that he's assembled, which can constitute some of the best minds in the field that can start to issue guidance, can start to speak to the American public and maybe with that kind of clear messaging, with a single voice, without any of the mixed messaging and

the evasions and the misinformation, you may see Americans actually start to accept this information and be able to modify their activities in a way that decreases the spread of the virus. And it's also important for him to articulate how he turns his plan into actionable items that state and local health depart rents at hospitals are going to use, so people know what what to expect and know what's coming in January. So dr we had that good news

from Fiser yesterday about their vaccine. Of course, there are other groups out there Moderna as well. How do you think this is gonna all play out as we get into maybe the mid part of the year. Are there gonna be a number of vaccine choices for consumers? Will doctors prescribe different vaccines for different people? How do you

think that will play out? Ideally? I hope that's the case, that we have so many vaccines that we have a choice and and and what might happen is that you have more than one vaccine get emergency use approval, and you're pulling all those resources together to vaccinate the country, and you just have to keep track of who gets what vaccine, which can be logistically challenging. But I think we would be happy to be in a position where

we have to have that as our problem. The other thing is is that some of these vaccines may do better in different subgroups, so we may have targeted vaccines for different groups, just like we do for influence to where we give certain types of flu vaccines to the elderly population and other types to other populations. So that

would be something I would expect to see. So it's important that we continue the research and development and the clinical trials on all of the other candidates, because I don't think this is going to be a one vaccine solution. We're likely going to have many different vaccines, and the vaccine we get in a couple of years for coronavirus maybe something completely different than what we're seeing now in

the clinical trials. If you don't mind talk to us a little bit about Europe right now, because we're seeing France coming very very close to i CU capacity. That is the whole entirety of France, it's already above capacity. We all have a major problem as well. In Denmark

with Mink explained this to us. For those who haven't been following this story, well, you have to remember that many of these European countries, what they relied on was an economic shutdown, a lockdown type of approach without actually investing in the public health infrastructure needed to think about to be able to deal with the cases that would inevitably occur once you started to get people socially interacting.

I think that there is this kind of magical thinking that this virus can just go away with with having people social distance for a period of time, and that's not the case. The virus has established itself in the human population and has a wide spectrumribilenus of many mile cases that never get big diagnosed. So when you when you lift the shutdown, when you lift a lockdown, if you don't have the ability to test, trace and isolate, if you have an expanded hospital capacity, you're going to

go right back to where you were. We're nowhere near her immunity for this. And it's if this is a lesson that if you don't invest in the public health infrastructure, you will continue to make the same mistake over and over again and not have any kind of sustainable approach to controlling this virus. Doctor, you're part of one of the biggest and most well respected medical facilities in the world. Give us a sense of how the rank and file

people that doctors, the nurses, the orderlies. What's the morale of those people right now as they face what again might be a very long winter. Well, it varies, and I do think think that talking to my colleagues all around the country, that this is something that everybody is dreading because we know inevitably that the cases are going

to increase. We're already seeing it happened in many parts of the country that that hospitals now have more COVID patients than they ever had before outside of the New York area, and we're we're worried about it because now there's a lot of complacency in the public and people in the community don't seem to care what's happening in

their own hospital. So I do think that that is demoralizing to realize that people, uh, they may clap for us, and they may call us heroes, but if they're not actually taking the actions that are not going to put us in harm's way, that are not going to put our hospitals into crisis so other medical care can't be rendered. I mean, it really is all empty applause. Yeah, I mean,

it's it's it's it's a desperate situation. And also in places like nursing homes where you know, the staffing levels have gone down after all of these people worked so hard to shepherd their patients through this or to you know, to Worrett, many patients died and then you know, because these nursing homes couldn't take in new patients, they didn't have money, and staff were let go. It really is there's there's there's almost nothing good about this. No, there

isn't and it's interesting. Dr amish Adology, thank you so much for joining us. We appreciate it as always. Dr Amisdaloger, Senior scholar and Infectious disease physician for the Dons Hopkins Center for Health Security at the Bloomberg School of Public Health, and of course, the Johns Hopkins Bloomberg School Public Health is supported by Michael R. Bloomberg, founder Bloomberg LP and Bloomberg Philanthropies and this radio station. So, Vonnie, some some

tough tough months coming up for this pandemic here. Uh, that's tempered somewhat by the advances that our scientists and medical research folks are making in terms of therapeutics, UH and vaccine, a steepening in the yield curve, A little bit of optimism out there in the marketplace. Let's get some more color on that. We do that whenever we talk interest rates yield curves with Ira Jersey, chief US interest rate Strategies for Bloomberg Intelligence. Ira, thanks for joining us.

What's the treasury market trading over the last several days and maybe even you know more than that. What's that telling you? Yeah, so there's obviously the vaccine news from

yesterday was it was pretty optimistic. We're bouncing right off a pretty important technical level right now in tenure yields at around uh zero point nine six, So you know, we're talking about basis points because yields are so low, but but that's a pretty important level because that's where we got to back in June, and if we break above that, then then we could see a pretty significant move,

maybe well above one percent for the first time since March. So, um, yeah, you know, the the I think as we see light at the end of the tunnel, you'll see more of this bear steepening you mentioned where the market sells off and longer term interest rates tend to go up a little bit more than, or potentially a lot more than shorter term interest rates, so that it's not not surprising that you're seeing this on kind of a more risk on tone that you've had the last couple of days.

At what point, IRA, does it become less about a better economy and more about inflation. Yeah, I don't think it does. So, you know, we've seen a pretty significant rebound in inflation expectations from the lows U in the second quarter of this year, so back to basically the reins that we were in for most of twenty nineteen. So um, So I don't see inflation expectations going up

a whole heck of a lot more inflation itself. The reason being that even though we might rebound, um, you know, pretty sharply in terms of growth, what really drives inflation in the U S And this is I think very underappreciated and misunderstood. It's really wages. So you need significant wage gains, and particularly wage gains by lower income sectors

in order to get a sustainable uptick in inflation. Because most of what US consumers buy is actually services, and those services all most of the prices of those services is our wages. So you really need unemployment to be backed down toward you know, five percent four percent probably in order to get the lower income spectrum hired again. And uh, and also jobs being created and new business is being created to drive that inflation and inflation expectations higher.

So so I don't think that that's going to happen, which which is very important actually, Vonni, because the last thing I would mention on this score is that means that if we do continue to get higher interest rates, I think it's really going to be tips, uh, tips that really do poorly in this such situation. And not because inflation is not going up, because inflation is going up, but it's because with yields moving higher, uh, really yields

move much higher. So so tips actually can have a negative return even if inflation is you know, one and a half to two percent. Tell us what happened, if anything? Really, How did the treasury market react to the election news from last week? Yeah, it was volatile, Um, it didn't really move significantly out of the ranges that they were in until until yesterday when you got the news about

about Fiser. You know, the market was was hadn't been anticipating I think a blue wave, and that blue wave would have probably meant that we'd have a very large fiscal stimulus, a lot more bonds outstanding. So the curve like like you had mentioned before, Paul, the curved bear steepened and anticipation of that as it looked like we were not going to get the blue wave and we'd have a split government. Um that that were unwound a little bit. And but again well within the ranges that

we've been in the last three or four months. So, UM, you know. So I think at this point, and one of the things that I've been looking at is how much new supply are we likely to get? What is the next size of a fiscal stimulus? Because I think we will get a fiscal stimulus, But how and the way is that? Um is that I think that that now uh a President Biden, assuming that um, you know,

he he is the ultimately the winner. UM, I think that that he will compromise with some of the moderates in the UH in the Senate on the Republican side, and you will get a reasonably big fiscal stimulus one and a half to two trillion dollars. Our baseline is around two trillion, and that will still need to be funded at least a little bit through through treasury issuance. IRA. What will be the difference if it's one trillion verses say just one point two trillion or one point five trillion. Yeah,

so so that there so one trillion. It's it's interesting, So one trillion dollars when it comes to the treasury market means that they don't have to issue any new bonds because the Treasury Department right now has over a trillion dollars sitting in cash with the Federal Reserve, so they can just use that money in order to fund

a small fiscal stimulus. A larger fiscal stimulus over one and a half trillion, and they'll have to continue to issue uh issue a lot of net uh net treasury bonds over the next twelve months in order to fund anything larger than about one and a half trillion UM fiscal stimulus. You know, it's interesting. We're going to get something. Is you were just mentioning your baseline is two billions, we get nothing? And if that were to occur, what

do you think the treasury market would do? Yeah? So, so I think if we don't get any fiscal stimulus, I think we are priced in for some kind of fiscal stimulus, and if not, I think we do probably rally. So you wind up seeing ten uere yields back in the old range call at six eight basis points. Um, you know, so kind of pretty boring. Very briefly, the FED made a comment yesterday which was interesting because it was right after the election. Tell us how much the

FED is weighing in on on this economy right now? Yeah. So, well that that was on fiscal on financial stability. So they do a quarterly financial stability report, and um, you know, in that they basically said that the virus really mattered, and um, the you know, I think that that they're worried about whether or not markets are functioning. And markets are functioning, so I think the FED can probably step away from that a little bit. All right, Ira Jersey

always with the latest. Thank you so much. Our Jersey is chief US interest rate strategist for Bloomberg Intelligence on the on Market and the universe of fixton come out there. Thanks for listening to Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter at

pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg radio