Five Things The U.S. Can Do To Prepare For Iran: Adm. Stavridis

Diplomacy at Tufts University. Also a Bloomberg opinion columnist, Admiral Stefridas a pleasure always to speak with you. What is your reaction to the war of words on Twitter between the United States and Iran? I think it's worrisome, pim um. But let's take it from Pres Trump's perspective. First, he sees um kind of an angry but actually fairly stereotypical set of rhetoric coming out from Tehran. We've we've seen that kind of language from them repeatedly. And then he

launches this real screed, all in caps um. I can understand the emotion of the response, but I'll tell you, you know, to put it in a movie context, we probably need less fast and furious and a little more cool hand Luke, which is to say, slow down, analyze and understand. We want to avoid getting in a war, but we do want to change Iranian behavior. Um. Finding that balance, I think it's going to be the challenge going forward. Well, what do you recommend? What would be

the next thing to do? Given that the president seems to well, I mean, if you want to, you don't carry the cool hand Luke. Analogy further, Um, it's a failure to communicate between the Iron and the United States. What a nice point. Um. So I'd do five things, I think, and I'll knock them off very quickly. One, I would focus the intelligence community more dramatically, particularly in

the maritime zone. Secondly, I would increase our defensive posture in the Middle East, because if this thing is gonna go hot, we're gonna need to be ready. So that's for example, missile defenses. Thirdly, I'd go out to our allies, partners and friends in the region are Sunni partners and our Israeli partners. Fourth, I'd go to NATO. I'd go to the Europeans and try and work through our current

set of tensions there to get them on board. And fifth and finally, PIM, i'd get the inter agency more connected. We need c I, a Department of Justice, Department of Treasury working more closely together. UM. We need That's a long way of saying we need a strategy g not an angry Twitter burst. Do we have any evidence that these strategies work? I think we do. UM. If we look around the world. UM, our strategy worked very successfully

in Colombia in defeating an insurgency. It has worked very well in the Balkans, bringing peace to a very troubled region there. I think, uh. More contemporaneously, our strategy has worked fairly well in Asia, keeping our allies working together as we put pressure on North Korea. I commend the administration for what's happening in North Korea, and I think they took a strategic approach there. I hope they do the same in Iran. You mentioned the Sunni allies Saudi Arabia.

What do you believe they want to have happened? They have a very belligerent stance towards Iran. Broadly speaking, what they want is Iran to withdraw from a variety of Arab countries where they are pushing hard at Sunni populations. Iran, of course leads the Shia bloc in the region, so that is they would like to see Iran back out of Syria, back out of Lebanon, back out of Yemen, back out of trying to interfere with the kingdom itself. The Kingdom of Saudi Arabia reduce its ties with Guitar.

So they see Iran as an inspansionist imperial power. They want to contain it, and under Crown Prince Muhammad bin Salomon, they will be very strong in doing so. You mentioned the maritime zone, and I of course want to mention your latest book entitled Seapower, The History and Geopolitics of the World's Oceans. When you mentioned maritime power, don't you have to think of what China wants to do. You

absolutely do. And let's reflect on the fact, Pim that this region is parked almost dead center in the One Belt, one Road UH strategy that is employing in the movement of raw materials from Africa and the Middle East to them and the return flow of finished goods. So this in my view would be an area in which attempting

cooperation with China might prove fruitful. China does not have preconceived notions about its relationships with Iran, and it is in China's interests and in the United States interest to keep uh that maritime flow of goods going back and forth, especially out of the Arabian Gulf. Who or what entity inside of NATO do you believe will respond positively if we want to improve that relationship to help in these

issues regarding the Middle East. You know, at the moment relations between the United States and the rest of our NATO allies are quite low. Let's be honest, we had a bad summit. Um, there was finger pointing both ways. UM. I think the President is right to press on the

European allies to increase their defense spending. But I do think that they have a point that Um, if they are going to go forth and operate with the United States around the world, they want to do that in a spirit of cooperation, which didn't feel like it was

forthcoming at the summit in Brussels. So I think there's some fence mending to do on both sides in terms of who we're closest to, who can help us the most, it would be the United Kingdom within the Alliance UM, and we have to hope that we improve our relations, particularly with Germany, which is a significant actor both within the EU and within NATO, and that relationship is in bad shape right now. Well in that vain. The summit in Brussels was followed by the summit in Helsinki. What

is your reaction, what is your analysis? Um, the summit in Helsinki was a major misstep by the President of the United States, and I think that's pretty well validated across the political spectrum. The problem was UM less about the fundamental idea of talking to Russia. I believe we should. I think we should confront Russia where we must, but cooperate wherever we can. We don't want to stumble back

into a Cold war. But the problem was the atmospherics, the sense that our president was taking the side of Vladimir Putin over the intelligence community, and I think above all a kind of refusal to fully admit Russia's intrusion into our election, which is a fundamental UM violation of international law by Russia. So atmospherically didn't work, particularly coming on the heels of the twelve indictments of Russian intelligence operatives. The overall idea of working with Russia does make sense.

We've got to leave it there, Thank you very much. Admiral James Stavridis, Dina the Fletcher School of Law and Diplomacy and the author of Power, The History and Geopolitics of the World's Oceans. Currency manipulation, the dollar, China, the Federal Reserve all come into focus of Vincent Signerella, are global macro strategist for Bloomberg News, joins us here in studio to figure this all out. All right, Vincent, what is going on with US officials talking down the dollar,

talking up the dollar? Who are we to believe? I think you're gonna stick with Minuchin on this one. I think Trump's just firing a couple off the off the bow basically, just to get everyone a little nervous. He's very upset with Germany. So when he says the Europeans, he's really speaking about Germany. Uh, in terms of trade with Germany, we have a big deficit. So he when he's that all automobiles a big part of it as automobiles. But at the same time, I mean, it's uh, it's

very specific machinery. Germany specializes in very high tech machinery, especially in the surgical space, so we we do have this broad deficit with Germany. He throws the Europeans all under the bus with it with the same stroke um, but at the same time, the Euros eighteen it's not doing anything. So I would look past any criticism of Europe and realize that this is specifically aimed at China. But is this is wait a second, but before we get to China, is this bus going to get more expensive?

Which what do you mean the bus that if you want to import an automobile from Germany, is that going to get more expensive? My guess is at the end of the day, we'll reach an accord, especially on autos with the Europeans. It's a big business and he's getting a lot of pressure from the United States manufacturers as well, so I think they're gonna come together on that one. It's the same kind of squawking we hear about NAFTA. Eventually NAFTA will come back around. To believe that will happen.

I believe it will happen. It's just going to take a little bit of time and a little bit and we're gonna see these gyrations in the market. Okay, because we've got John Claude Junker. I believe he's tending the White House. This is going to be really he's kind of lost some credibility on the street, to be honest, So it would be very interesting to see what he says.

We'll explain that. Well, he's gone off over the years and in really odd, almost Trump like statements, so that the markets have like sort of pulled back and and and not reacted so much to what he's had to say. We're not you know, if you if you look at it in the sense it's like who is he really representing? He's going to the White House on Wednesday, all right. The move to China, China on what I would like to really really stress is this is not a currency war.

This is not China trying to devalue the currency and take it back a few steps. When when Bernanke did q E and we were accused and he was accused of starting a currency war, what he was doing was keeping interest rates low, flattening the curve because of worries about the economy. China has some substantial worries about the economy, They've seen increased corporate defalse. They had a massive liquidity issue that they've just again once again did a big

medium term lending facility to add to this liquidity. Whenever a central bank does a big add you see a currency weaken, so that the China's you and by default, is weakening. But it's not their aim to weaken the currency to be a pain to Trump, although he will point to that they're really pointing towards trying to to STI is a domestic issue for them, purely a domestic issue, purely liquidity issue, and it's a worry. I mean, if if you're an emerging market investor, this is a big,

big worry. China's growth has been slowing and for them to to put this much money into the system is a is a real wake up call for emerging markets. It should be UM. We've seen some appreciation and emerging market currencies, but to my look, we have a lot more to go if this becomes a major economic issue for China. What is the Vincent Signarella chart tell you about the future of EM currencies such as Brazil, Russia, India.

I think EM is gonna stay under the gun. I think we're going to see Trump continue this pressure through the midterm elections in November. This plays well to his political base. Even if there's short term pain for US manufacturers, which is in this rust belt, in the place he's trying to aim at. From a political standpoint, there's a there's a great deal of long term support and a

great deal of play that he gets out of that. Um, it doesn't have a lot else to hang his hat on, you know, other than I mean he's got tax cuts as well, So we may see another round of tax cuts hit the US before November. But in and in the end, that should keep the dollar a little bit alive. It should see pressure in the UM. Do you look at the price of copper? I do. What does the price of copper which has been yeah, falling, un volatile and following yes, what does that tell you about let's

say the economy of a place like Australia. Well, I think what it says again, um, what's going on with the China situation and how that impacts Australia and then eventually obviously copper. If these are the the the base metals that feed into production, and when you have the the main buyer of those products stumbling a bit, then the input to that main product stumbles, and that's what we've been seeing in copper, and we're also seeing any

Australian dollar. What's the biggest mistake that you see currency traders make in an environment like this? Reacting to the immediate news, we saw something hit the markets this morning about how Mexico's economy minister says we're going to aim to get an after done by the end of August. Paso strengthened immediately off of that, a couple of big

figures told news he actually said that yesterday. Um. And then the piece of immediately weakens when everybody wakes up, or actually I squawked it and said, by the way, this is yesterday's news. Uh, and then it immediately turned around. The odds of getting NAFTA done by August are really really tight. And then the bigger picture is, even if we get an agreement of sorts, needs to be ratified by Congress, which at this point unlikely to get done

in two thousand and eighteen. So even if we had a agreement at arms length, we still need to go through the congressional process. Not happening this year, So reacting to news like that is always going to come back to buy two ten seconds. Tell people how they can follow you on Squawk. If you have a Bloomberg terminal and you're just type esquq, you you'll see a launch bad come up for a Squawk go and what we'll do is we will speak live breaking news. Uh down

your terminal. Thanks very much, Thank you, Vincent Signarella, Global macro strategist for Bloomberg News. Well, one of Colorado's largest recreational pot companies is planning to bring Willie Nelson's marijuana brand to Canada and then go public in Toronto. Here to tell us about raising capital in the cannabis industry is Kevin Murphy. He's the chief executive of Acredge Holdings.

Kevin Murphy, thanks very much for being with us. Tell us about Acreage Holdings and your capital raise and what that tells you about the appetite that investors have for the industry. Bamn and Lisa, thanks so much for having me on the show. And uh. Acreage Holdings today is the largest US cannabis provider UM now with thirteen states and to be fifteen states. UM I'll our footprint covers a hundred and fifty million people in this country, and our goal is to raise enough capital to be an

aggregator into space. And this would be the last round of financing that we will do before accessing the public markets here in the fall. All right, before we get to the public markets, Acreage owns cultivation, processing, and dispensary operations. Correct, that is correct. We are vertically integrated in every state, um or striving to be vertically integrated in in every state. But you are absolutely correct. We control the entire um the life cycle of the plant from seed to dispensary.

And on your advisory board you have former Massachusetts Governor William Weld as well as former House Speaker John Bayner. That is correct. We couldn't be more proud to have those two gentlemen standing shoulder to shoulder with us at Acreage. Why if you could raise a quarter billion dollars, two hundred and fifty million, why did you then just raise

a hundred nine million. Well, we had initially sit out to raise fifty million dollars, but we had so much enthusiasm for the raise that we ended up raising as much as a hundred and nineteen million dollars, which is the largest rays ever done in the United States for cannabis. We also anticipate raising additional capital in the fall, and so we wanted to leave a little bit room in order to do another financing this year. Now you intend

to launch on the Canadian Securities Exchange. Why in Canada, Well, that is correct, and we go where every we are welcome, and today the Canadians are with open arms welcoming us um to the Canadian Exchange. In Canada, it is federally legal. Unfortunately, in the United States, cannabis is still a Schedule one drug,

which is defined by having no medicinal value. Now that would preclude us from being on the New York Stock Exchange or the NASDAC, but we do hope soon to be able to list on one or the other here in the US. What kind of financial gain are let's say, taxpayers missing out on by having the federal government still regard cannabis as a Schedule one drug. This business, in this industry is estimated to be by two thousand and twenty five one hundred billion dollars in size. Compared to

other consumables. It is a very very large marketplace. We at acreage, advocate for a banking, we advocate to pay taxes, and at the end of the day, I believe that it could have a major impact on um this country's opay crisis. We'd love to be taxed and have a lot of those tax dollars go to reducing opiate use in this country. That tax revenue is currently unavailable to the federal government. What is holding this up the fact that it's a Schedule one drug today again being defined

as having no additional value. And at the end, we believe that this drug needs to be de scheduled. The majority of this country believes that cannabis should be legal, and we're hopeful that Congress will essentially vote with their constituents to make that a reality, and we believe it's going to happen sooner than later. Just give you a thirty seconds. Does it strike you as ironic that cigarettes and alcohol are legally sold in the United States and

tax but cannabis isn't. Every industry goes through a change, and we believe that the change is now for cannabis. We've seen prohibition in this country with alcohol, and from our vantage point, we are on the cusp of sea change. And with Speaker Banker being a naysayer historically and now having the courage to change his mind, we believe others will as well. And that's why we believe we're well positioned to be a dominant force in the cannabis space

when it is federally illegal to us. It's not an if, it's a matter of when. Kevin Murphy, Chief Executive Acreage Holdings. They've raised nearly a hundred and twenty million dollars in their latest financing round, with plans to go public at the of the year in Canada. This is Bloomberg Markets. I'm pim Fox. My next guest knows all about the modern economy in a world where everything can be copied. In other words, control C control V. We all know about it, but how do you deal with it? He

is Howard You. He is the legal Professor of Management and Innovation at the I M d School of Business in Switzerland, and his new book is called Leap How to Thrive in a World where Everything can be Copied? How are you? Thank you very much for being with us. Maybe you could just start off by telling us a little bit about why you decided to write this book.

In many ways. The book concept really came from my conversation of executive and manager home I had run conferences and workshop and one of the key topic, or one of the biggest complaint they always have. They would say, my product is getting commoditized, meaning they find it very,

very hard to differentiate in marketplace. They subject to all kinds of pricing pressure, and whenever they launch or introduce a new type of innovation, those product features get copy overnight, and so that becomes the crux or the thrust for me to dive into this inquiry. Now, as you decided that this was a focus of attention, did you notice that this is an issue that had been going on

for a very long time. I mean, we may think that this is just something to do with technology, but you know, you go back even to let's say the founding of the United States and and the industrialization of the United States. UH, factories in the U S were copying European goods even then. Absolutely, I thought that's pretty

much a contemper phenomena. But as I died dig into the historical past, it turns out things getting copy was a repeated complaint across era, across industry, across continent as well. In fact, once a point in time in Switzerland there is no pattern law for chemistry or chemical product. So in the land of counterfeat the Swiss were basically copying the German to produce drugs, and that had historically two years ago the biggest complained by the German drug manufacturer. Well,

let's talk about leap and what did you discover? How can companies deal with copying in an age where it is as simple as a control C movement on the keyboard. Yeah, in many ways, executive always dream about building up a competitive possessioning that they could stay away from global competition. That turned out to be pretty much a mirage. In many ways, competition is almost like mountaineering. So the pioneering company would try to reach the mountain peak and the

lake comer would also try to reach the same altitude. Now, when the knowledge underpinning the industry stays tgnate, the lake comers sooner or later would reach the same height. No value proposition can stay unique forever. No blue ocean can stay blue forever. Eventually blue ocean turn red. What I discover is pioneering company can play a different game. They can leap from one knowledge discipline to the next and then the next. And when the underlying knowledge of an

industry continued continue to leap forward. Then climbing the mountain is as if there's constant mudslide pushing everyone down. In that scenario, it turns out it's the most experience, the most pioneering company stand a better chance to stay on top of competition. Can you give us some examples of companies that are able to do this? Sure? Um. One of the prime examples I use in the book is

the pharmaceutical industry I briefly mentioned earlier. So it turns out in the beginning of the pharmaceutical industry two years ago, everyone come up with new drugs based on organic chemistry. The first blockbuster in the world is in fact called ant hip hiring is a fever reducing drugs, and it is this chemist making chemical die for the textile industry discovered this municipal medicinal benefit to to solve human issues.

Now you might remember after people talk about Alexander Flaming who discover peninsillin the first an hipolytics roughly around the Second World War. So after the Second World War, all the pharmaceutical industry moved from the study of chemistry to microbiology. They want to find out the more potent fungus, to find out the next pay dirt, to find out the more potent ant hibiotics. So the knowledge discipline really moved from organic cam street to the study of microbiology. Today

it's all about genomics and DNA and genetics. So looking back to the long history of pharmaceutical industry, the salient features of this particular sector is the leaping of knowledge from one to the next, from organic chemistry to microbiology

to genomics. But that doesn't that beg the question that you need to have confidence in order to do that, because if you don't have the confidence, you're gonna try to build a bigger moat around your mountains so that no one even gets the climb on top of it. How do you help build that confidence? Yeah, this is a tricky question because on the verge of leaping from the old knowledge to the next, oftentimes those require investment. Is very very hard to pinpoint through the traditional financial

and analysis. I give you a concrete example on the virtue of launching the targeted cancer drugs called Clevick by novartists. At the time, this CEO was facing a paradox in many ways. This new targeted drugs solving a rare form of leukemia cancer called CML. The target market is relatively small, so all the executives around him basically said we should allocate the corporate resources to more larger diseased class like

prostic cancer, breast cancer and so on. But the CEO at the time, Daniel Vanzella, when he reviewed back the early clinical trial, he thought, it's not so much about increase of revenue, but it really pioneering of a new way for drug discovery using genomics. No how and he basically told the team money doesn't matter. We have to

move ahead. So every time when I look back to historical analysis that companies successfully leap from one knowledge to the next, there is certain top down intervention has to happen, going beyond the traditional financial analysis that we all know very well. That was Howard you. He is Lego Professor of Management and Innovation at the I M d School of Business in Switzerland. His new book is entitled Leap How to Thrive in a world where everything can be copied.

And to just give some more uh well pertinent information related to this, you know, the food and us Food and Drug Administration. Just last week it announced what it called something called the bio Similars Action Plan, and the idea is to improve the efficiency of the biosimilar and interchangeable product development and approval process, basically making it the easier and uh faster for companies to create biosimilar drugs.

And already we know that about a dozen approvals for bio similars have made it through the f d A, and they have started this effort to accelerate the development and adoption of these particular drugs. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. It's one

before the podcast. You can always catch us worldwide on Bloomberg Radio.