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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferrell and Lisa Brownowitz Jailely. We bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com,

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Speaker 1: and of course, on the Bloomberg Terminal. I want you

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Speaker 1: to stop and pause, folks, because what is important buried

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Speaker 1: in the Bloomberg terminal of great use is the track

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Speaker 1: record of people. He is in the nineties seven percentile

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Speaker 1: of three year performance and in the last year's tumult

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Speaker 1: defeated the Standard and Poors five hundred by what's called

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Speaker 1: seven thirty one basis points that seven plus out performance

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Speaker 1: off sp X. He is so alone, Well, he has

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Speaker 1: time to come on with us. Andrew Slimmon Joints Senior

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Speaker 1: Portfolio May Morgan Stanley, let me look back, Andrew, how

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Speaker 1: did you do that in two thousand twenty one? Well,

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Speaker 1: I think what really worked for us was to most

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Speaker 1: people owned too many gross socks and starting to increase

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Speaker 1: the exposure to box and owning some energy and financials

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Speaker 1: that that really distinguished. Look. I think the S and

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Speaker 1: P has become a growth index. Top ten stocks are

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Speaker 1: largely gross stock tech stocks, so tacking away from that

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Speaker 1: UH and being overweight some of the value areas in

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Speaker 1: a year where they're working, and they certainly are so

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Speaker 1: far that you know that that you can drive you know,

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Speaker 1: look at the end of the at the end of

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Speaker 1: the seventies and top ten socks r energy socks and

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Speaker 1: now the top ten of tech socks. So I think

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Speaker 1: it's uh, it's a great opportunity for active management. You

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Speaker 1: published this morning that what we're seeing here in our

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Speaker 1: international relations, in our fractured moment to moments UH focus

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Speaker 1: is a buying opportunity. Why is that, Well, look, I'm

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Speaker 1: certain because if you look at ten percent corrections on average,

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Speaker 1: twelve months later, you're up a lot, even if they

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Speaker 1: morph into much worse worse in ten percent corrections, about

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Speaker 1: half of the ten percent corrections become fiftent corrections, and

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Speaker 1: a quarter of the ten percent of corrections become twent corrections.

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Speaker 1: But even if you look out a year, if you

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Speaker 1: bought down ten percent, it might get ugly earlier, which

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Speaker 1: I think it will this time. Again, a year later,

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Speaker 1: you've been well served to step up into those corrects. Andrew,

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Speaker 1: you just we're talking about the importance of active management.

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Speaker 1: We've been talking about the turn under the surface. Some

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Speaker 1: big winners. I'm thinking of energy, some big big losers.

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Speaker 1: I'm thinking of certain tech stocks. What do you buy

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Speaker 1: if this is a buying opportunity, Well, I think you

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Speaker 1: still well, So look on the surf. I'm really changing

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Speaker 1: my tune a little bit since i've been on. Last year,

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Speaker 1: I was on and I kept saying, look, the uber

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Speaker 1: grow the the real high flying growth tocks are too expensive,

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Speaker 1: but I don't think the quality grows socks are as expensive. Well,

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Speaker 1: you know what, those high flying grows socks have come

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Speaker 1: down so much, and they actually the quality grows socks

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Speaker 1: have held in there that now the pricing is shifted,

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Speaker 1: and I think the safer gross socks, which are the

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Speaker 1: mega cap tech stocks, are more vulnerable because these uh,

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Speaker 1: you know, the high flying gross socks are just been

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Speaker 1: so thoroughly trashed. So at the end of the day,

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Speaker 1: the opportunity remains in the value stocks. Look, if the FED,

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Speaker 1: this is the very important part. If the FED was

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Speaker 1: going to over tighten and kill the economy, cyclical stocks

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Speaker 1: wouldn't be outperforming trasier yields would be dropping, right, they're not.

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Speaker 1: It tells grows there would be a growth rotation at

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Speaker 1: a growth tox that's not happening. That tells me as

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Speaker 1: much as the discussion about how many times the Feds

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Speaker 1: going to raise rates, They're probably not going to raise

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Speaker 1: rates as much as some of these predictions because the

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Speaker 1: market is telling me to stick with the economically sensitive stocks,

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Speaker 1: and I think that's where you want to be. Although

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Speaker 1: a lot of people are looking at the yield curve

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Speaker 1: which is contracting and some of the narrowest levels that

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Speaker 1: we've seen since the beginning of the pandemic and saying, actually,

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Speaker 1: recession risk is real, growth scares are real, and frankly,

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Speaker 1: we're not saying that baked in some of these stocks,

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Speaker 1: which means that perhaps they are more vulnerable. How do

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Speaker 1: you push against that? Well, that's true. I mean, yeah,

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Speaker 1: you're absolutely right. The yield curve yesterday came down a bit.

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Speaker 1: We'll have to see, you know, it has come down

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Speaker 1: and then it bounces back. Usually as it gets closer

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Speaker 1: to zero, it becomes a tougher, more stubb We'll have

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Speaker 1: to see high yield spreads, investment grade spreads haven't blown

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Speaker 1: out that much, so I'm watching. I'm still sticking with

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Speaker 1: this stick to the stick to the value trade. I

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Speaker 1: still think you'd see a much bigger rally and treasury

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Speaker 1: yields uh than we saw yesterday if, in fact recessions

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Speaker 1: around the corner. And then the other thing that I

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Speaker 1: would push back is what no one seems to be

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Speaker 1: talking about is, Lisa, do you know that the estimate

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Speaker 1: for the SMP is higher today than it was at

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Speaker 1: the beginning of the year. Estimates keep going up. Yes,

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Speaker 1: I understand they're not going up at the same rate

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Speaker 1: they did before, but the fact is companies continue to

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Speaker 1: do better than what was estimate at the beginning of

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Speaker 1: the year. That's bullish. It's bullish, but we've got to

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Speaker 1: do something here. Andrew, how much cash do you hold

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Speaker 1: right now? I mean, with your track record, I think

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Speaker 1: people really want to know that confidence is displayed by

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Speaker 1: cash and portfolio. Yeah. Tom, I've heard you asked that

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Speaker 1: question before, and I think it's a little uh. You know,

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Speaker 1: if when manager said, well, I don't like the market

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Speaker 1: and I've raised cash, I find that a little misleading

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Speaker 1: because at the end of the day, what is it

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Speaker 1: if the markets down ten and you raise five percent

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Speaker 1: cash or ten percent cash, You're gonna lose money, right,

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Speaker 1: You're gonna lose money. So so you know, to suggest

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Speaker 1: that if I raise cash, I won't lose money as

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Speaker 1: an equity long manager, I think that's very misleading because

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Speaker 1: at the end of day, no one's giving me investing

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Speaker 1: in my fund to go to eight percent cash. I'm

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Speaker 1: a long equity manager. I hope to god I do

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Speaker 1: better on the downside than the than the markets. But

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Speaker 1: I'm invested. So the only question is how much will

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Speaker 1: investors panic and liquidate? And we have seen redemptions the

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Speaker 1: last few days that, unfortunately, tragically, that's normal market draw

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Speaker 1: us in. As much as I'm saying, hey, it's a

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Speaker 1: buying opportunity, people hit the panic button, and I suppose

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Speaker 1: after today we'll see inflows. Andrew, just to sort of

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Speaker 1: tie this all together, if someone was listening to this interview,

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Speaker 1: that might come away saying, all right, go all in

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Speaker 1: on pinterest and Twitter? Is that your Was that your

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Speaker 1: point here? No? I don't think so. I think those stocks,

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Speaker 1: uh are not not specifically those stocks, with just those

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Speaker 1: stocks in general, they the carnage is so great. I'm

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Speaker 1: not sure. I wouldn't recommend people to run out and

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Speaker 1: sell them. I think they could bounce, but I don't

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Speaker 1: think that's the big opportunity. I still think it's in

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Speaker 1: the value names, but I just want to stress I'm

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Speaker 1: a core manager. I'm looking for the fast pitch. I

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Speaker 1: still think it's in the cyclical stocks, because we're gonna

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Speaker 1: get some more ugly insulation prints. And think about this, right, Lisa,

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Speaker 1: Yesterday financials out the market got crunched in financials outperformed.

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Speaker 1: Think about since the Great Financial Crisis, every time the

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Speaker 1: market went down, a lot financials got destroyed. And they're not.

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Speaker 1: They're actually leading in the downturn. That's very unusual. So

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Speaker 1: I'm pardoned to see that even in the downturn, some

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Speaker 1: of the cyclical era seemingly are leading and usual one

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Speaker 1: of the best. We've gotta go. It's gonna catch up

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Speaker 1: by a wise interested them in that of Morgan Stanley

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Speaker 1: Investment Management. It was an essay in the Financial Times

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Speaker 1: a number of days ago from Jeffrey Sachs of Columbia

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Speaker 1: University talking not of appeasement, but how do we, after

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Speaker 1: the debris of all this move forward with Russia. The

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Speaker 1: authority of Jeff Sex here is truly, truly enormous, and

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Speaker 1: goes back to January with his advisement to a Yeltson

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Speaker 1: regime that then changed to something different when Jeff Sex

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Speaker 1: got off the airplane at JFK. That interview was shocking.

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Speaker 1: Professor sexing US of Course of Columbia University this morning,

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Speaker 1: Jeff Sex, we all got Boris Yeltson wrong? Do we

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Speaker 1: get Mr Putin wrong? Well, I think we've got our

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Speaker 1: own policies not right. And we have been on a

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Speaker 1: very provocative course of really NATO enlargement seen by the

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Speaker 1: Russian side as encircling Russia, a point that has been

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Speaker 1: made actually for more than thirty years, first by the

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Speaker 1: Soviet Union, by Mr Gorbachev, then by President Yeltson, now

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Speaker 1: by Putin. We don't want to think about that in

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Speaker 1: the US. We don't want to discuss it. We're dishonest

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Speaker 1: because the West, the leaders said clearly to Mr Gorbachev

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Speaker 1: and to Putin and I'm sorry and to Yeltson, no

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Speaker 1: enlargement to the East. Then Clinton decided, because of the

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Speaker 1: pressures domestically and from Central European countries, that NATO would enlarge.

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Speaker 1: It was predicted by many at the time, including Clinton's

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Speaker 1: own Defense secretary William Perry, that this was a very

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Speaker 1: dangerous and provocative move. And now we're here, we need

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Speaker 1: diplomacy on our side. All we're doing right now is

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Speaker 1: sacrificing Ukraine in the name of a theory, because if

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Speaker 1: you talk to senior officials, they say, oh, there's no

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Speaker 1: way Ukraine's actually going to join NATO, but then they

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Speaker 1: say publicly, of course, Ukraine has every right to join NATO.

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Speaker 1: If you put the two together, it's the worst combination

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Speaker 1: for Ukraine's security. Jeff, what's so important here is I've

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Speaker 1: got Jeff Sex, the liberal from Colombia. On the same

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Speaker 1: page is Mersheimer Chicago, the arch servative real politic. I mean,

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Speaker 1: that is truly extraordinary to steal a phrase from a

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Speaker 1: younger Jeff Sex. What is the diplomatic shock therapy to

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Speaker 1: jump start a legitimate dialogue to come to a good

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Speaker 1: resolution here we need basic points agreed, Russia out of Ukraine,

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Speaker 1: Ukraine's sovereignty assured, NATO not enlarging into Ukraine, the mints

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Speaker 1: to agreement being implemented for basic points, they're not so

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Speaker 1: hard to come to the table, except actually the difficulty

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Speaker 1: is on the NATO side. NATO says, oh, everyone has

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Speaker 1: the right to join, as if it's some great, somehow

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Speaker 1: moral right to have a military alliance that increasingly runs

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Speaker 1: up against the border of an antagonist. That's not a right.

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Speaker 1: That's just imprudent, is what it is. But Jeffrey, you're

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Speaker 1: talking about diplomacy. Can we have diplomacy? If people question

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Speaker 1: whether Vladimir Putin is a rational actor, it's it's a

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Speaker 1: great question. You cannot test that theory if you don't

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Speaker 1: have diplomacy. What Putent said in his speech a couple

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Speaker 1: of days ago is we called for new security arrangements,

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Speaker 1: the United States would not even discuss them. That is

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Speaker 1: the truth. The US said first moment NATO is open

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Speaker 1: for enlargement. It is the right of Ukraine. Well, I

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Speaker 1: don't call that smart diplomacy. Uh. And then when uh,

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Speaker 1: the response is a failure, which was predictable, we say, well,

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Speaker 1: nothing could have worked. My view is we should try

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Speaker 1: real diplomacy. It might not work. It might not work,

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Speaker 1: but if you don't try it, you can't tell. And

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Speaker 1: what's always true in negotiations throughout history is if you

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Speaker 1: start with the premise that the counterpart is just a madman.

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Speaker 1: If you start with that premise, you will absolutely end

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Speaker 1: up in conflict. There's no way to reach an agreement

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Speaker 1: on that starting point. It may be true that the

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Speaker 1: counterpart isn't interested in negotiation, but you can't find that

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Speaker 1: out by talking to yourself, So you have to talk

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Speaker 1: to the other side. Jeffrey, we're talking tactics right now

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Speaker 1: and how to avoid some sort of altercation. But longer

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Speaker 1: term strategy. You specialize in sustainability, and I do wonder

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Speaker 1: what type of investment would be necessary now in order

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Speaker 1: to immunize both the US and frankly, even more so

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Speaker 1: the European economies from the vulnerability of dependency on Russia

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Speaker 1: for oil and gas. The truth is we ought to

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Speaker 1: be dependent overwhelmingly on our sunshine. That's the whole idea

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Speaker 1: of the decarbonization agenda, which is a massive increase of

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Speaker 1: solar and wind power to replace fossil few wolves. Why

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Speaker 1: are we in yet another fossil fuel crisis. By the way,

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Speaker 1: this is where I entered the economics. I won't tell

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Speaker 1: you how many decades ago, writing about the oil shocks

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Speaker 1: of the nineteen seventies. We can get away from that,

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Speaker 1: because if we're relying on our own sunshine with solar

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Speaker 1: fields are on our offshore wind or on our wind

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Speaker 1: in the US Midwest, we are not going to be

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Speaker 1: suffering what we're going to be suffering right now. So

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Speaker 1: that's actually a pretty straightforward approach and the one we

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Speaker 1: ought to be taking anyway, Jeff, and the time we've

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Speaker 1: got left, And very importantly, you make the the assumption

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Speaker 1: here that the West is talking to itself instead of

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Speaker 1: talking in a more formal diplomacy to the oddities of

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Speaker 1: the Kremlin. The Democratic Party and the liberals of the

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Speaker 1: Democratic Party and progresses all agree are going down in

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Speaker 1: flames at the next election. Whether that's true or not,

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Speaker 1: we'll find out in November. Are the progressives in this

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Speaker 1: nation guilty of talking to themselves and not reaching out

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Speaker 1: for compromise with the Biden moderates or indeed the GOP moderates.

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Speaker 1: I just think there's a lot of bad strategy going on.

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Speaker 1: I am unimpressed with the diplomacy of this administration. I

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Speaker 1: kind of well, let's just say I'm unimpressed, and I'm

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Speaker 1: unimpressed with the strategy on the domestic policy. Senator Joe Manchin,

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Speaker 1: with whom I often do not agree, put forward a

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Speaker 1: very reasonable proposition. Raise taxes, use some of it to

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Speaker 1: reduce the debt, use some of it for the social programs.

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Speaker 1: That's a point of the left. Meet the gentleman from

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Speaker 1: West Virginia. It clearly it broke for the left. How

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Speaker 1: did it break for the left? Well, it has to

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Speaker 1: start with the White House, Frankly. That's the job of

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Speaker 1: the President and the White House to coordinate. How you

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Speaker 1: could have this situation and not reach an agreement. Is

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Speaker 1: is really disappointing, frankly, because there is an agreement to

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Speaker 1: be had. Even a Senator Mansion sketched it out in

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Speaker 1: the last couple of weeks. I said, Okay, here we go.

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Speaker 1: But they don't move. And it's really not so understandable. Tom.

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Speaker 1: It's a good question. I don't have a good answer

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Speaker 1: for it, Professor. Thanks for bam with us today. Jeffrey

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Speaker 1: snacks that Columbia University right now one bonds and when

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Speaker 1: an incredibly smart note he credit sizes Winning Caesar, global

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Speaker 1: head of Strategy and Winning I love what you say

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Speaker 1: about capturing little bits of movement here where it's not

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Speaker 1: about yield change, but it's trying to find in fixed

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Speaker 1: income where price will go up. Where is that? What

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Speaker 1: part of fixed income do I find little bits of

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Speaker 1: ice moving up? Good morning everyone, thanks for having me.

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Speaker 1: That's a great point. And what we've noticed is the

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Speaker 1: belly of the curve and investment grade you're actually now

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Speaker 1: trading at a discount to par, which very rarely happens, right,

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Speaker 1: I mean, usually in the investment grade market, investors are

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Speaker 1: going to expect to be made whole at par, and

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Speaker 1: you don't see these discounts outside of very stressed period

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Speaker 1: of times all that often. And so we are recommending

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Speaker 1: that investors take a look at the belly of the curve.

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Speaker 1: And then also in high yield, we've now started to

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Speaker 1: see bond prices trade at a discount to part and

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Speaker 1: that market is a much different market than it was

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Speaker 1: in the mid two thousand's, and really the leverage to

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Speaker 1: energy in that market is a fairly positive thing. Um

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Speaker 1: with all of the geopolitical risks and and kind of

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Speaker 1: Russia Ukraine headlines, we got some major jargon going on here, folks.

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Speaker 1: See if I level one, the belly of the curve

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Speaker 1: is identifiable. But when do you seriously here, how do

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Speaker 1: you define the belly the curve? Yes, I did have

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Speaker 1: the jargon speak, so we like the five to ten

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Speaker 1: year segment of the curve, so not really long duration,

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Speaker 1: you know that thirty year segment of the curve, but

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Speaker 1: just extending a little bit so you don't have a

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Speaker 1: really kind of inflated front end portfolio into the point

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Speaker 1: of curve curveew where you actually see a lot of

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Speaker 1: new issue, which also helps when you're looking for liquidity

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Speaker 1: and adding to portfolios and sizes. When taking a look

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Speaker 1: at the broader credit complex, a lot of people say,

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Speaker 1: we are not heading towards another credit crisis by any means,

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Speaker 1: because companies have done such a good job of kicking

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Speaker 1: the can down the road of extending out the maturities,

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Speaker 1: of getting their financing as cheap as possible. But are

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Speaker 1: you starting to see that window for cheap financing really

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Speaker 1: close up? What we're beginning to see is the opportunistic

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Speaker 1: window shutting. So for those issuers who are really trying

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Speaker 1: to aggressively address capital structure and refinance, I think that

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Speaker 1: that window has closed. We've already hit the all time

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Speaker 1: low point and yields in both investment grade and high yield,

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Speaker 1: and now it's about kind of picking your spots where

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Speaker 1: those types of opportunities still makes sense. The energy sector

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Speaker 1: is one such spector where we think that refinancing is

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Speaker 1: probably going to continue because you've had a bit of

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Speaker 1: a later recovery in that sector for issuers, and borrowing

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Speaker 1: costs are still pretty attractive all things considered. Now, overall,

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Speaker 1: we don't think that the moving yields has become a

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Speaker 1: threat to either investment grade or high yields quite yet.

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Speaker 1: Companies can still borrow at very low levels all overall,

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Speaker 1: and this kind of flow down a new issue supply

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Speaker 1: that's just a natural effect of volatility in the market

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Speaker 1: is actually very constructive technically for the market when there

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Speaker 1: are two issues here, and this is something a lot

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Speaker 1: of people have been trying to wrap their heads around.

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Speaker 1: On one hand, you could potentially get a rates driven

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Speaker 1: sell off in the credit market, at what point does

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Speaker 1: that lead to some sort of corporate credit response? In

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Speaker 1: other words, it's not going to affect these corporations because

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Speaker 1: their financing is so cheap and they don't need more money.

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Speaker 1: So at what point are we kind of immunized because

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Speaker 1: you see a pretty big sell off in evaluations of

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Speaker 1: some of these credits, but even see companies with very

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Speaker 1: solid balance sheets. So what you ultimately need to have

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Speaker 1: is this kind of spiral of rates volatility driving spread volatility,

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Speaker 1: which drives really negative total return losses and portfolios. And

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Speaker 1: then when investors go and look at their you know,

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Speaker 1: Q one two statements and say, oh, my gosh, why

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Speaker 1: are my investment grade bonds down seven percent this quarter?

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Speaker 1: And then they start selling into that down market, and

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Speaker 1: you get this kind of spiral of spread widening more

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Speaker 1: and liquidity really gets cut off from the market. Now,

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Speaker 1: given the amount of cash still on the sidelines, we

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Speaker 1: feel fairly confident that there will be a clearing level

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Speaker 1: where institutions step back in and say, oh, actually, you know,

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Speaker 1: ten year credit looks pretty attractive at three and a

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Speaker 1: half percent. But we haven't quite reached that point yet.

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Speaker 1: We were thinking three to three and a half percent

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Speaker 1: in investment grade as the level where institutional investors would

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Speaker 1: kind of step back in, But given the rush of

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Speaker 1: Ukraine headlines, I think that that's keeping people kind of

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Speaker 1: sitting on their cash a little bit longer than we

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Speaker 1: would have expected when he thank you as always going

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Speaker 1: ahead from you when he sees that of credit size.

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Speaker 1: I've got unity at Knight's Hotel, and we've got unity

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Speaker 1: with Alice. That's the good news. The bad news for

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Speaker 1: some people. And where the criticism has come from that

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Speaker 1: those sanctions that they delivered Tom aren't strong enough, that lightweight,

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Speaker 1: Well they're lightweight. And again the key thing here is

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Speaker 1: now the response from Mr Putin. She gave us a

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Speaker 1: wonderful brief a number of days ago. We're thrilled to

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Speaker 1: bring back Tina Fordum I had a global political strategy,

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Speaker 1: and Evan Hurst just thrilled she could be with us.

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Speaker 1: And this morning, Tina, I read the Putin speech you

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Speaker 1: did with all your professional ability, and I mentioned I

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Speaker 1: believe it was yesterday a Lenin and the Bolsheviks. You

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Speaker 1: go even further back to the eighteenth century and Catherine

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Speaker 1: the Great, piecing together what Peter the Great uh rought.

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Speaker 1: How does Putin go back to Catherine the Great? I

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Speaker 1: think we should interpret those remarks as his aspirations. But

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Speaker 1: you know, without giving away my trade secrets, if I've

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Speaker 1: been any good at anticipating developments with respect to Russia,

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Speaker 1: it's because I'm taking put In at face value. He

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Speaker 1: is telling us what he wants. I think he's also

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Speaker 1: moved the from I mean, I never thought he was

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Speaker 1: a chess grand master, but from somebody tactical to somebody's

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Speaker 1: concerned about legacy. So that's what this is about. What

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Speaker 1: does the Soviet people want? Would you suggest the Soviet

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Speaker 1: people excuse me, the Russian people I misspeak there. Seriously, folks,

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Speaker 1: do you believe that the Russian people parts between Lenin

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Speaker 1: and Stalin as he did in the speech, or that

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Speaker 1: the Russian people care about empire? So, first of all,

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Speaker 1: we don't really have very good sources of public opinion

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Speaker 1: data about what Russian people think. They are concerned about

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Speaker 1: what they hear on you know, Russia, Russia Today and

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Speaker 1: and other domestic channels, which is that Russian speakers in

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Speaker 1: those so called breakaway republics are being abused. UM. And

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Speaker 1: that's where the risk of a false flag incident comes in. UM.

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Speaker 1: This notion that Putin is trying to project saying that

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Speaker 1: Ukraine is not a real country because of the borders

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Speaker 1: drawn by Lettin, etcetera, has been masterfully deconstructed. By the way,

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Speaker 1: if you haven't seen this speech yesterday at the United

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Speaker 1: Nations from the Kenyan Ambassador to the U n UM.

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Speaker 1: He talks about how if we're going to revise the

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Speaker 1: borders and reconsider the sovereignty of every country that came

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Speaker 1: out of empire, um, where do we start? And that

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Speaker 1: that the ken yeah and other African nations, which of

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Speaker 1: course came out of colonial borders also largely arbitrarily drawn,

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Speaker 1: don't want to go there. That's the risk of what

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Speaker 1: Putin is talking about by denying the sovereignty, the right

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Speaker 1: to exist of Ukraine. And that's why this isn't about

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Speaker 1: just these breakaway republic don edskar luhansk Oh. If the

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Speaker 1: global order doesn't respect except sovereignty and borders, then we

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Speaker 1: have no water tin that. I think most people would

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Speaker 1: agree on that. What's interesting for me right now is

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Speaker 1: just how effective these sanctions might be. Team that they

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Speaker 1: seem to be sanctioning again the high net worth individuals,

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Speaker 1: the Oligar incident around President Putin. I wonder how effective

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Speaker 1: that's going to be. I watched that National Security Council

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Speaker 1: meeting that was broadcast on Russian TV. They didn't seem

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Speaker 1: like the kind of individuals that were about to turn around.

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Speaker 1: It's how President Putin he should change course. Do you

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Speaker 1: think that this will be effective to go after the

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Speaker 1: people with money, the people close to President Putin? Of

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Speaker 1: course it's not enough. But let's also remember, in fairness

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Speaker 1: to the sanctions drafters who have a very tough job,

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Speaker 1: that they're also attempting to sequence the sanctions, right, so

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Speaker 1: to start with one wave, um, the EU sanctions have

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Speaker 1: gone further, by the way, Jonathan, the EU has sanctioned

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Speaker 1: all of the parliamentarians, hundreds of them in the Duma,

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Speaker 1: who supported this move. But if there is a full

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Speaker 1: blown invasion, as U S intelligence seems to be warning,

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Speaker 1: I also think Putin will go further. I don't buy

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Speaker 1: what I'm seeing in some investment research that we're going

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Speaker 1: to see a de escalation. I see the opposite, We'll

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Speaker 1: see another round of sanctions. So you don't want to

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Speaker 1: you know, you want to keep some powder dry in

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Speaker 1: the event of of a worse event. But what I

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Speaker 1: think markets are not giving enough attention to, and I

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Speaker 1: listened with great interest to the previous guests and the

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Speaker 1: and the bullishness, is the risk of a of a

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Speaker 1: catastrophic incident we are in what clauses what's called the

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Speaker 1: fog of war and Russia has nuclear weapons. Well, Tina,

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Speaker 1: then what are you advising clients to do? I mean,

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Speaker 1: how do you factor in that risk, that tail risk

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Speaker 1: that perhaps in your view is becoming more real. Well,

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Speaker 1: I think we moved from a tail risk a long

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Speaker 1: time ago. And one of the things that I've I've

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Speaker 1: been advising my clients for many years now is not

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Speaker 1: to think in terms of a base case and a

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Speaker 1: tail risk, but rather clause Heble scenario. So we need

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Speaker 1: to test a stress test portfolios against that. I don't

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Speaker 1: disagree with the immediate conclusion of market participants that, um,

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Speaker 1: if anything, a geopolitical risk incident may you know, keep

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Speaker 1: rates lower for longer, but not not yet. I think

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Speaker 1: the more worrying point really is about supply disruptions and

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Speaker 1: you know, the international system. How does it impact investor portfolios?

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Speaker 1: We are Russia has given us a very clear signal

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Speaker 1: that it is not coming back into the fold, that

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Speaker 1: it doesn't really care about sanctions, and that it is

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Speaker 1: not a reliable partner. And in my twenty five years

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Speaker 1: of watching Russia, this is this is a real change

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Speaker 1: in trend. We're not going back Tina. Wonderful to catch

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Speaker 1: him with you. Some really strong words that Tina Fordon

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Speaker 1: of Avon Hurst, they head of global political research at Strategy.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Thanks for listening. Join

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Speaker 1: the terminal. I'm Tom Keene and this is Bloomberg