Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course, on the Bloomberg terminal. Richard Hass has
Speaker 1: a very busy Monday morning because he is at the
Speaker 1: center of a raging debate of the past in Afghanistan.
Speaker 1: He's at the Council on Foreign Relations. I can't say
Speaker 1: enough about their website this morning to give you depth.
Speaker 1: And also my book of the Summer and Number of
Speaker 1: Summers Ago the World a brief introduction, I would suggest
Speaker 1: Ambassador Hass. It needs an update, Richard Ass. I want
Speaker 1: to get right to it, and I want to get
Speaker 1: to the movement forward. As I'll speak to Thomas Barfield
Speaker 1: coming up. Is this Taliban the same as the talib
Speaker 1: and of two thousand two if anything gets worse, Tom,
Speaker 1: because now it's had a chance to regroup, it now
Speaker 1: has access to American arms, and it's proven it's its
Speaker 1: resilience and the opposition in Afghanistan is if anything weaker
Speaker 1: than it was, so it's at least as bad. There's
Speaker 1: no sign, what you might say, of any mellowing by
Speaker 1: the Taliban. A careful read of Richard Hass The world
Speaker 1: is a vacuum gets filled. It's physics one O one
Speaker 1: Investador House, I know you took three courses in physics.
Speaker 1: It Overlain a few years ago. Is the vacuum going
Speaker 1: to be filled by China with the forty seven mile
Speaker 1: boarder they have constructed by the British in eight No,
Speaker 1: the Chinese don't want to get into Afghanistan. What they
Speaker 1: want tom is to keep essentially Afghanistan out of China.
Speaker 1: They are worried about their own Muslim minorities. The last
Speaker 1: thing they want is for them to be radicalized. Indeed,
Speaker 1: none of the neighbors, with the exception of Pakistan, I
Speaker 1: think is a lot of appethete for getting into Afghanistan.
Speaker 1: They want to keep it orrisks, they want to keep
Speaker 1: its gons, they want to keep its drugs out of
Speaker 1: their country. Also, one other thing, they're worried about refugee flows.
Speaker 1: And that's the other thing that people are going to
Speaker 1: be focused on. Let's swing five hundred miles west to
Speaker 1: Iran in the in the wonderful frontline effort that was
Speaker 1: done a number of weeks ago. There it is sunny
Speaker 1: and it is she is that ultimately what this will
Speaker 1: be about. No, again, I don't see particular friction there
Speaker 1: between Iran and Afghanistan. We've got problems with Iran, but
Speaker 1: that's to do with everything they're doing in the region,
Speaker 1: their nuclear program. This is uh Look, Iran has been
Speaker 1: helpful in the past twenty years ago, Tom, the Iranians
Speaker 1: are actually helpful and standing up a post Aliban government
Speaker 1: in Afghanistan. Why they want to stable neighbor. They don't
Speaker 1: want one that's producing and exporting drugs. So I don't
Speaker 1: think Iran is the place to look either for the
Speaker 1: problem here or for the solution. So Richard, where do
Speaker 1: we look? We looked at the allies who feel somewhat
Speaker 1: betrayed by the U S. No, the answer is there
Speaker 1: is no solution to look for. This is now the
Speaker 1: new reality in Afghanistan. It's going to be awful, awful
Speaker 1: for Afghans. The danger is they invite terrorists back in,
Speaker 1: or terrorists invite them themselves back in. Obviously, America's reputation
Speaker 1: for consistency and reliability has taken a hit. I worry
Speaker 1: about the long term consequences for Pakistan. It's ironic Pakistan
Speaker 1: provided a sanctuary which kept the Taliban alive, helped bring
Speaker 1: us to this point. It's quite possible some in the
Speaker 1: Taliban may now want to go ahead and further radicalize Pakistan.
Speaker 1: So in the medium to long run, I would I
Speaker 1: would worry about that. But I think for the United States,
Speaker 1: the focus has got to be on getting as many
Speaker 1: Afghans who work with us out of that country. It's
Speaker 1: outrageous that we would leave them behind, that we would
Speaker 1: abandon them. And then I think we have to go
Speaker 1: around the world trying to demonstrate that the awful scenes
Speaker 1: that we're seeing in Afghanistan are not somehow representative of
Speaker 1: the totality of American foreign policy. We've got to persuade
Speaker 1: people that they should not read too much into this. Richard.
Speaker 1: A lot of officials have said, this is not a
Speaker 1: war we could win. We basically were keeping the peace
Speaker 1: and sacrificing American soldiers and frankly soldiers of the Allies
Speaker 1: to keep a peace that was unnatural in this nation.
Speaker 1: What do you say to counter that why it was
Speaker 1: important in your view, for US troops to remain in
Speaker 1: Afghanistan at a much lower rate than they had been
Speaker 1: say five ten years ago. Look, we had reduced the
Speaker 1: US military presence to around three thousand. There hasn't been
Speaker 1: an American combat debt for for eighteen months, so this
Speaker 1: is a situation. I thought that for a relatively modest investment,
Speaker 1: we were getting good results. The American presence was essential
Speaker 1: to keep the eight nine thousand Allied troops there, and
Speaker 1: they provided a psychological and military floor for the Afghans.
Speaker 1: So no, it wasn't going to give you peace, It
Speaker 1: wasn't going to give you a military victory. What it
Speaker 1: was going to do is avoid bringing about exactly what
Speaker 1: we're seeing on our screens. And I think sometimes in
Speaker 1: foreign policy you've how to measure success not by what
Speaker 1: you accomplish, but but but why what you avert? And
Speaker 1: by that definition, this was a success and we undermined
Speaker 1: our own policy. Richard hasas with all of your experience,
Speaker 1: this comes back to and it's of our childhood Scoop
Speaker 1: Jackson of Washington State and maybe on the late Donald
Speaker 1: Rumsfeld and others, it's this thing called neo conservatism. How
Speaker 1: do the neo conservative crew pick up the pieces in
Speaker 1: your Washington a much or neo conservatives matter a whole
Speaker 1: lot right now because they haven't an ambitious farm policy.
Speaker 1: They want to transform the world. They're often want the
Speaker 1: United States to act alone. I would think Tom the
Speaker 1: biggest challenge for the United States right now, and by
Speaker 1: the way, across his party lines, just like Afghanistan policy
Speaker 1: was something that crossed party lines, is that we do
Speaker 1: too little, that the United States essentially pulls back from
Speaker 1: the world, focuses on our challenges here at home, and
Speaker 1: essentially under reaches in the world. And if I were
Speaker 1: wire Las crystal Ball, I would be more worried about
Speaker 1: American underreach going forward than overreach. Well, I mean, did
Speaker 1: you go to zacurious post American world? What does our
Speaker 1: post Afghanistan world look like? Well, in Afghanistan, it looks horrific. Uh,
Speaker 1: you know, we'reund the rest of the world. That's up
Speaker 1: for GUS still for us to determine. Are we going
Speaker 1: to stand by our allies, Are we going to stand
Speaker 1: up to Russia and China? Are we going to actually
Speaker 1: do more to combat climate change? To improve global health?
Speaker 1: Machinery there's nothing about Afghanistan, TOM that stops UPS from
Speaker 1: increasing our exports of COVID vaccines. There's nothing about Afghanistan,
Speaker 1: TOM that stops UPS from joining the Asia Pacific Regional
Speaker 1: trade Agreements. I can go on. So again, I disagree
Speaker 1: fundamentally with what the last administration and this one have
Speaker 1: done in Afghanistan, but that doesn't stop us from doing
Speaker 1: other smart things in the world which are just to
Speaker 1: sort of put a bow on this. You were talking
Speaker 1: about this concern about allies and the perception of the
Speaker 1: United States and the trustworthy US of some of the
Speaker 1: assertions and involvement that the US has had. You're concerned
Speaker 1: about under involvement with some of these other initiatives that
Speaker 1: you're talking about, whether it's combating global warming, whether it's
Speaker 1: combating the pandemic. How much cloud has President Biden lost
Speaker 1: on the international stage among allies who already are somewhat
Speaker 1: skeptical of the U s promises. Look, this is I'm
Speaker 1: not going to sugarcoat it. This is this is a
Speaker 1: bad thing. He gained some cloud by the original response
Speaker 1: to COVID increasing vaccine production and distribution. He gained cloud
Speaker 1: by the performance of the US economy. This is clearly
Speaker 1: a setback. That said he's got three and a half
Speaker 1: years to to go to to to make a record,
Speaker 1: But there's no way this is anything but something significant
Speaker 1: in the deficit columns. This this, this will hurt both
Speaker 1: the reality and the perception of the United States in
Speaker 1: the world, and it reinforces a narrative that was already
Speaker 1: out there, which is that Disunited States is different than
Speaker 1: the old United States that had tremendous staying power throughout
Speaker 1: the Cold War. Richard tremendous pace in Project Syndicate over
Speaker 1: the weekend. Thanks for writing now before we let you go,
Speaker 1: a message for this administration. We've heard a limited amount
Speaker 1: from the President over the weekend. What's your number one
Speaker 1: question for them this morning? What more can they do
Speaker 1: to help these Afghans who are trapped in the country
Speaker 1: and are vulnerable. It's I just find that I find
Speaker 1: it painful to to watch. I think we've got to
Speaker 1: do more to help them. We can't simply be focused
Speaker 1: on getting Americans out. And then the real question is
Speaker 1: what we've been talking about here, how do we how
Speaker 1: does this administration prove to the world that American foreign
Speaker 1: policy should not be understood through this lens or or prison.
Speaker 1: We have got to be active and we've got to
Speaker 1: be smart elsewhere. We can't undo the mistakes we've made
Speaker 1: in Afghanistan. Let's be blunt. Doesn't mean though, we have
Speaker 1: to make mistakes elsewhere. Important words this morning, Richard, Thank you.
Speaker 1: Richard has their Council on Foreign Relations President. Right now,
Speaker 1: we're gonna digress with Christopher Morange. He's the Valley Funds,
Speaker 1: their chief investment officer. Of where the value is right now,
Speaker 1: Chris Marangie, where is the value going into September of
Speaker 1: two thousand twenty one. Oh, it's certainly harder to find
Speaker 1: than a year ago, but there is still value out
Speaker 1: there in the market. And the question is is now
Speaker 1: the time to jump back in the reflation trade if
Speaker 1: you missed it nine months ago? And I think typically yes,
Speaker 1: there are some areas that were um, perhaps exuberant uh
Speaker 1: and have now corrected. UM. Still like areas like live
Speaker 1: entertainment between we think we'll come back strongly again this
Speaker 1: fall into next year. UM. You know as well as UH,
Speaker 1: the consumer impulse to purchase is still there. UM. Obviously,
Speaker 1: as we heard from Kate, you know, some supply chain
Speaker 1: issues which are constraining of the ability to meet that
Speaker 1: demand you've got, And folks on radio, you need to
Speaker 1: understand that the secret weapon of Christopher Marange is all
Speaker 1: the Manila full olders he's got over his left shoulder,
Speaker 1: covering every company out there. What is the knowledge base
Speaker 1: that you and Mario Gabelly have right now company to company?
Speaker 1: Do you have a confidence in what you're hearing or
Speaker 1: is it a mystery for you into the next round
Speaker 1: of conference calls? Yeah, so, you know, we don't put
Speaker 1: a lot of weight in things like the Empire in decks.
Speaker 1: We you know, we're listening to what companies are saying
Speaker 1: on their conference calls. What are they saying some of
Speaker 1: those meetings, and and it's pretty much universally the demand
Speaker 1: is there. It's hard to meet that demand. Um supply
Speaker 1: chain issues affecting not just manufacturing companies, but you know,
Speaker 1: service companies that just can't get the stuff to install
Speaker 1: in people's homes for example. And and the concern one
Speaker 1: concern is that could worsen is as the rest of
Speaker 1: the world is China and Asia in particular, you know,
Speaker 1: deal with the delta variant. How concerned are you about
Speaker 1: margin pressures. This seems to be one of the dividing
Speaker 1: factors between the bulls and the bears. Are the less
Speaker 1: bullish of for US equities, Yeah, you know, the we
Speaker 1: tend to focus. We we love companies obviously that have
Speaker 1: uh pricing power. We've always focused on those kind of companies, UM,
Speaker 1: you know, companies with the control scarce resources, whether that's uh,
Speaker 1: you know, broadband, UM, consumative brand of products, UM, waste collection,
Speaker 1: et cetera, and um. You know, they've been able to
Speaker 1: take price and pass some of that probably through a
Speaker 1: maintain margin. But yeah, it's gonna it's gonna be hard.
Speaker 1: You know, a lot of companies benefited in the first
Speaker 1: and second quarter from the tail winds of cutting causes
Speaker 1: deeply in the crisis a year ago, and now those
Speaker 1: costs are gonna start coming back, and so it is
Speaker 1: something that we're watching and we're a little concerned about
Speaker 1: for the next year. I don't think you're focused on
Speaker 1: value right now. We're hearing a real bifurcation between those
Speaker 1: who say it's time to keep leaning into the cyclical trade,
Speaker 1: especially after the under underperformance of late and others who
Speaker 1: say stick with big text, stick with some of these
Speaker 1: names to just have incredible amounts of cash and relatively
Speaker 1: small staffs compared to the overall revenue. Where do you
Speaker 1: weigh in on this and why? Yeah, you know, I
Speaker 1: tend to lead toward the former that that there's still
Speaker 1: some likes to the to the cyclical trade. Um. You know,
Speaker 1: there are you know, a few specific big tech names,
Speaker 1: Glogle in particular, which we own, um that actually benefit
Speaker 1: from both sides. They are both the reopening play and
Speaker 1: a quarantine play. If you can keep both things. You know,
Speaker 1: they are a major beneficiary of their turn of advertising,
Speaker 1: particularly as really relates to things like travel, um and
Speaker 1: so um. You know, you have to look company by
Speaker 1: company and not just make judgments about individual sectors, which
Speaker 1: is ya, all these Minila folders here, that's good. Let's
Speaker 1: make a judgment about one of the wheelhouses of good
Speaker 1: belly over the years, and that is this whole entertainment
Speaker 1: streaming telephone, cell phone infrastructure. When you guys are way
Speaker 1: out front on what John Malone wrought, where are you
Speaker 1: now on all that stuff that we use every day? Yeah?
Speaker 1: So you know, we used to define the world as
Speaker 1: distribution versus content. Um. Yeah, that's a little bit of
Speaker 1: uh of a fake um uh break. But I still
Speaker 1: think distribution is very important. The broadband company's high pricing
Speaker 1: power the warrior has been and always will be what
Speaker 1: does the government do about that? And so far, you know,
Speaker 1: the infrastructure Bill is probably a net positive for the
Speaker 1: broadband companies to the extent that it funds you know,
Speaker 1: additional build out and gets the additional customers. But but
Speaker 1: that regulatory uh sort of democles is out there, and
Speaker 1: obviously the fid administration seems to be swinging that more aggressively. Late.
Speaker 1: On the content side, you know, a lot of questions
Speaker 1: about what happens with theatrical and the streaming wars continue.
Speaker 1: It was a little bit of a lake wabby gone
Speaker 1: in the second quarter where pretty much all the streaming
Speaker 1: services did a little bit better than everyone expected. But
Speaker 1: that's probably gonna change at some point. The consumer will
Speaker 1: have too many services choose from Chris, you mentioned policy,
Speaker 1: and I do want to sort of end here where
Speaker 1: we begin, which is Afghanistan, and how much that actually
Speaker 1: does put a kink in a President Biden's ability to
Speaker 1: push through his policy, to push through his three and
Speaker 1: a half trillion dollar human infrastructure bill, let alone the
Speaker 1: bipe partisan bill that has about five fifty billion dollars
Speaker 1: of spending. How are you looking at this? You trading
Speaker 1: on this in any way? Yeah? You know, I think
Speaker 1: one of the when um, when it became probable that
Speaker 1: Biden would get elected and was in fact elected, we
Speaker 1: anticipated higher tax rates and built those into our company models.
Speaker 1: And obviously we haven't seen that just yet. You know
Speaker 1: that will have to be paid force in the in
Speaker 1: the reconciliation, and so tax rates aren't going to go up,
Speaker 1: but I think they probably go up less than maybe
Speaker 1: we expected a year ago. Uh, and so that's a
Speaker 1: sort of a plus. Um. But you know, this is
Speaker 1: gonna put additional pressure on inflation, which we look at
Speaker 1: and U I think we mentioned Afghanistan parked the price
Speaker 1: that directly into the market, but you probably some additional
Speaker 1: defense spending and the risk premium in general just has
Speaker 1: to go up. Chrismin Ranky back in the office going
Speaker 1: to say that, Chris, it's gonna catch out. Chrismin RANKI
Speaker 1: that Betty funds the value. Let's get to the discussion
Speaker 1: right now. What we're gonna do here is really focused
Speaker 1: on setting up your end of August here into the
Speaker 1: end of the third quarter in September. No one better
Speaker 1: to do that than with someone managing real money, no
Speaker 1: coorum is it invest goo And what's really interesting to
Speaker 1: be you know, while you're in the crosshairs the hardest
Speaker 1: part of the market right now, which is intermediate bonds.
Speaker 1: What are you doing on the duration bet right now?
Speaker 1: Is you, by portfolio mandate, are caught in the crosshairs
Speaker 1: of this market right so on the duration mandate, we're
Speaker 1: staying largely close to neutral. I think it makes sense
Speaker 1: to have a bit of a steep neer on here
Speaker 1: UM if you have more of a multisector account UM,
Speaker 1: but from the duration standpoint, in our intermediate bond fund
Speaker 1: vers staying clothed the neutral. And then we would recommend
Speaker 1: for high yield UH portfolio managers to add some defensive
Speaker 1: or you know, maybe UM other growth related asset managers
Speaker 1: to add some defensive assets here, like the intermediate bond
Speaker 1: fund or investment grade UM just because there are like you.
Speaker 1: You are were just referring to a lot of blooming
Speaker 1: and uncertainties around and you said, the ball market is
Speaker 1: not reacting. It's all it's because we're waiting on Wednesday,
Speaker 1: were waiting on the Emblom see minutes and the taper,
Speaker 1: the big taper debata on timing. We all started to
Speaker 1: say some discrimination just in terms of credit quality and
Speaker 1: the degree to which you are exposed to things like
Speaker 1: the doubts of variant. No Whill, is that encouraging for you?
Speaker 1: Is that a healthy sign that the credit market is
Speaker 1: functioning that way? So we are seeing it. So earning
Speaker 1: the earning season was very healthy. Earnings growth was very strong.
Speaker 1: UM where that strength came in was a little bit bifurcated,
Speaker 1: but we expect overall the earnings growth to continue and
Speaker 1: to and leveraging to continue. The delta variant we have
Speaker 1: to watch very closely. Of course, we don't see it
Speaker 1: necessarily impacting our base case for growth. Really the most
Speaker 1: impact has been the supply destructions from it UM, and
Speaker 1: that's something that we have to watch closely. But the
Speaker 1: demand is still there, so ultimately that just kind of
Speaker 1: maybe flattens the trajectory of growth, but that doesn't necessarily
Speaker 1: take it away. Does it make sense, Noel to then
Speaker 1: that high yield bonds are under performing investment grade? The
Speaker 1: high yeld bonds, Yes, for um. For most of this year,
Speaker 1: high yield bonds have done really well, triple seeds have
Speaker 1: done really well. Premium and new issue has not necessarily
Speaker 1: been very attractive lately, and I think that's why we're
Speaker 1: seeing some of that um that peel back in in
Speaker 1: high yield bonds, just taking a broader step back. Mark
Speaker 1: Howard of b MP Pariva was on the show earlier
Speaker 1: and he was saying that right now, where there is
Speaker 1: no problem, you can keep leaning into risk, But longer
Speaker 1: term we're setting ourselves up for some inequalities within the
Speaker 1: markets and potential. I don't want to say bubbles, but
Speaker 1: bubbles particularly with respect to you a certain credit borrowing.
Speaker 1: What's your sense of that? Do you agree that this
Speaker 1: is going to become a serious problem in a couple
Speaker 1: of years time. So this is something that we definitely
Speaker 1: have to watch and could be a problem in a
Speaker 1: couple of years time. But what we're watching, i'd say
Speaker 1: over the next three to six months, after we get
Speaker 1: the taper announcement out of the way, and you know
Speaker 1: whether or not it's going to be a taper tantrum
Speaker 1: and whether or not we learn from history is up
Speaker 1: for debate. But um, in the next three or six months,
Speaker 1: we do want to stay nimble here because that's when
Speaker 1: the FED hikes start to get priced in. That's when
Speaker 1: the market turns to focus on the actual f MC mandate,
Speaker 1: So employment coming down and whether or not inflation is
Speaker 1: going to be transitory, and how sticky those sticking components
Speaker 1: just can really be. So walk me through your approach
Speaker 1: to floating right with that in mind, to a whow
Speaker 1: what is it said? Right now? I'd have a little
Speaker 1: bit of floating rate just to kind of take some
Speaker 1: down some of your exposure to high yield be because
Speaker 1: they're still is You're still getting compensated there. The demand
Speaker 1: and technicals they are still very strong, still seeing for
Speaker 1: in demand in both floating rate and investment grade and
Speaker 1: some crossover in high yields. So I think it makes
Speaker 1: sense to diversify, or I'm always kind of selling the
Speaker 1: diversification picture because it does make sense here. There's still
Speaker 1: a little bit of value to to be had in
Speaker 1: the floating rate hed your conviction about the future, while
Speaker 1: conviction about high rights or a hedge that we might
Speaker 1: get them. Um, I think we're gonna see higher rates
Speaker 1: from here. It's just gonna be a little bit messier,
Speaker 1: um than you know, over the next several weeks, we
Speaker 1: just have a lot of uncertainty and um, that's gonna
Speaker 1: be definitely something to watch. If we get past the
Speaker 1: taper and it kind of u is quiet, then I
Speaker 1: expect the rates to continue to steepen out because we
Speaker 1: do continue to expect growth to be robust, and that's
Speaker 1: ultimately going to push this curve steeper. What is the
Speaker 1: goal over the next three to five years. Is it
Speaker 1: to clip a coupon or can you actually find total return?
Speaker 1: I think you can find total return, but it's gonna
Speaker 1: be more on a sector basis um or specific bond basis.
Speaker 1: But over the next three or five years, while the
Speaker 1: the you know, of course, when we get into the
Speaker 1: five year scenario, it's hard, of course to call that
Speaker 1: far out. But the ultimate goal would be to clip
Speaker 1: the coupon, diversify ad where there is value and complacency
Speaker 1: within markets and complacency within sectors. No, we've gotta leave
Speaker 1: it that it's gonna catch up. And this fixed income market,
Speaker 1: now i'll call him that invest portfolio manage you what
Speaker 1: we've always tried to do here is John Lisa and
Speaker 1: I are committed to bringing you the experts you know
Speaker 1: on China, Folks, that the expert is Jonathan Spence and
Speaker 1: its classic to Search for Modern China. What is the
Speaker 1: Search for Modern China? For Afghanistan? It is Thomas Barfield
Speaker 1: out of Penn and Harvard, holding court in anthropology at
Speaker 1: Boston University, and he's president of the American Institute for
Speaker 1: Afghanistan Studies and his red covered book, a cultural and
Speaker 1: political history. Trust me, folks, this is the absolute singular
Speaker 1: one volume on the real Afghanistan. Professor Barfield, thank you
Speaker 1: so much for joining us. We're honored. I must ask
Speaker 1: of the people of your institute. Are they safe in Afghanistan? Uh?
Speaker 1: We don't know. My director got out to Delhi um
Speaker 1: last week and we're trying to move our staffs there
Speaker 1: if they have visas. But you know, all air traffic
Speaker 1: has gone so um they're in safe houses in Kabble.
Speaker 1: But we're watching what's what's going to happen, Professor Barfield,
Speaker 1: just because the time I've got to get to the
Speaker 1: advanced moment as we wait to hear from the President
Speaker 1: in the coming hours. Or is is there a risk here?
Speaker 1: Of a Sunni Shia civil war among the tribes that
Speaker 1: you are expert on, including the Taliban and their dominance
Speaker 1: versus to the west of Hussari and their relationship with Iran.
Speaker 1: Probably not, because the Ars are too weak to take
Speaker 1: on a central government. And also they're in the center
Speaker 1: of the country. They don't border Iran. It's difficult to
Speaker 1: run in if you don't have a sanctuary, as the
Speaker 1: Taliban did in Pakistan. Is this the same Taliban as
Speaker 1: twenty years ago or is it so different now? You
Speaker 1: need to brief us on that distinction. That is what
Speaker 1: everybody is waiting to see. Um. The talk out of
Speaker 1: Doha is smoother. Um. Their opposition to even photographs and television,
Speaker 1: you know in the nineteen nineties. Now they're very immediate
Speaker 1: media savvy. Uh. They're big problem is, all right, they've
Speaker 1: taken over the country, how do you govern it? And
Speaker 1: they lacked the capacity to govern, And the question is
Speaker 1: what kind of compromises are they willing to make to
Speaker 1: keep the country functioning so that they can, you know,
Speaker 1: have their ideology predominant and not to involved into a
Speaker 1: civil war. Professor, That's exactly where I wanted to go
Speaker 1: and I'm wondering if you could elaborate on that. I
Speaker 1: was reading reports of civil servants just not showing up
Speaker 1: to work because they were worried about the Taliban and
Speaker 1: how they would be treated. The Taliban said, please come
Speaker 1: back to work, try to restore confidence. They didn't all
Speaker 1: come back to work, and then they started to take
Speaker 1: a harder line and people started to come back out
Speaker 1: of fear. The reports really highlight the difficulty in ruling
Speaker 1: out of fear. Do you see any signs that the
Speaker 1: Taliban is adjusting strategy or trying to consolidate power against
Speaker 1: behind a ruler who can actually impose some sort of
Speaker 1: discipline and also some sort of respect in the population. Well,
Speaker 1: we don't even know who's a Taliban ruler, right, So
Speaker 1: one of the thanks were looking for is what he is.
Speaker 1: The Taliban government in the nineteen nineties, Mullah Omar never
Speaker 1: even came to Cobble. He ran Afghanistan sort of out
Speaker 1: of his bedroom in Condahart, all right. So you had
Speaker 1: a government in Cobble and the guy that led it
Speaker 1: not even bothering to show up in the capital. The
Speaker 1: other thing is, if you go back Afghanistan, is seeing
Speaker 1: these transitions before. When the Soviet back regime fell, essentially
Speaker 1: the bureaucrats went to work for the Mujahadeen. So a
Speaker 1: lot of the fear right now, how are we going
Speaker 1: to be treated as the civil servants? But I I
Speaker 1: remember being in the shower when the Mujahadeen shadow Minister
Speaker 1: of Agriculture I wanted some statistics. He says, I'll ask
Speaker 1: the ministry and cobbalize that. How can you do that?
Speaker 1: He says, they serve whatever government And he got the
Speaker 1: statistics he wanted, and they send a little nest to
Speaker 1: come to power. Remember where bureaucracy. So we're what we're
Speaker 1: watching that it's just unknowable because it's happened so fast.
Speaker 1: Thomas Barfield, there is a professor at Boston University by
Speaker 1: the name of Basevich who has sacrificed his son to
Speaker 1: these wars. In the distance from base of Itch to
Speaker 1: Barfield is a distance of can we export liberal democracy?
Speaker 1: Have we learned a final lesson here in this debacle
Speaker 1: that we cannot export liberal democracy at the risk of
Speaker 1: our soldiers and at the risk of our debt and deficit.
Speaker 1: I would say probably not. We probably learned a lesson
Speaker 1: for the next ten years. But it's like the British
Speaker 1: who got badly burned in the first Anglo Ascan Wars,
Speaker 1: that they never go back in. They re invaded it
Speaker 1: and then decided it was not a good idea and
Speaker 1: went back out. Um countries like people kind those as
Speaker 1: as things fade and sometimes not to remember the things
Speaker 1: they should are. The Taliban tribal You're infinitive work is
Speaker 1: the anthropology of Afghanistan. Is the Taliban part of the
Speaker 1: tribes that you write about. No, that's one of their
Speaker 1: advantages because they're not tribal. They can bring all of
Speaker 1: these tribes that would otherwise be rivals with one another,
Speaker 1: and they call for unity in the name of God.
Speaker 1: Who can resist good? I mean the Taliban in nineties
Speaker 1: with the first government in Afghani history that was ruled
Speaker 1: by mullus Um. But the advantage they had was they
Speaker 1: could say we do not represent tribe, their regional interest.
Speaker 1: Even if you've done down a little bit, then maybe
Speaker 1: they did um. And they seem to have really surprising
Speaker 1: this time because it's historically and I would still looking
Speaker 1: at the interviews the leaders are speaking and pushed out.
Speaker 1: But they took the north First, that's the non Plushtun
Speaker 1: region of the country. The ashraf Ghani regime had to
Speaker 1: do something really bad to alienate all the non Plushtuns
Speaker 1: in the north so that they were willing to a
Speaker 1: lie with with with the Taliban. So um, it's it's
Speaker 1: not tribal. A much needed level of detail there from
Speaker 1: Thomas Bonfield. Thomas, thank you, Professor of anthropology at Boston
Speaker 1: University and president of the American Institute for Afghanistan Studies.
Speaker 1: There is no one, and I mean no one in
Speaker 1: the investment community who is educated on what experts think
Speaker 1: about stars, about Avian influenza and about the present pandemic.
Speaker 1: And David Kotalk of Pennsylvania and Florida, he's somewhere out
Speaker 1: west right now singing John Denver songs and he joins
Speaker 1: us here from Cumberland Advisors. David, your latest UH memo
Speaker 1: is striking for the three articles you attach on pediatric hospitalizations. Bonus,
Speaker 1: you're living this in Florida. What have you learned? We've
Speaker 1: learned that uncertainty is a powerful forecasting tool. It tells
Speaker 1: you nothing. Risk is one thing. You can estimate it.
Speaker 1: You can have science, you can measure things you can
Speaker 1: create probabilities. Uncertainty does not permit that we are living
Speaker 1: in uncertainty with delta and the variants, and we have
Speaker 1: a massive failure in the public health system in the
Speaker 1: United States and most of the world. And that was
Speaker 1: the conclusion Tom and Lisa in Maine. David Kotok when
Speaker 1: I look at when I when I look at where
Speaker 1: we are right now at dovetails into economic data like
Speaker 1: Empire manufacturing, which was very, very weak. Are you pricing,
Speaker 1: in your view for a slowdown or disappointment in GDP.
Speaker 1: The answer is yes, And the sentiment into haiters that
Speaker 1: just came out drive that home very strongly. In our portfolios.
Speaker 1: In our US et F models, we are up to
Speaker 1: twenty eight percent cash and we have doubled the market
Speaker 1: weight of the entire healthcare sector in the broad sense
Speaker 1: of the word, because we believe that the variant evolution
Speaker 1: and public health demands on the healthcare system and the
Speaker 1: companies that provide the resources to fight COVID are going
Speaker 1: to go on for several years. So the answer is yes, David.
Speaker 1: Percent cash at a time when bulls cake get bullish
Speaker 1: enough and our upgrading their forecasts what's the trigger, what's
Speaker 1: the catalyst to cause a sell off that could actually
Speaker 1: allow you to deploy some of that cash. We don't know.
Speaker 1: We're looking at the sentiment collapsed, Lisa. That was a
Speaker 1: very strong Michigan data and it also captured the huge
Speaker 1: political divide in the country when you dissected the data.
Speaker 1: And what do we know from Neil Ferguson's wonderful work
Speaker 1: which Bloomberg has helped tell the world about, every single
Speaker 1: pandemic has led to a recession following it, and every
Speaker 1: single pandemic has had led to major structural political change
Speaker 1: and geopolitical events. There's been no exception in history. Neil
Speaker 1: established that in his work. And we don't know. We're
Speaker 1: uncertain as to what's gonna come in this structure, but
Speaker 1: we do know something is going to come. It's major changes.
Speaker 1: I don't buy the two months recession we've just had,
Speaker 1: but the NBER said it's over. I don't think we've
Speaker 1: had the shock yet. Well, what would you say to
Speaker 1: people who look at corporate earnings and say they're phenomenal,
Speaker 1: who look at the fact that rates are going to
Speaker 1: be low for a very long time and say there
Speaker 1: is no alternative. I mean, there are some strong arguments
Speaker 1: for risk right now. No, I would agree with that.
Speaker 1: And when uncertainty gives way to some risk and we
Speaker 1: can begin to measure more impacts, the answer would be s.
Speaker 1: We just had a quarter where we had over fifty
Speaker 1: dollars in earnings out and the SNP and the trend
Speaker 1: is higher. By the way, when you shift labor share
Speaker 1: away because you have sick people and dead people and
Speaker 1: reluctant people to work, you alter the mix between capital
Speaker 1: and labor. We're doing that. Capital wins. There's winners and
Speaker 1: losers and bandemics, and the stock markets one of the winners.
Speaker 1: I can see a longer term trajectory from the stock
Speaker 1: market to six or seven thousand with three hundred dollars
Speaker 1: in morning. David, I don't care who caught the biggest fish. Oh,
Speaker 1: I can't go to that one because that one creates
Speaker 1: a bunch of opinions. Let's just say we had great fishing,
Speaker 1: great conversations, and it was nice to have the gathering back.
Speaker 1: If I can add one very quick, please hudent vaccine
Speaker 1: passport requirement. Guides, lodge and guests if they didn't want
Speaker 1: to conform they couldn't come, and everybody was a team
Speaker 1: player from all over the country. David Kotak, Stay Healthy,
Speaker 1: David kote Cumberland Adviser c i O, and truly the
Speaker 1: streets experts on collating call using in all of this
Speaker 1: research on these medical issues. This is the Bloomberg Surveillance Podcast.
Speaker 1: Thanks for listening. Join us live weekdays from seven to
Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television
Speaker 1: each day from six to nine am for insight from
Speaker 1: the best in economics, finance, investment, and international relations. And
Speaker 1: subscribe to The VALA's podcast on Apple podcast, SoundCloud, Bloomberg
Speaker 1: dot com, and of course on the terminal. I'm Tom
Speaker 1: keene In. This is Bloomberg m