WEBVTT - Surveillance: War in Ukraine with Kimmitt 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you 0:00:13.320 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, sun Cloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:30.520 and of course on the Bloomberg terminal. What we will 0:00:30.600 --> 0:00:33.400 do is speak of this war. We do this with 0:00:33.440 --> 0:00:36.599 a gentleman early in his career at that time when 0:00:36.720 --> 0:00:40.040 Russia again blew up in the early nineties, Mark Kimmitt 0:00:40.040 --> 0:00:43.320 was with the eighth Infantry and then answer other tours 0:00:43.320 --> 0:00:46.840 of duty with the Army and General Kimmitt Division Artillery 0:00:46.880 --> 0:00:51.080 Commander the first Armored Division in Germany. He has hands 0:00:51.080 --> 0:00:54.560 on experiences Ben Hodges did the other day for US 0:00:54.600 --> 0:00:57.800 as well. General Kimmitt, thank you for joining us UH 0:00:57.840 --> 0:01:01.320 this morning. Mark Kimmitt, What will the tank warfare look 0:01:01.440 --> 0:01:06.240 like in Carcave? What will the warfare look like in Kiev? Well, 0:01:06.280 --> 0:01:08.840 first of all time, it won't be tank warfare. All 0:01:08.880 --> 0:01:12.440 those advantages that the Russians have with those mechanized vehicles, 0:01:13.160 --> 0:01:16.679 UH in too great extent, is completely neutralized when you 0:01:16.720 --> 0:01:20.720 go inside the city. These are small streets, even the 0:01:20.800 --> 0:01:23.160 large ones can't fit a lot of tanks through them, 0:01:23.800 --> 0:01:27.319 And it goes down to a completely different kind of 0:01:27.360 --> 0:01:31.880 warfare that we're seeing right now on the roads. If 0:01:31.920 --> 0:01:34.680 we're seeing a different warfare, do you suggest we'll see 0:01:34.680 --> 0:01:37.560 it in any moment's notice and with that we will 0:01:37.560 --> 0:01:41.920 see Ukraine do better than the last twenty four hours. Well, 0:01:41.959 --> 0:01:46.280 we'll see clearly the Ukrainians have done very very well 0:01:46.360 --> 0:01:49.040 up to this point, but it's the first ending in 0:01:49.080 --> 0:01:52.200 a nine ending ball game. When you go into the cities, 0:01:52.800 --> 0:01:56.160 everything that they've been doing up to this point changes. Uh. 0:01:56.320 --> 0:01:59.640 They certainly have the advantage as the defender in the 0:01:59.720 --> 0:02:03.640 city ease and a lot of the advantages that the 0:02:03.720 --> 0:02:08.240 Russians had are just completely neutralized. But it is still tough, 0:02:08.800 --> 0:02:12.160 brutal combat in a way that we haven't seen yet. 0:02:12.320 --> 0:02:18.040 Urban combat is for any military historian certainly understood. It's 0:02:18.040 --> 0:02:22.280 the toughest, grittiest, bloodiest kind of warfare there is. We've 0:02:22.280 --> 0:02:24.560 had a many times, General that it has to favor 0:02:24.639 --> 0:02:28.680 the attack. The ratio in combat in urban wol fat. 0:02:28.840 --> 0:02:30.639 Can you run me through the kind of ratio you're 0:02:30.639 --> 0:02:33.160 thinking about, General, Because we hear things like six to one. 0:02:33.440 --> 0:02:35.799 What an attack it needs to overwhelm the defender in 0:02:35.919 --> 0:02:39.480 Uban wol fat, What kind of ratio is needed? Oh, 0:02:39.520 --> 0:02:41.960 it could be far more than that. You took a 0:02:42.000 --> 0:02:45.000 look at what happened in Mosle. A hundred thousand troops 0:02:45.120 --> 0:02:50.240 were necessary to go against ISIS and Mosle about six 0:02:50.280 --> 0:02:55.520 thousand inside there. Uh. And unfortunately there's a huge toll 0:02:55.720 --> 0:02:59.200 on the civilian population inside those cities as well. But 0:02:59.320 --> 0:03:02.920 for an attack her to win in a city fight 0:03:03.080 --> 0:03:07.640 is our marines did in Felluja. It takes extraordinary numbers 0:03:08.000 --> 0:03:12.000 and it also takes extraordinary valor. And that last point 0:03:12.080 --> 0:03:14.080 is the important point, General, And can we sit on 0:03:14.120 --> 0:03:16.600 that for a moment. How unique is this when we 0:03:16.639 --> 0:03:20.040 see these videos of the individuals coming from the Russian 0:03:20.120 --> 0:03:23.800 army into Ukraine, which seemingly very little appetite to attack, 0:03:24.360 --> 0:03:27.640 and the Ukrainian people just pushing those tanks back. General, 0:03:27.639 --> 0:03:29.359 what have you made of that? You've seen those videos 0:03:29.360 --> 0:03:33.840 through social media reporting on news networks around the world. Yeah, 0:03:33.880 --> 0:03:36.920 I have seen the ones that are shown in social 0:03:36.960 --> 0:03:40.040 media where the Russians aren't coming across the Well, what 0:03:40.160 --> 0:03:43.320 we're not seeing is those early insertions done by the 0:03:43.400 --> 0:03:47.560 Russian paratroopers into some of those air fields. Uh. Those 0:03:47.600 --> 0:03:51.440 are professional paratroopers, they are not conscripts, and they're much 0:03:51.440 --> 0:03:54.640 better trained. But when you're talking about the conscripts that 0:03:54.680 --> 0:03:58.960 we're seeing on the road that are basically giving up 0:03:59.080 --> 0:04:03.440 or dying, I think that the Ukrainians have acquitted themselves 0:04:03.480 --> 0:04:06.480 spectacularly up to this point. General, do you think that 0:04:06.520 --> 0:04:10.640 we are underestimating the morale issue, both the boosted morale 0:04:10.720 --> 0:04:15.760 on the Ukrainian side and the opposite on the Russian side. No, 0:04:15.920 --> 0:04:17.839 I think we got it about right. I think that 0:04:17.920 --> 0:04:20.800 everybody is surprised at how poorly the Russians have done 0:04:20.839 --> 0:04:23.640 up to this point. Much can be explained number one 0:04:23.800 --> 0:04:26.440 by the fact that these are conscripts that never knew 0:04:26.440 --> 0:04:29.040 they were going to be thrown into the war. Uh. 0:04:29.040 --> 0:04:34.040 And number two, the intense, intense leadership shown by President Zelensky, 0:04:34.080 --> 0:04:37.800 which is toughened uh, the backbone of every one of 0:04:37.839 --> 0:04:41.920 those civilians and the military and the militias that they're 0:04:41.920 --> 0:04:45.159 fighting them. General, can you see an endgame at this point, 0:04:45.200 --> 0:04:47.599 given the fact that it seems like Vladimir Putin is 0:04:47.600 --> 0:04:50.720 not giving in in any way, and the Western allies 0:04:50.760 --> 0:04:54.200 are simply trying to remain with the sanctions and clamping 0:04:54.240 --> 0:04:57.120 down harder on that front. Yeah. So that's a good 0:04:57.200 --> 0:04:59.640 question because, as I said earlier, this is the first 0:05:00.080 --> 0:05:03.760 in a nine ending ball game, and the Russians will 0:05:03.920 --> 0:05:08.120 just continue to hammer and hammer and hammer away at 0:05:08.120 --> 0:05:11.800 you in places such as cities. They don't worry about casualties. 0:05:11.880 --> 0:05:15.240 They weren't, don't worry about collateral damage, they don't worry 0:05:15.279 --> 0:05:20.479 about infrastructure. So I would expect that his endgame will 0:05:20.520 --> 0:05:24.120 be to go into those cities and destroy them. It's 0:05:24.240 --> 0:05:29.000 that simple. Destroy the buildings, destroy the people, destroy the civilians. 0:05:29.040 --> 0:05:31.839 They don't care. They will continue to flow troops and 0:05:31.880 --> 0:05:35.800 equipment in there and fire artillery missiles and bomb them 0:05:36.120 --> 0:05:39.120 until they are destroyed. That's how they see the end game. 0:05:39.160 --> 0:05:42.360 In many ways, people would say that's the only endgame 0:05:42.520 --> 0:05:45.920 that you can accomplish inside this type of warfare. And general, 0:05:45.960 --> 0:05:47.560 I want you to speak to the public that does 0:05:47.600 --> 0:05:51.040 not warn the uniform that you have warned there's a 0:05:51.120 --> 0:05:55.159 massive primal screen. Just do something. And I want to 0:05:55.200 --> 0:05:59.479 talk about the American initiative or even initiatives plural here 0:06:00.080 --> 0:06:03.520 to fly into western Ukraine and deposit a massive force 0:06:03.560 --> 0:06:07.000 that the Ukrainians can use or to come in through 0:06:07.000 --> 0:06:10.000 the Black Sea, alistra Vitas and the others. What's the 0:06:10.120 --> 0:06:18.160 initiative America can do now to assist militarily, President Zelinski? Well, 0:06:18.200 --> 0:06:19.960 I think the main thing is to do what we've 0:06:19.960 --> 0:06:22.719 been doing, not only as Americans but as our NATO 0:06:22.800 --> 0:06:26.040 colleagues and our NATO allies, which is flow as much 0:06:26.120 --> 0:06:31.920 precision weapons into UH Ukraine as possible, whether it's sting 0:06:32.000 --> 0:06:35.400 or missiles to bring down their helicopters, javelins, to knock 0:06:35.400 --> 0:06:40.720 out there UH tanks in their artillery, drones to UH 0:06:40.839 --> 0:06:46.360 conductoral warfare against selected targets. But we want to contain 0:06:46.440 --> 0:06:50.679 this inside Ukraine. We can't be put in Americans into Ukraine, 0:06:50.800 --> 0:06:53.880 otherwise this will spill over into NATO and it would 0:06:53.880 --> 0:06:56.440 be a much much bigger war. What would you do 0:06:56.520 --> 0:06:59.480 as a mandate as a general in combat which you've done, 0:07:00.080 --> 0:07:02.920 What would you do with a convoy forty miles long? 0:07:03.240 --> 0:07:07.760 Is that the job of modern technology and drones? Well, 0:07:07.760 --> 0:07:09.760 the problem with that, of course time is that we 0:07:09.880 --> 0:07:13.840 don't have air superiority. You remember in the First Gulf War, 0:07:13.920 --> 0:07:18.080 so we need to fly zone the common of the moment, Generals, 0:07:18.120 --> 0:07:21.320 we need to know fly zone. Well, the no fly 0:07:21.520 --> 0:07:24.720 zone won't help the Ukrainian Air Force get into the air. 0:07:24.760 --> 0:07:28.520 It's personally non existent at this point. Um and again, 0:07:28.760 --> 0:07:33.120 the no fly zone would completely change the dimension of 0:07:33.160 --> 0:07:37.080 this conflict from a war inside of Ukraine to a 0:07:37.120 --> 0:07:40.000 war that can spill over in Europe. What we need 0:07:40.040 --> 0:07:42.840 to do more than anything else is see if we 0:07:42.920 --> 0:07:45.840 can get those Ukrainian helicopters in the air, because, as 0:07:45.920 --> 0:07:50.760 we say in the military, forty miles of vehicles is 0:07:50.800 --> 0:07:54.000 a target rich environment. We've seen them destroyed as we 0:07:54.040 --> 0:07:56.640 did in the first Gulf War where were destroyed about 0:07:56.640 --> 0:07:59.560 ten miles and vehicles, and it would be pretty easy. 0:08:00.040 --> 0:08:02.960 But the Russians have air superiority, and we've got to 0:08:03.000 --> 0:08:07.720 take that air superior already away from them through anti 0:08:07.920 --> 0:08:10.760 aircraft devices such as stingers. But I don't think that 0:08:10.800 --> 0:08:13.600 will happen in time. General, as things stands. To wrap 0:08:13.640 --> 0:08:15.880 things up, we'd love your assessment of the base case 0:08:15.920 --> 0:08:17.760 about how this turns out, you write. A group was 0:08:17.760 --> 0:08:19.679 on with us earlier this week. They said we continue 0:08:19.720 --> 0:08:22.120 to see the most likely outcome of the invasion as 0:08:22.160 --> 0:08:25.720 a combination of regime change and Russian political control of 0:08:25.800 --> 0:08:29.640 the entirety of the country. What's your conclusion, your base 0:08:29.680 --> 0:08:33.720 case at the moment, General, Well, I think that's probably 0:08:33.720 --> 0:08:36.640 where it will end up. At these peace negotiations. Of 0:08:36.720 --> 0:08:41.280 these peace talks on the Belarusian border don't accomplish anything. Remember, 0:08:41.360 --> 0:08:44.559 wars don't end when the last person dies. Wars end 0:08:44.760 --> 0:08:48.680 at the diplomacy table, at the negotiating table, and candidly, 0:08:48.720 --> 0:08:55.520 the sooner we can negotiate Russia out of Ukraine, the better, mark, General, 0:08:55.600 --> 0:08:57.800 I'm wondering a lot of people are talking about the 0:08:57.800 --> 0:09:00.920 fact that Russia is a nuclear power, and NATO came 0:09:00.960 --> 0:09:02.760 out this morning and said that there's no need to 0:09:02.840 --> 0:09:06.120 change the nuclear weapons alert, even though Russia has come 0:09:06.120 --> 0:09:09.440 out and taken steps on that front. How concerned should 0:09:09.440 --> 0:09:12.800 we be? Can we shrug this off? Well, I don't 0:09:12.840 --> 0:09:15.640 think we can struggle just shrug it off. But I 0:09:15.679 --> 0:09:19.160 wouldn't tell you that while Vladimir Putin maybe stupid, he's 0:09:19.160 --> 0:09:22.640 not suicidal. And I think even he recognizes that a 0:09:22.760 --> 0:09:26.079 nuclear exchange any kind would be not only the end 0:09:26.440 --> 0:09:29.440 of his regime, but in many ways could could completely 0:09:29.520 --> 0:09:32.800 sink the Russian Federation. General we have to leave it there. 0:09:32.840 --> 0:09:35.160 We appreciate your time, and sir, please stay close. We'd 0:09:35.160 --> 0:09:37.160 love to catch up with you again soon. Lucky to 0:09:37.200 --> 0:09:45.960 catch up with General Mark Kimmitt this morning, let us 0:09:46.000 --> 0:09:50.800 go to an informed guest. She is absolutely brilliant in mathematics. 0:09:50.800 --> 0:09:54.240 Her graduate studies are just bulletproof. She holds court if 0:09:54.240 --> 0:09:57.760 b n Y Melon Wealth Management Alicia Levine on this 0:09:57.960 --> 0:10:01.520 historic Tuesday. Alicia, how is your view of the markets 0:10:01.640 --> 0:10:07.880 changed given war? Look, the geopolitical situation over in Europe 0:10:07.880 --> 0:10:12.199 with a hot war really just adds another layer to 0:10:12.360 --> 0:10:17.760 an already kind of very difficult environment for equities here, 0:10:17.800 --> 0:10:21.880 because you have that specter of the nineteen late nineteen seventies, 0:10:21.920 --> 0:10:26.520 early nineteen eighties, of that stag flash, stagflationary fear of 0:10:26.640 --> 0:10:31.120 sort of ever ratcheting down growth and ever ratcheting up inflation, 0:10:31.240 --> 0:10:34.560 as you've just spoken about. And what this conflict does 0:10:34.720 --> 0:10:37.960 is it plays into the inflationary piece, because I don't 0:10:38.000 --> 0:10:41.080 think the oil and gas piece, you know, the markets 0:10:41.080 --> 0:10:43.679 assuming that flows are going to say the way they 0:10:43.720 --> 0:10:46.240 are and then Iran will come on and it will 0:10:46.280 --> 0:10:48.920 be fine. And I think we have to ask ourselves, 0:10:48.920 --> 0:10:51.080 what if that doesn't happen. You know what if we 0:10:51.120 --> 0:10:54.240 do see a disruption, and I think you could see 0:10:54.320 --> 0:10:57.199 energy higher. And let's not forget that Ukraine is the 0:10:57.240 --> 0:11:01.520 bread basket of the former Soviet. You Union of the 0:11:01.559 --> 0:11:05.760 world's week comes from Ukraine, and so therefore commodity price 0:11:05.800 --> 0:11:09.040 inflation is going to stay higher. So it just really 0:11:09.080 --> 0:11:13.320 adds to those concerns and difficult and difficult environment for 0:11:13.360 --> 0:11:15.439 equities as a result. At least s are you surprised 0:11:15.440 --> 0:11:18.560 by how much we're fighting FED action this year, a 0:11:18.679 --> 0:11:21.959 CP action potentially later this year, and getting comfortable with 0:11:22.000 --> 0:11:24.240 the idea that the FED will pull back a bit. 0:11:25.360 --> 0:11:28.559 So I'm not surprised that the expectations for the ECB 0:11:28.720 --> 0:11:31.120 have pulled back, because after all, in a sense, the 0:11:31.160 --> 0:11:34.320 European economy is going to be most directly hit by 0:11:34.360 --> 0:11:37.640 this conflict and by the sanctions and by some turmoil 0:11:37.720 --> 0:11:41.280 in their local banks. So so that's not entirely surprising. 0:11:41.320 --> 0:11:44.200 I think it is more surprising for the FED simply 0:11:44.200 --> 0:11:49.479 because the inflation here is broad based and becoming sticky, 0:11:49.960 --> 0:11:51.679 and that is something the FED is going to have 0:11:51.720 --> 0:11:53.680 to deal with first and foremost. And I think the 0:11:53.679 --> 0:11:56.760 war is about growth. Are going to be secondary. They 0:11:56.800 --> 0:11:59.720 have to deal with the inflation piece, and ever increasing 0:12:00.000 --> 0:12:03.720 oil here is not going to help. It's just lasting longer. 0:12:04.040 --> 0:12:06.720 And what we've seen is that the length of time, 0:12:06.760 --> 0:12:12.760 the duration that these kind of factors filter into expectations 0:12:12.960 --> 0:12:15.800 just make it worse. And so even if we think 0:12:15.840 --> 0:12:19.280 it's transitory for a year, it's already gotten into the 0:12:19.280 --> 0:12:23.520 psyche of consumers and business leaders. Alicia, what happens if 0:12:23.520 --> 0:12:26.560 we continue to get this move where rates actually come 0:12:26.640 --> 0:12:28.880 down because people think that the FED is not going 0:12:28.920 --> 0:12:31.719 to move, and yet we see stock markets continue to 0:12:31.760 --> 0:12:34.800 decline because people are starting to price in stagflation. What 0:12:34.920 --> 0:12:37.360 happens in a regime where people basically are saying the 0:12:37.400 --> 0:12:42.040 FED has lost control over inflation. Right, Look, that that's 0:12:42.080 --> 0:12:45.040 the key question, because it's it's not a great environment 0:12:45.520 --> 0:12:48.360 for equities. But we actually think we're here in a 0:12:48.520 --> 0:12:53.360 range somewhere between hundred range, which is where we've been 0:12:53.400 --> 0:12:57.439 bouncing around until we settle what the main issue is, 0:12:57.800 --> 0:13:02.280 whether can inflation start moving lower in the spring, and 0:13:02.320 --> 0:13:04.679 can can be fed do it in a way that 0:13:04.720 --> 0:13:07.160 doesn't inhibit growth. I'll say this, the data on the 0:13:07.200 --> 0:13:10.840 real economy is coming in pretty nicely in February, and 0:13:10.920 --> 0:13:13.840 so that really does support better than you know, pretty 0:13:13.880 --> 0:13:17.720 decent growth. I am happily surprised about that, but that's 0:13:17.880 --> 0:13:21.240 the range is where we are until it gets settled 0:13:21.320 --> 0:13:24.880 one way or another. So there's risks in both directions here. 0:13:25.360 --> 0:13:27.040 I think you're going to start to see a bit 0:13:27.200 --> 0:13:30.079 in some of those large cap text socks also simply 0:13:30.160 --> 0:13:33.679 because that is that is really the safety play, earnings, 0:13:34.080 --> 0:13:38.080 cash flow dependability of a business that's really divorced from 0:13:38.200 --> 0:13:41.000 from the economic cycle. We're a little bit more cautious 0:13:41.000 --> 0:13:43.640 on the consumer cyclicals here, simply because in a rate 0:13:43.720 --> 0:13:48.280 hiking environment and an increasing inflation environment, that's those are 0:13:48.280 --> 0:13:51.040 really the areas to get hit first. What are you 0:13:51.040 --> 0:13:54.160 doing with energy companies right now? So we still like 0:13:54.400 --> 0:13:56.920 energy here. I think that much of the move is 0:13:56.960 --> 0:14:01.360 probably behind us. But given the situation here, I think 0:14:01.480 --> 0:14:05.199 energy is really still the play. The really interesting question here, 0:14:05.640 --> 0:14:08.040 and you've been bringing this up all morning of CEO 0:14:08.120 --> 0:14:12.040 from Devon Energy. You know, why isn't the US changing 0:14:12.200 --> 0:14:15.160 it's it's energy policy in the way that Germany has. 0:14:15.200 --> 0:14:19.160 I mean, think of German policy changed radically. You know 0:14:19.160 --> 0:14:21.680 what what it was for the last several decades as 0:14:21.720 --> 0:14:24.280 a response to this, and I think that's really something 0:14:24.680 --> 0:14:27.480 on a policy basis would not be a bad thing 0:14:27.560 --> 0:14:31.400 for the administration to address here, simply because it turns 0:14:31.440 --> 0:14:34.760 out that complicts and places with very small percentages of 0:14:34.800 --> 0:14:38.160 global GDP really do affect us. Alicia, wonderful to hear 0:14:38.160 --> 0:14:40.280 from you, and so always Alicia living of BM y Man, 0:14:40.320 --> 0:14:48.600 I'm with some really important questions. Let us move on 0:14:48.680 --> 0:14:51.200 to our interview of the damn for in exchange with 0:14:51.920 --> 0:14:55.560 Comac Travetti of Golden Sax were thrilled that you could join. 0:14:55.920 --> 0:14:58.160 Uh this morning, come act you very simple, where is 0:14:58.200 --> 0:15:04.080 the true valuation of ruble? Good morning? Thank you for 0:15:04.160 --> 0:15:08.280 having me. I mean, this is the kind of situation where, uh, 0:15:08.320 --> 0:15:12.440 you know, fundamental valuations are very hard to do. I mean, 0:15:12.520 --> 0:15:17.440 you can think about things like Russia's oil and gas exports, 0:15:17.440 --> 0:15:21.080 its current accounts surplus, it's reserves. None of these things 0:15:21.200 --> 0:15:24.560 matter at a time when a large quantity of the 0:15:24.600 --> 0:15:30.400 reserves are sanctioned. Essentially, the sanctions are making Russian assets 0:15:30.440 --> 0:15:36.000 uninvestable for most you know, Western investors, and they're making 0:15:36.080 --> 0:15:39.800 you know, valuations and fundamental valuation calculations pretty much impossible 0:15:39.800 --> 0:15:43.720 as well. Can you use adjacent ratios to come up 0:15:43.720 --> 0:15:47.200 with some form of guestimate of dollar ruble right now? 0:15:47.640 --> 0:15:50.240 Moving out from my eyes are failing me here from 0:15:50.240 --> 0:15:53.640 a one oh one, one oh two right now, can 0:15:53.680 --> 0:15:59.680 we dare say one fifteen or one twenty? Look, it 0:15:59.760 --> 0:16:03.520 all depends on how things evolve. You know. If you 0:16:04.480 --> 0:16:08.120 look back to the period fifteen when you had the 0:16:08.160 --> 0:16:12.200 annexation of crimea, hostilities in the don bus and of 0:16:12.240 --> 0:16:15.680 halving in the oil price, you saw, you know, a 0:16:15.760 --> 0:16:18.280 huge sell off in the ruble, you know, nearly you 0:16:18.320 --> 0:16:22.200 know or so, and that came along with a drain 0:16:22.480 --> 0:16:27.200 of central bank reserves of something like a hundred billion dollars. Uh. 0:16:27.240 --> 0:16:30.280 That kind of drain or that kind of decumulation in 0:16:30.360 --> 0:16:34.200 order to support the ruble is just not possible today. 0:16:34.240 --> 0:16:36.640 So again I think that you know, one can come 0:16:36.720 --> 0:16:41.880 up with you know, maximum undervaluation numbers or things like that. Uh, 0:16:41.920 --> 0:16:44.440 you know, and we are well through those points at 0:16:44.480 --> 0:16:46.960 at you know, hundred and fifteen or whatever it is. 0:16:47.080 --> 0:16:50.440 But I just think at this point it's it's not 0:16:50.560 --> 0:16:53.200 you need to see some crystallization of the risks. You 0:16:53.200 --> 0:16:55.520 need to see some sense of the end point here 0:16:55.920 --> 0:16:58.280 before you can put a firm value that this is 0:16:58.360 --> 0:17:00.240 kind of as far as it goes, and and no 0:17:00.360 --> 0:17:02.960 further in the meantime comm act share we're seeing is 0:17:03.240 --> 0:17:06.359 nodes of liquidity amid the sea of illiquidity that is 0:17:06.440 --> 0:17:09.639 the Russian market for all assets, where are you seeing 0:17:09.680 --> 0:17:14.000 the most traumatic ramifications, the most traumatic moves simply because 0:17:14.000 --> 0:17:16.159 it is the only place that people are using to 0:17:16.240 --> 0:17:19.399 offset some of their other bets. That potentially could be 0:17:19.440 --> 0:17:21.920 an overshoot if things do come to some resolution in 0:17:21.960 --> 0:17:26.720 the near term. That's the That's a very interesting question. 0:17:26.720 --> 0:17:28.760 I think that is really one that investors should be 0:17:28.800 --> 0:17:31.880 asking themselves as well, right, I mean, you know, Russian assets, 0:17:31.880 --> 0:17:33.920 as I said to the sanctions are making them very 0:17:33.960 --> 0:17:36.240 hard to to to touch. But there are the whole 0:17:36.240 --> 0:17:39.280 host of other assets that may be affected by what 0:17:39.480 --> 0:17:42.760 is going on in Russia and Ukraine. Uh and there 0:17:42.800 --> 0:17:46.640 at some point there may be a more interesting opportunity. 0:17:46.760 --> 0:17:50.120 I think the most significant risk premium is being put 0:17:50.160 --> 0:17:52.800 in the assets that are closest to the theater of 0:17:52.880 --> 0:17:56.520 conflict parts of Central Eastern Europe, Poland, Czech Republic, Hungary, 0:17:57.160 --> 0:18:00.800 The equities, the currencies in those regions, and those are 0:18:00.800 --> 0:18:04.760 places where if you saw some stabilization, some secession of 0:18:04.800 --> 0:18:07.399 some cease fire, I think would probably see some of 0:18:07.440 --> 0:18:11.639 the biggest recoveries and the fastest moves. Uh. And I 0:18:11.640 --> 0:18:14.159 think then there are assets that are pretty far away 0:18:14.200 --> 0:18:16.760 from that. You know, if you think about oil producing 0:18:16.800 --> 0:18:19.920 countries like Colombia and the Colombian Paso or the Middle 0:18:19.960 --> 0:18:22.760 East and oil producers the credits preds on those, I 0:18:22.760 --> 0:18:25.320 think some of those things could be You know, I 0:18:25.320 --> 0:18:27.920 have already been pretty resilient, but could see more out 0:18:27.960 --> 0:18:30.600 performance in the world where the hostility sees but oil 0:18:30.640 --> 0:18:34.280 prices are still meaningfully higher. You are an economist at 0:18:34.280 --> 0:18:37.719 the Bank of England. You understand the interplay of oil 0:18:37.800 --> 0:18:43.040 prices and growth and how the combat for inflation can transpire. 0:18:43.440 --> 0:18:45.879 Do you think that markets have gotten ahead of themselves 0:18:46.160 --> 0:18:49.000 in pricing out possible rate highs from either the Bank 0:18:49.040 --> 0:18:51.919 of England or the ECB, or even the better reserve 0:18:52.040 --> 0:18:55.720 on the hills of this conflict? I should say I 0:18:55.800 --> 0:18:58.240 was about economist the Bank of England many many years ago. 0:18:59.080 --> 0:19:03.119 Now obviously it's attist at Goldman facts, but um, look, 0:19:03.160 --> 0:19:05.960 I think the markets are trying to price a very 0:19:06.000 --> 0:19:08.879 uncertain situation, and I think what is really happening is 0:19:08.920 --> 0:19:13.199 that markets are, you know, implicitly making the assumption that 0:19:13.320 --> 0:19:16.400 the tightening in financial conditions that is needed to bring 0:19:16.440 --> 0:19:20.119 inflation down. Some of that tightening is already being delivered 0:19:20.520 --> 0:19:24.080 by the move higher and commodity prices and oil prices. 0:19:24.440 --> 0:19:26.640 I think that is sort of what the market is pricing, 0:19:26.640 --> 0:19:29.560 and I think that's why you're seeing the interest rates 0:19:29.560 --> 0:19:33.080 the yields moved down. I think that, you know, my 0:19:33.680 --> 0:19:35.640 our view is that you will still need to see 0:19:35.720 --> 0:19:39.720 considerable tightening, especially in places where as I said, the 0:19:39.800 --> 0:19:43.320 growth impact from this conflict may be relatively limited, but 0:19:43.400 --> 0:19:46.679 the negative shock from oil prices to inflation might actually 0:19:46.680 --> 0:19:50.600 be quite meaningful. So I it's it's understandable why markets 0:19:50.600 --> 0:19:52.879 are doing what they're doing, but I think it may 0:19:52.920 --> 0:19:55.119 be a bit too fast, and I think you're probably 0:19:55.160 --> 0:19:57.800 still going to see major central banks, at least in 0:19:57.920 --> 0:20:01.199 the near future, continue to be on a tightening trajectory. 0:20:01.359 --> 0:20:03.040 Can act right to catch up. We're gonna get your 0:20:03.040 --> 0:20:05.639 perspectives and really impotent thoughts on what's gonna happen with 0:20:05.640 --> 0:20:09.200 his current state. COTTI of Gellman Sacks thank you said 0:20:16.119 --> 0:20:19.240 right now, what we're gonna do is link a Russia 0:20:19.560 --> 0:20:23.080 surrounded by what is at fourteen nations to in America 0:20:23.600 --> 0:20:27.600 surrounded by two with great commonalities with Canada and Mexico. 0:20:28.320 --> 0:20:31.240 One company that has done that over the decades in 0:20:31.320 --> 0:20:35.760 North America is Target. Let's get your attention. Target is 0:20:35.840 --> 0:20:39.120 beat Walmart by over six hundred basis points per year 0:20:39.560 --> 0:20:41.679 in the last ten years in the name of Global 0:20:41.720 --> 0:20:46.119 Wall Street. That is success. Their chief financial officer, Michael 0:20:46.119 --> 0:20:48.879 Fidelki joins us this morning. Mike, I'm gonna cut to 0:20:48.920 --> 0:20:51.600 the chase. The President will speak tonight on a hundred 0:20:51.600 --> 0:20:55.800 and four hundred five dollar Brent crude. You spoke today 0:20:55.920 --> 0:20:59.960 with twenty four dollars per hour on your wage. How 0:21:00.000 --> 0:21:02.000 are you going to do this at twenty four dollars 0:21:02.000 --> 0:21:05.639 an hour blended forty eight thousand dollars a year for 0:21:05.760 --> 0:21:10.880 line employees. I'll tell you the investments that we make 0:21:10.880 --> 0:21:13.960 in our team from my seat for the best investments 0:21:14.000 --> 0:21:16.160 that we make, and that's been a path of investment 0:21:16.280 --> 0:21:17.960 over years now. We laid a path to get to 0:21:18.000 --> 0:21:22.480 a fifteen dollar starting wage back in accomplished that a 0:21:22.520 --> 0:21:25.640 couple of years ago. We've invested in additional benefits. We've 0:21:25.640 --> 0:21:30.240 invested in tuition free education, assistant assistance, and we see 0:21:30.280 --> 0:21:33.399 those investments paying off. You can see it and the 0:21:33.400 --> 0:21:36.119 results that team delivered in our quarter with growth of 0:21:36.200 --> 0:21:38.160 nine percent because of time. I don't mean to cut 0:21:38.160 --> 0:21:40.080 you off, but I think this is so important, Michael, 0:21:40.080 --> 0:21:43.560 because you lead on this and you and I'm gonna say, Amazon, 0:21:43.680 --> 0:21:45.760 Jesse and the rest are in the cross. Here's on 0:21:45.840 --> 0:21:48.520 this are we have an arms race right now for 0:21:48.640 --> 0:21:53.640 line employees. It's definitely a tight labor market, but our 0:21:53.680 --> 0:21:55.919 story might look different than what you'd hear elsewhere, and 0:21:55.920 --> 0:21:58.840 that we track our ability to attract and retain those 0:21:58.880 --> 0:22:02.239 metrics really closely. Those metrics are stronger for us right 0:22:02.280 --> 0:22:05.560 now than they were pre pandemic. So we see the 0:22:05.560 --> 0:22:08.440 results of that investment over time really paying off with 0:22:08.480 --> 0:22:10.440 a team that wants to come to work at Target 0:22:10.440 --> 0:22:13.800 and that best team in retails delivering. Michael, this is 0:22:13.840 --> 0:22:15.639 one side of the equation that you have a bird's 0:22:15.680 --> 0:22:18.639 eye view on the employment aspect. The other side is 0:22:18.640 --> 0:22:21.880 consumers willingness to keep spending at the same pace even 0:22:21.960 --> 0:22:24.440 as they see their price of gasoline rise to the 0:22:24.480 --> 0:22:27.440 highest level since two thousand and fourteen, even as wheat 0:22:27.480 --> 0:22:30.080 futures arise to the highest since two thousand and eight. 0:22:30.359 --> 0:22:33.400 How do you game this out when you talk about pricing, 0:22:33.440 --> 0:22:36.160 when you talk about passing it on to the consumers 0:22:36.400 --> 0:22:39.000 and your ability to do so. Is time running out 0:22:39.280 --> 0:22:43.080 to keep passing it all on directly? Now, we certainly 0:22:43.119 --> 0:22:46.520 see the inflationary costs pressure in the environment, but we 0:22:46.600 --> 0:22:50.040 tackle that really through the lens of our guests. Were fortunate. 0:22:50.080 --> 0:22:52.680 We have a lot of levers to pull within our 0:22:52.720 --> 0:22:56.560 business to make sure that we're protecting value for our guests, 0:22:56.560 --> 0:22:59.600 and price is the lever we pull last, not first, 0:23:00.160 --> 0:23:02.159 and that investment in value is working. If you look 0:23:02.200 --> 0:23:04.760 at our fourth quarter results that nine growth, it came 0:23:04.800 --> 0:23:09.240 almost entirely from traffic. That means guests picking target more often, 0:23:09.280 --> 0:23:11.840 whether with their footsteps or clicks to our website, and 0:23:12.240 --> 0:23:15.000 so those investments in protecting value or paying off. Michael, 0:23:15.160 --> 0:23:17.119 I'm asking because you sort of are at this cross 0:23:17.160 --> 0:23:19.119 section of what we talked about every day. We're talking 0:23:19.119 --> 0:23:22.320 about what's going on with Russia invading Ukraine, the possible 0:23:22.320 --> 0:23:25.840 disruption of supply chains, the possible ramifications on growth of 0:23:25.880 --> 0:23:28.960