Transcripts For BLOOMBERG Bloomberg Markets Balance Of Power 20240713

And the u. S. Is out with secretary pompeo showing they had intelligence showing there was going to be an imminent attack that justified this strike at an iraqi air base where Kassem Soleimani was believed to be coordinating the actions of the iranian officials in the country. David the ayatollah has said there would be serious repercussions for the United States. What is the United States doing to try to protect us against possible attack . Bill u. S. Has ordered americans in iraq to leave. It is bolstering security at key facilities. There are a lot of new potential targets for iran to strike out in the middle east. Dozens of military and civilian targets, as well as more soft targets, places like shopping malls and other soft targets in countries and the region. There is a lot for the u. S. State department and the department of Homeland Security to do in the u. S. Analysts are looking for a possible early reaction or response from iran to come on a cyber channel. Korea andith north russia seen as having some of the best hacking capabilities in the world. That is one area u. S. Officials are keyed into. David thank you for reporting to washington. That is bill faries. Lets stay in washington with jordan fabian. We know the president is in maralago in florida. What are we hearing from the white house about what led to this attack . Jordan we have not heard a lot from President Trump personally. He has not taken to twitter this morning he has taken to twitter repeating some of the lines bill was saying, saying soleimani was carrying out attacks against americans and was plotting more attacks and had to be taken out. For allowingd iraq iranian influence in the government and said soleimani should have been taken out long ago. There are still many Unanswered Questions about why the president ordered this attack, especially when it seemed like the protests at the u. S. Embassy in baghdad were subsiding. This is significant escalation. We have not heard the president publicly, perhaps unusually after such a consequential decision. He is scheduled to speak later today to evangelical supporters in miami. Perhaps he will address the situation more broadly. David that was a political rally with the evangelicals in response to the christianity today editorial. Are there any plans to speak to congress who wants to know more . Bill just before we came on air we were hearing that key members of congress, congressional leaders are starting to be briefed. We heard some members of Congress Even before hand. Lindsey graham was on fox news. President wasthe cluing him in on some of this before was happening. We are still trying to piece together exactly who knew what when and he was informed before the action was executed. David thank you so much. That is jordan fabian who reports on the white house for us in washington. It is time to figure out how the reaction has been in the market. Abigail doolittle is here for that. Abigail we are looking at a classic risk off day. If we backup, that has a lot to do with the recent sense of 2019,g could go wrong in especially december, priced perfection from the valuation standpoint. But also sentiment not pricing in the possibility of some sort of macro uncertainty along the lines of the middle eastern tensions ratcheting back up. He of investors selling stocks, going into haven assets. We have been talking about havens over last couple of days. When you start to see a divergence between stocks going up and havens going up, it typically speaks to something unexpected happening. This could be accurate david spend a minute this could be it. David spent a minute on that one grade part one green part. Bill oil abigail oil. However given the fact that you have this attack and the fact that iran could retaliate and disrupt the supply picture, not as much as you would expect. Well off the highs. Just the best day in a month. Investors telling you cooler heads are prevailing, waiting to see what could be next in these tensions. David we are all waiting for that. Thank you to abigail doolittle. Now we want to go to san diego and Michael Mckee at the American Economic association meeting. I will start. Are they paying attention to this at all . Michael they are. Obviously people are talking about it the way they do anywhere. The economists are all wondering what it might mean for Global Growth in the United States. I spoke with Charlie Evans a short time ago. He said it raises question marks about the economy but it is too early to know what kind of impact it will have. Have to see how it plays out. Said, but are up, he the u. S. Economy is Strong Enough to withstand that because we use a lot less oil than we used to. They are much more concerned about the ism number. Evan said it was quite a surprise to him in november. It goes up a little bit. He thought it was related to the gm strike, but that is over. Now it does maybe suggest there is more weakness in the economy than the fed thought. They will look for other indicators to find out if theres anything that backs that up. David it is fascinating. Up said there was one tick but it has been several months it has been down. Does that do we have a problem with manufacturing . Michael we do and people trying to figure out whether it is definitely related to the tariffs. Ew paper suggests it is the president s tariffs have resulted in higher prices for manufacturing inputs and job losses. If that continues, if the phase i deal does not turn things around, does not raise confidence among business ceos, it could lead to deterioration in the economy in 2020. That is something Charlie Evans and his politics will be watching closely. David many thanks. Appreciate that reporting. Mike will be back at 1 00 eastern time to interview cleveland fed president Loretta Mester on Bloomberg Television and radio. We turned to Viviana Hurtado for bloomberg first word news. Americanwe begin with citizens being asked to leave iraq by the u. S. State department. The move coming after an airstrike in baghdad. One of irans most powerful generals was killed. Qasem soleimani leading militias that extended irans power across the middle east. Toe pompeo called on tehran deescalate tensions in the region. We do not seek war with iran but at the same time we will not stand by and watch the irradiance continue to put american lives at risk without responding in a way that deters and creates an opportunity to deescalate the situation. Viviana florida senator marco rubio said soleimani was planning a coup in iraq. Minnesota senator and president ial hopeful reported her campaign raised 11. 4 million amy klobuchar. Elizabeth warren announced her fourth q number. Her campaign raised more than 21 million. On the last day of the year, more than 1. 5 million in contributions was raised by her campaign. The Federal Reserve may drop a hint on plans for the repo market within minutes of its december meeting. We also could get an idea of what could shift the view Interest Rates are on hold all year. 1417 320 20, 14 of 17 officials estimated 14 officials estimated rates would be unchanged. Bill gates says u. S. Lawmakers should close loopholes, raise the estate tax, and increased Capital Gains tax. Bill gates is the worlds second richest person, worth 114 billion. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am Viviana Hurtado. This is bloomberg. David Senate Leader Mitch Mcconnell is speaking right now on the senate floor. He has been talking about iran, saying irans master terrorist has been removed from the battlefield. He has now turned onto the question of impeachment, which is what he was originally slated to talk about. Watches complete speech on the bloomberg at the function live. Ons is balance of power Bloomberg Television and radio. David this is balance of power on Bloomberg Television and radio. This morning political reaction is rolling in on the killing of qasem soleimani. Several democratic president ial candidates questioned the presence decision, and joe biden President Trump to provide more clearly to the public what caused this event. Just tossed ap stick of dynamite into a tinderbox, and he owes the American People an explanation of the strategy to keep save our people and our interests here and abroad i hope the administration has thought through the consequence in of the path they have chosen, biden says. Matt gorman joins us from hartford connecticut. Jeannie, let me pick on you. There was a time you used to say political disagreements ended at a nations borders, we do not take it overseas. Those days are gone. The democrats did not take long before they started criticizing. Jeannie those days are long gone. The criticism came in quickly, but i think joe biden, you just talked about his reaction, he is on point. Democrats have to be careful and cautious, but we need more information on what person potato what has to be known as the most significant Foreign Policy incident and engagement we have had in the 21st century, at least since 2003. You communications guy. Historically, we have the president explaining what caused him to do this. Doesnt eo it to us . Matt i think you will see that in the coming hours. President trump does know how to handle Public Relations and keep folks attention. You saw will see, as with joe biden, Bernie Sanders, and others, is the democrats trying to figure out a message. This reminds me in a lot of respects of 2008. Many of us thought the 2008 president ial election was going to be focused on how to deal with iraq and Foreign Policy, and then september you had the economic crash and that shifted the game to domestic policy and you had john mccain, who everyone knew was a very important policy pop a very important Foreign Policy mind having to talk about things he was not comfortable with. Now that you have Bernie Sanders and elizabeth warren, their campaigns were focused on domestic policy. They need to find their footed their footing and a message not only with iran but a Foreign Policy worldview. David he makes an important point. The most important thing is National Security, but there are potential political ramifications. If you are Bernie Sanders or elizabeth warren, are you hoping this goes away quickly . If you are joe biden, youre not wishing this on anybody coming up that it plays to his strengths. Jeanne it plays to his strengths and mayor pete strengths. Are political ramifications on both sides. One of the things the president will have to be careful about is to tell the American Public exactly why this happened. Lets not forget this is somebody in 2012 who talked about then former president barack obama using a bombing in to energizeffort his base and ensure his election victory. Now we have a president who has done this just after an impeachment. 11 months before an election. He is going to have to explain and make it clear why was this in americas best interest . What are the facts on the ground. Democrats will then be in a position to decide how to respond to that. David we do not run the country just for political elections, we run it for the sake of the people. We are concerned about our people and our interests. If you think about the politics, there has to be uncertainty about possible reprisals from iran. What happens if there are attacks on the United States . Is a very matt it good question and there are no easy answers. If i was advising President Trump, i would tell the American People several things. I would say this is a necessary action to protect americans here and abroad. No matter the party, no matter the president , that is the president s first job. Over the decades, iran has set the rules and the terms of how to deal with that. You slap them with sanctions but they kept on getting more blatant and bolder with their actions, killing americans, threatening to kill more because they did not think we would respond in kind. Heaction has split tour effects of its own inaction escalates on its own. I would say this was a necessary defensive action to protect the country. That is what i would tell the American People. If there is a possibility about some of these plans soleimani and others had without engaging without endangering the lives of americans, i would be as forward leaning as i could possibly be talking about those plans. David one of the questions all of us would have is why now. General soleimani was not a good man. No question about that. Tactically we are better off without him, but that has been true forever. He has been trying to kill americans forever. Why now is the question . Jeanne absolutely. The president and his administration will have to take clear. United states has taken out the second most important person in a foreign country we are not at war with. It is a big step to take. We have to be able to defend that. We as a country, and the president has to give us the facts to tell us what precipitated this event, what was the reason to do this now. He is going to have to be clear. He needs to make that point now and not wait much longer. We are already 24 hours out. We have still not seen or heard from the president. David many thanks to our clinical panel. Sorry we have to leave it there. Matt gorman and jeannie zeno joining us. Coming up, we talk with the retired general on what could come next as iran promises retaliation. This is balance of power on Bloomberg Television and radio. [indiscernible] we do not seek david we do we do not seek war with iran but we will not put american lives at risk without responding in a way that creates an opportunity to deescalate the situation. David that was mike pompeo issuing a stark warning to iran earlier today after u. S. Air strike killed one of irans most powerful generals, Kassem Soleimani. For more on these fastmoving to elements, we welcome general former assistant secretary of state for political and military affairs. Thank you for being here. Youve have kept us on the story because youve been to iraq even recently. The question i have at the moment is when will we get a better sense of why we did this now . General soleimani was no walk in the park. He did a lot of bad things, but that has been true for some time. What we are hearing from pentagon sources is sometime today we will get information from perhaps the president , but everything that has been indicated so far is that soleimani was in baghdad, came into baghdad for the purpose of overseeing a robust and dangerous attack on u. S. Forces and u. S. Facilities. If that is the case, it is probably in the best benefit of the president to explain that as at least some justification for why he took this heavyhanded response. David we have a sense of where the Iraqi Government is curated it is something youve been focused on, whether we are cooperating with the Iraqi Government so we do not undermine our position with them. Gen. Kimmitt i think we are. The Iraqi Government is the meat in the sandwiched between iran and the United States. That is where they never wanted to be. They want to be strong, sovereign, and independent. Right now they are concerned their country is going to be used as a proxy battlefield between iran and the United States. David general soleimani was the war hero from the iraniraq war. Is there a chance we have degraded their capability by taking him out. Was he that good . Gen. Kimmitt he was that good. We have a begrudging respect for his capabilities. We have no tolerance for what he has done, but he was a strategic genius, he was a tactical genius, and he was the most commanderquds force and one of the Strongest Special forces commanders in history. He has been replaced already, but we cannot think that cutting off the head of the snake will kill the snake. He will be replaced by somebody not as good as him, but somebody who can keep up the fight he has been fighting for decades. David is there a chance somebody not as good as he is takes rasher actions . Gen. Kimmitt could be. Could be he takes more timid actions. We do not know. Right now things are hot in the region and i would suspect many of the iranian backed militias you and i have talked about for so long will take action on their own because they do not have somebody like soleimani who is calibrating and organizing operations. David the ayatollah has said there will be real repercussions for the United States. Lets talk about cyber. What are their capabilities . Might that be a way of their retaliating without escalating . Gen. Kimmitt i think that is not the case. I think cyber will be quickly identified as coming from the islamic republic. There is likely to use drones or likely to use missiles. They may use their speedboats inside the persian gulf to go after the kuwaiti offshore oil platforms. They have a large menu of capabilities. They may not use them immediately, as ambassador pickering said, it may be time before they strike, but they will probably strike sooner or later. David what is our situation with our allies . We have them on board . We have a coalition we can defend against them . Gen. Kimmitt i do not think so. I think at this point the nations around the world are watching carefully, they are calling for deescalation. That may be the only point of agreement amongst us. Secretary pompeo is calling for deescalation, everybody is accept the islamic republic. They feel they must respond and hopefully they will listen to the world when the world says lets pull back, lets deescalate. David as far as i know, we have not heard much from russia. Can we read anything into that . Russia is not pouring gas on the fire. Gen. Kimmitt not yet. The comment from the chinese was helpful, which is lets try to deescalate this. The russians understand what is happening in iraq and what is happening in syria. They have no great love lost for the islamic republic, so i think they are keeping their cards close to their chest. David thank you so much for all of your reporting today and otherwise. That is general mark kimmitt. Next, we will talk with nato partners about Market Reaction to the drone strikes. This is balance of power on Bloomberg Television and bloomberg radio. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. David from new york, this is balance of power on Bloomberg Television and radio. Im david westin. Bloomberg first word news, we go to Viviana Hurtado. Viviana weirdos and misfits. That is what Prime Minister Boris Johnson government is looking for. His top advisers says he wants to overhaul the government, seeking people with different skills and backgrounds. He also said the government needs true cognitive diversity, instead of gender identity diversity blah blah. In spain, a new government has formed, persuaded the Catalan Party to help them win a second term. Separatists agreed to abstain. The move gave sanchez the support to lead a coalition. The Trump Administration says earlyinas president Foreign Policy moves may jeopardize support from the imf and could cost the nation investment in shale, oil, and gas deals. By sheltering the former bolivian president and engaging maduro, they crossed a red line. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im Viviana Hurtado. This is bloomberg. Hit a Lockheed Martin has fresh record high, climbing more than 3. 5 today, as defense stocks rally on the flaring tension between the u. S. And iran. Im not totally surprised. Is not unusual that these groups of companies are rallying in the height of geoPolitical Risk. Northrop grumman is up almost 5 . Raytheon also touching a record high earlier. Lockheed martin had over 50 billion in defense revenue last year. Ti was out with an interesting note, talking about the , whatened Political Risk it could mean for government spending. It could mean increases, gives democrats less of an excuse to hold back on that spending, increasing those already high levels of spending. David President Trump has already given them more money. It it is even more on top of that, it is something. Kailey the Defense Budget of the u. S. Is larger than the next seven countries combined. You look at a company like lockheed, which has gotten approval for 90 jets from ansident trump, obviously area that has gotten a lot of benefit under a republican president. Looking forward to 2020, its often perceived that the fence spending goes down with democrats. That spendingow is trending higher regardless of which party is in office. And analyst talking about the 2020 election said defense stocks could outperform this year. They usually do in election years, but we could have an entirely democratic chamber, and the chances of having that as well as a democratic president is pretty low. David thank you so much, kailey leinz. Investors already had plenty to think about heading into 2020, before the attack that killed a Senior Iranian general. From impeachment to trade to an election year, there is plenty of geoPolitical Risk to assess. Joining us now is henrietta treyz. Before we go on to other things, welcome back, happy new year. Lets talk about whether we should be taking into account as an investor what happened in iraq. Seem to be happening this morning and overnight is the energy worse sector is responding most to the attack but also taking it in stride. The house will get a briefing tomorrow and this evening, will be talking with senators next week. It doesnt appear there is anything imminent that was suggest we are about to get into a fullblown war. The main focus is on secondary tears, things like cybersecurity, the impact to u. S. Personnel in iraq, and in surrounding areas, making sure they are safe from reprisals, but not clear about how iran set retaliate, which will up a storm of what the u. S. Decides to do next. For this moment, it seems to be relatively calm. Before thee calm storm. Investors are waiting to see what happens. Seed it is too early to what the longterm effects would be, but what are you looking at, and one of the questions i have limited toconflict the area or could it spread more broadly in the economy . Henrietta i think when you look at the economy, you have other headwinds. The consumer is driving the u. S. Economy right now. That is clear for the last couple quarters of data. The problematic data we get from ism manufacturing, conflated with escalated gas prices, points to continued drags on the consumer. There could be continued layoffs, reduced wages as ism continues to come down. December was Just Announced this morning. That coupled with the reality that there are still tariffs on a number of goods. When i think about the u. S. Consumer and i see them as the driver of the u. S. Economy, and then the conflation of the drag on the u. S. China trade war, regardless of whether phase one is agree to or not, coupled with higher gas prices, i merely start to recall the great recession. Not that we get to that point, but those are the problems. David when you look at that ism number, which was disturbing, part of a longerterm pattern, do you attribute that to the u. S. China trade tensions, and more generally a reduction in trade . Henrietta absolutely. The Federal Reserve proved that last week in the report. Thats what weve been hearing from the trade associations and the manufacturers from the beginning. Go back to march 2018 when we started to do steel and aluminum tariffs, it was the first downstream utilizers then used to see those higher prices come through. Then you find that out and we have a real problem. Manufacturers have been clear that this is a result of the trade war. You have seen Companies Bring down their earnings estimates for the past year largely because they dont expect these tariffs to come off. Speaking with major manufacturers around the global community, they have every expectation that wants we reach this phase one deal, we will not see an excavation, which is great, but we will not see a reduction. So these tariffs will continue into 2020, continuing to be a drag on these manufacturers. David coming back to the u. S. Attack in iraq, might it change the discussion in washington . One example, a lot of talk about impeachment, a trial in the senate. If we are in conflict with iran, is it going to be strange talking about impeaching the president . Henrietta its an interesting and rapidly moving situation. My understanding is the house will move forward to try to strip President Trump of his authority to unilaterally escalate. There was no briefing by the president or the administration to the top eight ranking officials in the house and senate before the attack. We have heard that a couple senators maybe got a look ahead before this came through. But for the vast majority, and particular the democrats, there was no briefing. My understanding is the speaker of the house has not sent over the articles of impeachment, understanding that majority leader mcconnell will not hold a vote on impeachment until thats done. Comesuggests when they back into session on tuesday, well be going back to status quo, talk about nominating judges, confirming judges, and then potentially get around to usmca. We thought that maybe the way to february or march, but given the articles have been held up, this attack overnight, you could see it delayed even further. I would suggest it goes nomination for a while, lets pretend this is clear, assuming iran does not respond in the ,nterim, move on to usmca despite the president ability or not to wage this kind of attack unilaterally, and then maybe in midjanuary. David that is a complicated winter we have in front of us. Always great to have you with us, henrietta treyz. Stay tuned for our interview with cleveland fed president Loretta Mester. Right now on the senate floor, Chuck Schumer addressing the floor. He says the president needs to be more transparent with. Ongress something that former President Biden has already said. You can watch the complete speech on the bloomberg, the function is live go. This is bloomberg. David this is balance of power on Bloomberg Television and radio. Im david westin. He is perhaps the most distinguished american diplomat of his generation, having served as u. S. Ambassador to the United Nations, russia, israel, and india, ultimately achieving the rank of career ambassador. Ambassador Thomas Pickering from washington. Welcome come good to have you with us. Thank you. Thank you for the kind introduction. David anyone that has been following this knows that have a general soleimani gun is not a bad thing. Tactically aside from what we want him off the board, is there a strategy that we are pursuing here . Tom one wonders. There have been strategies that have come in one way or another, come through in the last months off and on in the trump approach. He doesnt want another war in the middle east. For this, we should all support him. The second is, he wants personally to be out in front, lead the charge in working out some kind of solution, and he had his eye on president rouhani would fix thet he stair, to see if he could work out some kind of an answer. Wouldthe problem with that is e answer has not been clear. Having broken the joint comprehensive plan, the nuclear agreement, there is no trust left. That trust is not going to be uilt by further big states steps up the escalation letter, either by the u. S. Or iran. We have just seen one of those. In awere looking at iran historical way, i would not count on them not coming back, but i would count on them doing so. But i wouldnt necessarily believe that they would do so right away. I think they would try to surprise us. Certainly, the drone shootdown, tanker more recently in the gulf, the question of striking in a Saudi Oil Field were all within the range of possibilities, but not within the range of probability, if i can put it that way. That is part of irans strategy. Iran will not become one with the notion that they should move forward and try to deescalate or solve this problem for negotiations. Both things the u. S. Has suggested within recent hours. But i think we can find a way to do that. A war is not going to find solve anything. A war will require a political settlement. If a political settlement is is, it and i believe it should become before a war, not after. Same time, we had taken military action, taking on general soleimani. Too early to know where this leads, but is it possible we have crossed the rubicon, going from diplomacy supported by economic sanctions, to one that will have military action much more prevalent . A way of looking at it, and i dont think it is necessarily bad. But we didnt have diplomacy. We had a struggle to find a way to a table, but we have never gotten there. There is no communication. Without communication, diplomacy is a nice idea but not a successal equivalent of , or even of progress. So we need that. That is an important piece. Whether our friends, allies, or others will be helpful in getting us to that particular point, i dont know. What i do know is we are still in iraq and still in afghanistan after what is now 17, 18 years without a solution to the problem. Bad, in thisis so case, is military any better to a solution solution to a problem . I think we should see whether the present escalation, as the pressure tactics have tried to do, can get us to the table before it gets us to the battlefield. David mr. Ambassador, one question for diplomats, as you read into the other side what they do, when their meaning is, what is a response from iran that may permit deescalation . It is clear the Supreme Leader will respond somehow. If, for example, he just did , would as a diplomat you say, he took action, but it is not as bad as the other things he could have done . Cannot count the nature of the iranian response as the way to end the titfortat that is going on, in part, because thatranians are feeling they are now the under people in this arrangement, and will want to try to get back on top. My feeling is they will not be able to do that, but they will do their damnedest, and i would be careful in predicting where they go. If thats the case, then they will look to the u. S. For some kind of lead of going to the table. We came close at the United Nations when president macron put together a series of ideas. Those ideas were not at all bad, and could be resuscitated in a stepwise fashion. Perhaps something small to begin with. But it would have to stop, certainly, the idea that each side would continue to take kinetic action against the other, some kind of a military ceasefire. It cyber intruded, it would depend on the damage as to whether or not that would be seen as a pinprick or a mighty blow. If it is the latter, be careful, because in the u. S. Will move again. The iranians need to be very careful that they not count on the u. S. Solely to be mesmerized by the notion that a war is something that, one way or another, is not possible in the region. I think they have over calculated recently. I think its important for both sides to work through intermediaries, to try to raise again the notion that this is getting nowhere but up the danger latter. It is important for us to see if i can find a way mutually, as said a moment ago, through friends, to see whether we can down,to have that build as your question implied, if there was a cyber pinprick. David we talk about possible intermediaries. Who could we be talking with that could do with the iranians . Havepast intermediaries included a country like oman, which nobody counted on to be a successful intermediary, but iveause of success relations, were able to help. President macron tried. Through a little bit more grandiose proposal than the situation would then. Ontemplate, he overstretched Prime Minister abe of japan is someone that people would think of. There are these people around. Some have even suggested china, because of its careful statements, would be interested in seeing this deescalate. Maybe that is something that could be used. David thank you so much, former ambassador thomas occurring. For another Thomas Pickering. For another perspective, we are going to admiral mike mullen. He was in the situation room when the navy seals killed osama bin laden. Thank you for joining us. We just heard from retired ambassador pickering. Give us a sense from a Military Point of view when we should be prepared for. It is difficult to know specifically, except we need to be vigilant, given the seriousness of this particular action. Im actually supportive of the action. You had a military commander who was an extraordinarily dangerous guy with a rich history countering the United States, including blood on his hands since the early 2000s. Allas in iraq, and by reports, planning additional attacks on the embassy. So he was a legitimate target. Itself regard, the blow has badly damaged the National Security apparatus in huron. I do expect they will respond. One of the sayings i learned in the middle east is at a time and place of our choosing. It is hard to say how quickly they will respond but certainly the rhetoric is indicative, and the path is indicative that they will respond. Heard,four years, i have one of the concerns with iran is if we ever did anything, they have a lot of surrogates. We have hezbollah in lebanon, people in syria, has that been degraded to an extent . There are problems now in libya that did not exist before. Is it possible they are not quite as powerful through their surrogates as they once were . Adm. Mullen it may be possible in those specific areas because of dilution of whats happening in yemen, but they are powerful in iran, iraq, and syria. Soleimani at a level of brilliance which extended his reach them at the middle east. We really need to be on guard from any possible surrogate at this point. I would not expect iran necessarily to respond conventionally, but i would expect them to respond to their terrorist network. David do they have to be concerned about World Opinion at all . Some targets would be soft, but would be very unpopular throughout the world, civilian targets, that would do a lot of reputational damage. Are they concerned about that . Adm. Mullen one of the things that has led up to this is the deterioration between the united since the Iran Nuclear Deal was locked away from on the part of the United States, and this maximum pressure campaign. My concern has been, i see for iran, andamps im not sure there are any for the u. S. , and its been steadily building. That is the backdrop, to get us to the latest episode, which is a serious episode in and of itself. I heardove forward briefly what Tom Pickering was talking about. Can we get in place some sort of legitimate diplomatic have to deescalate this . I havent seen any indication of that even up to this point before this incident, so i would hope that we could do that. But im somewhat pessimistic with being able to resolve it at this particular point in time. In the meantime, the United States has to do what it has to do to protect itself. If you were back in uniform, what would you do first . I think it would be all of the above. We certainly have the wherewithal to comprehensively defend ourselves, comprehensively prepare for all of those options, the ones you mentioned, and others as well. This part of the world well, we have been there a long time. Certainly, our forces to be on alert in that regard in a media reporting, there has been focus on where we have troops, lots of sailors and families in bahrain. Obviously, u. S. Military personnel in qatar. Im sure all of those places will be on high alert. David to what extent do we need to be concerned about the regime in iraq . There was a tweet from senator rubio who said it was a coup, that that was why we had to go after general soleimani. Do we have to work with iraq and prop them up as it were . I would hope that we can still work with the government of iraq. We have invested a lot in that country. The Trump Administration is trying to figure out the best way to support what is still in a nation democracy with respect , and that steps not be taken by the iraqi leadership to see the u. S. Out of the country, if you will. I think we need to be working in every single domain, the diplomatic domain, economic domain, and military domain, to try to sustain the relationship we have with that country, figure a way to come down off the ladder in this crisis. David thank you for taking the time, admiral mike mullen. Fedng up next, cleveland Vice President Loretta Mester. We will be talking with her next. This is bloomberg. David from bloomberg World Headquarters in new york, im david westin. This is balance of power, were the world of business. Tensions in the middle east flaring up again following the u. S. Drone strike against a top iranian general, and the ice and manufacturing numbers posting their week list performance since 2009. Michael mckee is at the American Economic Association Annual meeting in san diego with an important Voting Member of the fomc. Mike thank you very much. We want to welcome in loretta