Amazon Got Whole Foods for Free, Kantor Says

Bloomberg dot Com, and of course on the Bloomberg. We have a wonderful guest to brief us through this half hour, and it's on Distress Desk. It's about taking opportunity when nobody else has the courage. Honsky Rooms out of Williams College has made a career of listening to the markets and then acting when few have the courage uh to act. He is with Greylock and joins us Um this morning. Where do you learn to buy distress? You were a

literature major? You know are you? Are you reading Dickens or you know ed Gary Ellen Poe to figure out how do you train to buy something for twenty cents on the dollar when everybody's running for the theater exit. Um. I think I had less to do with my education, probably more to do with where I grew up. We moved to Nigeria when I was three years old, and then from Nigeria to Morocco. And my father likes to talk about me haggling with the merchants and the markets

and Moroccos. So that's really interesting actually. And you know, when I was a kid, I used to I realized that it was pretty easy to make money every time around spring cleaning. So you wait for people to take all the garbage out, you run around, take the nice things in. Two weeks later, you have a stoop sale. Are you an embarrassment at a modern Starbucks? Do you go in and bid? Um? You know, I'm probably not the best person to go to a Starbucks. I just understand.

Don't understand why you could spend that much money on a cup of coffee. What's the opportunity in distress right now? Is it like it wasn't oh seven o eight oh nine? Or is it all quiet on the Hans front? No, I certainly doesn't. You don't have the opportunities that you had, uh two thousand nine? Um, But what's going on currently. UM One, we're seeing the sort of the last few legs of a trade that came about UM in two

thousand eleven, two thousand twelve, which was Greece. UM there, you know, ended up being a technical default on the bonds of restructuring bonds traded down to actually quite a bit belower lower than than twenty cents in the doll or the trading at the same prices North Korean debt UM. And now on a back of Brexit, what you're seeing in UM you know, the EU is staying together. UM So as soon as the vote happened last year, you could really tell that Greece was going to be on

a one way train. UM. So you've gotten recovery maybe two bases points left of tightening on the bonds in Greece, and you're probably gonna have a pretty good leg of an up trade in the equities we we we within. That is the basic idea of a cramdown. I've asked this question twice last week. Let me ask it of you now. I would suggest any resolution of a distress sovereign process is somebody has to take a price loss.

What I mean hearing out of Europe is we're gonna extenderation out until we're all dead, and we're gonna lower the interest right down to something I can stomach. Okay, that's hans Hume one oh one. But isn't part of hans Hume one oh one is the creditors have to take a price cut. You know, you coming, you buy the piece of twenty and they own it at a hundred or eighty or whatever, and the takeout price has got to be like forty or fifty, right, Um, you know,

the takeoff price, it depends on the country. In the case of Greece, that what they're talking about now in terms of debt relief only is in relation to the official sector. Um, you know, we in the two thousand twelve deal, the private sector took the haircut. We took fifty three and a half cents a principal haircut. So we're not gonna be part of any future debt forgiveness. And quite honestly, I think the Greeks and their biggest

creditors have some sense of what they're gonna do. It's the I, M F and the EU, so you know, to a much broader you know, from much broader perspective. You're putting your finger on one of the big drivers and how you approach this market, which is what possibility do you have of getting crammed down? And it's really a case by case situation. That's a beauty. Well let's continue that fencing. Laqua joins us off from a francying.

Good morning, Good morning Tom. What a difficult comment by Prime Minister May it it seems to me and I can honestly say, Francine, I don't think we've seen the set of many events of crisis exhaustion in the United Kingdom. We've ever seen that in the United States. I mean, is the city just overwhelmed this Monday morning. Well, what you're talking about, of course, Tom, is this latest terror incident. And we understand from Theresa Made that this is a

terror attack. It was a van that plowed into a crowd outside in North London mosque and it's basically as you say, Tom, it's the third terrorist attack on the capitol in as many months. I don't know if people are exhausted, but there's certainly seems to be a resolve in the capital of the UK so that it doesn't divide the society and brings people closer together, fighting together.

But all of this is a distraction because there's also breggsit talks, so of course the government trying to deal with two things at the same time, whilst the Prime

Minister is weakened almost by the day. Interesting. I don't know, Frenzy, and if you heard Hans comes comments are in Greece, but I really thought they were interesting about taking a distress piece of looking at a time extension and interest rate deduction, reduction, I should say, And as he set a selected set of cramdowns where each case is different as well, Frenzy, why don't you continue with Hans Comes

right now? Yeah, Hans, I was really interested in your comming out in Greece and whether you actually thought that any other European countries would need a bail out in the next eighteen months. I think that the answers no. I mean what I saw, I think the same as

that everybody else did post the Brexit vote. Um was that there was a sense in the EU, you know, the different organizations managing the EU setting up for a tough negotiation with the UK, which the UK has made for for itself, but basically ring fencing the rest of

you know, the market. Um so I think that you know, there's some been some concerns obviously passed about Spain, but currently maybe a little bit about the sovereign on the Portugal, you know in Portugal, and maybe the banking system in Italy. But these are all situations that the balance sheet of the EU can support quite readily. And what you've seen is a big change in the rhetoric that's come from

the deep pockets of the EU. Germany even Scheibla has backed off some of the austerity talk and has been basically supportive of the entire EU project. So I don't see any other countries falling by the wayside. Let's continue on this. We'll come back with Hans Hume, gray Lock and really a lot to talk about their unpack on

this strange trace. Cramdown trying to say, like k London of time, Mr Girl off off off today with this Hans Hume of Garylla, we we opened hours ago and on China, and I think we want to wander back not only the China, but the the the distress of Asia. When you and I study this racket, there was little in bonds in Asia. Is that no longer true. Is there like almost a mature debt market or guys like you can play in Asia? Um, you know, there's clearly

a fixed income market that's developed. Um, you know, mature, it's a bit, Yeah, it's mature. Yes. The issue there is the on a relative basis, the opportunities for guys like us aren't quite as attractive as in some of the other geographical areas like Latin America. It's still well, there's just been a lot of money chasing chasing returns, so you know you'll get on a credit basis issuers from China where you're not going to get a real pick up and yield for the kind of risk that

we think you'll be taking. Um. Yeah, potentially, it's the biggest market out there. If there is a major correction in China and a major sell off, there'll be a lot of money going for the exit. Uh, Hans, are you expecting a correction in China or what's a likelihood at the moment. I know you're still pretty bullish on the country, but even if it's a thirty percent chance of a correction, that could be quite ugly. Yeah. No, and that's fair. Um, you know, personally I don't see

anything this year. Um. I'm pretty constructive on the markets in general. Um. But you know, as a business, we don't we don't like to try to anticipate crisis by putting short positions on. We find it's actually easier to wait for the sell off and then step in for the you know workout. Um, so if it happens, will

be there. Um. I'm not gonna sit there and set up a broad number of short positions and Chinese corporates and you know, try to profit on a downturn because one, I don't think it's a likely scenario, and to even if I did it, the negative carry can knock us out of the trade before we realize the timing. If there's a downturn on, what is the first signal that

actually tells you that there's a downturn? Is there a concern that it could be like the O A crisis where some people saw it but actually no one realized until it was too late. Um, yeah, I think you know, building up to the O A crisis, you saw a lot of cracks, you know, starting two thousand six, two thousand seven, So it was one of these things where people, you know, the markets were telling you that something was going on, and the question was had we found a bottom?

And then you know, because of yeah, real estate here in the US, and you put pressure on financial institutions and then you know, bear Sterns and then finally collapse a Lehman and then we went off. So I don't think we're going to have one thing. You know, a market, if China leads a downturn, will get a lot of signals before things actually the bottom falls out. But one of the things about your assessment there is could have happened again. It's francy and I know every Friday afternoon

the doom in gloom letters come out. It's gonna be the same again, etcetera, etcetera. I'm not hearing that from you that it's the same frameworkers those seven oh eight. Yeah, I don't think there's you know, the markets are very different, so I think you know you're not. We don't have nearly the amount of leverage in our markets that we

did in two thousand and eight. Um. So if there is a all in risk off you know trade where everything correlates to one and we're basically going off a cliff, it's going to have to happen for a different reason than it did in oh eaight um and but yeah no, I I just don't see the circumstances for a similar type of you know, turnaround in our market generously. You're trying this morning, Thank you so much. Humans with Greylock folks. We haven't seen him in the ages, which is my fault. Man.

It's good to see him this morning, without question. The interview of the day on Amazon and on Whole Foods Market. Joining us now from Newburger Berman is Charles Cantor, with decades of experience and attempting to find value in The distinction here is he is a kinder general er uh, person of bringing together transactions and combinations. You're not adversarial when you dial one hundred Avocado and say you guys are too cheap, let's go. You do it a more

gentle way. What's the Cantor distinction. We're trying to think about long term value. Were very active and engaged with our companies. We're trying to have a constructive dialogue. We think we can add a lot of value in helping companies think through financial communication, capitalification, capital structure, and and it's all about long term and trying to kind of put the noise, put the noise away. The chief executive officer of Whole Foods has had to skip around on

rhetoric recently. You're nodding here. Charles Cantor called another operation greedy bastards in this transaction, is Newberger Berman greedy bastards? I would hope not. We're trying to get a reasonable reward for our effort over time. UM and UM. I think it's best for others to comment on that. It's but ultimately, UM, when you become a public company, your responsibilities are too shareholders. When you remain a private company,

your responsibilities are those that own you privately. But once once you come to the public markets, Um, the game changes for many any different ways. Legendarily, you walked into the Bryant Park Whole Foods and said this place needs to be revalued. Was it the gluten free avocados that did it for? You know? I think what Wholefuls has done so well is it's it's convinced the millennials that it's a very cool place to go shop. And and the Brian Park shop is by no means a grocery store.

It's actually a restaurant with grocery as as a side items. So they've been whole foods and and and and and the management team they have been very forward thinking in

in in how they've built out their boxes. Um, And what people for a long time didn't appreciate or may not have realized, is that a set of Whole Foods businesses is prepared foods and restaurants, of course have a different margin structure than groceries and Briant Park like like many of whole foods boxes around the country has an incredible energy and vibe that that you probably don't experience in some of your traditional grocery stores. Jeff Bezos of Amazon,

he needs a bidding work. You have made clear with your report from dal Jones and Wall Street Journal that one should be had. Who would come in to lift this transaction over fourteen billion dollars? Look, I think, um, I think I suggested that that Amazon was typically thrifty in in how they thought about the value of whole foods. We think whole foods is uniquely attractive strategic asset. Um, do you have a valuation number that is in mind without giving away the secrets, We don't, But but but

there's there's plenty of room um above. Should should others step in? I think what was so remarkable amongst the many remarkable things around around thinking about the deal, was that Amazon's share value went up UM equal to the total transaction value of I mean I kind of candidly joked that that Amazon got Whole Foods for free. It's I can't remember of another transaction where the entire purchase price was covered by bye bye bye by the increase

in Amazon's value. Look, Walmart, for example, went down twelve billion dollars. So I think there are many grocery executives, boards of directors, both in the US and globally that are probably going to think about the strategic value of the sasset very quickly. Here would you suggest any acquirer, including Mr Bezos could bring net income in the bottom

line of the income statement up rapidly? Can they add if it's a hundred basis point business making one percent, can they get that up to two hundred basis points quickly? I think UM as a deal itself, UM, those that acquire this asset will make a very very good risk adjusted return. I think Amazon specifically, I'm guessing yet, but I'm probably not far off. They have about fifty million prime members. My guess is Whole Foods has about twelve

to th million customers. There's a huge opportunity to take to take the prime members um into the Whole food store, whether that be in person um or through the wire, so to speak. Very quickly, and I want to come back Charles Cancer. When people go into Whole Foods within your research at New Burger Berman, are they buying the fancy pants organic stuff or as Whole Foods about the more private label three, it's, it's, it's it's probably a

bit about both. I think people go to Whole Foods because the brand resonates with their values and across American, across the world, people care about what they eat, and Whole Foods has been a pioneer in getting people to think through what they put in their body. Brunch you by Bank of America, Mary Lynch. With virtual reality, virtually everything will change. Discover opportunities in a transforming world, be of a mL dot Com, slash VR, Mary Lynch pierced

Fenner and Smith Incorporated. And now we go to David West and his conversation with Robert Ross. What is your main argument to them all why they should be investing in the United States right now. Mr Secretary, it's the same reason as American companies should be and in fact are, namely regulatory reform, getting rid of red tape, tax reform, getting our rates down to very very competitive levels, unleashing our energy resources, fixing our trade agreements, and creating a

much more healthy environment for businesses and consumers. So all of those reasons are the why excuse me? So let's talk about fixing those trade agreements. One of the things you mentioned, which comes within your purview, um to what extent, is fixing the trade agreements. You've been very outspoken you want trade, but you want fair trade. To what extent to tightening up those trade arrangements encourage US investment in the sense that people need to be here to manufacture

so they're not subject to whatever restrictions there might be. Well, I think it's a factor, but probably a relatively small factor. I think cutting the tax or it's hugely as we have is planned to do, is a very very big benefit. Our tax structure used to be a major disadvantage. Similarly,

our regulatory structure had been a huge disadvantage. We were I believe the most overregulated country going well, when you're paying a lot of tax and you're having a lot of regulatory bread tape, that discourages not only green field investment, it discourages any kind of investment in the country. So we think it's mostly the question of removing impediments and then coupling that with the normal benefits of the US A huge population base, wonderful market, open access to it

once you're here, highly educated workforce. That those are the kinds of fundamental factors that were always at work, but now we're supplemented with the improvements in business climate created by President Trump. As you suggest, Mrs Secretary, you have plans to cut taxes as well as reform taxes to somewhat different things. You have plans, and there's a lot of you worry about that initially during the tramp administration.

What do you say too, would be investors right now and say, let's wait and see if that happens, because right now it looks somewhat less likely or certainly delayed from what we originally thought last January. Well, the timing the administration has very little control over that really requires activity by the Congress. But we seem to be making very good progress on healthcare reform, and that's really the

prerequisite to getting the tax reform enacted. So the first key to timing on tax will be when we get the healthcare reform completed. Uh. Talk about the trade agreements again that you raise. Where are we right now? For example, let's be specific NAFTA. We've talked about that before when you've been on the program. Where are we in the process of renegotiating NAFTA and who's responsible? Is it you

or is it your colleague Bob Lyheiser. Well as to where we are, we are right now awaiting the maturation of the ninety day letter that we're required under the Trade Promotion Act to send to the Congress. That clock text on the of August. Thirty days before that, we will we will be revealing to the Congress a more detailed negotiating strategy than we had discussed with them before. So the eighteenth of August is a big red letter day for trade. But even short of that, we have

a big day very soon. In the middle of July is our next announcement period, the next meeting session with the Chinese. As you know, we've accomplished quite a little bit ever since the dayton at the Mara Largo conference, and we're hoping to achieve still more deliverable items in the very very near future. Okay, we want to welcome again our listeners on Bloomberg Radio as well as Bloomberg TV. We're talking with Wilbert Ross, the U S. Commerce Secretary.

So before we get to China, let's go back just for moments and AFTA. So you're saying mid July, there's supposed to be a more detailed outline of the negotiating strategy e commerce than August eighteen, you really start the negotiations. Give us a sense after that, what is your hope on the timetable when you might have something concluded. With the Mexican government and the Canadian well, both governments are

quite receptive to the idea of a renegotiation. They both know that this is at best an outdated agreement, doesn't really address the digital economy, that doesn't very much address services in general, certainly doesn't do much on financial services. Also doesn't do very much unnatural resources. So those are some big gaping holes in it. In part because some Mexicans have changed their regulations for the better unnatural resources, and in part because nobody way back when NAFTA was

negotiated even knew there would be the digital economy. So first of all, it needs updating. Second of all, that needs some reprovisioning to adjust to the economic realities of today. For example, their rules of origin, namely what percentage of the total content of a product will qualify as true NAFTA product even though it came from outside NAFTA. In automotive, they specified particular parts to which the percentages applied. Well, half those parts aren't even used in cars anymore because

automotive technology has progressed. So there are many things like that that need to be fixed, and I think everybody is up to the idea of fixing them. Is currency manipulation on the agenda and the negotiations with Canada and Mexico, Well, neither Canada nor Mexico in my view, is a currency manipulator. As you're aware, the Congress has specified that determining whether currency is manipulated is the purview of Treasury, and Congress

has laid out very very specific tests to apply. Those tests are applied twice a year, generally in April and October, and very recently Treasury Secretary Manuchtion released the results of this year and found that there are no currency manipulations. That's quite different from the question are there misalignments. I think the Mexican pace, so for example, has been very weak against the dollar, partly out of concern that the trade negotiations might go very badly. That lately has rallied some.

And my best guess is that once we have the noon NAFTA, there's a pretty good chance that both the Canadian and the Mexican currencies will strengthen because of removing that uncertainty from their picture. So that's the way we're looking at currency visa be these negotiations. We're speaking with Wilver Rossi's US Converse Secretary for Television and Radio on Bloomberg. So Mr Secretary, let's talk about one specific UH product,

and that is steel. UH. The administration has been quite outspoken and I must say has taken some action on steel that hasn't been taken a good long time. There are various reports about what the approach to steal might be, including the idea that perhaps there would be duty free going up to a quota and then after that a duty would kick in. Can you tell us what the approach of the the Trump administration is right now to

steal employees? Well, it's right now our work in progress, because we have not yet submitted our report from Commerce to the President, nor has he had a chance therefore to act upon it. But in general, enforcement has been a very big hallmark of the present administration. We now have in place a hundred sixty one trade cases which have put either anti dumping or countervailing duties on steel

products from about thirty seven different countries. So this this has been a very big problem, the problem of global over capacity and more importantly, global overproduction. So the report will address those issues, will address them in the context of national security the to find the way that section to thirty two defines it, which is a pretty broad definition, including very strong reference to the needs of the economy.

So it will then perhaps make some specific recommendations as to measures to deal with that, and those could range from the ones you describe two more complicated ones. But the real key will be what does the President ultimately decide to do with the recommendations. He has announced that he intends to take bold action. Mr Secretary, what I just find puzzling is that U. S. Steel producers are having trouble making money now even though you have severe

anti dumping tariffs of like triple digits. Uh currently, why not just let it go? I mean, why you have to simulate and user demand whether or not you do anything about China which is having its own problems with overcapacity and their own profits. So, how does it any more tariffs fix that? Well, it's more complicated than just tariffs under two thirty two. There's also the potential for quotas, there's a potential for tariffreight quotas. They are all kinds

of potentials to be brought to bear. The reason that the individual cases have been ineffective is that the w t O, the World Trade Organization, rules are so precise that you have to identify very clearly the product and very clearly the place of origin. And what that means is if I'm a serial dumper, of which there are quite a few lurking out there. If I'm a serial dumper, all I have to do is trendship it through another country and I evade the duty or send it to

another country for further processing. However trivial that processing might be or give it a little further processing in my own country. So those trade cases help, but they have not been able to cure the systemic problem. That's why there are thirty seven different countries involved. The dumping of steel from one country into another makes that second country have excess capacity which they then dump, and then the

country they dump it into continues the saga. So one ton of dump steel probably results in three or four tons of dislocation in different markets throughout the world. The two thirty two gives the potential for a broader solution that is less geography dependent and less individual product dependent. Finally, Mr Secretary, if we just read the newspapers or watched the evening news, and that we would include that all of Washington is consumed with investigations of various sorts and

lawyers going back and forth. Give us a peek inside the administration. You've been called perhaps the most powerful Commerce secretary in history. You have a lot in your agenda, even as we've discussed, we've touched some of right now, to what extent does this really impinge on your ability to get your job done or a different way to put it, how do you avoid it becoming a distraction. Well,

it's not a distraction at all. Um. I was in Miami on Friday with the President when he made his amazing announcement about how we're going to redo relationships with Cuba, and it was more excitement than at most average campaign rallies.

It was a very heartwarming event, and especially because they had on stage a man who when he was twelve years old, his father was assassinated by the Castro regime and shortly after that the regime figured out this little boy was a child prodigy violinist, so they ordered him to appear on some TV spectacular. The brave little boy refused, so the next day the stormtroopers came to his house, surrounded him and said, you a little boy, Now you must play for us. You know what this boy did.

He played the star spangled banner, and that's what the President had him play again on the stage in Miami. It's one of the most heartwarming, heartrending tales I've seen in a long time. President is going about his job, which is managing the country. These investigations are something of a side show. As far as I can see. There's no there there. It's just kind of a series of TV appearances by the various investigators, but there's been nothing

to engin will come to bear. And so in terms of the overall picture, President is carrying out his program than on commerce. We certainly are carrying out our program. And now joining us a gentleman who had a job in the locker room of the Pittsburgh Steelers and the rest of his career was downhill from there. Michael Hayden joins us. Of course, General Hayden is a former head of the National Security Agency, Director of the National Security Agency.

I make just of his time with the Pittsburgh Steelers. General very quickly, or what did you learn in the Pittsburgh Steelers locker room before Ducane? Uh? The Steelers represent the city almost perfectly, and the epic of the city is the Lucar. Go to work, do your job, work hard. And that's the way the Steelers operated as an organization, and the reason they're so popular in Pittsburgh is that's the way they operate on the field too. You know. Uh, we have so many topics to speak of, and we

have a generous time with you this morning. Let me speak with the uproar right now of a Commander in chief abdicating decision making on the branches to the Secretary of Defense, etcetera. UM, we've had strong language on this show this morning that this is not appropriate. Do you agree that President Trump must take a more direct interest

in the apportionment of our troops abroad? It would be good if he took a more direct personal interest and let me live you caution you can overachieve them that and try to make tactical decisions from the White House, which was a complaint sometimes against the Obama administration. So yeah, I think you should so show more interest, but be very clear to make no mistake. This is his re sponsibility.

Don't care Secretary Mattos picks the final number. This is the President's number, and he will have to live and we should expect him to live with the consequences. General, talk to me a little bit about Jim Comey. So you you know him? How well do you know him? I do? Yes, Um, we had fairly frequent contact in the Bush of sation. It would have been oh four, oh five, oh six. Um, he was the Deputy Attorney General at the time. Do not routine, but we knew

one another. In fact, have a bit of a history on different sides of an issue with regard to the president's surveillance program. But you know, Jim was tough, well informed, and only ethical. You're probably closer to the story than most of us. So how do you see this investigation into Russia unfolding? You think more people will be called to testify and actually, how long does it take to

do this investigation and follow up testimonies? Well, the good news is Bob Mueller is going to conduct an exhaustive investigation and so he's gonna touch everyone in any way, shape or form related. The bad news is and Sary reports this that's time is gonna take a year or a year and a half, and so we're gonna have that kind of hanging over us. And you ask where do I think this ends up? I think it ends up in a clown. It's in there. Of course there

was collaboration. You're gonna find evidence if you go in there and thinking no, no way, you're gonna find a lack of evidence. And this is gonna roman a question mark over the country. I I'm afraid general, we want to come back and talk about the immediate uh moments of cybersecurity and issues I guess of espionage and intelligence. But I guess you didn't fly a Beach twenty nine bomber. You came out of the Air Force in the nineteen

sixty nine. What was your response when you heard that the US jetted had shot a Syrian jet out of the skies over the weekend? Yeah, not unexpected. That's a crowded battle space and what's happening. And there were two wars going on, the Russian the Iranians, the Syrians fighting the Syrian opposition that was kind of the west of the country, and then we were fighting Ice and they were obviously related, but you could separate them. Now that

we've got isis on their back foot. Well, we're getting some break up there with Generator and we'll try to get a better connection. Uh there in a moment. We're speaking with Michael Hayden, forcedtar general and former director of the National Security Agency this morning. We'll see what we can do to get that hooked up again. That may be in the in the day of the modern cell phone, that can be a challenge with all that technology. General, Hey, how is the n S a different now than it

was on your tour of duty? Well, it's kind of continue the trendline we knew was going to be there when I was there, and that's moving in the direction of well, letting to explain the dilemma. We're going through a world in which signals intelligence, which is accepting communications, was too too little, too hard to get to a world in which the communications are there are too much, too hard to understand. And we moves keep moving in

that direction of too much, too hard to understand. And so it's the volume of modern communications that most challenges n A plus the availability of high end encryption around the world, which makes it hard for the agency to do the up not for us for sixty years without giving away the trade secrets. How do you respond to someone from the public saying, people like you general could tell what we're doing on our cell phones. Are we

that vulnerable to intelligence communities? Can they just quote unquote tap right into our conversations? The threat you just described isn't one that our citizens should feel for the American intelligence community that said there there are other intelligence or inventions are on the world that have got at what they do and what you describe is technically possible. Our intelligence is controlled by law, controlled by oversight, controlled by a by a culture of deep perspective to the Furth

Amendment about unreasonable search and seizure. And so although you get some imedgining issues and more nos, Congress are going to debate one of those later this summer. That's good to American privacy is not from American intelligence. It's from foreign intelligence services. And can I just add from the commercial sector that does gather a bunch of information on each and every one of us for their own commercial needs. Yeah,

and that's something that certainly food for thought. General, Can you talk to us a little bit about intelligence sharing with foreign entities In the wake of the Manchester attacks, there were questions here in the UK about whether the UK should really give files to certain entities in the US. Is that a dangerous mindset? It is? And um I was request say uh for just under three years. And in that time I went and visited about fifty countries

and that that was an espionage tourism. I went to those countries because we considered each and every one of them to be partners with US, and we shared information, frankly with with countries that might supprise the general American population, because you know, intelligence services have a lot in common, even when their political systems that they serve might be arguing with one another. Now, the tightest relationship we have is what the google countries we called the Five Eyes ourselves,

the British, the Canadians, Australians, and the New Zealanders. And they're particularly in the kind of work that n s A does. They're almost inseparable. And so I know we had some rough water here after the Manchester event, that I think we held that pretty quickly because all these countries depend on the others. What do you think the Trump administration's message to NATO should be. I know there was a lot of talk when President Trump came here about the fact that their allies, but he did not

mention Article five. Is that just noise for nothing? Well, no, that that that's real and it has a political effect. And I wish some of the things that, frankly wish all of the things you were saying, and some other things too weren't happening. But I have found in my life experience and this this is a bright spot. The deepest keel on our relationship with other nations is almost always intelligence. It's it's the part of the ship that keeps the rest of the ship more steady than it

would otherwise be. So although that behavior you described as bad, how it's just the political level doesn't help intelligence. I also believe that our intelligence relationships are are actually quite stable general. The time that we've got left with you, you had a wonderful moment uh in an auditorium named after a half Arnold, I believe, out at the Colorado Springs Academy of the Air Force, where you spoke to a bunch of cadets in January of this year. What

did you tell the young cadets? Uh? You know, in the media, I think we're so distorted with the news slow military. What did you tell the troops sitting in the half Arnold auditorium? I was honored they were giving me an award for leadership, uh, And I had a chance to talk to actually half of the core candets. And that's a really big crowd, and its fundamentally what I said to them was you work hard, do your job,

but be a technical expert. But the more senior you get, the hiring rank you achieve, the less you're going to rely on Any professional expertise at the Air Force has taught you and the more you're going to rely on what you learned at home, at church, from your mom and dad, from your neighbors, the basic values that that creates American society. And at one point you get promoted for doing things right. At a certain point, you get

promoted for doing the right things'll generated. Let's leave it there. Michael Hay, the former director of the n s A from Vacaine and of course the director of the Central Intelligence Agency at one point as well. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keene. David Gura is at David Gura. Before the podcast, you can always catch us worldwide.

I'm Bloomberg Radio. Runt You by Bank of America Mary Lynch. With virtual reality, virtually everything will change. Discover opportunities in a transforming world. Be of a mL dot Com, slash VR, Mary Lynch, Pierce, Uner and Smith Incorporated,