Flynn Not First Time U.S. Had Secret KGB Contact, Cohen Says

whether at the grocery store or the trading floor. Find the Bloomberg P and L Podcast on iTunes, SoundCloud and at Bloomberg dot com. The White House Press Secretary Sewan Spicer saying the President had been concerned for a few weeks that General Michael Flynn had misled Vice President, hence here to tell us more. Ariel Cohen, Senior Fellow at the Atlantic Council and also director of the Center for Energy,

Natural Resources and Geo Politics. Uh DR Cohen, thank you very much for being with us and the Institute for Analysis of Global Security, also based in Washington, d C. Maybe you could just give us your reaction to the ongoing and I guess investigation into the former head of the National Security Council. Well, unfortunately, this is an unprecedented situation where from the get go, from the beginning, the National Security Advisor is investigated by the FBI counter intelligence

their allegations flying. You remember General Flynn appeared at the unfortunate dinner with Mr Putin and also Jill Stein from the Green Party was sitting at their table. Uh. This was for the Russian UM fake news channel Russia Today in UM. And then the question is what does it involve. Is it just a bad judgment or something more significant? And of course I'm not private to any information beyond

what we have in open sources. But at the same time I must say, UM, there were clandestine, uh hush hush contacts between electoral campaigns and foreign powers, including identified KGB agents. For example, Henry Kissinger was negotiating or at least in contact with UM the Soviet representative who was identified KGB before Richard Nixon took power in But Kissinger and ultimate pro was very careful to advise his boss, President Nixon, to keep meticulous notes and to advise other

people about his contact. So he did it with the blessing of the principle UM. Kissinger also had a lot of behind closed doors and under the table contacts with the Chinese UH, and for that during the Cuban missile crisis, Bobby Kennedy, President's brother, an attorney general, was in contact with the Russian ambassador um anatoly Rin to try to evade the nuclear holocaust UH caused by the Soviet placing

nuclear weapons in Cuba. So there were precedents, and we will see in the next weeks how General Flynn extracts himself out of this. Uh. Well, the bigger issue here there there are a couple of bigger issues. First of all, Uh, there's an issue of security. And if indeed, uh, Michael

Flynn wied to Vice President Pence, that's part of the issue. No, and not only that, but then, but the idea that there is some kind of security breach that not all members of the core group in President Trump's administration are on the same page about this is a problem. No, up aolutely. Uh. First of all, Um, misleading or or misinforming Vice President Pence was probably a very bad idea. And as always in Washington, it's not the transgression that

gets you, it's lying a bit about the transgression. So that's a known thing for an ultimate insider, as Mike Flynn, this was to me a surprise. UH. Secondly, now you are having Congress the Senate eager to investigate a broader range of issues in terms of connections to Russia, and

we will see how that will go. So from the beginning, instead of focusing on massive challenges I've just written today about, uh, the North Korean and Iranian nuclear I'm sorry, ballistic missile tests that probably were timed to derail the Japanese Prime Minister's visit to lag almar and UH to test the administration instead of focusing on that and Mr Natanio coming

to town tomorrow. UH, the President and the Vice President and the White House have to deal with investigations and allegations and everything else that distracts them from the business of running the country and running the free world. UH. Dr con What if you could just step back a second. I want to ask you about Russia because I've been looking at the performance of the Russian rouble and it

has continued to gain strength against the US dollar. UH, increase in any oil revenue because of cutbacks and OPEC production and so on. What if you could just give us a perspective of what kind of situation does Vladimir Putin face as president, Because you know, many times you always think the opposition or the person you don't know has everything together and is quite organized. Sometimes everyone's, you know,

in the same boat, they just don't know it. The Russians are in the same boat with the Iranians and the Saudis, that's for sure. That's why they're pushing so hard to cut production. This is the first time we see Russia cutting significantly uh it's output. But the main burden is of course on the market maker of the Saudias, and also Iran is not increasing its production as fast as they want. But this is a challenge for the

Trump administration. If we really want to uh force Iran to comply with the Obama era nuclear agreement, we may want to keep the oil prices down. We may want to increase domestic production, including shale, and also to allow the United States to produce more by opening UM the offshore acreage for exploration and exploitation of oil and gas UM in the Pacific Shelf, Atlantic shell Off and the

Gulf of Mexico. President Obama, just before he finished his term, closed back a lot of acreage that was opened before, and also on land. We want to increase UM opportunities for e NP, for exploration and production. As far as Russia is concerned, of course, Uh, Putin is playing his cards quite well, and his cards are bad. The economy. I just came back two weeks ago from Russia. Uh, and then I was there before in December. The economy

is not doing great. They ran out of growth, so their only hope is oil gas, uh, some other raw materials. And then nuclear reactors and space launchers and the space launch industry just collapse. It was an incredible thing to watch when I was there, the investigations by the secret police of their space sector that just people because of corruption because uh they were stealing precious metal. Um, they just destroyed a whole industry. Right, Thank you so much.

Aril Cohen, Senior fellow at the Atlantic Council, breaking down what the potential implications are for the regarding the resignation of Michael Flynn. I'm Lisa Bramoy. It's here with pim Fox. This is Plomper p and l is brought to you by Proper Cloth, the leader in men's custom shirts at Proper Cloth Dot com ordering custom shirts has never been easier. Create your custom shirt size by answering ten easy questions, select from over five fabrics to suit your personal taste.

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com Custom shirts made Smarter. After high drama at the High Court in the United States, we're taking We've been taking a little bit of a breather from the immigration executive Order that President Trump signed, but it has not gone away, and we want to get a sense of

what the next steps are for this presidential administration. I want to bring Alex Narrasta, immigration policy analyst at the Center for Global Liberty and Prosperity at the Cato Institute in Washington, d C. Alex, I'm so glad that you could join us. I just want to start first with what is the next step for President Trump. Do we

have a sense of that yet? Well, the next step that everyone's talking about is that he's just going to put out a newer draft of the executive order that removes all of a lot of the thorny issues that the Court has raised, as well as all the draft are and oversights that were in there in the first issue. UM. Reissue that order, um, and then it will be much more legally defensible and wipe out a lot of the

courts disagreements. So we've heard a lot of talk about what harm could come from either the passage or the acceptance of this executive order or or not or the rejection of it. Where do you in in this well the band um? I'm much more uh sort of interested in what the supposed benefits are. I mean, we can talk about the cost of the band as well. But it's supposed to try to decrease or eliminate foreign born

terrorism on US soil. But the seven countries that are part of this band that will put it on this temporary band, um, there have been zero Americans killed in terrorist atacks committed by folks from these seven countries on US soil and none uh, no convictions or arrest at all of Libyans or Syrians for planning attacks on you as well. So in order to understand like what downsides could happen from this um, we need to realize that

the upsides are very small that I existent at all. Now, on the downside, you have about fifty thousand Green cards a year going to folks from these countries. That's about five percent or so of the total each year, and a few hundred thousands visitors, not very many. So the economic impact of this right off the bat won't be that great for Americans. But because there's really no upside in terms of how it could decrease terrorism, uh, it's

it's still a net cost. Before we uh so leave the immigration topic, I want to get your thoughts about immigration, but legal immigration as well as the illegal immigration from Mexico obviously not part of this specific travel band, but I'm wondering if I could get your deeper view as to the forward looking to the direction of immigration policy. Well, I think we're immigration policy should be heading is toward

a liberalization i than a restriction. So the reason why people come illegally to the United States is that there is no legal pathway from them to come legally in the first place. So if you take a look at green cards in the US, which is the way that you get lawful permanent residency and can eventually apply for citizenship. There is no category in there for a low skilled

worker unless they're closely related to an American UM. So just to say that again, because most people don't realize that there is no green card category for a low skilled worker UM. And that is the main reason why these low skilled workers from Mexico, Central America and some other countries are able to come come here illegally, is that there is no way from the come legally, and I think that we should allow them to come legally

and work here. Now, the other areas of immigration, like high skilled workers entrepreneurs, those also need to be expanded so that we can allow more people to come here and grow our economy and start new businesses. UM. But on the low end side, the reason why we have illegalization is that just can't come legally. Alex what do you say to people who say that these immigrants are taking us jobs? Well, there's really no evidence of that.

We don't live in a fixed pie economy. There's not a fixed number of jobs, which means that if there are more people in this country who are spending money, who are starting businesses, who are working, that actually increases the number of jobs that are available. Meanwhile, if the number of people in this country were to decrease, it wouldn't free up jobs for Americans, for unemployed people. Um. Most of those people they disappeared, they would take their

jobs with them. UM. And that's because more people are a benefit to the economy, more people as workers, as consumers, as entrepreneurs, as investors, as people who make their lives and their homes here. It stimulates a lot more economic activity uh than the jobs that they merely take themselves.

So that when you look across American states, you see the states that are doing the worst are the places where there are the fewest demogrants and nobody wants to move to a lot of the places that have a lot of job opportunities for natives and for immigrants are the ones where everybody's moving to. Thank you very much

for joining us, Alexa nor Rasta. He is immigration policy analysts Center for Global Liberty and Prosperity at the Cato Institute in Washington, d C. It seems we cannot go a day without u S docks hitting a new high, and our next guest thinks that they will keep rising. I want to bring in Phil Orlando, Chief Equity strategist for Federated Global Invested Investment Management and Phil I want to start with inflation. We got a very good reading

today with wholesale prices coming in. They rose at the fastest pace since two thousand twelve. I believe when is inflation going to become a problem for U S stock valuations? Well, that's an interesting question because the metric you just referenced was nominal inflation. What we like to look at is core year of a year inflation, which strips out the volatility of food, energy, and and more recently with the pp I trade services, that number was actually a poor number.

It was up one point six percent year of a year. It was down to tick from December. You look at the most recent wage data we got when the January Labor report came out, year of a year wage growth, which had been two point nine December is now down to two point five percent. Basically, you're saying that inflation doesn't seem to be getting ahead of itself at this point. It seems to be in a sort of sweet spot

for stocks. Well, yeah, inflation. You know, there are folks that are thinking, you know, inflation is going to go vertical eventually and it might, but it's not right now. And and if the FED is truly data dependent, as they've been telling us for the last you know, so many years, uh, it's not in the numbers. Inflation is

not a concern right now. Now. You raised another interesting point, which is that with inflation ticking up, bond yield should be ticking up, and and and stock multiples should be going the other way, you know, based upon the mathematics of the FED model, and and and I agree with that conceptually, but if you go back and look at you know, the last twenty cycles were bond yields sort of moved up gradually, you can coexist with expanding multiples.

The reality is that that price earnings ratios continue to expand as treasury yields get to five It's not until treasury yields surpass five percent that we start to see that contraction. So we're still okay. Just to sort of what we were talking about offline, is that ten year treasury yields are now near the lowest since two ten

relative to the earnings yield on the smp FRED. So it raises the question of at what point where people cycle back into bonds seeing that there is an alternative two stocks and holding stocks just by virtue of their dividend payments. Well, I don't know if I can connect those thoughts, but I just want to give you some stats. Right, take a look at the SMP five hundred is up more than four and a quarter percent so far this year.

All right, Um, you've got a big fund to move, I know, the Federated Global Allocation Fund, Right, that's like almost a half a have a trillion No, no, no no, a million billion. I beg your pardon. So we're about four okay, not from your lips to god. Yeah, And and you know it's it's one of these global asset allocation You've got everything from nest lee to bonds to okay, So why is it that on the one hand, you could have a Greek course that tells us that we're

all going, you know, in a handbasket. On the other hand, as Lisa just started off the segment, we're hit new highs uh with stocks. So how do you reconcile all this handwringing and um, the world is ending conversation with stock uh stock crisis moving higher. Well, it's gonna make more You're gonna make more money if you get a corporate tax cut. Right. Look, the old chestnut is that stocks, you know, climb a wall of worry. And that's certainly

to some degree what we're doing now. If you're asking the question, we've had a phenomenal run here since the election. Uh, you know, the smps up more than ten percent, the Russell's up more than Should we have a correction here? In their terms, I can't disagree with that. And and and the reality is that stocks do look a little over brought to me here in near tournament. I wouldn't be at all surprised if we had a modest correction, which I would define is something in the you know,

two to five percent neighborhood. But if I'm looking out over the next three years, Let's say, if I'm looking out three years and I'm putting in place trump Anomics, you know, tax cuts, deregulation, more infrastructure spending, YadA, YadA, YadA YadA. We're we're looking at SMP. What's the worst bet over the next twelve months? In your opinion, it

ought to be treasury yields. Treasury yields out to work higher that that if if if economic growth and inflation tick up as they should over the next two years. Treasury yields ought to go up as well. But from let's say a retiree standpoint, if somebody is about to retire and they have a sort of safe allocation two bonds, is it going to be a blood bath for them or is it going to be a little bit of pain, but ultimately it should be an orderly kind of move

into another rate cycle. Well, that's a different question, which is to say that not every retiree has all of their money in benchmark tenure treasuries. You know, our fixed income guys would say that we would underweigh treasuries, but there are other aspects of the fixed income market that

are perfectly fine spread products. And then our equity guys would say, well, you ought to have, you know, even though they're not doing so great at the moment, you ought to have some of the big dividend payers on the equity side, your your reats and your utilities and consumer staples and whatever, because those are companies that are paying you three or four five percent dividend yields when you've got a treasury yield, you know, paying half that

at two and a half percent. So there are ways for a retiree to get their income without having you know, all of their money. And treasury yields benchmark tenure treasury bonds with the yields are going up in the prices are going down. Phil Orlando, thanks very much for spending time with us. You've got to spend more time. Always my pleasure. Just invite me, invite me, I'll come your time. I should say he's got a red heart tie on

Happy check out, ordinating cuff links. He thinks ahead, he's got as they say, he's a strategic thinker, and so are you. Thank you, Phil Orlando, Chief equity strategist for Federated Global Investment Management. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at iTunes, SoundCloud or whatever podcast as platform you prefer. I'm pim Fox. I'm out there on Twitter at pim Fox. I'm out there on Twitter at Lisa Abramo. It's one

before the podcast. You can always catch us worldwide on Bloomberg Radio. P and L is brought to you by proper Cloth, a leader in men's custom shirts with proprietary smart sized technology and top rated customer service. Ordering a custom shirt has never been easier. Visit proper cloth dot com to order your first custom shirt today