California Governor Says U.S. Needs to Step Up Its Game

and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course on the Bloomberg Welcome

nor Bloomberg eleven three studios. Joe Quinlan, he's the head of market and Thematic Strategy at Mary Lynch and US Trust and correct me if I'm wrong with There seems to be a great deal of anticipation at the volatility we might see on through you say, there's so much happening, whether whether it's the hearing on Capitol Hill or the e c v U. I mean, how do you position

yourself ahead of an event like those? Well, you know, we we don't do a lot of positioning, you know, and more investors than traders, but we do have to hold the hands of our clients to say, okay, what's the risk to the portfolios when it comes to the UK election or what's happening in Middle East and Thursday. So, but you know, we kind of see through the political noise, try to discern what's real what's not and focus on earnings, the underlying growth, um, you know with the FED messaging

when it comes to the balance sheets. So we're trying to look beyond some of the noise. But if we get some real fireworks or so smoking, you know, fire instead of smoke on Thursday, Yeah, you have to start thinking about what do we do with the portfolios to manage the risk. We just got a sense of how you regard Europe at this point. Um, when you look at the economy, it seems like it's in decent defined shape. Politically, it's still a bit thorny. How how do you navigate

to I did navigate that right now. Wait, we still like these big large cap companies, life science companies out of Switzerland, Um, the capitol machinery guys out of German. You know, actually we're looking to buy some Spanish Italian banks because I think Merkel's more into Europe now that

ever before, because of the differences with Trump administration. So if you've got a Germany acting more European and ready to step up and provide some of that capital, I think the spreads come in and I think some of these weaker banks look very good on the upside. Hey, you highlight this in a recent note of coming from Uncle and Merkel. We Europeans must take our destiny into our own hands. What changed after the French election, or after the G seven summit, or after the US with

three from from from the Paris Agreement. What's what's Europe looking like now? Where is it head to do? You thing? Well? I think I don't want to see a transatlantic breaker divorce in the United States and Europe are the bedrock of the global economy. But there's clearly frustration on the part of the Europeans, Brussels, France and particularly Mercle that the US is going to just go its own way, and therefore we've got to just step up and be our own, you know, kind of grow up. The question

is will Germany actually lead in that lecture? So well, that's yet to be determined. So we see what's happening in the realm of geopolitics. How weird are you about the continuity or the strength of the economic relationship between the US and Europe at this point. I think it will stand the problems we have here in a near term with the Trump administration and also the Merkel because when you look at the underlying commercial linkage is they're

very deep, they're very broad, their investment, their trade. Uh you know, you've got Deer just announcing they're going to buy a German capital goods maker. That's going to continue in Ireland is very much and radar screens of a lot of US companies related to taxes or not. So Yeah, I think business in general continues, but the policy overlay could be better. There's no one's talking about t TIP

anymore because that died on the vine. Joe Quinlin, the head of market in Thematic Strategy at Marylynch and US Trust, How would you of a risk? Is trade still at this point? You mentioned t TIP, that agreement that was being hammered out for for a long time between the US and Europe. Is it still downside risk that the fact that we could see some increased protectionism or some changes to trade policy. I think the biggest risk would be really local, whether it's between NAFTA UM in the

United States because it's the global supply Chaine. It's remarkable. In the last ten years or so, even the last five years, a lot of US companies brought their supply chains closer to the U. S vs V, Canada and Mexico, you know, away from China after the crisis, and now we're ready to the disruptive supply chains. Mexico is very important. It's just an extinction of the industrial production network of

the United States. Good morning everyone, Good morning David. We sent way too much time to you think it's three days in a row to change Joe Quitlin with this Maryland and US trust as well as some good perspective UM. One thing we've seen in our trade interviews is the idea of process. Industrial process has changed everything. I understand that any politician has to go back to residences of previous culture and dialogue within America. How do the politicians

explain the new industrial proper process to beleaguered constituents. Well, Tom, I think they gotta listen to the governors. You know, if you're the governor of South Carolina or Alabama, you've you've been at the table negotiating with these big multinationals in terms of tax incentives, But what are we going to get in return when it comes to the number of employees, How we're going to bring in parts, how

we're gonna increase our main in America content. So I would talk to Kentucky governors, Michigan maybe perhaps, but the southeastern part of this country has done a fabulous job reinventing itself as a manufacturing powerhouse courtesy of foreign multinationals being on the ground. You mentioned how you're able to sort of tune out, to try to tune out that

the political noise. If if I'm the head of a multinational German base multinationals, say, how am I supposed to navigate what I'm seeing from the President when it comes to his focus on the trade deficit side. Well, I mean that's very challenging, and there's a lot of anks around, you know, the kind of welcoming Matt for here in Washington. But you know, but if you're a CEO, you're spending more time out in the states or the local communities

than you are in Washington. Obviously you've got your big lobbyists working the corridors of power. But I think at the end of the day. The US economy is still open. We've got a very large consumer base, great universities that you want to be here. You a lot of just

many multinationals can't afford not to be here. We're talking about European equities, and what you find an attractive there is the baskets of the basket of goods, the basket of kinds of companies similar in the U S. When you're looking at US equities that you like in general, whether it's pharmaceuticals, some logistics companies out of the Nordic States.

But I think the upside, the opportunity could be these weaker financial institutions and how do you dare saving Greece, Spain, Italy have a Barbell strategy, you have the risk out there. You want to own the big, big guys that I mean to interrupt, but the theme this morning David Gura has been mergers in combinations. That's the only way in a subpart nominal GDP is that just what we're gonna see. Joe Quitlin is Andrew mellon Redux. I mean, you have

more more Bolton's. It's it's very hard to drive that organic growth and you're gonna you're seeing really transatlantic alliance become even more consolidated by industry. I think that's time. You know, you gotta buy the market share, and the shareholders are okay with us, so the border directors, it's just very hard to come out and drive that get those new markets. David, I think this is a huge deal.

I mean, given what we see on the tape with futures deteriorating just in the last twenty minutes, yields once again coming down Joe Quillan two one. They haven't broken through in the two year but you really just wonder if rates don't rise, that's got to mean cheap money, which means the strongest stronger, right, the strongest stronger they can they can take on more risk, leverage up. Not not to the point where we're looking at it, but I think you know, the m n A, the share

buy backs, the dividends. Time. You know, it's a it's a tired story, but it's it's playing out and you don't you don't want to miss it. Given where the yields are in the fixed income you have a lot of have a lot of people missed it. John Trucker Total total no I'm totally on top of it now. I think a lot of folks have it, just the disbelief of waiting for the turn and it hasn't come yet. So we want the dividend payers, the growth players, and but you can get some upside when it comes to

the emerging markets. And I think some of these technology companies leverage. Is there a limit to the leanness? How lean these companies can can become? That's a good question. We're working for a bank, I always think that same thing. Um, is there a limit? Yeah, not yet, not that we've seen, right. I mean, it's a remarkable what we get out of a workforce being so taunt and tank that it is. So, I mean, is there a limit? Sure? But we can

we can automate. But the question is the consumers when we're sitting on a line for like, you know, two minutes before we get to a body or that's we pay Joe Quinlin with US Maryland, US Trust through these with US. Joe in the old days used to say, can you withstand a bear market? You know you're go into equities, you put risk in hand, and the bearer markets define I'll call it eighteen percent. The gloom crew would say, it's been so long since we've enjoyed a

ten percent correction or beer market. Are we ready to withstand losses in a constructive fashion? I think constructive. I think so yes. But we're not seeing that, Tom, I mean we were. We're in the portfolios you managed to risk. Um. We do have a lot of people I think well positioned because they didn't put all their money into into equity. If we've got a lot of folks sitting in fixed income yielding virtually nothing, but that that helps them sleep

at night. So I think we can manage the downside. I guess you'd have to tell me how do we get to a bear market? One of the conditions the catalysts. I don't see any of my experiences when we get to a bear market. We get there by not experience, by not knowing it's that was like, oh, that was harsh that now we see it was to see a certain percentage of our younger girl like audience has never

enjoyed the bearer market. But with Tom, I think what I've noticed with some of our clients, many of our clients actually coming out of the Great Recession two thousand nine two, they really remain cautious. We have we have clients still in cash, for instance, or they're buying hard assets timber, farmland, um, gold, commercial real estate. So I don't see I see a cautious undertone to the investors since two thousand and nine, So maybe that minimizes some

of the risk on the downside. We'll get through the Comy polluts of this week and two too next week when we have a two day FED meeting. We've heard a lot of commentary from Fed policy makers about the challenges of the plans for unwinding that massive balance sheet, and a lot of the maintaining it's not going to have a huge effect on on the market. Least that's their their hope. What's your sense of of how that's all going to play out. I think it's gonna play

out very in a very long deliberate ways. I mean, very very long term. It's not gonna happen all at once. I think the Fed wants to move next week and then kind of step back and reassess how strong is the economy, what kind of cute three numbers where we're gonna look at, you know, we need the underlying strength to unwind the balance sheet, and so so does Europe and Japan and everyone else for that matter. So I

think that's it's unwinding. The balance sheet is an out front and center, but when it comes to actually happening, you're talking story mark one. In that end sense, it's gonna be a long term process. That long. Yes, I think it could take that long because you're you're it's gonna you're gonna They're not gonna do it all at once.

It's gonna be well advertised. I think they're gonna go slow. Now, another issue could be who's gonna be running the FED a year from how or so that's gonna be another issue in the composition of the How much thought are you giving to that? I mean, how big a difference could that make? Names floated now about who might be We're just we're just starting to look at that kind of I don't think no one radical, but like it could be something that could be a variable in terms

of the timing. I look, Joe at all the discussions today people in the markets, and they still go back to basic securities research one on one, which is multiples, multiples. It's a bit rich right now, Where is the value in the market thinking the value in the market. Time. I think in certain I think banks are still there's some good value at banks, you know, whether it's large banks, some regional banks. And is that because you wake up January one to know you're gonna get x percent dividend

dividend growth and in share buy back. UM, that's part of it. But I also think the banks are you know, many of them are under owned. I think there's summer trading at book value. UM. I believe the US economy plots ahead, good demographics, household ownership is rising, the household in general net worth is at all time highs UM. So I think there's some value there and believe it

or not. Time I think there's value in technology. I know that's crazy because I just go back to like all the new Internet users are going to have these phones, these devices get connected the digital global economy. It's that we're only halfway there in terms of overall development. So there I see some value there. Hold in on that a little bit if you would. I mean, we saw what happened with with Snap. Are you interested in the

hardware side more than the software side? Where where do you see that value where that potentially more in the hardware. I mean looking at an Apple or even say a Facebook. If they can crack India, I come act to Indian China because over two billion people in India's behind when it comes to the Internet usage. But it's coming. You see with the females, the girls. That's gonna be a big issue driver for education. So you know Africa's to poor. Do we have a smartphone just yet? But that's changing

rapidly in the big cities. So I think, you know, you've got to look at these big US multinationals, look at the valuations, how can they drive earnings? And then you've got to look at the emerging markets and match it up. So very valuable. Thank you so much. With Marylynch and US trust. Joseph Quinland with US today. Failure to Adjustice a wonderful complete book on trade dynamics. It will make you smarter and more cute about our trade.

Hees with the Council on Foreign Relations and he's gone rusvelty And is that how you pronounce it, David girls, welty and honest. He sees a new deal in the trade world. When you say new deal, Ted Alden Republicans turn shades of pink, what is a new deal in trade? No, I'm sure, I'm sure they do, referring to a new paper I've I've written with my friend Bob Lytton, who's

a superb economists. We're, you know, we're trying to think through the problem of you know, here we are in this hyper competitive global economy, and it's not just trade, it's technology, and Americans are having trouble responding to that, particularly a lot of people who are not getting the education the skills they need to thrive in that economy. And we argue that we need to think about that, uh, systematically,

at the federal level, at the state level. And the Republicans have a lot of good ideas here in terms of of, you know, people taking individual responsibility for their career choices. But Democrats also have a lot of good ideas in terms of trying to give people a leg up. So so we were trying to blend those two in this in this new paper we put together and walk us through what you're proposing, just in in broad detail.

One of the as you're you're suggesting, as we need kind of a kind of national and elective national service mechanism just to get people trained, get people new skills. I mean, there are a bunch of different things. On the one hand, where we're arguing, you know, let's let's eliminate obstacles to people being able to find work. We've got licensing restrictions across states that are a huge obstacle.

You look at land use restrictions make it very difficult for people to move to areas where jobs are being created. I mean, we call in general for you know, tax reform to increase investment. That's all things that the Republicans would be very positive about. On the other side, you've got to make it possible for people to acquire the skills they need to fill the good jobs that are

being created. So we call, for instance, for for lifetime career loans where you know, not just borrowing for college, but you could borrow to to train at any point in your career, repayable based on future income, which is an idea that's been developed in the in the student loan area. And then on the service side, particularly for young people, expanded opportunities for or National service to work with with other people from different backgrounds to develop a

set of skills to launch them in their careers. It sounds positively Australian. With my limited knowledge of the Austrians have done well at some of these things, so well, I guess I'm gonna learn. Now. Do we have any political feasibility on either party to be less American and more Australian? I mean, I do think, you know, we're in this period where predictions are really hard because the

Republicans are a divided party. I think some of what Trump ran on I think fits very well with this agenda, particularly helping you know a lot of the voters from the rest belt who put him in the White House. But you've got a Republican party that's that's still basically a tax cutting party, very allergic to any sort of positive role for government. But I do believe there is the possibility here for new cross party coalitions. Whether we're gonna get there remains to be seen, but I think

the possibility exists. Ten Alton, this we will continue with the console foreign relations. We'll go back to more traditional tradegar you want to talk some sugar, you're in charge with us. A senior fell at the Council on Form Relations, author of the book Failure to Adjust How Americans Got Left Behind? In the global economy and going to break

ted I said, I wanted to talk sugar. Looks like we're going to get a press conference this afternoon with wilpur Ross, the Secretary of Commerce, on a deal with Mexico on sugar. So much of our focus has been on NAFTA, the prospect for reforms or changes to NAFTA. Of course, the White House sending it's a letter to Congress indicating it plans to renegotiate that deal. What can we learn about this administration's trade policy from how they've handled the issue of sugar with Mexico. Well, we will

see what the deal is this afternoon. But I think this is actually an encouraging sign. I mean, sugar is one of those difficult issues where you've got, uh, you know, a very protected market in the United States, sugar producers who rely on quotas and other trade barriers. You've got a Mexico this pretty efficient in producing sugar, sells a lot of it to the United States. And so this is just one of those shoes where you've got to balance off the interests of Mexico the interests of sugar

users like candy makers here in the United States. And the interests of the sugar producers in Florida and the sugar beat producers in Minnesota and other places. And I think the fact that they've been able to come away with a deal is very encouraging. I mean, you contrast that with Canadian lumber, for instance, where we're in the middle of of a much more serious trade conflict. I think this is a good sign. I think bodes well

for the NAFTA renegotiation. What if you have observed about the interpersonal relationship here between Secretary Ross and his Mexican counterparts, when when you look for signs of optimism, does it seem like there is a a good basis for conversation at the very least between between these officials. I mean, I do. I think Ross has emerged as a very important figure in this administration on trade. He's very active

on the subject. He's very engaged both here in the United States with the various interests and and with his foreign counterparts. I think the fact you've got Bob Leitheizer now confirmed as the US trade representative, I think we have the makings here of of a serious professional team on trade policy. And I think the fact of the sugar deal has come together. Here's an indication of that. What do we know about Bob Lightheiser helped be different

from Wilber Rosse's in Paris? As I understand it, this week meeting with THEOE see the beginning to travel some. Of course, Wilbert Ross has been doing the bulk of that while we were waiting for the confirmation of Bob Lightheiser. What's he gonna do differently? How's he going to compliment Secretary Ross? Well? I think there's clearly some overlap. They both have a long history in the steel industry. Ross is an investor and Lightheiser as a trade lawyer in

Washington for steel interests. Um. You know, Lightheiser goes back to the Reagan administration, very long history working on these issues. I think they they share in common the belief that the United States needs to be tougher with its trading partners drive better deals. Um. I think they're the difficult issues will have to do with the role of trade negotiations going forward. I think Lightheiser is more amina boll

to to doing trade deals of various sorts. I think there's a fair bit of resistance from from the White House and and from Ross, So we'll see how that plays out. How are we staffed to do trade? I mean across state, across commerce, etcetera, etcetera. Are we staffed? Does anybody called in Ted Alden Well? I mean, no part of this government is properly staffed. The Trump administration is woefully behind and filling the key positions. It's starting to happen slowly. In trade. Um, We've just had a

deputy U. S. Trade representative announced. There's a uh, you know, an international Trade under secretary in place in commerce, but it's still a kind of very thin layer at the top, and and I think unfortunately it's very imbalanced. You've got extraordinary representation from steel and other heavy industries. You know, nothing in the senior ranks dealing with the very important services part of the economy and financial services or banking, architecture,

anything else. You've got nothing dealing with intellectual property, industry, treas. Uh. The agriculture side is still really weak. So a lot of US trade interests are not yet well represented in this administration. That's about the climate deal. I remember there was some criticism I hope I'm remembering this right, some criticism of the Trans Pacific Partnership because it didn't address climate head on or in much detail or trade documents.

Good writers for things like a climate change In the light of what we've seen over these last twelve eighteen month after this this campaign and the rejection of the Trans Pacific Partnership, are they going to become writers for for issues like those? Well? Yeah, here's my concern on

on on Paris. The there's been a trade issue that's under underlies all the discussion on on climate, and that is, if you have some countries that are using a lot of of cheap but dirty energy, are they thereby gaining an unfair competitive advantage in global markets? And so you've had the Europeans muse, for instance, about charging a carbon tax on American exports to offset that advantage. The Canadians

have sort of mulled over the same idea. It's never gotten uh to a point of being a serious threat yet, But with the US now having pulled out of the Paris Accords, I think that is a more genuine threat. The US for a long time was a leader on pushing for environmental related provisions in trade agreements. It now seems to be on the other side of that issue. And I think the Europeans are going to be pushing

that much more strongly. Something to that to me when when Scott Prute was speaking in the Brady Press briefing room after the President announced his decision to pull out of the Paris Accord, uh, he was talking about going back to the table to renegotiate the Paris deal, and he said the US will always have a seat at the table were the US And I wonder how that rings out across Europe and around the world in light of what we've seen with Paris, with the G seven,

with the NATO summit. To to an extent, is is this administration overestimating its ability to get back to the table to negotiate deals like the Paris Accord? I mean, I do, actually, I mean the problem with that, and you know, with that idea in the Paris or it is that the targets were always voluntary under Paris, So you know, the notion that you're going to somehow go back and renegotiate it fundamentally, I just think it's kind of nonsensical and I don't think the rest of the

world has any interest. It's extremely hard to put together these multi country deals I mean we've seen that in trade. We haven't had a successful World trade round now for more than two decades because it's so hard to put these deals together, you know. I think the same is true with the transpecific partnership. I mean, the U S if it wanted back in, I think could get back in. But the notion that you're gonna redo that whole set of negotiations, I don't think there's a lot of appetite

for that. I think other countries are gonna move forward on their own without the United States. I think militarily, clearly, the United States is indispensable. In economic terms, not so much. Countries have lots of options that don't involve the United States. Can a president have power within trade discussions? Is there such a thing as an executive order or executive action in the ted Alden world. Well, we'll leave it there. We've got some difficulties. Our catting folio is at the

desk trying to figure out what's going. We think ted Olden for being with us from our studios in Washington. But there seems to me a fat was that you, John Tucker, Nobody could understand your question. That's what it was. Okay, I think, Dave David, I mean, isn't that a fair question? I mean, the President is acted. We had the news yesterday that he ripped up the NATO speech in some way and acted almost at hock. I mean, can he

do that in trade? I'm not so sure he can, but we are we are seeing h or we have seen with counterfailing. Dude, he said this White House was approaching things and more piece piece me away, and uh, you know, I think that as we saw yesterday with this letter that the President signed publicly, he is making his intentions, knows about what he wants to wants to see in a more formal way than his predecessor. Brought 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 Fenner and Smith Incorporated. California gowner Jerry Brown signed a cooperation agreement with China on climate positive trade and investment. That move comes as President Trump announces the US withdraw from the Paris Climate Agreement. Governor Brown discussed that initiative with the Bloombergs to McKenzie are called Tom mackenzie in Beijing,

and let's listen to a bit of their conversation. We can't reduce our carbon footprint unless we deal with transportation. Transportation is of the greenhouse castes. The only way we're gonna do that is with clean cars. The clean cars are not just gonna come out of California, although that's part of it. They're gonna come out of China and

other parts of the world. But I have to say China is a real driver in the money they invest in the diligence of their innovation, and I want California the partner with China in that endeavor, otherwise we won't be able to achieve our climate goals. And you talked about innovation there. How much of a threat do you think is opposed to US innovation in clean tech green tech that they've led in in California but across the US. How much of that is under threat now from Trump's

decision to pull out of the Paris Climate Accord. Well, I think the role of America in the world has been reduced because of Trump's pullout from the Paris Accord, And in general, I'd say the Chinese are on the move there are rising power. Writers are noticing how does the rising power get along with power that maybe slowing down a bit. So I would say that we're definitely um facing competitive pressure, and at the same time, we're very divided. We have a lot of issues about identity,

about politics. The Republicans are so divided from the Democrats. I think we're gonna have to find more national unity if we're gonna be able to maintain our leadership, let all our so called dominance. I mean, China has got one point three billion and they're investing in America now at least of President Trump has his wife is going to reduce their health, their medical investments, their energy investments,

and put most of their investment on on weapons. So I would say that's short decided and under the best of American leadership, we've got to work cut out for us because China is so much bigger, and their command economy along with capitalism and the market economy, is a very powerful, uh combination that we're gonna have to find in our diversity and our entrepreneurial spirit also a greater unity, or we're gonna find that we want to lose markets.

That's California got to Jerry Brown in conversation with our colleague Tom mackenzie, who was based in Beijing. Jerry Brown in China signing agreement on climate with with the Chinese government. Michael McKee are International Politics and Economics correspondent tuning us here on Bloomberg eleven three oh Studios Now and Mike I was struck just in the days following the US decision to withdraw the president decision to withdraw from the Paris Climate Agreement. How much of this was couched in

economic terms? You saw the statement from President Obama, president Trump's predecessor, saying that that was what was going to be lost largely by this, not really mentioning the environment and some to some degree here, but really focusing on the economics. Yeah. Well, President Trump made it all about economics and the idea that the climate accord would cost jobs in extraction industries like coal mining and uh and

you know other energy production. Uh, it may not really do that because other factors are already weighing on those industries. The price of natural gas is killing coal at this point. You look at the Chinese ease. The pollution is so bad they're mothballing plants at cold fire plants as fast as they can. They set a goal of reducing their having their carbon emissions peaked by and it looks like

they may beat that by ten years. Where we may miss out on jobs is in the industries that might be supported by federal dollars, you know, research and development of clean energy opportunities. And that's what Governor Brown, along with the idea of global warming and its impact on the environment, that's what he is talking about. He signed an agreement today with the Chinese to to work together on developing electric vehicles. We forget this, but Governor Brown

was a driver of Plymouth satellites. He was so conservative and he was so cool for school. He drove Plymouth satellites, basic frugal cars. Is he a liberal, Oh very much so. He's very much a liberal, and he's governed in a very liberal state twice. Now. California is so big. It's economy is the sixth biggest in the world, in the world, and it has long been accused of having its own foreign policy, and that is becoming coming into even starker

relief now with their disagreements from the Trump administration. And you see that in this trip to China. All governors go to China and pitch their states and come to business with US and sign trade deals. But no governors that I know of come out and issue foreign policy

declarations in opposition to the unit. Essentially he did. He said that the Trump withdrawal from the Paris Accord will be a significant problem for the world and for the United States, and he committed California to work with China. Are you gonna Are you gonna stay around so we can talk predators hockey? We can talk predators hockey and those I don't be well, the real question is is the bad breath question? You know? Come on, it is

great hockey, That's what I know. I usually do my Book of the year end of June into the fourth July weekend. We can't do that because he's in the studio, And so when the guest shows up in the studio, particularly because he's usually a scon stuff outside Boston lecturing at Tufts in the Fletcher School, we will do it. Now. It's called the Leader's Bookshelf. It is the most odd

and twisted book of the year. Take a guy who knows what he's doing, who reads a lot, go out to fifty of his best friends and say, which fifty books would you read? So with the Leader's Bookshelf you get about when you get more than fifty, you get like seventy or eighty books. Were basically a lot of people smarter than you and me say shut up and read this, and it's proven very, very successful. James Travisis joins his x U S Retired our et period U S Navy. Which book did you learn about as you

put the Leader's Bookshelf together? Which book surprised you? The book that really surprised me was Connecticut Yankee in King Arthur's Court, which was suggested by my friends. Stay Captain Courageous is in there as well. Indeed mine was Connecticut Yankee King Arthur's Court, Mark Twain, suggested by General Stan McCrystal. It's a book Tom about innovation and leadership. Here's a nineteenth century engineer goes back a thousand years in time.

By definition, he's the smartest person on the planet, but he can't get anybody to do anything. He has all the right answers, but he has to drive innovation home. Terrific. What would President Trump learn from reading Kipling's Captain's courageous. He would understand the courage that is needed by men and women who go into combat. And I think it would weigh heavily on him as he makes some hard decisions coming up about, for example, more troops to Afghanistan,

more troops to Syria. Let's tail this with your your new book. Pretty prolific. Anastadis with the new book See Power, The History and Geopolitics of the World's Oceans. It's part history, part prescription for what should happen when it comes to our maritime issues, and also memoir. And you write about the first time that you stepped onto vessel sailed across the Pacific. When were you reading when we when you were in the navy, when when did you find time

to do it? How important was reading to you as you worked your way up? They only worked like a three hours. Hey, you know, as mayor may not surprise you. Of all the services the navy, officers and men and women are sailors are huge readers. Why because it does take time to get from San Diego, California, to the Arabian Gulf. You're not in danger while you're steam in there. You stand watch, you make sure the ocean is not gonna take out something on your ship. But at the

end of the day, you have time to read. So many sailors are readers, and I tried to pour all that into Sea Power, And that's how the two books fit together. How important is our navy right now? When you look at all of the conflicts around the world, what role is the U. S. Navy play? This is the heart of the book. And frankly, it's three things. It's trade and making sure that these global commons are open as as you all know of the world's trade

moves by sea. Secondly, it's the alliances and the geopolitics because Russia and China are rising in this capability. We don't have a free ride. The oceans are not in American Lake. We've got to compete. And thirdly, it's the environment of the oxygen that we breathe actually comes from photosynthesis in the seas. They are crucial for us. There are plenty of people you among them, calling for a bigger navy, for for more ships. Square that for us.

We have a huge navy compared to other countries around the world. Why does it need to be bigger? Why do we need more vessels at this point, let's do the numbers. UM. We have two hundred and seventy five warships today that are capable of offensive combat operations. Every responsible analyst says we need three hundred and fifty, David, and that's because of the scope and scale of what we need to do. We're in the East durn Met

jostling with the Russians over Syria. We are in the Arabian Gulf trying to keep Guitar and Saudi Arabia from blowing up and keeping Iran from closing the Strait of hor moves where in the South China Sea where China is attempting to take over the entire body. And we're in the Arctic plane hunt for Red October. We've got a lot of needs for ships. We need to go from to seventy five to three fifty. Tim Alex Lacki writes it up in Business Insider. It's Lady goulf I,

think again. We have three aircraft carriers, two cruisers, twelve destroyers trying not to run into each other at night somewhere in the vicinity of North Korea. Should we how should our listeners interpret that animal? Um, it's rare to put three aircraft carriers together, but it's not unheard of. It sends a powerful signal. The first thing any president asked as crisis looms is where are the carriers? When a president puts three of them together, Secretary Maddis knows

the impact of this. It's a strong signal to North Korea. That's what going on. Do we know where the carriers are? Can they be like a submarine where they're sort of out there but nobody knows where they are. We know where they are always, obviously, but it's hard for others to track. These things can move tom at a thousand miles a day, So these are big machines of war. Seven acre flight deck, eight combat are absolutely deal. Indeed, I commanded Enterprise carrier and she could go up towards

thirty five not she had eight nuclear reactors. Never needed. Big misconception that we have about Enterprise or other carriers. The public, what's what's the thing we get most wrong? I think the public would say, well, these ships must be invulnerable. There are a hundred thousand tons. They're just enormous. They have all this defensive capability, but unfortunately they are vulnerable to see minds, to hypersonic cruise missiles, two submarines, so we have to have the destroyers and crew users

around them to protect them. I think the public doesn't appreciate the integrated defense that's required for these beautiful, beautiful carriers. We'll come back here in just a minute. But what's what's on the horizon when it comes to technology, what future ships look like? We hear about the literal combat vehicle, all of that. What's what's the ship of the future look like. It kind of looks like what you'd picture

as Batman's destroyer. It's very modernistic, it's got stealth technology, it may be able to semi submerge, it'll operate more unmanned vehicles often, and above all, it'll be much more hardened for cyber conflict, because that's where war is going. Come back here with m James Stefred is now the Fletchery School of Tough author of See Power, The History and Geopolitics of the World's Great Oceans. To Admirals, say read it. Mr Mullen, Admiral mccraven is all a captain

says read it. He would be John McCain of Arizona and Robert Gates has read it as well see Power. Very thoughtful about is David mentioned the geography of our oceans. We're gonna come back with Admiral Stevidus lots to talk about, including uh, some of the vignettes from his Leader's Book. It is my book of the summer, and we'll do a lot with that in the next four or five weeks. We're eve gonna try to force Michael bar to read it as well. Read Read Leader's Bookshop David Gara and

Tom Keene in New York. This is Bloomberg Surveillance on Bloomberg Radio here with retired Anaeld James to read is the author of Sea Power, The History and Geopolitics of the World's Oceans. And we were talking yesterday with Larry Summers, University professor at Harvard about a piece that was in the Wall Street Jurnal not just about a week ago by Lieutenant Generally A char McMaster and Gary Khen, the Chairman of the National Economic Council at the White House.

They were laying out their vision or the White House's vision here for the USS role in the world. A big theme throughout your book, your new book is the importance of alliances and Uh, I wonder what you've made about that piece in the Wall Street. You know what we saw at the G seven, what we saw at the Native summit preceding, and how worried you are about what the trans atlantic relationship is going to look like, what the U. S has role in the world is going to be. I talk a lot in Sea Power

about the way we should think of the oceans. We tend to, unfortunately think of them as discreete little lakes. The Mediterranean Sea, the Caribbean, the Atlantic. They're all connected. So I am very worried that we are. You would say in the investment world, we're undervaluing, We're underweight in the alliances right now because the White House is not making the right moves to reassure allies and get them

in this case to see with US. NATO has good capability in that regard, but we're dismissing it and not building the alliance structure we need for maritime operations. When you look at the team of advisors that President Trump has, and we've talked about how it's smaller than you might expect, there are a lot of jobs that haven't been filled

filled yet. Are you satisfied that there are people. They're giving him the right advice or nuanced advice, or the kind of information he needs to do his job well. Whether or not he accepts that or works off of it is another question. But are those people around him? Are they there in government right now? He's got the right team at the very top, David, But there are no deputy secretaries there, or no assistant secretaries the next

level down. There are no senior executive service. We have no secretary of the Navy, and a gaping hole in the size of our fleet, as I talked about in Sea Power, So that nuanced advice is at the very top, and it's not clear to me he's listening or acting on it either. I brought it up the day came out. Thank you Bodin for giving me the heads up. David from Row in The Atlantic, David Brooks in the New

York Times. Laurence Summers was with us a few days ago, all talking about this concept of arena, which to me is out of Game of Thrones or an old child in Heston movie. How does a grizzled military veteran like you look at the comedy of a politician speaking of an arena? Arenas as a term and the way we ought to think about it is the last resort. We don't want to go into an arena anymore than we want to go into the thunder dome to go in

the wrong way to think about it. We need to be finding solutions that are collaborative, especially at sea in this maritime world. Arena really bad mental map. I want to go back to one of the books in my my book of the Summer, the Leader's Book of Yours, Admiral, and there's those points where you just stopped den your tracks. And it may be in April Harriman, who served for years, or John hay Of of hundred and fifty years ago,

Lincoln secretary who worked with Roosevelt. There's a point in the end of Eric Larrabie's book on f DR where James Longstreet's wife, his young wife is a riveter in a World War Two factory in Georgia. Who was the oldest general or type you worked with? You were out n nobody wanted to join the navy you did. Who

was the elder that you saw within your career? Um The admiral who most impressed me in terms of longevity was Admiral Verne Clark, who was a chief in naval operations, and he was came out of the mold of Admiral Lee Burke. He was a destroyer officer. He operated high speed at sea, but deep and thoughtful when he came

ashore in the Pentagon. Those kind of figures for all of us who pull us along in our lives, are crucial you Right as I said, the book is part memoir, and each of these chapters is divided by a different ocean. You start with the Pacific, there's the Atlantic, Mediterranean, Arctic. Uh, there's the experience of going to those places for the for the first time. In the romance associated with that, you say that your dad was not one who was fond of being on the sea. You you end up

joining the the Navy. When you look at recruitment today, young people who are weighing whether or not to join the service, how do you how do you what's your sense of how how likely they are to do that? What is the Navy need to do more to recruit people to following your footsteps to join the Navy. Well, and first of all, that's essentially why I wrote the book to talk to the next generation of sailors coming along.

And uh uh in part what I had learned, which was simply a pass through of what others had taught me. David Um the Navy needs to help identify that to be on a ship at sea is is being part of a long continuous line that goes back thousands of years, That it's in office with the best view in the world. That you bond with your shipmates in a way you can't in any other profession, and that you live a life of adventure and travel. Not a bad package if

you think about it. Mother of all oceans, the cradle of colonization, the future see the Mediterranean rewar at sea began, the likely zone of conflict installed in the past, Caribbean promise in peril up north and is Admiral Stevida's mentioned the outlaw sea oceans as crime scenes. The new book is Sea Power, History and Geopolitics of the World's Oceans. Uh,

we will take a close look at that. Just it just outright like the movie right today today today today, if the movie rights, did you force everybody it toughs to buy this? I did. And also also they've already cast me in the movie. It's gonna be Danny DeVito. George Clooney inexplicably turned the part see power with Danny DeVito looked for that Memorial Day, fourth of July two thousand, nineteen April James de Vitus of Tufts and Fletcher School

as well. I think he did listen to me. He didn't decide what I wanted him to decide, and I think he decided wrong. I think it's not good, not in the best interest in the United States what he decided. And uh so. But but in terms of you know, the way that I look at this thing, and do you do you interact with politicians or do you not? Um? My view is that first and foremost things are about can you help your country? And if you can help your country and you do that about interacting, then you

do it. You have other people that are leaving the table, though, like Bob Eiger, like Elon Musk is the President jeopardizing his relationship with one of his key constituencies. That would differentiate leaving a council and advising in a way that you think can help our country. And I think the first one is a judgment call that people make. Uh I didn't join a council. And so it's not a decision I had to make. But but I understand both

sides of that. Uh. But but advising on something that you believe will help America, I think is a is a is a requirement as a as A as a CEO, you you definitely do that. And you know, if, honestly, if I get the chance to, uh go pitch the Paris Agreement again, I'm gonna do it again because I think it's very important that we engage to fight climate change on a on a global basis. This isn't something where you can solve it country by country. It requires

a global action. You know, omissions created in one country affect another. And uh so you know, it's something that we feel very strongly about. And uh I wanted to do every single thing that we could do to um to tell how important it was to to stay in the agreement. Why didn't you join a council? Why didn't I? Because?

Uh two reasons. One, my primary job is being the CEO of the company, and I spend the bulk of my waking hours doing that, and and I do so willingly because I of the company and the people in it, and so traveling back East isn't something that I that I look forward to doing except when I need to do. Secondly, I don't find these councils in general and committees to

be terribly productive. And uh, but but it it wasn't about not wanting to advise on something where I thought that, um, you know, we could help or we had a point of view that should be heard. And so I'm doing the ladder. I can't imagine a situation where I wouldn't do the ladder because I think it's in the best transience of America to do it, and I am first and foremost in America. Thanks for listening to the Bloomberg

Savannahs 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 could 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, Pierced Fenner and Smith Incorporated,