Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferroh, along
Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each
Speaker 2: day for insight from the best in markets, economics, and
Speaker 2: geopolitics from our global headquarters in New York City. We
Speaker 2: are live on Bloomberg Television weekday mornings from six to
Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify
Speaker 2: or anywhere else you listen, and as always on the
Speaker 2: Bloomberg Terminal and the Bloomberg Business App. Israel launching another
Speaker 2: round of attacks on several locations in Iran. President Trump
Speaker 2: reportably telling ABC QUO, I think it's been excellent and
Speaker 2: there's more to come. Joining us now to discuss is
Speaker 2: Dannington on the Israeli Ambassador to the United Nations, Ambassador
Speaker 2: Goo Mornic.
Speaker 3: Thank you for having me do.
Speaker 2: Thank you for sharing some of your time with us,
Speaker 2: because I'm sure you've been exceptionally busy. Let's just talk
Speaker 2: about where things stand right now. Is this operation on
Speaker 2: and ultimately one of the gals.
Speaker 4: Where the gods are very clear, we want to be
Speaker 4: sure that they will not put the threat not only
Speaker 4: against Israel, but against the entire Western civilization, and specifically,
Speaker 4: we have two main goals. To eliminate the nuclear capabilities
Speaker 4: and to stop the production of ballistic missiles. And let
Speaker 4: me elaborate on that. You know, it's not only the
Speaker 4: nuclear weapons. We all know about the UNU enrichment and
Speaker 4: about that they're getting very close to put a bomb together.
Speaker 4: But to look at what they're doing with the ballistic missiles.
Speaker 4: They want to They wanted to be at the same
Speaker 4: level of the US and Russia in terms of the
Speaker 4: quantity and the technology of the ballistic missiles. We couldn't
Speaker 4: allow it to happen. We got intel about their intentions
Speaker 4: to create another attack against Israel. You know, we all
Speaker 4: remember what happened on October seventh, But this time they
Speaker 4: wanted to use thousands of ballistic missiles and invade into
Speaker 4: it well with their proxies.
Speaker 3: So it was a preemptive attack.
Speaker 4: So we will continue until we will be sure that
Speaker 4: we eliminated those two capabilities.
Speaker 3: Share rank you right now, Well, we will.
Speaker 4: Have to wait and see the result of the attack
Speaker 4: of last night.
Speaker 3: It was a major attack.
Speaker 4: More than two hundred aircraft participated in the attack. Many targets,
Speaker 4: many senior military officials were eliminated last night, and we
Speaker 4: will continue until we will know that one is in
Speaker 4: the point that they cannot continue with the efforts.
Speaker 1: Including the IRGC General commander. Is there an intent for
Speaker 1: regime changing around from Israel, Well.
Speaker 4: That's not our goal. You know, we are concerned about
Speaker 4: the threats to it. Well, for the Iranian people, I
Speaker 4: wish they will have a different regime.
Speaker 3: You know, we saw what happened in the one.
Speaker 4: The people are suffering there that have no way hitting
Speaker 4: the winter, no ac in the summer, that are suffering there.
Speaker 4: But our goals is to eliminate the capabilities of A
Speaker 4: one so they will not be able to threaten us.
Speaker 4: And then when you look at the map, we have
Speaker 4: no border with A one. It takes us hours to
Speaker 4: fly there in order to attack those facilities. But still
Speaker 4: they spend billions of dollars to create threats against Israel.
Speaker 1: This nuclear enrichment is deep into the mountains. How long
Speaker 1: will that victory actually take? And it's called Rising Lion?
Speaker 5: Why is that?
Speaker 4: Well, you know, every time we pick a name when
Speaker 4: we have a military operation, sometimes the computer is doing
Speaker 4: it for us. So there is no real meaning for
Speaker 4: the world of the operation. But I would say that
Speaker 4: Ia published recently that they ran at the enough urvenium
Speaker 4: to create not only one bomb, multiple bombs, so it's
Speaker 4: only it was a matter of days to put it together.
Speaker 4: We decided not to wait, not to take that risk.
Speaker 4: We believed the threats of the Iranian when they said
Speaker 4: that they're going to use those ballistic missiles to destroy
Speaker 4: is well, we took it very seriously.
Speaker 1: How much did the Israeli government brief.
Speaker 5: The US government?
Speaker 4: So we talked with the US, but this decision was
Speaker 4: decided in Jerusalem, and we took that decision independently, not
Speaker 4: for the first time in the eighties and on too.
Speaker 4: Remind you we attacked the nuclear actor in Iraq. We
Speaker 4: took the decision by ourselves when we attack the reactor
Speaker 4: in Syria. I think it will serve the US and
Speaker 4: other Western democracies, but it was a decision that was
Speaker 4: made in Israel.
Speaker 1: Do you think the United States will come to not
Speaker 1: just Israeli defense, but potentially if you're needing help with
Speaker 1: more attacks, if this continues for days and.
Speaker 4: Weeks, Well, since the day that was established, we never
Speaker 4: asked the US to fight for US. We know how
Speaker 4: to fight and we know how to defeat our enemies.
Speaker 4: You know, we have heard threats that Dirnia that are
Speaker 4: threatening the US, targets that are threatening the allies of
Speaker 4: the US in your embassy right, So we take precautions
Speaker 4: in different places around the world. We are aware of
Speaker 4: the threats, but we will continue. Also in Israel. We
Speaker 4: have to be honest, you know, in needwel today we
Speaker 4: are getting ready for serious attacks coming from Iran. It
Speaker 4: will be very intense, intense in Israel in the next
Speaker 4: few days. We are preparing the population in this operation.
Speaker 4: It's not only about the bravery of the pilots, it's
Speaker 4: about the population in Israel. They will have to follow
Speaker 4: the guidelines in order to avoid casualties.
Speaker 2: Ambassadors, you know, the United States is system themselves from
Speaker 2: this in the last twenty four NS and said they
Speaker 2: weren't pound of the attack. What's not clear to us
Speaker 2: is whether they assisted in the defense of Israel. Did
Speaker 2: the well, you know we have capabilities and we are
Speaker 2: Did they assist you when they sent over drafts from
Speaker 2: Iran to Israel? Did you receive any help from partners
Speaker 2: outside of Israel?
Speaker 4: Well, as far as I know that we were able
Speaker 4: to deal with the ones by ourselves and in a way.
Speaker 4: But we have to realize, you know, the threat is
Speaker 4: not only against the Israel as I said earlier, iranly
Speaker 4: threatening the allies of the US in the Gulf. So
Speaker 4: we have the capabilities. I'm not sure they have the
Speaker 4: same capabilities.
Speaker 1: Are you worried about an asymmetrical response from Iran?
Speaker 4: Well, we took into consideration that there will be retaliation
Speaker 4: and marine and.
Speaker 5: We will be proportional.
Speaker 4: Well, they know that we have capabilities as well, so
Speaker 4: they will have to think twice before the attackers and
Speaker 4: what they are doing. And I would say that today
Speaker 4: we can reach every target in Iran.
Speaker 3: We have the control in terms of.
Speaker 1: Our pilot to reach every target.
Speaker 4: Well, you know we have the capability. We focused on
Speaker 4: on the gore the earlier I mentioned earlier, the ballistic
Speaker 4: missile infrastructure and the nuclear facilities.
Speaker 1: How long will that take if you were to reach
Speaker 1: every target.
Speaker 4: Well, it's not going to be a short operation, and
Speaker 4: it will be weeks or months. I wouldn't say months,
Speaker 4: but it can take days or weeks.
Speaker 2: How lonely this is round the United Nations at the moment.
Speaker 3: Well, I will let you.
Speaker 4: Know in a few minutes when I go there, Jonathan.
Speaker 4: But it's gonna be it's gonna be tough for US.
Speaker 4: Iran already called for the Security Council to meet public
Speaker 4: what happened this afternoon. But you know, I will tell
Speaker 4: my colleague that the U n where were you in
Speaker 4: the last ten years when I ran threatened this? Well,
Speaker 4: where were you when the same ballistic missiles? Where were
Speaker 4: you when they actually acquire the nuclear capabilities?
Speaker 3: So you know what will not stop Iran is well.
Speaker 1: Will the international response. Saudi Arabia calling it heiness, the
Speaker 1: NATO Secretary General calling for de escalation, the UN Secretary
Speaker 1: General calling from maximum restrain. Do you think there is
Speaker 1: a diplomatic group when it comes to dealing with this regime?
Speaker 4: Well, I think that they you know already you have
Speaker 4: the diplomatic Act and the time for that will come.
Speaker 4: But we saw that the diplomacy didn't convince Iran to
Speaker 4: change courts. You know, for decades they negotiated, they played
Speaker 4: the game. The light we found we had the intel
Speaker 4: that they are developing nuclear capabilities for military usage.
Speaker 1: There's some analysis so that under the JCPOA, they were restrained,
Speaker 1: they were capped.
Speaker 5: They are not capped.
Speaker 4: Now when it comes to enrichment, well, you know with
Speaker 4: the without the JCPOA, they were continuing.
Speaker 3: And what only recently that you know.
Speaker 4: The alongside the reactors and the plan that was supervised
Speaker 4: by the international community, they developed a military capability that
Speaker 4: they were hiding it from the international community. So once
Speaker 4: we realized that going to that direction, we decided to
Speaker 4: stop that.
Speaker 2: Ambassador, we appreciate your time this morning. Thanks for making
Speaker 2: take for I'm sure you're gonna have an exceptionally busy
Speaker 2: down ahead of you, so thank.
Speaker 3: You, sir.
Speaker 2: The Israeli Ambassador to the UN Dannyton on there and
Speaker 2: the latest attacks on Iran, it's the latest this morning.
Speaker 2: Investor's rushing into bonds, pushing gilds lower. Briefly, as tensions
Speaker 2: between Israel and Iran reached a boiling point, joining US
Speaker 2: natural discusses, Robert said of PGM. Rob I said briefly,
Speaker 2: because yields now up, particularly at the front end, by
Speaker 2: about two basis points, it feels like a tug of
Speaker 2: war between natural risk, a version out of risk assets
Speaker 2: to something else, plus an inflation redevelopment. What would you
Speaker 2: put more weight on one versus the other?
Speaker 6: Right well, actually, for right now, the market is in
Speaker 6: some respects putting more emphasis on the FED this point
Speaker 6: in the cycle. I mean, actually from the best levels.
Speaker 6: At some points overnight we've seen some flattening of the
Speaker 6: Yell curve, where effectively having a higher oil price reduces
Speaker 6: the odds of FED rate cuts, which then is positive
Speaker 6: for the inflation outlook, you know, leads to a flatter curve.
Speaker 6: And you know, so that's rather ironic, but we've seen
Speaker 6: a lot of these situations in the Middle East over
Speaker 6: the years, you know, going back, and they're all at
Speaker 6: different points in economic cycles. So when you go back
Speaker 6: to nineteen ninety, you know that was hitting in the
Speaker 6: middle of a recession. This one is hitting in the
Speaker 6: middle of a pretty firm economic backdrop, albeit one with
Speaker 6: a lot of anxiety. But it leads to a different
Speaker 6: kind of market reaction to.
Speaker 5: Your point, staying points, Mensa.
Speaker 2: So let's talk about the stancing point with my some
Speaker 2: progress on inflation, full consentctive month of downside surprises. Where
Speaker 2: are we now, Robert, and do we risk upending some
Speaker 2: of the progress we've made.
Speaker 6: Definitely. You know, we have had three good months of inflation.
Speaker 6: But the problem with this cycle is before the three
Speaker 6: months of good inflation, we had three months of terrible inflation.
Speaker 6: And then before that last year there were months of
Speaker 6: good and then months of bad and not just one,
Speaker 6: but a few and a crack. And that's why this
Speaker 6: has been such a difficult cycle for people to get
Speaker 6: their arms around. And the same has been true on
Speaker 6: the real economic activity, where you get a few strong
Speaker 6: months a few week months, and so the Fed is
Speaker 6: in this constant pull and pull, a push and pull of.
Speaker 5: Oh yeah, we've succeeded.
Speaker 6: We're going to be able to cut interest rates, although
Speaker 6: we have to really stand tough. And already most inflation
Speaker 6: forecasters were looking for inflation to go up as a
Speaker 6: result of tariffs. If not in yesterday's warning, yesterday morning's number,
Speaker 6: definitely in the next several numbers that are coming.
Speaker 2: So it thanks the question, rob, let me jump in
Speaker 2: at the time we have left. What does it mean
Speaker 2: for the Fed next Wednesday when they've got to put
Speaker 2: out full costs.
Speaker 6: Yeah, so they're definitely going to be on hold and evaluating,
Speaker 6: and I think it's going to make them very reluctant
Speaker 6: to even change their dots to make any fine tuning.
Speaker 6: They're going to want to say they need more information.
Speaker 6: And going back to that nineteen ninety incident where people think,
Speaker 6: you know Kuwaits, you know, being invaded and the Iraqis
Speaker 6: being repulsed was very quick. That actually took a few
Speaker 6: months for the price of oil to make it all
Speaker 6: the way up to the top. So these things can
Speaker 6: take some time to evaluate. We're not in a weak
Speaker 6: economic backdrop. The Fed's going to have time to evaluate.
Speaker 6: I think they're going to stand pat try to talk
Speaker 6: down volatility, talk about the firm underrelying situation.
Speaker 2: Robert f Pa, Jim rub appreciate at the time so
Speaker 2: as to make consign for us this morning to spend
Speaker 2: time on the potential Iranian response. We can do that
Speaker 2: now with Stephen Kirk, the Senior Fellow for Middle East
Speaker 2: and Africa Studies of the Council on Foreign Relations. Stephen,
Speaker 2: welcome to the program sir. What a timely opportunity to
Speaker 2: catch up with you, Stephen. Can we start with I
Speaker 2: Runian defense and military capabilities, how degraded they've been, how
Speaker 2: greated they've become, and not just Theirs, but also the
Speaker 2: military capabilities of Iranian proxies as well.
Speaker 5: What is the current state of play? Yeah?
Speaker 7: Well, reporting coming out of Iran and Israeli reporting indicates
Speaker 7: that a tremendous amount of damage has been done to
Speaker 7: Iran's ability to respond. Her reports of James Bond like
Speaker 7: Mozart operations in which they have disabled the ability of
Speaker 7: the Iranians to launch large numbers of ballistic missiles towards Israel,
Speaker 7: that they have targeted Iran's air defenses so that Iran
Speaker 7: is more vulnerable than ever. Thus far, the only thing
Speaker 7: that the Irans have been able to muster or a
Speaker 7: wave of UAV strikes, most of which I believe have
Speaker 7: been shot down. As far as the proxies go. His
Speaker 7: Belaw has said it will not respond to Israel's attacks
Speaker 7: on Iran, and in fact, the Lebanese government has said
Speaker 7: it will make sure that his BiLaw does not respond
Speaker 7: to Israel's attacks on Iran. We haven't yet heard from
Speaker 7: the Iraqi militias, but in the past, specifically last October
Speaker 7: when the Israelis hit Iran previously, the Iraqi militious have
Speaker 7: said that they weren't interested in retaliation, that leaves the Huthis,
Speaker 7: and we'll have to see how they respond. But by
Speaker 7: early accounts, the Israelis have done a very significant amount
Speaker 7: of damage to Iran's ability to strike effectively.
Speaker 5: Of course, its early days.
Speaker 7: The Iranians may have some tricks up their sleeves, but
Speaker 7: right now all the advantage goes to the Israelis, who
Speaker 7: are once again undertaking attacks against Iran.
Speaker 5: Steven.
Speaker 1: If it's true that the US and Israel have a
Speaker 1: tight security relationship, why would Israel choose to act in
Speaker 1: the United States.
Speaker 7: Not, Well, we don't know for sure whether the United
Speaker 7: States was not in on this. There is a lot
Speaker 7: of Israeli reporting suggesting that this was the last few days.
Speaker 7: We're in an elaborate deception campaign. But I think, in
Speaker 7: keeping with the President's worldview, Defense Secretary Pete Heggs had
Speaker 7: said it best before Congress just the other day, in
Speaker 7: which he said Prime Minister Natanya is going to do
Speaker 7: what's best for his country, and President Trump's going to
Speaker 7: do what's best for the United States. I think the
Speaker 7: Israelis view is that the Iranians in recent weeks have
Speaker 7: crossed a certain threshold and that they just could not wait.
Speaker 7: There is a fair amount of Israel US security coordination
Speaker 7: and nas these attacks were unfolding, It's likely that the
Speaker 7: United States provided real time intelligence to the Israelis, and
Speaker 7: of course, in retaliation. Because Israel is part of Senkom,
Speaker 7: the United States and Israel and other regional partners will
Speaker 7: cooperate in defense of Israel as a result of that.
Speaker 5: It remains to be seen.
Speaker 7: I think the president's posts on social media this morning
Speaker 7: would suggest he'd like to have it both ways, and
Speaker 7: maybe when you're the president of the United States he
Speaker 7: gets to have it both ways. But I think more
Speaker 7: needs to be We need to find out more about
Speaker 7: the actual US role here.
Speaker 1: You just insinuated that you don't think this would hinder
Speaker 1: the US response in defending Israel. So do you expect
Speaker 1: the US to come out in full force and Israeli
Speaker 1: defense when we see Iran's retaliation.
Speaker 7: We already see in this Sencom area of operations the
Speaker 7: Jordanian Air Force is shooting down Iranian drones and that
Speaker 7: is in coordination with the United States.
Speaker 3: So yes, I do think that the United.
Speaker 7: States will help them the defense at Israel in the
Speaker 7: event of a kind of massive Iranian response, And I
Speaker 7: do think that the United States would get involved if
Speaker 7: the Iranian seek to respond by, for example, closing the
Speaker 7: straight up removes or attacking shipping in the Persian Gulf.
Speaker 1: We've been talking about for months, actually years, about Iranian
Speaker 1: enrichment and these breakout periods.
Speaker 5: Why now, Stephen Well?
Speaker 7: I think the Iranians have been working diligently at this
Speaker 7: and that their security situation has deteriorated over the course
Speaker 7: of recent months. I think we should be skeptical about
Speaker 7: the reports over these many years that Iran was not
Speaker 7: seeking to weaponize its program and has been diligently working
Speaker 7: throughout in order to develop weapons capability. I was privy
Speaker 7: to an open source briefing just recently which made it
Speaker 7: clear that the Iranians really have never stopped their efforts
Speaker 7: to develop nuclear weapons.
Speaker 1: So do you think today's attack was all about where
Speaker 1: they are in terms of their capability when it comes
Speaker 1: to their nuclear program, or is there something else Israel
Speaker 1: knows that we have yet to be briefed on.
Speaker 7: Well, I think the Israeli for these relatives, a certain
Speaker 7: threshold had been breached and they felt that they did
Speaker 7: not have much time left before the Iranians weaponize, but
Speaker 7: I think that there's a broader goal here for the Israelis.
Speaker 7: The way this attack is unfolding is quite similar to
Speaker 7: what the Israelis did to his Belaw in the fall
Speaker 7: of twenty twenty four, essentially an effort to decapitate the regime,
Speaker 7: make it render it render its ability to respond effectively
Speaker 7: quite weak, and provide an opportunity for the change in regime.
Speaker 7: It is the Iranian regime that is the danger, not
Speaker 7: necessarily Iran or the Iranian military or even the Iran
Speaker 7: nuclear program. Is the regime and what their intentions are
Speaker 7: to do with it. If you change the regime, you
Speaker 7: provide an opportunity for perhaps a more benign government.
Speaker 5: There an opportunity.
Speaker 7: It's a very, very risky strategy, but it seems clear
Speaker 7: based on how the Israelis have attacked the IRGC leadership,
Speaker 7: the military leadership, and he even reportedly took a shot
Speaker 7: at the Supreme Leader himself.
Speaker 2: Even I want to follow up on this. What you're
Speaker 2: saying is really quite important, because what I've heard so
Speaker 2: far this morning is something quite different. That this was
Speaker 2: a targeted, limited operation to degrade the military and nuclear
Speaker 2: capabilities of this country and that regime change was something bigger,
Speaker 2: something that they weren't pursuing. If the Iranian regime believes
Speaker 2: that the Israelis are looking to tople the regime and
Speaker 2: they view this as the start of an existential threat,
Speaker 2: how does that shape their response in the coming weeks
Speaker 2: and months, Because I can tell you from a financial
Speaker 2: market perspective, a lot of people are thinking about the
Speaker 2: Strait of Homers and some people would sit here and
Speaker 2: say that's the big cup, the nuclear option. They wouldn't
Speaker 2: reach for that. Maybe they look to de escalate things
Speaker 2: from here. Are you saying this could play out differently?
Speaker 5: Oh?
Speaker 7: I certainly think that that's the case, and I think
Speaker 7: that people are missing the point here. Prime Minister Benjamina
Speaker 7: Dnialo has for months been talking about the Iranian people,
Speaker 7: how the Runian people are suffering under this.
Speaker 5: Regime, that.
Speaker 7: A different regime would be better for the Iranian people,
Speaker 7: And so I think that there is absolutely a broader
Speaker 7: goal that is here. The Israelis promised Prime Minister Natanao
Speaker 7: himself promised on October ninth, twenty twenty three, to change
Speaker 7: the Middle East. That doesn't entail limited operations just against
Speaker 7: nuclear programs now. As I said, it's a risky strategy.
Speaker 7: The Israelis are far away. They are looking to greatly
Speaker 7: weaken this regime so that it can be more easily toppled.
Speaker 5: It's not a coincidence.
Speaker 7: I don't think that the Israelis call their Operation Rising Line.
Speaker 7: Take a look at the Shah's regime. Take a look
Speaker 7: at their flag. There's a lion in the middle of it.
Speaker 7: So I do think that it may be existential for
Speaker 7: the Runans, and that they may try to retaliate in very,
Speaker 7: very significant ways. I think the question is how much
Speaker 7: damage has the Israeli military done in last night's wave
Speaker 7: of attacks, waves of attacks that are being undertaken now,
Speaker 7: waves of attacks that are being contemplated in the coming days.
Speaker 7: How much damage they've done to the Iranian ability to respond,
Speaker 7: and whether whether the Iranians, after all this will be
Speaker 7: able to muster the kind of massive response against Israel
Speaker 7: or American bases around the region. They'll still have a
Speaker 7: lot of resources at their disposal, certainly the ability to
Speaker 7: create chaos in other parts of the region, but will
Speaker 7: it be this kind of existential regional war that people
Speaker 7: have been warning about so far? It doesn't look like it,
Speaker 7: with Hezbollah saying we're not involved. Quiet from the Iraqi
Speaker 7: militias that may unfold in coming days, but the Israelis
Speaker 7: seem intent on not allowing that to happen.
Speaker 2: Deeply thoughtful of stuff. Steven, appreciate its time, Steven Cooks.
Speaker 2: They have the Council on Farm Relations.
Speaker 5: Good morning, Jonathan.
Speaker 8: I'm here with the CEO, Jim Farley and Jim a
Speaker 8: lot to talk about here at Lama with you.
Speaker 5: You just got out of a race car.
Speaker 8: But before we do that, I want to ask you
Speaker 8: about the Israeli strike on Iran and the counter attack.
Speaker 8: Are all of the Ford employees that you know of
Speaker 8: in safe places? You do have operations in the Middle East?
Speaker 5: We do.
Speaker 9: It's a really important region for us. We're watching Turkey
Speaker 9: as well. We have a huge operation in Turkey. We
Speaker 9: export all the way through Europe and the UK. So
Speaker 9: so far, so good, but it's clearly a concern for
Speaker 9: all of us in business.
Speaker 8: One of the things we've seen as a result, obviously,
Speaker 8: is the oil price rise five or six percent really
Speaker 8: across the board. Has the low oil price been helpful
Speaker 8: to you or has it not helped to encourage people
Speaker 8: to buy electric cars.
Speaker 5: Yeah, it's interesting because it cuts both ways.
Speaker 9: At Ford, we're sixty percent almost of the commercial business
Speaker 9: in the US, and a lot of that is energy.
Speaker 5: So you go to Odessa, Texas, everyone drives the forward
Speaker 5: super duty. So you know, if.
Speaker 9: Oil isn't in that sixty five seventy dollars range, our
Speaker 9: customer suffer. But you know, obviously, I think for the economy,
Speaker 9: for everything, it needs to be in that kind of range.
Speaker 5: That makes sense for everything.
Speaker 9: Large spikes, big changes in oil prices and gas prices.
Speaker 5: Have huge impacts on our demand.
Speaker 9: We see truck and full sized SGUV demand go down
Speaker 9: when they're big spikes.
Speaker 5: Happened in eight it happened many times.
Speaker 9: So no, I don't think our business likes big changes.
Speaker 9: For the consumer, it's very stressful for them.
Speaker 8: The electric business, though, I would imagine, also is dependent
Speaker 8: on kind in some sense higher gas prices. I drove
Speaker 8: your Lightning. It was fantastic, spent a week in it.
Speaker 8: I've driven the Machi for a couple of weeks and
Speaker 8: one of the great pleasures is you don't ever have
Speaker 8: to go to a gas station.
Speaker 5: Right, How are those businesses doing right?
Speaker 8: Now because you've taken such big losses there and maybe
Speaker 8: slowed down in terms of your progress into evs.
Speaker 9: Yeah, we've really changed because we're thankful we've been number
Speaker 9: two to Tesla for three years in the US because
Speaker 9: we spent our capital like five six years ago and
Speaker 9: all that product has been out for four years that
Speaker 9: you mentioned, So we've learned a ton.
Speaker 5: Now.
Speaker 9: We've changed our capital allocation for evs. We've reduced the spending,
Speaker 9: changed the battery chemistry a lot to focus on more profitability.
Speaker 9: We've gone down market and mostly in commercial. Those are
Speaker 9: the only markets where we think in the US, you know,
Speaker 9: an age seven percent of the industry is going to
Speaker 9: make sense for ev where you can actually make money.
Speaker 9: And the EPA requirements have a big impact on the
Speaker 9: EV investments by OEMs. During the last several years, you know,
Speaker 9: we had to kind of sell like fifteen to twenty
Speaker 9: percent of our mix to be EV's both for the
Speaker 9: ZEB States California, Colorado, New York, but also you know,
Speaker 9: to meet the national tailpipe emissions and so what's happened. Interestingly,
Speaker 9: the total number of evs in the US has grown,
Speaker 9: but the total revenue has not changed. In three years
Speaker 9: because the prices have come down equal to the volume
Speaker 9: going up. So the EV market has not been going
Speaker 9: for three years. If you look at total revenue, everyone
Speaker 9: looks at unit volume. Don't look at that. Look at
Speaker 9: the price and the volume. And I think we now
Speaker 9: have a good strategy going forward. A lot of our
Speaker 9: competitors are just investing for the first time, and good
Speaker 9: luck if you're selling an eighty thousand dollars SUV electric vehicle.
Speaker 9: We've invested a lot in hybrid. We are really successful
Speaker 9: with our truck. Hybrid's twenty five the best selling vehicle
Speaker 9: in the US for forty seven years, been in the
Speaker 9: F one fifty. Twenty five percent of those customers now
Speaker 9: by hybrid, and a.
Speaker 5: Lot of it is exportable power.
Speaker 9: You can run your house for six days with an
Speaker 9: F one fifty hybrid now, and the others don't offer
Speaker 9: that at all. So yeah, we think hybrid is really
Speaker 9: the mainstream technology. We'll see erevs come to the US
Speaker 9: soon as the next technology for partial electrical I.
Speaker 5: Want to ask you about.
Speaker 8: Race on Sunday, sell on Monday, since we're here at Lamas,
Speaker 8: since you just got out of a Mustang race car,
Speaker 8: how does this racing effort, and it's a big effort
Speaker 8: trickle down to the bottom line for Ford shareholders.
Speaker 5: Well, for us, the biggest is off road market. You know.
Speaker 9: We have you know, almost twenty percent of a global
Speaker 9: profit coming from our enthusiast off road products, and we
Speaker 9: race it to car. We said Baja, were said King
Speaker 9: and the Hammers. That's a big thing, you know. I
Speaker 9: don't think there's a better way to promote your brand.
Speaker 9: Look what Ford winning in sixty six at Lama did
Speaker 9: for Ford Motor Company.
Speaker 5: It made us a global company.
Speaker 9: We're American company, but that moment changed us completely, and
Speaker 9: that's why we're going back in twenty seven to take
Speaker 9: on Ferrari and take on Porsche.
Speaker 5: We think we have the technology but also the.
Speaker 9: Tech transfer software, battery, tech, error dynamics. It's different than
Speaker 9: the seventies, but the tech transfer over to our road
Speaker 9: cars is immediate. You'll see hundreds of Ford engineers here
Speaker 9: who will be working on Monday on our road cars.
Speaker 9: And it's really important tech transfer. But we do it,
Speaker 9: I think as smart as we can. And maybe as
Speaker 9: a racer, I'm more sensitive about wasting money on racing,
Speaker 9: and we challenge ourselves to be really smart. I think
Speaker 9: we've done a great job with the off road, the raptors,
Speaker 9: the tremors, you know, all the broncos. I think that's been, frankly,
Speaker 9: some of the smartest investment we had in racing.
Speaker 8: You say you're an American company, You've outed yourself as
Speaker 8: literally the most American car maker. Eighty percent of the
Speaker 8: cars that you sell in America are made there. Donald
Speaker 8: Trump was out overnight saying maybe he's going to go
Speaker 8: after even.
Speaker 5: Higher auto tariffs.
Speaker 8: While you've said in the past that causes costs and chaos,
Speaker 8: does it also kind of help you because no one
Speaker 8: else makes as many cars as you do in America.
Speaker 9: Well, for Ford, this is a moment for us. You know,
Speaker 9: we have employee pricing out there. We gained a couple
Speaker 9: points a share year over year. A lot of Americans
Speaker 9: are shopping forward because now they're starting to think, hey,
Speaker 9: half the cars in the US are imported, and if
Speaker 9: all the car companies were like Ford, there'd be fifteen
Speaker 9: new factories in the US, a million new jobs. You know,
Speaker 9: I think a lot of Americans are starting to pay
Speaker 9: attention to where these where these cars come from. And
Speaker 9: for us, yes, I think Donald Trump's policies, especially around
Speaker 9: the Asian countries where they've supported with substies direct or
Speaker 9: indirect for their automobile industry.
Speaker 5: You know, this is a great thing.
Speaker 9: We have to sort out this Mexico Canada thing because
Speaker 9: we need to keep the vehicles affordable in the US
Speaker 9: and there's actually a lot of parts we can't even
Speaker 9: make in the US, Matt as you know, and so
Speaker 9: we have to kind of sort out what it ruled
Speaker 9: does Mexico and Canada have in our North America market
Speaker 9: from supply chain and manufacturing keep the vehicles affordable, and
Speaker 9: that's something that we're talking to the administration. We found
Speaker 9: the administration to be very positive to work with. They
Speaker 9: want to help companies like Ford that did the right
Speaker 9: thing for Americans.
Speaker 5: But we have more work to do in terms.
Speaker 8: Of what the administration has been trying to do with China.
Speaker 8: Are you satisfied with the rare earth minerals that you
Speaker 8: have access to?
Speaker 5: I know that you had to slow down production in
Speaker 5: the past. Yes, Have you been able.
Speaker 8: To secure the amount of magnets that you need?
Speaker 5: Is stay to day?
Speaker 9: It's stay to day these high para magnets. The raw
Speaker 9: materials to them only come from certain places in the world.
Speaker 9: They're all processed in China, and they go in your
Speaker 9: speakers and your autosystem. They go in your motors, for
Speaker 9: your wipers and your seats.
Speaker 5: They're all over our F one fifty for example.
Speaker 9: We have applications in them offcom.
Speaker 5: They're getting approved one at a time.
Speaker 9: You know, we're educating the administration, We're educating the Chinese
Speaker 9: leadership about how important these jobs in the Midwest are.
Speaker 5: There dependent.
Speaker 9: We have had to shut down factories. It's hand to
Speaker 9: mouth right now, and I'm reading the paper like everyone else.
Speaker 9: I was very happy to read about London and having
Speaker 9: a good meeting there because it has a direct impact
Speaker 9: in our jobs in Michigan, Ohio.
Speaker 5: So we'll see. It's hand to mouth right now.
Speaker 8: Jim, thanks so much, really appreciate your time and congratulations
Speaker 8: on the race.
Speaker 5: Thank you.
Speaker 2: This is the Bloomberg Savenans podcast, Can you the best
Speaker 2: in markets, economics and geopolitics. You can watch the show
Speaker 2: live on Bloomberg TV weekday mornings from six am to
Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify
Speaker 2: or anywhere else you listen, and as always on the
Speaker 2: Bloomberg terminal and the Bloomberg Business app.