Former CIA Ops Chief: In the Long Game, Maduro Goes

spot that we ought to be paying attention to, Paul Sweeney. Luckily, we have Jack Divine here to go through them all with us. He is the founding partner and president of the ark And Group, also former chief of the CIA's worldwide operations, joining us here in our Bloomberg Adder Active Broker's studios. Jack, we love having you. Thank you for

being here. I want to start with Venezuela because a lot of people are pinpointing the fact that it's become sort of a proxy location for a battle for supremacy between Russia and China on one hand and the US on the other. And I'm wondering, from your perspective, how valid is it to view the conflict in Venezuela currently through that lens at Lisa. As you know, I'm a Cold warrior, unreformed if you will, and if you if you stay in a game long enough, it repeats itself.

So when I look at Venezuela to day with my background having spent so many years in the struggle with the Russians and the Cubans, I mean, this is a very familiar pattern. And they see a vulnerability on our flank and in our sphere of influence, and they push it for maxim advantage. Now, I think most Americans haven't been following over the past several years just how important

Russia's financial support has been to Venezuela. And on again the professional side, the part that I'm quite familiar with, having supported the Cuban intelligence group and being able to monitor the opposition and how to counteract. It's very reminiscent

of the Cold War. Having said that, the second part of that play is we have always resisted uh those adventures into this hemisphere, and I the strong action of sanctioning Venezuela is all part of this bigger chess chess game, and I do think we have to keep rushing Cuba from gaining another foothold in the region. So, Jack, given your long experience in that region of the world, what

is your sense of how this plays out? It seems like when the um there's a lot of support for we have two presidents now, I mean, I guess my sentence is very quickly. How do you think this will play out? I think it's a very complicated situation. We tend to underestimate how far a country has to fall

before there's an eruption of of a regime change. So when you look at the dynamic, I mean the inflation and UH in Venezuela, the shortages it is the lack of UH sufficient protection for the city, a sence, the autocratic nature of of the Madero government. They're at a very low point UH in the process. That doesn't mean

that it's going to be resolved quickly. Actually was reading an article today in which one of the opposition leaders had one of our vulnerabilities here, if we think that this is a short game, we're probably gonna be you know, we're gonna dissipate our energy. So this is a sustained, sustained effort. I don't think it's over anytime soon. And as you know, the key, or at least many analysts would say the key is where does the military come down?

But the military is not a united, monolithic group. You have military leadership and then you have the private and sergeant that's living with inflation shortages and his family. So the military doesn't have a lock on it. And the question is at what point in this process does the system break? And it is uh. I always say it's a game of chicken that the manages it, but there is this is going to be a move and counter move. I think for some period of time over the long

play Madero goes not sustainable. I want to I want to shift gears a little bit. The way that we get a sense of how to engage most effectively is through our intelligence operations, both in Venezuela and elsewhere in

the world. And I want to just check in with you about something that we've talked about over the over the past few years, which is morale at the CIA right now, Given the fact that we still are getting leeks about things out of the CIA and the fact that there does seem to be some dissonance disagreements within the administration right now, can you give us a read

how are things just internally. My experience in the agency is that morale is often directly correlated to how important the agency is in the scheme of things in our policy and how much is an administration using the CIA that is really the ingredient. As a population has probably split fifty two Republican Democrats, switching is part of America, So it's not so politicized in that regard today, whether you have a Republican president or a Democratic president. The

CIA is a really critical piece of the action. So I at the working level as opposed to uh, we're seeing it played out some policy level disputes, but the rank and file is more interested in doing doing the job. Now At the policy level, UM, I mean the mission of the CIA engraved on its wall, and we've talked about this before. Its product is just tell the facts the way they are, and when it gets in trouble, it deviates from that. So policymakers need to understand that

and live with it. And the best ones understand that that is a strength. And so I think, um, looking at the situation today, UM, I think, um, you know everyone's looking that there will be a fight between the intelligence community and policy makers. I think that's not good for this country. UM And, I think over time, good objective intelligence prevails and most presidents events eventually succumbed to

the to the importance of relying on it. So, how the so you're saying that the UM some the commentary from President Trump at administration detigrating UH the intelligence agencies. You're thinking your senses that these agencies can withstand that certainly in the near term, focus on the long term. You know, I may be an optimist, but my experience leads me to believe the truth does prevail, that reason

does prevail. UM And I think when you look at the assessments, you know, there's things that are said in the public forms, other things were said in the back room. I don't think the intelligence being shocked. I know. Let me differently, I know the intelligence community really considers Iran and evil empire. Right. It's you know, my career, I

was in charge of Iranian operations at one point. There's no school of thought inside the agency that Iran is a good nation and the part of the brotherhood U. So, I think the dispute is whether or not the specific ingredients of the UH of the treaty worked out with them on nuclear uh development is being adhere to, and I think the senses it is they would point out if pressed, and I believe it's probably even in the record that you know, this is not an ironclad agreement,

the nuclear agreement, so there is room for developing missiles. There's sights that can't be worked, so it's it's not as clean as may be portrayed publicly. So I think the sea is very much awared about all of these things and understand the motivations. But if you look at the technical point A, point B, they haven't broken it. Chack Devine, we love having you on. Thank you so

much for being with us. Jack Devine, founding partner and president of the ark And Group, also former chief of CIA's Worldwide Operations author of Good Hunting, A Spy Master's Story. Really interesting to get this perspective because the intelligence community is so pivotal in national security and has been under

under a lot of scrutiny of late. The US retail industry continues to undergo tremendous disruption brought about by e commerce writ large and perhaps Amazon dot Com in particular, and no US name has been more impacted, arguably than Sears, the venerable Sears Brandon the United States to help us kind of passed through what is going on in retail these days, particularly with Sears. There's been some more news. There's Bert Flickinger. Burg is a manager director at Strategic

Resource Group. Bert joins us in our Bloomberg Interactive Broker studio. Bert. We love to have you here. Thank you very much. Can you give us the latest on what is going on at Sears? It looks like Eddie Lambert one another round of to keep this company afloat. My question to you is what is going on? What's the latest Paul

and Lisa. Another really regrettable example of bankruptcy Judge Bob drain who was a big Wall Street partner let letting Lampert's lawyers, who making thousands of dollars per hour, just

run rough shot. In my professional view, with a lot of experience in this area, run rough shot over the creditors Um, including the vendors, the workers, the landlords, and Lampert is epitomized retail and aptitude throughout his career, and and for drain Um to not have the right person with Lampert, with his advisers, with the law firm wild gotchall without the right skills. How to you know? It's

an institutionally an excuseable view. So Sears has been an absolute mess for a while, and certainly that's been reflected in the fact that the shares are trading under a dollar until very recently they've surged. They've actually almost doubled from sixty cents to a dollar in the past two sessions. But I'm just wondering what could Sears do at this point to rejuvenate itself, Lisa key question you're asking, And here's where Lampert fails to have a good grasp for

the obvious. He had e commerce right in front of him. As you've presently pointed out a number of times, the Sears catalog couldn't have been converted to e retail to compete with Amazon, but it could have been effective. Kurt Avalon, who was one of the founders of Takeoff e Retail, was the chief merchant for Lampert. Uh Lampert let him leave the company. Avalon's done ninety e retail micro fulfillment centers were body sized, mechanized eight thousand square feet, can

do a million a week. That would have saved Sears. The guys sitting in the executive suite with Lambert, and Lambert doesn't want to invest in sales circulars, doesn't want to rental, and Revinal the store raises prices with impunity, sees the solution to save the company, lets it go. What do we do here? We bring back Bob Mettler, Arthur Martinez, the dream team that saves Sears twenty years ago, and the boards Tip two is to do it and Lambert, in my views, has has too much ego to do it.

And the American taxpayers are going to pay a very painful price for this one. So is Lambert's play here, in your opinions, simply a real estate play of the stores and so on and so forth. I just don't see away how he recovers anything remotely close to what he I'm sure originally planned. Polish is you referenced, well, it was a real estate play to start with Marty

Whitman when they controlled Kmart almost twenty years ago. In that bankruptcy combined with Sears real estate play and huge fees to Lampard and his company in addition to him demification for him not to have litigation liability, and in my view, he should be investigated and if investigated, pay the commercial consequences. So that sort of takes us to the whole concept of shopping malls and the role of

them going forward. And honestly, this was called into relief by j Z Penney, which decided to stop selling major appliances as well as furniture in some US stores this week. As Bloomberg News reported yesterday, I'm just wondering, you know, what will be the role of shopping malls, just how much of the carnage has already happened versus needs to happen, Lee Lisa, what's happening in the US will be much

worse than what's happening overseas. And our worldwide work for arbitration tribunals Paris, Dubai, we had to do a worldwide study of research luxury to mid mid tier to downstream and what we see in London is Selfridge's store the year three years ago in a row. Harvey Nichols digit digitized the experience, so they get young consumers. It's almost like going to a Disney property and they get all kinds of graphics one would see on her his mobile phone.

What the Parisian retailers do when Bloomberg is not correctly reporting the yellow vests um rioting in the streets. The retailers in South Korea, Japan here know how to evolve with the future investing malls to make them exciting. Here. Uh, they're they're dead elephants, just waiting to be restructured by private equity firms. Some of the private equity firms are good in our view. I don't think uh Lambert's private

equity firm in anybody's view, is constructive. So you still think that there is a role for bricks and mortar retail, but is your view that has to be much more closely tied in and aligned with the digital e commerce offering. That is that the life the life raft for bricks and mortar exactly as you stated, Paul. And here's the example Sears four in Hamburg, where the Buffalo bills played close to the Canadian border. Like all the Sears Canadian

border stores should be doing lots of business. It's not. But Amazon moved in to Niagara Falls Boulevard with a combination Amazon Whole Food Store where they blew up the whole on Niagara Falls Boulevard and mall replaced the Bontan bankrupt department store with an Amazon Amazon Whole Foods. That store is supposed to do one point to five million

a week. That store is now doing less than two hundred thousand a week a year after its opening, is going to close like the Amazon bricks and mortar stores. So the retail a cop apocalypse or ice ages affecting everybody from Sears to Amazon. Because while Bezos and my views, most brilliant person who's ever worked in retail, when he's running the show, he's great. But now he's going to the show and all these side shows that he's personally

distracted with his divorce. So Amazon's failing in bricks and mortar as his seers and the guys with the great leaders will win. So let's talk about who's actually doing a good job of adopting brick and mortar to the modern era in the United States. Uh, look at what Frank Blake did to completely turn around Home Depot before he became chairman of Delta doing doing tremendous job off price. Uh is you've referenced well a number of times, Lisa, whether it's Ali's bargain stores on the low end or

Burlington or t j X or Ross off price. Customers want to shop primarily on price Chris Baldwin. But this has something to do with the experience, right, Uh, the experience and and price. So it's a combination, uh, treasure hunt. In terms of the experience home DEEPO is a great experience in store online uh. And if and if you look at a number of others from the department stores and luxury start with South Korea, then then go to London, Paris, Uh, you go to Dubai uh and and throughout the PRC

in Japan. A lot of great in store experiences, but the retailers are looking at everything in cap as access and expense rather than an investment to profitably drive sales. Yeah, definitely gonna be a big challenge. How do you invest? Will also watched declining sales and adopt to a modern era both in brick and mortar as well as on their online platforms. But Bert flickant Jer, thank you so much for being here. As always, Bert flickint Jer, Managing

director at Strategic Resource Group. You know, definitely a big existential question facing retail. How big can the brick and mortar presence be? How do you fight against Amazon dot Com. So trade talks on off, on again, perhaps off again. Now we know that President Trump is not going to be meeting with jumping ahead of that March first deadline. Why what happened? It's hard to know, but we knew. The one person is keeping track of it very closely.

Mike McDonough, chief economist for Financial Products at Bloomberg LP, joining us here in our Bloomberg Atta Active Brokers studios. Mike, what happened? Why are the talks now off before the March first deadline? I mean, are they all right? Well? There we go? It seemed like, I mean, the Trump she meeting may apparently be postponed, but they're still having talks next week. So I mean, it's really hard to decipher what this means. I mean, I think, why are

we hearing about all this? Why? Why the chatter? Why the it seems like someone asked him a question and kind of a random press conference are just discussion he was having. I'm not really sure how we we we got the information. It was actually a little bit confused by that yesterday. It was not a formal pronounced and and you know, I noticed the earliest headline I could see was at eleven thirty, and I think the um uh you know, the mark was actually selling off before that.

So the whole thing kind of confused me. But so let's take a step back. Um, you know, I I don't know what this says about a potential deal. I do think that President Trump's bar for a deal has come down quite meaningfully because of what's been happening in the markets and concerns that the economy has been slowing. In fact, I wouldn't be surprised if it's come down

so far. It may actually be at odds now with the people negotiating the trade deal primarily what I mean by that is Lighthouser, so you know, we could have a conflict there. Uh So I'm still optimistic we're going to reach some sort of deal. I think we'll get the best possible deal, which will not be what Trump had originally proposed, but we will. He will get some

uh consolations. I think that we'll have some tangible stuff as it relates to the deficit, and I think we'll have promise is for some of the more difficult challenges, the intellectual property opening up an investment in some Chinese sectors, and I think right that the difficult thing is going to be uh what kind of measures are put in place to enforce those? And I think that's probably where

the negotiations are centered right now. And I think the Chinese are realized now and are more willing to to give more concessions as well. So I do think a deal is possible. This delay of of the She Trump meeting is confusing because he said that it will be finalized at a meeting between us. If they don't meet by the deadline, what happens. Do we get the tariffs? Do we not get the tariffs? I suppose we'll know more next week when the the meetings do happen, not

between uh She and Trump, but between more junior negotiation. So, Mike, again, it's do you have a sense of who's more incentive to get a deal done? I think we hear about China's economy slowing. Obviously we know that that. Maybe we've had some people come in here saying it's slowing materially more than the government is letting on, I e. They may be more incentive to do a deal. Do you

buy into that? Well? I think you know, looking at last year, you had a problem where it was their deleveraging agenda that was causing the slowdown in the country. Trade wasn't really a factor. Yet you still have the issue with the deleveraging agenda slowing down growth more than they anticipated. And then you add on top of that trade. So yeah, that does put a lot of pressure on China.

But I think if you look at you know, when President Trump started this um with China, US GDP growth was over three percent, the markets were rallying, everything was looking great. In the US, things don't look as good now. Sentiment is collapsing. If you look at one measure in the University of Michigan and the percent of people who um randomly make good comments about government economic policy, it's

at the lowest it's ever been. During the Trump presidency, you had the shutdown, So there's some erosion and confidence in the economic agenda in the US. So Trump needs some wins, and this could be a nice, good, easy

win that could bring some confidence back. Which brings us back to the confusing head scratcher of yesterday when we got the headlines at President Trump was not going to be attending a meeting with President of China and just to put this in a perspective about why we're focusing on it if we don't really have a lot of clarity there. Arguably that's what sunk the NASDAC and the DOO in particular, and sort of led the week into a rather negative tone, right. I mean, this actually did

have a market effect. We saw it happen when the headlines hit. We saw stocks taken a further leg lower in the US. So my question is, if they are not talking, or if President Trump doesn't meet with Jim Ping, could we still get a deal ahead of that March first deadline? I think anything Obviously it is possible, but I mean, though it seems unlikely, but maybe we could get an extension of the deadline to accommodate the meeting. And what would I mean, would that be considered a

win for who? Fair enough? My point is that is that, I mean, is that enough of the market thank you? Oh yeah, I mean I think I think thank you for understanding. Maybe if you if you get that extension, I think that would imply a deal is basically has been reached and it's a formality that they need to meet and then sign the deal. So I think that the market would look at that as a positive. If there I'm not talking about like another three six month extension.

I'm talking about saying we're going to extend this deal another couple of weeks or whatever to accommodate a meeting between President and President Trump to finalize some of the loose ends our promises enough, like if they promised on technology,

that's not enough. No, And I think that's that's one of the key points right now is they're trying to figure out what enforcement mechanisms they could put in place that they could track over the next two years on some of the uh following through with some of the more difficult challenges. I mean, you know, you know, it's interesting. Thank you, Mike McDonald, Thank you very much. We always appreciate your your insights here. Mike is the chief economist

financial Products from Bloomberg LP. He joins us in our Bloomberg eleven three oh studios. Uh. You know, I don't know, color meet pessimistic, but that you know, I think some of the big issues that have to be addressed here on the trade deal are the very hard issues about technology, about intellectual property. It's about soybeans, paulbeans, but at some point they're gonna have to get down to brass tacks and go to those very tough issues which are really

economically material. We have seen the price of iron or surge by more than twenty five over the past ten sessions, catching a lot of people's attention. But you know, it's catching even more people's attention, at least the attention of Mike McLoone, that is corn and crops and the fact that we are finally going to get some information for the first time in two months about just how well US farmers have been doing over the past couple of months.

Mike mcloan joining us here in our Bloomberg at Active Broke Studios Commodity Strategy for Bloomberg Intelligence. So what's up with this, with this report that we're about to get. Well, we haven't had data from us d A for two months, so everybody is waiting for the market's stuck in a range and it's waiting for the data to night fear the market more likely kind of do what iron Ore has.

You know, commodities have been pretty beat up, the dollar has been very strong, and then you just get a little piece of news like what happened with the ballet and the market just has the path of least resistance seems to be up, and I think that's might be the more of the case today with with um, the grains and eggs. So what commodities in particularly are you

most looking forward to seeing data? You just I just I'm a little bit I need this data to help me form my opinion because it's been two months and there's a lot of altility. Which what are some of the data points you're most looking forward to today? Well, you mentioned corn, corn, soybeans, and we eat The key issue has been soybeans. We all know there's this way too much supply soy means because of the trade war UM, and we all expect the thing. It's already priced in UM.

But I'm kind of watching corn because corn has the best balance, and all the estimates are that all the that we had last year, yields of probably declined a little bit. The production estimates have probably come off a little bit, and so corn is gonna be the one. Also, once we think we can virtually guarantee next year we're gonna get a lot more corn planting. It's just a question of how much it's marketed, and we don't export a lot of corn. We use a lot, actually use

most are cornel for ethanol. Interesting, So, Mike, given the fact that you've done this for decades and you've been intimately connected with just how volatile things can get, look into your crystal ball. If we get a positive reading out of this FDA report or USDA usd A report, how much could you see the price of corn rice right now? My estimate is for to five percent and it's simple analysis session just well overall, maybe take a

few said. But even if the data is neutral, if you look at the futures curve, because there's really not a lot of data, the futures curve is switched towards more towards backwardation, which means the fritures curve is expecting demand to pick up versus supply. And then you look at one other key factor, the Brazilian real Remember we had the big election last year. It looks like the

realist bottom. So these two factors are turning positive. In addition, we all know what's going to happen when this trade issue. It's got to go back. It's not gonna get as bad as last year. We should see some mean version which mean to me means this data has to be really bare, so the market is more likely to go higher. So, Mike, let's switch from the softer commodities to the hard of stuff.

Commodities are arguably iron ore. How surprised are you know, as Lisa mentioned, you know a big move up in iron ore of the last tent tent sessions doing part I guess in large part to the supply disruption from valet in Latin America. UM, How surprised are you with the volatility of that commodity given what is you know, I guess a meaningful supply disruption. Yes, it was significant.

It's just like natural gas last year. The path of least resistance with some of this news is up because that's what commodities are doing in their bottom I mean the significance of iron ores. It's just not widely traded. There's no real active futures UM. And for me as a strategist, it's also not highly correlated to industrial metals. It's ironic, but it isn't, so I just kind of keep it as a as an Ey'm the backburner, and I watched copper and I watch aluminium, but iron ore

as an indication where things are going. It's not going down, yeah, but I mean I understand that it's it's might be thinly traded, but it's still is a commodity, that it's an essential ingredient in any infrastructure spending, and frankly that is often used as a gauge of global economic growth. So I mean, is there a bigger kind of message to take away here that as a slid disruption and a major producer of iron ore could cause really, I mean twenty seven increase in the price and ten sessions.

This is traumatic. I have to temper my enthusiasm to be bullish commodities because obviously I'm a commodity guy. But I look at this year, is this is an indicative of where markets are going with just little tweaks. It's much easier for them to go up with little things like this, and that this is a you know, this is a canary and the coal chef. But you look at copper, it's just bottom from a good level. Aluminiums

just bottom from a good level. We're going to see corn today, and all these demands supply demand factors are switching positive. In addition, the key factors of US though, if the dollars peaked from that sixteen year high last year, which I think it has, that's a pretty strong tail wind for all commodities. In addition, we get these little supplied rustions. But key thing remember about slight disruptions are usually short term events, and they come back. What's your

number one commodity right now? Real? Ten seconds? Good Gold, unfortunate Gold. I have to I have to give my credit. He's been making a very popular and a very good gold call for two or three months. I heard it just kind of in the background in the office about his gold. I read his reports and uh, spot on,

spot on. So gold, safety, safety, and gold. Mike mcglowan, thanks very much, Mike, as a commodity strategist for Bloomberg Intelligence joining us today in our Bloomberg Interactive Broker studio here in New York. Thanks so much, Mike. So again Gold, But I go, I can see gold in the space and gold, so again, gold in the market that is down two hundred sixty points on the Dow. Gold does

not sound so bad. We've got the you know, people concerned about the economic outlook, certainly in the back half of the year, So why not gold so Mike, we'll we'll take it. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney, I'm Lisa bram Boyd's I'm on Twitter at Lisa Abramo. It's one before the podcast.

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