1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,200 Speaker 1: us live on YouTube. 6 00:00:27,280 --> 00:00:32,000 Speaker 2: We efforted Richard Haas yesterday we are unable to get him. 7 00:00:32,400 --> 00:00:35,760 Speaker 2: We have him today and we extend out here commercial 8 00:00:36,040 --> 00:00:40,560 Speaker 2: free for you. In a conversation with the President Emeritus, 9 00:00:40,600 --> 00:00:44,879 Speaker 2: the consun Foreign Relations and of course senior counselor. Was 10 00:00:44,960 --> 00:00:47,000 Speaker 2: someen of you partners with Paul Far. 11 00:00:46,880 --> 00:00:47,440 Speaker 3: More than that. 12 00:00:48,360 --> 00:00:53,480 Speaker 2: The single best clarity before the attack I put out 13 00:00:53,880 --> 00:00:59,640 Speaker 2: on Twitter in LinkedIn Ambassador Has's essay in the Financial Times. 14 00:01:00,560 --> 00:01:01,520 Speaker 2: It's forever ago. 15 00:01:01,680 --> 00:01:04,000 Speaker 3: Richard. It was three or four days ago. 16 00:01:04,560 --> 00:01:09,000 Speaker 2: You wrote a jewel of short clarity of what to do, 17 00:01:09,360 --> 00:01:12,319 Speaker 2: what to hope for. If you wrote that essay now, 18 00:01:12,560 --> 00:01:13,520 Speaker 2: how would you change it? 19 00:01:14,959 --> 00:01:17,720 Speaker 4: Well, good morning, Tom, and thank you. Look, the United 20 00:01:17,760 --> 00:01:24,280 Speaker 4: States faced difficult decisions in the aftermath of the Israeli actions. 21 00:01:25,280 --> 00:01:29,480 Speaker 4: We chose the path of acting in this case to 22 00:01:29,560 --> 00:01:34,960 Speaker 4: do an intense but idealistically or optimally narrow, military strike 23 00:01:35,040 --> 00:01:37,319 Speaker 4: against Iran. What's so interesting to me if I had 24 00:01:37,319 --> 00:01:39,880 Speaker 4: to say one thing at this point. If you think 25 00:01:39,880 --> 00:01:42,440 Speaker 4: about this crisis over the last ten or so days, 26 00:01:42,800 --> 00:01:46,880 Speaker 4: the first week was dominated by Israel, it deciding in 27 00:01:46,920 --> 00:01:50,360 Speaker 4: the aftermath of October seventh, the weakening of Iran's proxies, 28 00:01:50,360 --> 00:01:53,080 Speaker 4: it was going to act against the Iranian nuclear program 29 00:01:53,120 --> 00:01:56,760 Speaker 4: and more broadly against the Iranian political leadership. Then the 30 00:01:56,880 --> 00:02:00,560 Speaker 4: United States decided this was the moment to set back 31 00:02:00,600 --> 00:02:04,200 Speaker 4: the Iranian nuclear program. But now initiative has passed to 32 00:02:04,240 --> 00:02:06,960 Speaker 4: Iran for the first time in this crisis. It's the 33 00:02:07,000 --> 00:02:11,960 Speaker 4: Iranian leaders who control as much as anybody. How this 34 00:02:12,120 --> 00:02:15,400 Speaker 4: unfolds from this point on, And that's what's different. If 35 00:02:15,400 --> 00:02:18,400 Speaker 4: I were writing today, indeed I will be writing later today. 36 00:02:18,800 --> 00:02:19,519 Speaker 3: That's what's different. 37 00:02:19,680 --> 00:02:22,480 Speaker 4: For the first time since this phase of the crisis began, 38 00:02:23,000 --> 00:02:26,400 Speaker 4: decision making, if you will, is in the hands of 39 00:02:26,760 --> 00:02:29,240 Speaker 4: Iran more than Israel, more than the United States. 40 00:02:29,440 --> 00:02:31,640 Speaker 2: Investor has and I want to make clear here that 41 00:02:31,760 --> 00:02:35,720 Speaker 2: Richard Hass redefined the international relations debate with the invention 42 00:02:35,840 --> 00:02:40,760 Speaker 2: of the Internet. At the Council Unfeigned Relations John Bellinger 43 00:02:40,840 --> 00:02:45,320 Speaker 2: at CFR, Richard Has writes a blistering essay with his 44 00:02:45,480 --> 00:02:51,120 Speaker 2: legal expertise. Does President Trump have the authority to strike Iran? 45 00:02:51,800 --> 00:02:53,959 Speaker 2: From where you sit with all your work back to 46 00:02:54,040 --> 00:02:57,919 Speaker 2: Northern Ireland. Did the president have the ability to act 47 00:02:58,000 --> 00:03:00,640 Speaker 2: from the executive branch? Or did you need to use 48 00:03:00,680 --> 00:03:02,720 Speaker 2: a different process with Congress? 49 00:03:03,880 --> 00:03:07,200 Speaker 4: And the president had the authority like all of his 50 00:03:07,320 --> 00:03:09,919 Speaker 4: predecessors if you look at the history of a modern 51 00:03:09,960 --> 00:03:15,040 Speaker 4: American foreign policy initiative, and foreign policy has decidedly passed 52 00:03:15,040 --> 00:03:17,760 Speaker 4: to the executive I mean, Tom, what was it sixty 53 00:03:17,800 --> 00:03:21,200 Speaker 4: years ago Arthur Slessinger Junior wrote his essay and book 54 00:03:21,240 --> 00:03:25,600 Speaker 4: about the impurial presidency. This is nothing new. Congress virtually 55 00:03:25,680 --> 00:03:30,840 Speaker 4: never ever fulfills its constitutional obligation to declare war, and 56 00:03:30,880 --> 00:03:34,840 Speaker 4: we have used military force hundreds of times in the 57 00:03:34,880 --> 00:03:38,680 Speaker 4: absence of anything so formal. So I just flat out 58 00:03:38,720 --> 00:03:43,880 Speaker 4: disagree with that kind of a narrow legalist interpretation. That said, 59 00:03:43,920 --> 00:03:46,760 Speaker 4: if I had been advising President Trump, I would have said, 60 00:03:46,760 --> 00:03:48,760 Speaker 4: take a page out of the book of President Bush, 61 00:03:48,800 --> 00:03:53,040 Speaker 4: the father push forty one. Do things with the internationally 62 00:03:53,120 --> 00:03:57,720 Speaker 4: with building on the International Atomic Energy Agency skating report 63 00:03:57,760 --> 00:04:00,680 Speaker 4: of Iran, Do things with the Congress, do things with 64 00:04:00,720 --> 00:04:03,640 Speaker 4: the American public if you're going to use military force, 65 00:04:04,080 --> 00:04:06,560 Speaker 4: people should come to conclude that you tried to do 66 00:04:06,680 --> 00:04:09,600 Speaker 4: diplomacy and at the end of the day you reluctantly 67 00:04:09,680 --> 00:04:11,800 Speaker 4: had to use it. But also, by the way, would 68 00:04:11,840 --> 00:04:14,560 Speaker 4: have helped this president with his magabase. So I think 69 00:04:14,600 --> 00:04:17,280 Speaker 4: he should have gone about this differently. But did he 70 00:04:17,720 --> 00:04:21,479 Speaker 4: under American political tradition? Did he possess the authority to 71 00:04:21,480 --> 00:04:22,080 Speaker 4: do what he did? 72 00:04:22,120 --> 00:04:23,599 Speaker 3: Absolutely, Richard. 73 00:04:23,640 --> 00:04:26,360 Speaker 5: As the world awaits some type of response to moren 74 00:04:26,440 --> 00:04:30,080 Speaker 5: do we have any good information as to their capabilities 75 00:04:30,120 --> 00:04:34,440 Speaker 5: today from just their military capabilities into their leadership because 76 00:04:34,600 --> 00:04:36,880 Speaker 5: Israel has dealt a blow to their leadership, what should 77 00:04:36,880 --> 00:04:37,360 Speaker 5: we expect. 78 00:04:38,360 --> 00:04:42,600 Speaker 4: No, they're both good points. I actually think they're unlikely 79 00:04:42,680 --> 00:04:47,279 Speaker 4: to retaliate. My reading of the Iranians is they're focused 80 00:04:47,320 --> 00:04:50,800 Speaker 4: on regime survival. In some ways. This is the second 81 00:04:50,839 --> 00:04:56,400 Speaker 4: great difficult period crisis for Iran's leadership since their nineteen 82 00:04:56,480 --> 00:04:59,200 Speaker 4: seventy nine revolution, the first one being a decade later 83 00:04:59,279 --> 00:05:01,840 Speaker 4: during the Iran Or War. So my guess is they're 84 00:05:01,839 --> 00:05:05,400 Speaker 4: going to focus on regime consolidation. Down the road, they 85 00:05:05,400 --> 00:05:09,359 Speaker 4: may focus on reconstituting their nuclear program. We have no 86 00:05:09,480 --> 00:05:14,839 Speaker 4: idea how much of their nuclear program is intact, but 87 00:05:14,880 --> 00:05:17,520 Speaker 4: I think it is difficult for the Iranian leadership to act. 88 00:05:17,600 --> 00:05:19,680 Speaker 4: They're trying to stay off the net because they don't 89 00:05:19,680 --> 00:05:25,640 Speaker 4: want to give signals for Americans or Israelis to target them. 90 00:05:26,040 --> 00:05:28,760 Speaker 4: They obviously have lost control over the airspace of their 91 00:05:29,400 --> 00:05:33,200 Speaker 4: own country. Their proxies are much diminished, so I don't 92 00:05:33,200 --> 00:05:35,640 Speaker 4: think they have very good options. That said, they can 93 00:05:35,680 --> 00:05:39,440 Speaker 4: still lob missiles at the forty thousand American soldiers in 94 00:05:39,480 --> 00:05:42,279 Speaker 4: the region. They can play havoc with shipping. It doesn't 95 00:05:42,279 --> 00:05:44,960 Speaker 4: take a lot to drive insurance rates up. They can 96 00:05:45,040 --> 00:05:49,120 Speaker 4: do asymmetrical warfare using cyber or terrorism, so they actually 97 00:05:49,160 --> 00:05:52,159 Speaker 4: have lots of capability. You don't have to compete with 98 00:05:52,279 --> 00:05:55,880 Speaker 4: US be two stealth fighters in order to be militarily effective. 99 00:05:55,880 --> 00:05:58,719 Speaker 4: But I just think that the Iranians right now, their 100 00:05:58,800 --> 00:06:02,279 Speaker 4: priority in the short is not to retaliate against the 101 00:06:02,400 --> 00:06:03,080 Speaker 4: United States. 102 00:06:03,320 --> 00:06:06,599 Speaker 2: Richard Haus with US, we continue with Ambassador House Paul Sweene, 103 00:06:06,600 --> 00:06:09,400 Speaker 2: and I welcome all of you across the nation are 104 00:06:09,440 --> 00:06:12,880 Speaker 2: continuing that coverage. Here a difference this morning, the markets 105 00:06:12,880 --> 00:06:16,200 Speaker 2: are open. We will consider the markets across the arc 106 00:06:16,279 --> 00:06:18,720 Speaker 2: of the show. We thank Golder mount Avali from London 107 00:06:19,320 --> 00:06:21,680 Speaker 2: for being with us. Jumana Brasseti from Dubai, and we 108 00:06:21,720 --> 00:06:26,240 Speaker 2: continue here on YouTube and on all of our commute 109 00:06:26,279 --> 00:06:30,839 Speaker 2: our audio radio affiliates as well, and we say good morning. 110 00:06:30,560 --> 00:06:31,680 Speaker 3: Paul Richard. 111 00:06:31,720 --> 00:06:35,080 Speaker 5: For many observers, the American strike on the nuclear facilities 112 00:06:35,080 --> 00:06:39,560 Speaker 5: in around was a bold strike, a surprising strike. Does 113 00:06:39,560 --> 00:06:41,760 Speaker 5: that have an impact in other parts of the world. 114 00:06:41,800 --> 00:06:45,760 Speaker 5: I'm thinking about Ukraine and Russia, thinking about China. How 115 00:06:45,800 --> 00:06:47,640 Speaker 5: do you think those actors are viewing this? 116 00:06:49,520 --> 00:06:52,960 Speaker 4: It was surprising more in the tactical rather than strategic sense. 117 00:06:53,279 --> 00:06:55,120 Speaker 4: We've been talking for years that we weren't going to 118 00:06:55,240 --> 00:06:58,200 Speaker 4: let her On gain nuclear weapons or even get close 119 00:06:58,240 --> 00:07:00,960 Speaker 4: to them. What was surprising, for how tactically was when 120 00:07:01,000 --> 00:07:03,480 Speaker 4: the President talked about his two week last chance for 121 00:07:03,560 --> 00:07:06,279 Speaker 4: diplomacy to work that turned out to be a faint 122 00:07:06,760 --> 00:07:09,720 Speaker 4: or a ruse. I think it was surprising tactically, not strategically. 123 00:07:10,200 --> 00:07:12,120 Speaker 4: I think the rest of the world took note both 124 00:07:12,120 --> 00:07:16,240 Speaker 4: that the United States acted as well as how effectively 125 00:07:16,280 --> 00:07:20,800 Speaker 4: the US military looked. What was brought together was was 126 00:07:20,880 --> 00:07:25,440 Speaker 4: criite extraordinary. My guess is the Russians probably have liked 127 00:07:25,480 --> 00:07:29,280 Speaker 4: this crisis any time. They like when energy prices go up. 128 00:07:29,360 --> 00:07:32,160 Speaker 4: They like when the United States expends munitions in other 129 00:07:32,200 --> 00:07:33,800 Speaker 4: parts of the world. That means we don't have to 130 00:07:33,840 --> 00:07:36,760 Speaker 4: give to Ukraine. People aren't talking as much about Ukraine. 131 00:07:36,760 --> 00:07:39,280 Speaker 4: I thought it was quite interesting at the G seven 132 00:07:39,840 --> 00:07:43,520 Speaker 4: that Ukraine almost seemed to be something of an afterthought. 133 00:07:43,600 --> 00:07:46,120 Speaker 4: So the Russians have to like that. My guess isn't 134 00:07:46,240 --> 00:07:49,800 Speaker 4: The Chinese are probably concerned about on the opposite side 135 00:07:49,800 --> 00:07:52,960 Speaker 4: of the coin, as a massive energy importer. They don't 136 00:07:53,040 --> 00:07:56,400 Speaker 4: much like instability in the Middle East, but all of 137 00:07:56,480 --> 00:07:58,080 Speaker 4: them have to be happy. I would think that the 138 00:07:58,160 --> 00:08:01,119 Speaker 4: United States is once again involved in the Middle East. 139 00:08:01,160 --> 00:08:05,280 Speaker 4: That means we have less bandwidth, less ability to focus 140 00:08:05,320 --> 00:08:08,560 Speaker 4: on safety Stasia or Taiwan, or on helping Ukraine. 141 00:08:09,040 --> 00:08:11,520 Speaker 2: Richard Haass with us and folks, I can't say enough 142 00:08:11,600 --> 00:08:13,800 Speaker 2: about this. This is a book you can throw at 143 00:08:13,800 --> 00:08:17,120 Speaker 2: your smart alec kids, the college brats. They're home from 144 00:08:17,200 --> 00:08:19,960 Speaker 2: Oberlin and you throw this book at him, and you 145 00:08:20,000 --> 00:08:24,320 Speaker 2: won't hurt them because it's beautifully brief bill of obligations. 146 00:08:24,480 --> 00:08:28,160 Speaker 2: I can't say enough about Richard Haas's cry for citizenship 147 00:08:28,880 --> 00:08:31,800 Speaker 2: in America. I can't again, I can't say enough about it. 148 00:08:31,840 --> 00:08:35,120 Speaker 2: I'll put that out on Twitter and LinkedIn as well. 149 00:08:35,480 --> 00:08:38,280 Speaker 2: Part of our bill of obligations, Richard Haass is to 150 00:08:38,400 --> 00:08:42,679 Speaker 2: have a coherent foreign policy. We can go back to 151 00:08:42,760 --> 00:08:47,480 Speaker 2: clash of civilizations staggered a Zakaria in a post American world. 152 00:08:47,640 --> 00:08:50,400 Speaker 2: Robert Cappen coming up in a bit, maybe with a 153 00:08:50,480 --> 00:08:55,560 Speaker 2: Kissingerian realist theory. What's the host theory you observe at 154 00:08:55,600 --> 00:08:57,120 Speaker 2: the State Department right now? 155 00:08:58,640 --> 00:09:02,319 Speaker 4: Well, State Department Israel to observe. It's actually a sad 156 00:09:02,440 --> 00:09:07,160 Speaker 4: story over the last decade or two of the weakening 157 00:09:07,200 --> 00:09:10,240 Speaker 4: of an institution, the hollowing out of the Foreign Service, 158 00:09:10,760 --> 00:09:14,080 Speaker 4: more broadly, the hollowing out of our interest or capability 159 00:09:14,120 --> 00:09:19,120 Speaker 4: in terms of diplomacy, in terms of the whole mission 160 00:09:19,160 --> 00:09:22,680 Speaker 4: of the Agency for International Development, the whole promotion of 161 00:09:22,720 --> 00:09:27,200 Speaker 4: democracy and American values around the world. We have dramatically 162 00:09:27,240 --> 00:09:31,240 Speaker 4: weakened one of the principal instruments of American national security. 163 00:09:31,240 --> 00:09:33,760 Speaker 4: We've then compounded a top with the hollowing out of 164 00:09:33,800 --> 00:09:37,360 Speaker 4: the National Security Council. This is an administration, I would 165 00:09:37,480 --> 00:09:40,280 Speaker 4: argue that is in some ways it's put itself dangerously 166 00:09:40,360 --> 00:09:43,920 Speaker 4: dependent on a top down approach to foreign policy, where 167 00:09:43,920 --> 00:09:46,760 Speaker 4: the president does things and quite honestly, the rest of 168 00:09:46,760 --> 00:09:49,319 Speaker 4: the administration falls in behind. I don't see an awful 169 00:09:49,360 --> 00:09:52,760 Speaker 4: lot of ground up analysis, but I do worry about 170 00:09:52,760 --> 00:09:55,880 Speaker 4: what's been now more than what decade and a half 171 00:09:56,440 --> 00:10:01,480 Speaker 4: of the weakening of the diplomatic dimension instrument of American 172 00:10:01,800 --> 00:10:04,800 Speaker 4: foreign policy and national security Richard. 173 00:10:05,280 --> 00:10:09,440 Speaker 5: Some folks are even discussing, probably a small chance, but 174 00:10:09,960 --> 00:10:13,360 Speaker 5: still discussing regime change in a rent How do you 175 00:10:13,440 --> 00:10:14,400 Speaker 5: think about that topic? 176 00:10:15,840 --> 00:10:16,640 Speaker 3: A couple of ways. 177 00:10:16,960 --> 00:10:20,720 Speaker 4: One is I find regime change in the category of wish, 178 00:10:20,800 --> 00:10:24,600 Speaker 4: not a strategy. If Bibi Netsnahu, the Prime Minister of Israel, 179 00:10:24,679 --> 00:10:28,200 Speaker 4: or Donald Trump said to their generals, I want regime change, 180 00:10:28,720 --> 00:10:31,320 Speaker 4: they wouldn't know how to implement it. Regime change is 181 00:10:31,360 --> 00:10:34,120 Speaker 4: not something you can design an operation to bring about. 182 00:10:35,080 --> 00:10:38,440 Speaker 4: Colin Powell used to say, the military military instruments do 183 00:10:38,520 --> 00:10:42,360 Speaker 4: two things. They destroy and they kill. Regime change is 184 00:10:42,400 --> 00:10:44,959 Speaker 4: not is not on the menu. So that's one thing. 185 00:10:45,080 --> 00:10:47,800 Speaker 4: Second of all, you never know if you can bring 186 00:10:47,800 --> 00:10:50,480 Speaker 4: about You also never know what comes of it. You 187 00:10:50,559 --> 00:10:54,560 Speaker 4: know what would follow this regime? Is it necessarily something 188 00:10:54,600 --> 00:10:57,240 Speaker 4: that you want for all, you know, nuclear materials which 189 00:10:57,240 --> 00:11:00,000 Speaker 4: are clearly still existing around could get into the hands 190 00:11:00,160 --> 00:11:02,760 Speaker 4: of all sorts of groups that might be in the 191 00:11:02,880 --> 00:11:05,040 Speaker 4: Be careful what you wish for. So I take, I 192 00:11:05,080 --> 00:11:08,760 Speaker 4: take regime changes, unseerious foreign policy. If it comes about, 193 00:11:08,920 --> 00:11:11,480 Speaker 4: it's going to come from within Iran. It's not going 194 00:11:11,559 --> 00:11:14,800 Speaker 4: to come, if you will, from Israeli or American bayonets. 195 00:11:15,280 --> 00:11:20,959 Speaker 2: Do we underestimate, ambassador, has the military violence of the 196 00:11:20,960 --> 00:11:26,040 Speaker 2: theocracy in Iran? The news flow to me, Ambassador, with 197 00:11:26,080 --> 00:11:32,079 Speaker 2: the respect of my colleagues, is so simplistic. Iatola theocracy, 198 00:11:32,720 --> 00:11:35,640 Speaker 2: the people of Iran. What's in between them? And the 199 00:11:35,679 --> 00:11:38,520 Speaker 2: answer is a harsh dictatorship. 200 00:11:38,640 --> 00:11:42,520 Speaker 4: Right, You've got that, You've got all sorts of citizen 201 00:11:42,559 --> 00:11:47,520 Speaker 4: groups that are uh, listen to them, the so called basis, 202 00:11:47,600 --> 00:11:49,319 Speaker 4: you know, the the guys who used to come out 203 00:11:49,320 --> 00:11:51,360 Speaker 4: with the sticks and beat beat up on the Green 204 00:11:51,400 --> 00:11:56,040 Speaker 4: Movement protesters. And then you've got formal authorities, uh, the 205 00:11:56,160 --> 00:11:57,320 Speaker 4: military and and. 206 00:11:57,480 --> 00:11:58,040 Speaker 3: And so forth. 207 00:11:58,080 --> 00:12:00,480 Speaker 4: So this is this is a regime that has tools, 208 00:12:00,520 --> 00:12:03,520 Speaker 4: if you will, time of repression in addition to what 209 00:12:03,559 --> 00:12:06,920 Speaker 4: it can do as a more traditional marilitary In addition 210 00:12:06,960 --> 00:12:09,640 Speaker 4: to its its proxies. But this is a this is 211 00:12:09,679 --> 00:12:12,160 Speaker 4: a system, it's been in place now for more than 212 00:12:12,160 --> 00:12:16,200 Speaker 4: half a century, that has instruments of repression and coercion. 213 00:12:16,440 --> 00:12:20,200 Speaker 2: Paul, I remember exactly where I was in the shock 214 00:12:20,360 --> 00:12:25,480 Speaker 2: of the hostages. Are you ready a country road in Pittsfield, Vermont, 215 00:12:26,000 --> 00:12:30,120 Speaker 2: on a cold, cold November day, walking down the road, 216 00:12:30,280 --> 00:12:33,480 Speaker 2: trying not to slip in my two tone Tony Lahma 217 00:12:33,600 --> 00:12:37,000 Speaker 2: cowboy boots, and we were in shock. Is a nation 218 00:12:37,559 --> 00:12:39,080 Speaker 2: over the failed hostage event? 219 00:12:39,160 --> 00:12:39,319 Speaker 3: Yep? 220 00:12:39,400 --> 00:12:43,520 Speaker 5: Absolutely, Richard, give us the point of view of Israel here. 221 00:12:43,960 --> 00:12:45,720 Speaker 5: A lot of folks are saying this might be a 222 00:12:45,760 --> 00:12:49,280 Speaker 5: special time for Israel to kind of reset the Middle 223 00:12:49,320 --> 00:12:52,079 Speaker 5: East as it takes care of, you know, many of 224 00:12:52,760 --> 00:12:55,680 Speaker 5: what it perceives to be its enemies, including obviously a 225 00:12:55,800 --> 00:13:00,079 Speaker 5: Ran most recently, can Israel change its position in the 226 00:13:00,120 --> 00:13:02,200 Speaker 5: Middle East or the balance of power in the Middle East? 227 00:13:03,400 --> 00:13:06,680 Speaker 4: Well, I would argue Israel has much improved its strategic position, 228 00:13:06,800 --> 00:13:10,000 Speaker 4: mainly through the weakening of Iran's proxies as Bola first 229 00:13:10,040 --> 00:13:14,120 Speaker 4: and foremost Amas secondarily, then through regime change what we 230 00:13:14,200 --> 00:13:19,200 Speaker 4: saw in Syria. Israel has improved its position against Iran, 231 00:13:19,320 --> 00:13:23,640 Speaker 4: but hasn't resolved it. By that, I mean Iran remains 232 00:13:23,720 --> 00:13:27,480 Speaker 4: hostile to Israel has capabilities. And again we don't know 233 00:13:27,480 --> 00:13:31,720 Speaker 4: how much of their nuclear components survived. For all we know, 234 00:13:31,760 --> 00:13:34,480 Speaker 4: a lot of them were parked in undisclosed location. So 235 00:13:34,640 --> 00:13:37,240 Speaker 4: Israel is not out of the woods there. And even more, 236 00:13:37,320 --> 00:13:40,840 Speaker 4: Israel's not out of the woods dealing with Gaza or 237 00:13:40,840 --> 00:13:44,840 Speaker 4: with the three million Palestinians in the West Bank. And 238 00:13:44,880 --> 00:13:48,439 Speaker 4: I think that's still the biggest strategic question. So Israel 239 00:13:48,440 --> 00:13:51,600 Speaker 4: has the Iranian dimension and still has the Palestinian dimension 240 00:13:51,800 --> 00:13:52,280 Speaker 4: very much. 241 00:13:52,440 --> 00:13:55,000 Speaker 2: Richard has one final question Paul and I in our 242 00:13:55,040 --> 00:13:57,760 Speaker 2: broadcast yesterday, Paul, please help me. 243 00:13:58,320 --> 00:13:59,640 Speaker 3: I agree that we. 244 00:13:59,440 --> 00:14:03,839 Speaker 2: Were thunder struck by the acuity and concision of our 245 00:14:03,960 --> 00:14:07,720 Speaker 2: Chairman of the Joint chief of Staff. I was blown 246 00:14:07,760 --> 00:14:11,680 Speaker 2: away by his report. Richard Hass you're the grizzled veteran. 247 00:14:12,040 --> 00:14:14,439 Speaker 2: What did you think of the press conference of our 248 00:14:14,520 --> 00:14:17,160 Speaker 2: Chairman of the Joint chiefs of Staff. 249 00:14:18,160 --> 00:14:21,680 Speaker 4: Tom He was impressive. General Carilla, the head of Central Command, 250 00:14:21,760 --> 00:14:24,200 Speaker 4: is impressive. Let me just make a larger point. When 251 00:14:24,240 --> 00:14:27,720 Speaker 4: I look at American society, I think there's two great 252 00:14:27,840 --> 00:14:31,240 Speaker 4: pools of talent one is in the American military. The 253 00:14:31,280 --> 00:14:35,280 Speaker 4: professionalization there is awesome. And the other is something you guys, 254 00:14:35,480 --> 00:14:37,440 Speaker 4: you have all deal with all the time, which is 255 00:14:37,480 --> 00:14:40,920 Speaker 4: the best of American corporate leadership. These are people who 256 00:14:40,960 --> 00:14:43,880 Speaker 4: know how to run big operations and do it in 257 00:14:43,920 --> 00:14:48,000 Speaker 4: a really responsible, accountable way. So I'm not surprised when 258 00:14:48,040 --> 00:14:50,560 Speaker 4: I see great talent in the military rise to the top. 259 00:14:50,640 --> 00:14:54,120 Speaker 4: It is a meritocracy. These people are tested and they 260 00:14:54,120 --> 00:14:58,720 Speaker 4: are responsible for large numbers of lives. So I find 261 00:14:59,000 --> 00:15:03,360 Speaker 4: the post Vietnam American military is quite an extraordinary institution. 262 00:15:04,800 --> 00:15:06,840 Speaker 2: Richard Huss, thank you so much. Just send of you 263 00:15:06,920 --> 00:15:10,040 Speaker 2: partners and a course is definitive work. The Council on 264 00:15:10,120 --> 00:15:15,280 Speaker 2: Foreign Relations Ambassador House back decades to the diplomacy of 265 00:15:15,360 --> 00:15:17,520 Speaker 2: a Northern Ireland solution. 266 00:15:23,280 --> 00:15:26,840 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch US Live 267 00:15:26,920 --> 00:15:30,120 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 268 00:15:30,160 --> 00:15:33,840 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 269 00:15:34,000 --> 00:15:35,520 Speaker 1: watch US Live on YouTube. 270 00:15:35,600 --> 00:15:39,680 Speaker 2: There is an approach that each expert in international relations 271 00:15:40,200 --> 00:15:43,600 Speaker 2: and geopolitics takes. We had Richard Haass with this earlier. 272 00:15:43,640 --> 00:15:47,320 Speaker 2: Ambassador Hass looking at the fabric of American culture and 273 00:15:47,400 --> 00:15:52,960 Speaker 2: extending it out across his treatment of foreign policy, Robert D. Kaplan, 274 00:15:53,200 --> 00:15:57,520 Speaker 2: over a stretch of over twenty books, just simply speaks 275 00:15:58,040 --> 00:16:00,880 Speaker 2: of the map. If you're one of those believers in 276 00:16:01,000 --> 00:16:04,920 Speaker 2: get out the map and look at it, Kaplan is definitive. 277 00:16:05,320 --> 00:16:08,520 Speaker 2: His new tour de force is Wasteland a world in 278 00:16:08,640 --> 00:16:09,880 Speaker 2: permanent crisis. 279 00:16:10,120 --> 00:16:11,040 Speaker 3: This is coming off my. 280 00:16:11,000 --> 00:16:13,000 Speaker 2: Book of the year a few years ago, The Loom 281 00:16:13,400 --> 00:16:17,640 Speaker 2: of Time from Morocco to Persia. Robert Chaplin, thank you 282 00:16:17,720 --> 00:16:20,320 Speaker 2: so much for joining us. I'll cut to the chase. 283 00:16:20,640 --> 00:16:26,320 Speaker 2: You say, technology has permanently changed our map, our geography. 284 00:16:26,840 --> 00:16:29,840 Speaker 2: Is that true of this war with Israel and Iran? 285 00:16:31,360 --> 00:16:34,760 Speaker 6: Yes, it is to an extent, because Iran is a 286 00:16:34,840 --> 00:16:37,720 Speaker 6: long distance from Israel on the map. 287 00:16:38,280 --> 00:16:39,200 Speaker 3: But yet the. 288 00:16:39,280 --> 00:16:44,520 Speaker 6: Israelis and of course the Americans have condensed that distance 289 00:16:44,640 --> 00:16:49,400 Speaker 6: through technology. The America excuse me. The Americans sent B 290 00:16:49,520 --> 00:16:52,520 Speaker 6: two bombers all the way from the center of the 291 00:16:52,640 --> 00:16:57,080 Speaker 6: United States white Men Air Force based in Missouri to 292 00:16:57,200 --> 00:17:01,840 Speaker 6: bomb Iran, so that Iran is is close to America 293 00:17:02,920 --> 00:17:09,399 Speaker 6: in you know, in in operational terms, as you know, 294 00:17:10,680 --> 00:17:14,080 Speaker 6: as Kansas was to the Indian wars in the middle 295 00:17:14,160 --> 00:17:18,840 Speaker 6: of the nineteenth century. And let me just make one 296 00:17:18,880 --> 00:17:23,240 Speaker 6: thing very clear here. Yeah, people who are saying that 297 00:17:23,359 --> 00:17:28,320 Speaker 6: this could this could lead to another you know, forever 298 00:17:28,480 --> 00:17:34,680 Speaker 6: forever war, Middle East quagmire, they're making a mistake of category. 299 00:17:35,880 --> 00:17:41,680 Speaker 6: Iraq is in different was in a different category than Iran. 300 00:17:41,920 --> 00:17:46,560 Speaker 6: Iraq was in the category of Vietnam and Afghanistan and 301 00:17:46,800 --> 00:17:51,720 Speaker 6: Korea in the sense that it involved tens of thousands 302 00:17:51,800 --> 00:17:56,440 Speaker 6: of ground troops which got stuck literally in a quagmire. 303 00:17:57,000 --> 00:18:01,000 Speaker 6: Here we're dealing with just air and naval sets. The 304 00:18:01,040 --> 00:18:03,760 Speaker 6: war could go in a number of ways. There could 305 00:18:03,800 --> 00:18:07,560 Speaker 6: be blowback, but as long as we stick with air 306 00:18:07,640 --> 00:18:11,040 Speaker 6: and naval assets, there's not going to be a quagmire. 307 00:18:11,240 --> 00:18:15,080 Speaker 6: There's going to be something different. It may be something bad, 308 00:18:15,440 --> 00:18:19,480 Speaker 6: but it will simply exist in a category different from 309 00:18:19,520 --> 00:18:25,360 Speaker 6: those four forever wars Korea, Vietnam, Iraq, and Afghanistan. 310 00:18:26,160 --> 00:18:31,159 Speaker 5: Robert, what do you expect the response from Iran will be? 311 00:18:33,280 --> 00:18:37,520 Speaker 6: I think there will be a response. It may take 312 00:18:37,560 --> 00:18:39,919 Speaker 6: a few days or a few weeks. It may be 313 00:18:39,960 --> 00:18:43,480 Speaker 6: a terrorist attack in Europe. It may be an attack 314 00:18:43,600 --> 00:18:48,919 Speaker 6: by Shia, a pro Iranian Shia militia in Iraq on 315 00:18:49,200 --> 00:18:54,880 Speaker 6: US troops not too far away. There certainly will be blowback, 316 00:18:55,240 --> 00:18:58,520 Speaker 6: but it's going to take a few months at least 317 00:18:59,000 --> 00:19:04,159 Speaker 6: to really just whether this decision by President Trump to 318 00:19:05,840 --> 00:19:10,560 Speaker 6: bomb the Iranian nuclear facilities was a wise or an 319 00:19:10,640 --> 00:19:15,640 Speaker 6: unwise decision. It will unfold stages, and. 320 00:19:15,560 --> 00:19:18,120 Speaker 2: You're the loom of time, and folks, I can't say 321 00:19:18,200 --> 00:19:21,879 Speaker 2: enough about this is your single concise read on the 322 00:19:21,920 --> 00:19:26,080 Speaker 2: span from Morocco to the Eastern Arab world and over 323 00:19:26,160 --> 00:19:30,200 Speaker 2: to Persia. You talked there, Robert Kaplan, about the giant 324 00:19:30,240 --> 00:19:33,960 Speaker 2: of your academics, which is Clifford Gertz, and it's the 325 00:19:34,040 --> 00:19:39,040 Speaker 2: idea of culture described for our American audience today, the 326 00:19:39,080 --> 00:19:46,000 Speaker 2: Persian culture, the Persian culture extant since the theocracy of 327 00:19:46,080 --> 00:19:47,280 Speaker 2: nineteen seventy nine. 328 00:19:47,600 --> 00:19:54,280 Speaker 6: Yes, Persia. Iran is not the Arab world. It is 329 00:19:54,480 --> 00:19:58,600 Speaker 6: not Iraq, it is not Syria, it is not Libya. 330 00:19:59,600 --> 00:20:03,560 Speaker 6: Iran has been a nation state of sorts on the 331 00:20:03,600 --> 00:20:08,720 Speaker 6: Iranian plateau for thousands of years. Iran was the world's 332 00:20:08,800 --> 00:20:14,639 Speaker 6: first superpower and antiquity. You're dealing with a highly sophisticated, 333 00:20:15,160 --> 00:20:20,360 Speaker 6: highly evolved organ you know, culture and civilization where there 334 00:20:20,400 --> 00:20:24,920 Speaker 6: is not one center of political power, but multiple centers 335 00:20:25,280 --> 00:20:28,640 Speaker 6: of political power. Uh. You know, I've been to Iran 336 00:20:28,840 --> 00:20:32,600 Speaker 6: several times. It takes two hours in traffic to drive 337 00:20:32,680 --> 00:20:36,000 Speaker 6: from one end of Tehran to the other. Being in 338 00:20:36,119 --> 00:20:40,560 Speaker 6: Iran is like being in Egypt or India, and that 339 00:20:40,760 --> 00:20:46,760 Speaker 6: is it's overwhelming. You feel overwhelmed. So the so the 340 00:20:46,960 --> 00:20:50,840 Speaker 6: idea that you know that a singular attack on nuclear 341 00:20:50,920 --> 00:20:55,399 Speaker 6: facilities is going in a linear fashion to lead to 342 00:20:55,480 --> 00:21:00,560 Speaker 6: a regime change is far too simplistic. They're you know, 343 00:21:00,600 --> 00:21:05,120 Speaker 6: they're very very well likely could be a regime evolution, 344 00:21:05,440 --> 00:21:09,240 Speaker 6: as I call it, but it will involve many other factors, 345 00:21:09,320 --> 00:21:13,640 Speaker 6: and it will be internally driven. It won't be imposed 346 00:21:13,680 --> 00:21:14,800 Speaker 6: from the outside. 347 00:21:15,560 --> 00:21:18,960 Speaker 5: Robert, what do you think our the US strategy should 348 00:21:19,000 --> 00:21:22,639 Speaker 5: be towards Iran at this point? Again, the over the weekend, 349 00:21:22,640 --> 00:21:27,199 Speaker 5: a significant escalation and military action, it should be our 350 00:21:27,200 --> 00:21:28,640 Speaker 5: strategic view. 351 00:21:28,880 --> 00:21:32,920 Speaker 6: Well, at this point, we should try, as President Trump said, 352 00:21:33,000 --> 00:21:36,000 Speaker 6: to keep it a one off that we try as 353 00:21:36,040 --> 00:21:39,040 Speaker 6: hard as we can not to attack again, not to 354 00:21:39,200 --> 00:21:42,359 Speaker 6: respond again. You know, if they're just going to do 355 00:21:42,440 --> 00:21:47,920 Speaker 6: a desultory pin prick response like they did after President 356 00:21:47,960 --> 00:21:52,399 Speaker 6: Trump bordered the assassination of Kassamsuleimani, the head of the 357 00:21:52,440 --> 00:21:57,640 Speaker 6: El Kutz force, back in twenty twenty. In January twenty twenty, 358 00:21:57,720 --> 00:22:01,239 Speaker 6: I think it was there's no need to spawn, you know, 359 00:22:01,320 --> 00:22:05,439 Speaker 6: the policy now should be to lower the temperature, not 360 00:22:05,680 --> 00:22:09,960 Speaker 6: talk about changing a regime from the outside. Because the 361 00:22:10,080 --> 00:22:14,080 Speaker 6: damage has been done. It will take days or weeks 362 00:22:14,400 --> 00:22:18,840 Speaker 6: to more properly assess exactly how much damage was done. 363 00:22:19,359 --> 00:22:22,399 Speaker 6: But the idea that the Uranians are just going to 364 00:22:22,520 --> 00:22:28,320 Speaker 6: rebuild their nuclear facilities is very simplistic. They're never going 365 00:22:28,359 --> 00:22:32,679 Speaker 6: to rebuild it to the point that Fardeau or Natans was, 366 00:22:33,880 --> 00:22:36,399 Speaker 6: you know, way before they get to that point, the 367 00:22:36,520 --> 00:22:40,120 Speaker 6: Israelis will be able to attack them. So this attack 368 00:22:40,359 --> 00:22:43,720 Speaker 6: really did do substantial damage. 369 00:22:44,400 --> 00:22:47,879 Speaker 5: What do you expect Israel to do here? Because a 370 00:22:47,880 --> 00:22:49,920 Speaker 5: lot of folks are suggesting this is a unique time 371 00:22:50,080 --> 00:22:53,440 Speaker 5: for Israel here in terms of exerting and expending and 372 00:22:53,640 --> 00:22:57,920 Speaker 5: its role within the Middle East and add to its security. 373 00:22:58,000 --> 00:22:59,359 Speaker 5: Is this a unique time for Israel? 374 00:23:00,840 --> 00:23:05,040 Speaker 6: Yes, it is because you know, Benjamin Netanyahu, love em 375 00:23:05,119 --> 00:23:09,520 Speaker 6: or hate him, is a world historical figure. People may 376 00:23:09,600 --> 00:23:14,080 Speaker 6: forget Clinton, Obama and Biden and half of the European 377 00:23:14,200 --> 00:23:17,719 Speaker 6: prime ministers, you know, who will be forgotten in the 378 00:23:17,800 --> 00:23:21,040 Speaker 6: course of the decades. But decades from now, people will 379 00:23:21,080 --> 00:23:26,120 Speaker 6: be writing biographies about Netanyahu, you know, because he's been 380 00:23:26,200 --> 00:23:29,639 Speaker 6: in power so long, and the way he was able to, 381 00:23:29,920 --> 00:23:33,920 Speaker 6: you know, achieve tactical surprise in his attacks on Iran, 382 00:23:34,280 --> 00:23:38,359 Speaker 6: and then I'll use the word manipulate President Trump into 383 00:23:38,440 --> 00:23:43,359 Speaker 6: taking action on his own is is nothing short of extraordinary. 384 00:23:44,480 --> 00:23:47,640 Speaker 6: I think with these the smart thing for the Israelis 385 00:23:47,680 --> 00:23:50,800 Speaker 6: to do now, now that they got help from the US, 386 00:23:51,160 --> 00:23:54,439 Speaker 6: is to give the US something that is start the 387 00:23:54,560 --> 00:23:57,200 Speaker 6: process of withdrawing from Gaza. 388 00:23:58,440 --> 00:24:00,680 Speaker 2: Robert Kevin one final question, and one's going to run 389 00:24:00,680 --> 00:24:02,440 Speaker 2: on with the day. And again, folks, I can't say 390 00:24:02,520 --> 00:24:06,400 Speaker 2: enough about Wasteland. Robert Caplin's new effort in The Loom 391 00:24:06,440 --> 00:24:08,719 Speaker 2: of Time, my book of the year. You wrote a 392 00:24:08,760 --> 00:24:12,119 Speaker 2: monograph I'm going to call it The Tragic Mind, taking 393 00:24:12,200 --> 00:24:16,120 Speaker 2: us back to Greek mythology and how we need tragedy 394 00:24:16,160 --> 00:24:20,840 Speaker 2: to move forward. Does President Trump have a tragic mind 395 00:24:21,600 --> 00:24:24,760 Speaker 2: in there somewhere? Is there a philosophy of tragedy? 396 00:24:25,320 --> 00:24:28,119 Speaker 3: Is a foundation strength? Very hard? 397 00:24:28,440 --> 00:24:32,439 Speaker 6: Yeah, Tom, that's a very hard question to answer. Because 398 00:24:32,480 --> 00:24:35,919 Speaker 6: I don't sense it. I think he's too vain and 399 00:24:36,080 --> 00:24:40,520 Speaker 6: superficial to really have a deeply, a deeply developed sense 400 00:24:40,560 --> 00:24:44,240 Speaker 6: of tragedy. But I could be wrong. I could be 401 00:24:44,400 --> 00:24:48,560 Speaker 6: wrong on this because the person who really did have 402 00:24:48,640 --> 00:24:54,520 Speaker 6: a deeply evolved sense of tragedy was President George H. W. Bush, 403 00:24:54,640 --> 00:24:57,560 Speaker 6: who is very cautious and another. You know, the great 404 00:24:57,640 --> 00:25:01,120 Speaker 6: thing about his administration was not what happened, but all 405 00:25:01,200 --> 00:25:05,679 Speaker 6: the bad things that did not happen because of governance. 406 00:25:06,359 --> 00:25:08,720 Speaker 2: This has been wonderful, Robert Kaplam, thank you so much. 407 00:25:08,760 --> 00:25:13,280 Speaker 2: It's a muster read folks wasteland, a world in permanent crisis. 408 00:25:13,520 --> 00:25:17,399 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 409 00:25:17,440 --> 00:25:20,439 Speaker 1: starting at seven am Eastern on Apple Corplay and Android 410 00:25:20,480 --> 00:25:23,520 Speaker 1: Auto with the Bloomberg Business App. You can also listen 411 00:25:23,600 --> 00:25:26,879 Speaker 1: live on Amazon Alexa from our flagship New York station, 412 00:25:27,400 --> 00:25:30,040 Speaker 1: Just say Alexa Play Bloomberg eleven thirty. 413 00:25:30,119 --> 00:25:34,920 Speaker 2: Lri Calvicina joins us for a quick discussion here this 414 00:25:35,040 --> 00:25:37,960 Speaker 2: morning with the RBC Capital Marcus Lorie. How did your 415 00:25:38,480 --> 00:25:41,840 Speaker 2: strategy change this weekend as you published for Monday? 416 00:25:42,320 --> 00:25:44,680 Speaker 3: How do you amend to a new war. 417 00:25:46,600 --> 00:25:48,720 Speaker 7: Hi Hi, Tom, So, thanks for having me. To be honest, 418 00:25:48,720 --> 00:25:51,160 Speaker 7: we didn't change anything. We had done a piece about 419 00:25:51,160 --> 00:25:53,600 Speaker 7: a week ago laying out our framework for how we 420 00:25:53,600 --> 00:25:56,879 Speaker 7: were thinking about rising tensions in the Middle East and escalations, 421 00:25:57,240 --> 00:25:59,960 Speaker 7: and I would say, you know, while while I got 422 00:26:00,160 --> 00:26:02,159 Speaker 7: more convinced that we needed to have some sort of 423 00:26:02,160 --> 00:26:04,639 Speaker 7: short term market draw down, which obviously we haven't gotten 424 00:26:04,680 --> 00:26:08,080 Speaker 7: so far yet, we really just continued to focus on 425 00:26:08,119 --> 00:26:10,280 Speaker 7: the things we've been focusing on, and I would say, 426 00:26:10,480 --> 00:26:12,600 Speaker 7: you know, maybe where our view is a little differentiated. 427 00:26:12,640 --> 00:26:16,960 Speaker 7: Everyone's debating the oil price supply disruption potential. We obviously 428 00:26:17,040 --> 00:26:20,240 Speaker 7: agree that's one big transmission mechanism to equities. We also 429 00:26:20,280 --> 00:26:21,560 Speaker 7: think that you have to look at it through the 430 00:26:21,640 --> 00:26:26,600 Speaker 7: lens of valuation. Heightened uncertainty on geopolitics typically suppresses pes 431 00:26:26,600 --> 00:26:28,520 Speaker 7: in the S and P. Five hundred. And also, we're 432 00:26:28,600 --> 00:26:30,919 Speaker 7: very concerned about sentiment. This has been a market that 433 00:26:30,960 --> 00:26:34,080 Speaker 7: has been melting up because of very very modest inflections 434 00:26:34,280 --> 00:26:37,320 Speaker 7: in various sentiment gauges, and we think that those sentiment 435 00:26:37,359 --> 00:26:39,280 Speaker 7: gauges could be at risk down the road from an 436 00:26:39,280 --> 00:26:40,080 Speaker 7: episode like this. 437 00:26:40,960 --> 00:26:44,760 Speaker 5: Laurie listening to the FED last week again, they don't 438 00:26:44,760 --> 00:26:47,200 Speaker 5: seem to be in any rush to cut rates here, 439 00:26:47,280 --> 00:26:51,960 Speaker 5: so that maybe puts even more pressure on corporate earnings here. 440 00:26:52,520 --> 00:26:54,760 Speaker 5: What is your sense of kind of where corporate earnings are? 441 00:26:54,920 --> 00:26:56,560 Speaker 5: Is there a risk to I don't know out of 442 00:26:56,600 --> 00:26:59,800 Speaker 5: the upside where the downside from here? 443 00:27:00,000 --> 00:27:01,880 Speaker 7: It's a great question, Paul, and I'll say our rates 444 00:27:01,880 --> 00:27:04,000 Speaker 7: team is still looking for September cuts, but they have 445 00:27:04,080 --> 00:27:06,280 Speaker 7: also highlighted the risk that perhaps the FED starts a 446 00:27:06,320 --> 00:27:09,120 Speaker 7: little bit later, and so we do think that could 447 00:27:09,200 --> 00:27:11,920 Speaker 7: potentially be a headwind for equities if you start to 448 00:27:11,920 --> 00:27:14,359 Speaker 7: see those cuts pushed out. I would say from an 449 00:27:14,359 --> 00:27:17,359 Speaker 7: earnings perspective, you know, we are sitting at two fifty 450 00:27:17,400 --> 00:27:19,800 Speaker 7: eight in our own twenty twenty five Sep. Five hundred 451 00:27:19,800 --> 00:27:22,359 Speaker 7: and forecast. It's a little bit below consensus. On a 452 00:27:22,359 --> 00:27:25,800 Speaker 7: bottom up basis, we think that's still the right number 453 00:27:25,840 --> 00:27:28,800 Speaker 7: for this moment in time. If we look at gauges 454 00:27:28,840 --> 00:27:31,560 Speaker 7: of earning sentiment, they've rebounded, but they're about as good 455 00:27:31,560 --> 00:27:33,440 Speaker 7: as they tend to get if you're not coming off 456 00:27:33,480 --> 00:27:35,679 Speaker 7: of an extreme low on a big crisis. 457 00:27:36,280 --> 00:27:37,720 Speaker 3: That's right where I wanted to go. 458 00:27:37,880 --> 00:27:41,119 Speaker 2: As we staggered towards July fifteenth, I mean, folks, with 459 00:27:41,280 --> 00:27:45,879 Speaker 2: all the distractions, I guess it's about earnings. LORI, where 460 00:27:45,960 --> 00:27:46,920 Speaker 2: is the street now? 461 00:27:47,040 --> 00:27:49,240 Speaker 3: Is the street still. 462 00:27:49,000 --> 00:27:51,840 Speaker 2: Overestimating earnings and then they pull them down? 463 00:27:52,320 --> 00:27:54,160 Speaker 3: Or we now as a consensus going the. 464 00:27:54,160 --> 00:27:58,080 Speaker 2: Other way where we're low balling like Lori Kelvisina and 465 00:27:58,119 --> 00:27:59,280 Speaker 2: we'll drag it up later. 466 00:27:59,400 --> 00:27:59,960 Speaker 3: Which is it? 467 00:28:01,840 --> 00:28:01,919 Speaker 4: So? 468 00:28:02,040 --> 00:28:04,320 Speaker 7: Look, I think we're in a discovery process, right and 469 00:28:04,359 --> 00:28:08,200 Speaker 7: I think that we've had these massive uncertainties from tariffs, 470 00:28:08,240 --> 00:28:10,159 Speaker 7: and we've listened to a bunch of companies that just 471 00:28:10,200 --> 00:28:13,000 Speaker 7: came out in the last reporting, Sayson saying, you know, Frankly, 472 00:28:13,040 --> 00:28:15,080 Speaker 7: I think they were in a state of shock, but saying, look, 473 00:28:15,119 --> 00:28:17,280 Speaker 7: you know, we can manage through this, we can mitigate. 474 00:28:17,320 --> 00:28:19,520 Speaker 7: We're going to pass things on through pricing and customers 475 00:28:19,560 --> 00:28:20,919 Speaker 7: are just going to eat it and there's not going 476 00:28:21,000 --> 00:28:23,040 Speaker 7: to be any erosion in demand at least that's what 477 00:28:23,080 --> 00:28:25,320 Speaker 7: you're hearing from more sort of the industrial side of 478 00:28:25,359 --> 00:28:27,639 Speaker 7: the economy. We're going to see if that's right. The 479 00:28:27,640 --> 00:28:31,320 Speaker 7: consumer companies having a much tougher time, you know, and 480 00:28:31,359 --> 00:28:34,000 Speaker 7: Frankly have sounded less optimistic, and we're going to see 481 00:28:34,000 --> 00:28:36,880 Speaker 7: how they're feeling as well. But you know, I think 482 00:28:36,880 --> 00:28:38,680 Speaker 7: there's still a little bit of downside risk to the 483 00:28:38,720 --> 00:28:41,840 Speaker 7: bottom of consensus numbers here and there, And you know 484 00:28:41,920 --> 00:28:44,400 Speaker 7: that contrasts with the numbers having you know, kind of 485 00:28:44,440 --> 00:28:47,200 Speaker 7: rebounded a bit in here, and so, you know, my 486 00:28:47,440 --> 00:28:49,400 Speaker 7: my concern is that we're going to see things go 487 00:28:49,480 --> 00:28:50,280 Speaker 7: the other way a bit. 488 00:28:50,520 --> 00:28:53,200 Speaker 2: Paul Discovery process, they were a great barbine. 489 00:28:55,240 --> 00:28:56,160 Speaker 3: They play blues like. 490 00:28:56,120 --> 00:28:59,800 Speaker 5: Nobody Lord to the extent that some level of terriffs 491 00:28:59,800 --> 00:29:03,320 Speaker 5: are year to stay. Does that suggest that the bigger 492 00:29:03,360 --> 00:29:05,680 Speaker 5: you are, the better you are on your income statement 493 00:29:05,800 --> 00:29:08,640 Speaker 5: to deal with that, that would suggest, you know, big 494 00:29:08,720 --> 00:29:11,040 Speaker 5: cap stable companies versus maybe smaller mid. 495 00:29:11,040 --> 00:29:14,600 Speaker 7: Camp Yeah, that's generally the rule of thumb we use, 496 00:29:14,680 --> 00:29:17,880 Speaker 7: Paul whenever there is something that poses a challenge to 497 00:29:17,960 --> 00:29:22,760 Speaker 7: corporate America to manage through. The smaller companies unfortunately don't 498 00:29:22,840 --> 00:29:25,280 Speaker 7: tend to manage through it quite as well. And that's 499 00:29:25,320 --> 00:29:27,840 Speaker 7: because they have less bargaining power, whether you're looking at 500 00:29:27,920 --> 00:29:30,680 Speaker 7: sort of their employees, whether you're looking at their suppliers. 501 00:29:31,400 --> 00:29:33,680 Speaker 7: And you know, it's interesting, Paul, I was, I can't 502 00:29:33,720 --> 00:29:35,680 Speaker 7: remember what survey this came out in last year. I 503 00:29:35,720 --> 00:29:37,720 Speaker 7: think it might have been the Duke's CFO survey. But 504 00:29:37,760 --> 00:29:39,920 Speaker 7: they did, you know, sort of a study on are 505 00:29:39,920 --> 00:29:42,760 Speaker 7: you using AI or not? Are you using automation tools? 506 00:29:43,080 --> 00:29:45,520 Speaker 7: And bigger This wasn't necessarily a big cap versus small cap, 507 00:29:45,520 --> 00:29:48,440 Speaker 7: but bigger companies were more likely to be using those 508 00:29:48,480 --> 00:29:51,000 Speaker 7: automation tools and to be using tools like AI to 509 00:29:51,120 --> 00:29:54,440 Speaker 7: enhance their efficiencies than smaller companies. And so you know, 510 00:29:54,560 --> 00:29:57,240 Speaker 7: even frankly, some of the tools that are being engaged 511 00:29:57,240 --> 00:29:59,440 Speaker 7: with are just different when you're looking from big cap 512 00:29:59,520 --> 00:30:01,120 Speaker 7: companies small cap companies. 513 00:30:01,240 --> 00:30:04,120 Speaker 2: Lurri Cavasena, thank us so much, RBC Capital Markets. 514 00:30:09,840 --> 00:30:13,760 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 515 00:30:13,800 --> 00:30:16,840 Speaker 1: starting at seven am Eastern on Apple Coarclay, and Android 516 00:30:16,840 --> 00:30:19,840 Speaker 1: Auto with the Bloomberg Business app. You can also watch 517 00:30:19,920 --> 00:30:22,880 Speaker 1: us live every weekday on YouTube and always on the 518 00:30:22,880 --> 00:30:23,960 Speaker 1: Bloomberg terminal. 519 00:30:24,120 --> 00:30:27,280 Speaker 2: Now, the markets we really wanted to focus in here, 520 00:30:27,320 --> 00:30:30,080 Speaker 2: and they have in studio Paul Sank coming up on 521 00:30:30,240 --> 00:30:33,760 Speaker 2: oil world class and even better, Steven Englander with its 522 00:30:33,760 --> 00:30:37,320 Speaker 2: Sandra Charter Bank joining us at the studio. Now, folks, 523 00:30:37,480 --> 00:30:39,280 Speaker 2: this is going to be a window in the global 524 00:30:39,320 --> 00:30:41,480 Speaker 2: Wall Street where they don't just look at yen in 525 00:30:41,600 --> 00:30:45,320 Speaker 2: euro Steven Englander, you walked in and you said, cad yen, 526 00:30:46,080 --> 00:30:50,240 Speaker 2: which is the number of Japanese yen per Canadian dollar 527 00:30:50,840 --> 00:30:55,280 Speaker 2: since a pandemic. It's been massively strung Canada weekend. 528 00:30:55,400 --> 00:30:56,480 Speaker 3: And it's reversed. 529 00:30:57,080 --> 00:31:01,640 Speaker 2: How do you glean information from a study of Canada 530 00:31:01,720 --> 00:31:02,520 Speaker 2: versus Japan. 531 00:31:03,560 --> 00:31:07,840 Speaker 8: Well, you know, I'm thinking of it more short term 532 00:31:08,040 --> 00:31:11,400 Speaker 8: that you know, even though yen traditionally is a safe haven, 533 00:31:11,840 --> 00:31:15,160 Speaker 8: it's it's still low yielding, has the lowest drilled interest rates. 534 00:31:15,240 --> 00:31:20,080 Speaker 8: The politics are kind of a little bit soft, and 535 00:31:20,120 --> 00:31:24,200 Speaker 8: it's very exposed to higher oil prices, whereas some of the. 536 00:31:24,120 --> 00:31:27,200 Speaker 2: Weakness we're seeing today in dollar yen as well. 537 00:31:27,760 --> 00:31:32,240 Speaker 8: Yeah, and you know, and what you're seeing is is 538 00:31:32,280 --> 00:31:35,320 Speaker 8: that the end is actually one of the weakest currencies overnight. 539 00:31:35,960 --> 00:31:38,400 Speaker 8: Canada is holding in there because it does have oil. 540 00:31:39,320 --> 00:31:40,760 Speaker 8: You know, it's trade related. 541 00:31:40,800 --> 00:31:41,440 Speaker 3: It's not as. 542 00:31:41,280 --> 00:31:45,280 Speaker 8: Exposed to to July the ninth, and you start of say, 543 00:31:45,360 --> 00:31:48,120 Speaker 8: if things go south that you know, maybe cad is 544 00:31:48,280 --> 00:31:49,480 Speaker 8: continues to hang in there. 545 00:31:49,520 --> 00:31:51,120 Speaker 3: But you know, yeah, you bet at. 546 00:31:51,040 --> 00:31:55,160 Speaker 2: The standard charter bank is strong, loooning weaker. 547 00:31:55,400 --> 00:31:59,280 Speaker 8: Yeah, well, we don't bet, but it's certainly sort of 548 00:31:59,320 --> 00:32:03,239 Speaker 8: something that we sink, we we would think about if 549 00:32:03,240 --> 00:32:05,640 Speaker 8: you're asking us, you know how markets might trade. 550 00:32:05,880 --> 00:32:06,920 Speaker 2: Put me in my place there? 551 00:32:07,960 --> 00:32:09,280 Speaker 3: Why did you save the interview? 552 00:32:10,760 --> 00:32:11,280 Speaker 2: Steve Hall? 553 00:32:11,720 --> 00:32:16,200 Speaker 5: Has a world of rising tariffs impacted your view of 554 00:32:16,400 --> 00:32:18,280 Speaker 5: currencies here. We don't know where the tariffs are going 555 00:32:18,320 --> 00:32:20,960 Speaker 5: to shake out, but we do know that we got 556 00:32:21,000 --> 00:32:22,680 Speaker 5: to pay attention to these things for at least for 557 00:32:22,720 --> 00:32:24,600 Speaker 5: the next several years. How does that impact your view? 558 00:32:24,720 --> 00:32:27,080 Speaker 8: Well, it's made very complicated because there are three factors 559 00:32:27,120 --> 00:32:29,840 Speaker 8: that are involved. One is that they've increased the risk 560 00:32:29,880 --> 00:32:31,760 Speaker 8: premium on US assets a lot. 561 00:32:33,040 --> 00:32:34,960 Speaker 3: Part weaker dollar, yeah. 562 00:32:34,840 --> 00:32:38,600 Speaker 8: Partly because of you know, the expansion of the envelope 563 00:32:38,640 --> 00:32:42,000 Speaker 8: of tariffs beyond what anybody thought was reasonable, but also 564 00:32:42,040 --> 00:32:44,600 Speaker 8: the possibility that they can do everything else with the 565 00:32:44,640 --> 00:32:49,760 Speaker 8: same kind of broader envelope of policy options. Second thing 566 00:32:50,240 --> 00:32:54,080 Speaker 8: is it's risk off for the rest of the world. 567 00:32:54,120 --> 00:32:56,000 Speaker 8: You know, if you get tariffed up, that's no fun. 568 00:32:56,040 --> 00:32:57,360 Speaker 8: It's going to disrupt trade. 569 00:32:57,920 --> 00:32:59,240 Speaker 3: And the third thing. 570 00:32:59,120 --> 00:33:01,640 Speaker 8: Is that normally you would sort of say, look if 571 00:33:01,640 --> 00:33:04,280 Speaker 8: your if US tariffs on Europe go up, the euro 572 00:33:04,360 --> 00:33:07,200 Speaker 8: would fall, although that hasn't been the case yet because 573 00:33:07,240 --> 00:33:10,640 Speaker 8: the risk premium has dominated. How you weigh all those 574 00:33:10,760 --> 00:33:12,880 Speaker 8: three is very complicated. 575 00:33:13,680 --> 00:33:15,520 Speaker 2: I look, Steve Angloder in my book of the Summer 576 00:33:15,600 --> 00:33:20,600 Speaker 2: Ken Rogoff out of Harvard, our dollar year problem fabulous, fabulous, 577 00:33:20,640 --> 00:33:24,120 Speaker 2: look back at Rudy Donbush and the late Stan Fisher 578 00:33:24,560 --> 00:33:28,280 Speaker 2: and all in our dollar for the greater public listening 579 00:33:28,400 --> 00:33:31,160 Speaker 2: right now, should they have dollar worries? 580 00:33:32,320 --> 00:33:33,640 Speaker 3: Yeah? They should. 581 00:33:33,880 --> 00:33:37,760 Speaker 8: I think that the You know what makes America great, 582 00:33:38,800 --> 00:33:42,560 Speaker 8: I think is the ability to attract money from abroad 583 00:33:42,600 --> 00:33:44,920 Speaker 8: at low interest rates. That's been the history of the 584 00:33:45,000 --> 00:33:49,000 Speaker 8: last twenty or thirty years. Invested in new technologies, get 585 00:33:49,080 --> 00:33:51,600 Speaker 8: high rates of return and do very well of it. 586 00:33:51,800 --> 00:33:54,040 Speaker 8: You know, the US is like a big hedge fund. 587 00:33:54,120 --> 00:33:56,680 Speaker 2: Do you suggest that's bro I love that. Can we 588 00:33:56,760 --> 00:33:57,120 Speaker 2: steal that? 589 00:33:57,320 --> 00:33:57,520 Speaker 3: Yeah? 590 00:33:57,680 --> 00:34:00,360 Speaker 2: Lisa right, that the US is like a big edge 591 00:34:00,360 --> 00:34:04,040 Speaker 2: fun My book of the Year by Ruster Sherman. Rockefeller 592 00:34:04,120 --> 00:34:07,800 Speaker 2: now is basically a trease on capitalism in America. Steven 593 00:34:07,840 --> 00:34:12,160 Speaker 2: Anglicher the Standard Charter Bank with this on quote, the 594 00:34:12,280 --> 00:34:16,239 Speaker 2: US is like a hedge fund. Is this the financialization 595 00:34:16,600 --> 00:34:20,200 Speaker 2: of America? It's only giving gains. 596 00:34:19,800 --> 00:34:22,319 Speaker 3: To the elite, not necessarily. 597 00:34:22,360 --> 00:34:26,040 Speaker 8: I think everyone benefits, you know, from the development of 598 00:34:26,080 --> 00:34:28,800 Speaker 8: new technologies. I mean, even if you're poor, having a 599 00:34:29,600 --> 00:34:34,719 Speaker 8: cell phone with remarkable capabilities is a wonderful thing. But 600 00:34:34,880 --> 00:34:38,720 Speaker 8: I do think it's dependent on being able to borrow 601 00:34:38,800 --> 00:34:41,200 Speaker 8: cheaply as long as you're running a current account deficit, 602 00:34:41,280 --> 00:34:43,759 Speaker 8: and that's not going to go away, so, you know. 603 00:34:44,040 --> 00:34:46,440 Speaker 8: And my worry about the dollar is that some of 604 00:34:46,480 --> 00:34:50,520 Speaker 8: the policies that are being pursued and that are contemplated 605 00:34:51,120 --> 00:34:54,880 Speaker 8: may raise the cost of capital to the most dynamic 606 00:34:54,920 --> 00:34:57,440 Speaker 8: sector of the US and that would be a pity. 607 00:34:58,719 --> 00:35:00,680 Speaker 5: Speaking of the US dollar year date, we've seen it 608 00:35:00,719 --> 00:35:02,879 Speaker 5: down you know, eight to nine percent, having a little 609 00:35:02,880 --> 00:35:07,120 Speaker 5: bit of a bounce back today, maybe risk even how 610 00:35:07,200 --> 00:35:09,080 Speaker 5: much more downside do you think there could be? Because 611 00:35:09,120 --> 00:35:11,360 Speaker 5: I've been asking, I don't know anything about your world, 612 00:35:11,400 --> 00:35:14,360 Speaker 5: the currency business. So my stock question is are we 613 00:35:14,400 --> 00:35:15,879 Speaker 5: ever going to see a bear market in the dollar? 614 00:35:15,920 --> 00:35:17,840 Speaker 5: I've been asking that for six years. Are we starting 615 00:35:17,840 --> 00:35:19,360 Speaker 5: to see the beginning of one? Or is this just 616 00:35:19,440 --> 00:35:20,000 Speaker 5: a trade? 617 00:35:21,560 --> 00:35:25,319 Speaker 8: It could be if you think of say we have 618 00:35:25,840 --> 00:35:30,080 Speaker 8: you know, another session a year from now, and tax 619 00:35:30,160 --> 00:35:34,640 Speaker 8: build has passed, tariffs have been resolved, and the US 620 00:35:34,719 --> 00:35:38,160 Speaker 8: is growing sluggishly, has a big fiscal deficit, has a 621 00:35:38,160 --> 00:35:39,960 Speaker 8: big current account deficit. 622 00:35:40,040 --> 00:35:41,680 Speaker 3: That could be real trouble for the dollar. 623 00:35:42,280 --> 00:35:46,239 Speaker 2: What does one final question, what does the standard Charter bank, 624 00:35:46,320 --> 00:35:50,040 Speaker 2: with all of your heritage of the Pacific RIM and 625 00:35:50,080 --> 00:35:53,000 Speaker 2: particularly down south over to India, what do you see 626 00:35:53,040 --> 00:35:55,600 Speaker 2: of a vibrancy in the Pacific RIM right now? 627 00:35:55,920 --> 00:36:00,360 Speaker 8: Ex China, you know, they're hit with the same issues 628 00:36:00,400 --> 00:36:03,879 Speaker 8: everybody else has hit. You know, there's the deflation being 629 00:36:03,920 --> 00:36:08,359 Speaker 8: exported from China. There's loss of confidence because of the 630 00:36:08,680 --> 00:36:11,359 Speaker 8: you know, the risk on the tariff side. So you know, 631 00:36:11,640 --> 00:36:14,600 Speaker 8: nothing is catastrophic, but a lot is sluggish. 632 00:36:14,840 --> 00:36:17,719 Speaker 2: I look, you know, just in the space folks, I 633 00:36:17,719 --> 00:36:21,120 Speaker 2: can do this on the Bloomberg Professional Service. I got 634 00:36:21,160 --> 00:36:24,200 Speaker 2: like a five standard deviation plus two to minus three 635 00:36:24,840 --> 00:36:29,200 Speaker 2: on Taiwan dollar. I got a massively strong Taiwan dollar 636 00:36:29,640 --> 00:36:33,640 Speaker 2: Sing dollar in the rest is that on an asymmetric basis? 637 00:36:33,920 --> 00:36:37,120 Speaker 2: Is that strong EM or is that weak US? Or 638 00:36:37,160 --> 00:36:38,080 Speaker 2: is it something different? 639 00:36:38,600 --> 00:36:41,640 Speaker 8: Well, there's a lot of speculation on you know, what's 640 00:36:41,680 --> 00:36:45,399 Speaker 8: causing these moves, and I think there's some anticipation that 641 00:36:45,640 --> 00:36:51,160 Speaker 8: perhaps currency adjustment was substitute for some of the trade 642 00:36:51,160 --> 00:36:55,280 Speaker 8: impediment adjustment that the US wants that you know, especially 643 00:36:55,400 --> 00:36:59,880 Speaker 8: Asian currencies as a group, may prefer to allow their 644 00:37:00,080 --> 00:37:04,239 Speaker 8: and he's to appreciate rather than sort of say, use 645 00:37:04,360 --> 00:37:08,040 Speaker 8: that as a leakage. Yeah yeah, but rather than open 646 00:37:08,160 --> 00:37:11,759 Speaker 8: up vulnerable sectors like farming and stuff where which is 647 00:37:11,800 --> 00:37:15,160 Speaker 8: politically important, they say, let's socialize this. Everybody will take 648 00:37:15,160 --> 00:37:16,200 Speaker 8: the hit through the exchange. 649 00:37:16,280 --> 00:37:18,160 Speaker 2: And you know, my keymail me and he says, Tom, 650 00:37:18,280 --> 00:37:21,120 Speaker 2: use the damn terminal. So yeah, I'm doing the t function. 651 00:37:21,280 --> 00:37:22,320 Speaker 3: Yeah a monthly. 652 00:37:22,320 --> 00:37:23,719 Speaker 2: I'm trying to impress englander. 653 00:37:24,000 --> 00:37:24,200 Speaker 3: Here. 654 00:37:24,280 --> 00:37:29,240 Speaker 2: I got Taiwan dollar in April plus two standard deviations 655 00:37:29,280 --> 00:37:33,399 Speaker 2: on trend and now it's minus exactly minus three. That's 656 00:37:33,440 --> 00:37:38,120 Speaker 2: a five standard deviations swing. That's it's it's like more 657 00:37:38,160 --> 00:37:39,080 Speaker 2: than substantial. 658 00:37:39,760 --> 00:37:39,960 Speaker 3: Was that? 659 00:37:40,200 --> 00:37:43,080 Speaker 2: Will you come back now that we use the terminal? 660 00:37:43,680 --> 00:37:46,040 Speaker 3: I'm always impressed when I talk to you. Well please, 661 00:37:46,360 --> 00:37:46,879 Speaker 3: there you go. 662 00:37:47,360 --> 00:37:51,439 Speaker 2: So that's what the third divorce lawyers, Thank you so much, 663 00:37:51,520 --> 00:37:55,120 Speaker 2: greatly appreciate it. He's with a standard charter at Bank 664 00:37:55,160 --> 00:37:55,680 Speaker 2: and Studio. 665 00:37:56,200 --> 00:38:00,000 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 666 00:38:00,160 --> 00:38:03,440 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 667 00:38:03,560 --> 00:38:06,520 Speaker 1: with the Bloomberg Business app. You can also listen live 668 00:38:06,600 --> 00:38:10,200 Speaker 1: on Amazon Alexa from our flagship New York station. Just 669 00:38:10,239 --> 00:38:12,720 Speaker 1: say Alexa play Bloomberg eleven thirty. 670 00:38:12,800 --> 00:38:14,560 Speaker 2: They emailed the White House today, I say, can you 671 00:38:14,600 --> 00:38:16,840 Speaker 2: give me an oil tweet from the president because we 672 00:38:16,920 --> 00:38:20,160 Speaker 2: got Paul Sanki coming and joining us. Paul Sanki, Sankie 673 00:38:20,239 --> 00:38:23,520 Speaker 2: researcher four. Our conversation we're going to do quickly here 674 00:38:23,680 --> 00:38:27,719 Speaker 2: the President of the United States moments ago, all caps. Everyone, 675 00:38:27,840 --> 00:38:29,880 Speaker 2: come keep oil prices down. 676 00:38:30,000 --> 00:38:30,440 Speaker 3: Period. 677 00:38:31,160 --> 00:38:35,080 Speaker 2: I'm watching exclamation point. You're playing right into the hands 678 00:38:35,080 --> 00:38:38,840 Speaker 2: of the enemy. Don't do it. What would you say 679 00:38:39,000 --> 00:38:44,360 Speaker 2: to the White House and the manipulation of oil prices? 680 00:38:45,200 --> 00:38:47,719 Speaker 9: H I think the best trade is of oil of 681 00:38:47,760 --> 00:38:50,560 Speaker 9: the Chinese. And so they're the real you know, the 682 00:38:50,680 --> 00:38:52,680 Speaker 9: under the power underneath this order is there is that 683 00:38:52,800 --> 00:38:54,080 Speaker 9: buying an Iranian crude. 684 00:38:55,320 --> 00:38:57,240 Speaker 2: They put the bid on oil. 685 00:38:57,480 --> 00:38:59,920 Speaker 9: They put the bid on Iranian oil so that the 686 00:39:00,040 --> 00:39:02,440 Speaker 9: main buyer, by far, you know, eighty percent of Iranian 687 00:39:02,480 --> 00:39:04,680 Speaker 9: oil is a lot of it actually goes to Malaysia 688 00:39:04,800 --> 00:39:07,800 Speaker 9: and then is reflagged. So you see that Malaysia exports 689 00:39:07,840 --> 00:39:10,399 Speaker 9: more oil to China than it produces oil, so it's 690 00:39:10,400 --> 00:39:14,240 Speaker 9: obviously smuggled. And basically the other manipulation is the White 691 00:39:14,239 --> 00:39:16,360 Speaker 9: House turning their blind eye. And this is the second 692 00:39:16,360 --> 00:39:19,120 Speaker 9: administration that's done that to all these sanctions. So you know, 693 00:39:19,160 --> 00:39:22,440 Speaker 9: you haven't really interrupted Russian oil despite all the sanctions. 694 00:39:22,920 --> 00:39:25,600 Speaker 9: Iranian oil as of today is still flowing as it 695 00:39:25,800 --> 00:39:30,040 Speaker 9: was that you know, recent, very high levels compared to history, 696 00:39:30,640 --> 00:39:33,319 Speaker 9: and so there has been you know, concerted efforts not 697 00:39:33,440 --> 00:39:37,640 Speaker 9: to get the oil interrupted, and nobody, including Iran, wants 698 00:39:37,719 --> 00:39:40,080 Speaker 9: to interrupt the oil. The other thing here is that, 699 00:39:40,120 --> 00:39:41,839 Speaker 9: you know, people seem to think that there's some sort 700 00:39:41,880 --> 00:39:43,880 Speaker 9: of gate at the Straits of hor Moves when they 701 00:39:43,880 --> 00:39:46,640 Speaker 9: talk about closing the Straits of horr Moos, you know, 702 00:39:46,920 --> 00:39:48,680 Speaker 9: they think Iran has the power to do that. The 703 00:39:48,719 --> 00:39:52,800 Speaker 9: real question is does Iran start shooting missiles at tankers, 704 00:39:53,560 --> 00:39:55,760 Speaker 9: which is really going to be dramatic if it happens, 705 00:39:55,760 --> 00:39:57,879 Speaker 9: And of course that's what happened in the tanker War 706 00:39:58,280 --> 00:40:00,560 Speaker 9: of the seventies between Iran and a Rock, where they 707 00:40:00,600 --> 00:40:03,520 Speaker 9: were both firing missiles, and that's actually what got us 708 00:40:03,560 --> 00:40:06,960 Speaker 9: the nineteen seventies high in oil prices, which was over 709 00:40:06,960 --> 00:40:08,000 Speaker 9: one hundred dollars a barrel. 710 00:40:08,440 --> 00:40:11,960 Speaker 5: Given that background, why isn't Brent crude north of one 711 00:40:12,040 --> 00:40:12,960 Speaker 5: hundred dollars today? 712 00:40:13,520 --> 00:40:16,600 Speaker 9: There's plenty of oil, and you know, Chinese demand is weak, 713 00:40:17,000 --> 00:40:19,680 Speaker 9: suppliers abundon. I think to me, Tom and I have 714 00:40:19,719 --> 00:40:21,960 Speaker 9: known each other twenty five years. What's so extraordinary about 715 00:40:22,000 --> 00:40:24,640 Speaker 9: the current market is firstly that we're a one hundred 716 00:40:24,640 --> 00:40:26,520 Speaker 9: and three million barrels a day of demand, you know, 717 00:40:26,520 --> 00:40:29,440 Speaker 9: an extraordinary number, one hundred and three million barrels a 718 00:40:29,520 --> 00:40:31,279 Speaker 9: day of every day, you know, so this is like 719 00:40:31,320 --> 00:40:34,440 Speaker 9: one thy three hundred barrels a second of consumption. But 720 00:40:34,520 --> 00:40:36,759 Speaker 9: even more extraordinarily, which we would never have thought you 721 00:40:36,760 --> 00:40:39,960 Speaker 9: could do twenty years ago, you've got capacity of you know, 722 00:40:40,000 --> 00:40:41,680 Speaker 9: one hundred and eight million barrels a day, so there's 723 00:40:41,680 --> 00:40:44,560 Speaker 9: actually five million barrels a day spare. The interesting thing 724 00:40:44,600 --> 00:40:46,600 Speaker 9: about the spec capacity is it's all in the Gulf, 725 00:40:47,080 --> 00:40:49,840 Speaker 9: so the market is clearly as further to the answer 726 00:40:49,840 --> 00:40:52,080 Speaker 9: to your question is the market is thinking that the 727 00:40:52,800 --> 00:40:55,680 Speaker 9: risk of interruption in the Straits of horn Moves is low. 728 00:40:56,200 --> 00:41:00,560 Speaker 9: Basically because China, US, Europe, everybody set out pretty much 729 00:41:00,640 --> 00:41:04,080 Speaker 9: maybe less so want the oil to keep flowing, and 730 00:41:04,080 --> 00:41:07,560 Speaker 9: that the Iranian's only source of revenue now dollar revenue 731 00:41:07,600 --> 00:41:09,799 Speaker 9: is going to be oil. So it's difficult to see 732 00:41:09,800 --> 00:41:11,839 Speaker 9: exactly who wants to shut the straits of war moves, 733 00:41:12,280 --> 00:41:14,759 Speaker 9: and I think the odds on various betting sites are 734 00:41:14,800 --> 00:41:18,240 Speaker 9: far too high. It's actually quoted at thirty percent chance 735 00:41:18,320 --> 00:41:20,799 Speaker 9: the straits are shut by the end of June, which 736 00:41:20,840 --> 00:41:23,399 Speaker 9: I just think is extremely unlikely because I don't even 737 00:41:23,400 --> 00:41:25,560 Speaker 9: know how you would shut it short of sending missiles. 738 00:41:25,640 --> 00:41:27,879 Speaker 5: If you take the risk premium, assuming there's some risk 739 00:41:27,920 --> 00:41:30,720 Speaker 5: premium in global crude today, if you take that out, 740 00:41:31,880 --> 00:41:34,600 Speaker 5: is a market still pushing this monority lower? 741 00:41:36,000 --> 00:41:37,680 Speaker 9: Yes, I think so. I mean I think that you know, 742 00:41:37,680 --> 00:41:40,480 Speaker 9: we are in a plentiful supply situation. The one thing 743 00:41:40,520 --> 00:41:43,839 Speaker 9: that hasn't turned out well for the Bears has been 744 00:41:43,840 --> 00:41:47,799 Speaker 9: that demand remains pretty strong, particularly Middle Eastern heat. So 745 00:41:47,840 --> 00:41:51,279 Speaker 9: we saw a very cold winter in the globally in 746 00:41:51,960 --> 00:41:54,600 Speaker 9: you know the key markets, which would be Northeast, Asia, Europe, 747 00:41:54,600 --> 00:41:56,800 Speaker 9: and the US that gave us a lot of extra demand, 748 00:41:56,800 --> 00:41:59,120 Speaker 9: a million over a million miles a day of extra 749 00:41:59,160 --> 00:42:02,520 Speaker 9: demand just on than Q one and now we're getting 750 00:42:02,520 --> 00:42:04,560 Speaker 9: a good four hundred thousand bars a day of extra 751 00:42:04,560 --> 00:42:07,520 Speaker 9: demand because of the massive heat that we've had in 752 00:42:07,520 --> 00:42:09,399 Speaker 9: the Middle East. You're doing if you think it's hot 753 00:42:09,400 --> 00:42:12,800 Speaker 9: in New York today, Abby Dabbi recorded fifty three degrees 754 00:42:12,840 --> 00:42:15,200 Speaker 9: I think, which is one hundred and twenty seven degrees 755 00:42:16,040 --> 00:42:21,000 Speaker 9: in the shade in May. And as a result, experts 756 00:42:21,040 --> 00:42:23,200 Speaker 9: have been a bit constrained. Now having said that Saudi 757 00:42:23,280 --> 00:42:25,440 Speaker 9: is now all of them have now started sending as 758 00:42:25,520 --> 00:42:27,960 Speaker 9: much oil out of the Gulf as possible. So we 759 00:42:28,040 --> 00:42:32,160 Speaker 9: really need some incremental geopolitical disaster to make well go high. 760 00:42:32,600 --> 00:42:35,120 Speaker 2: Can we do something quaint like an individual stack? 761 00:42:35,800 --> 00:42:38,640 Speaker 10: Yeah, I don't know if he still does OXI Vicky 762 00:42:38,800 --> 00:42:42,680 Speaker 10: over at Axey with Warren Buffet twenty seven percent ownership 763 00:42:42,719 --> 00:42:45,920 Speaker 10: of Berkshire at the way, debt encumbered. 764 00:42:46,360 --> 00:42:51,319 Speaker 2: Essentially, his stock's gone nowhere for ten years. Akson has 765 00:42:51,360 --> 00:42:56,399 Speaker 2: sixty some thousand employees. Oxy's teen swings thirteen thousand employees. 766 00:42:56,719 --> 00:42:59,600 Speaker 2: Is mister Buffet got himself into a problem. 767 00:43:00,080 --> 00:43:03,160 Speaker 9: Warren Buffet, as you call him, owns actually more dollars 768 00:43:03,160 --> 00:43:05,600 Speaker 9: of Chevron than he does of Oxy. So my thought 769 00:43:05,760 --> 00:43:09,279 Speaker 9: is that if he wanted to engineer something. Yeah, you 770 00:43:09,320 --> 00:43:11,040 Speaker 9: know that you could. You could roll it all up 771 00:43:11,040 --> 00:43:14,160 Speaker 9: into Chevron and move on. So that's one option. But 772 00:43:14,160 --> 00:43:16,120 Speaker 9: of course Chevron's buying Hess at the moment, and we're 773 00:43:16,160 --> 00:43:18,759 Speaker 9: in arbitration on that deal. So I think a lot 774 00:43:18,800 --> 00:43:21,920 Speaker 9: will obviously depend on whether that arbitration says that Exxon 775 00:43:22,000 --> 00:43:23,960 Speaker 9: has a right of first refusal on the assets in 776 00:43:24,000 --> 00:43:27,160 Speaker 9: Guyana or whether Chevron simply wins the deal and moves on. 777 00:43:27,440 --> 00:43:29,799 Speaker 9: If Chevron wins Hess, it's in terrific shape. It's got 778 00:43:29,840 --> 00:43:32,880 Speaker 9: a great asset base with that extra Guyana leg that 779 00:43:32,880 --> 00:43:35,720 Speaker 9: they really need to make them source complete. The beauty 780 00:43:35,760 --> 00:43:38,120 Speaker 9: of Oxy for a Chevron would be that it would 781 00:43:38,160 --> 00:43:41,000 Speaker 9: catapult them pretty much beyond Exxon, you know, which would 782 00:43:41,000 --> 00:43:42,359 Speaker 9: be a historic moment for them. 783 00:43:42,400 --> 00:43:45,200 Speaker 2: To be larger and more international than the Exon. 784 00:43:45,320 --> 00:43:47,760 Speaker 9: Not more international, but larger because they've become the largest 785 00:43:47,760 --> 00:43:50,759 Speaker 9: player in the Permian. Chevron actually in twenty twenty, when 786 00:43:50,920 --> 00:43:53,640 Speaker 9: Xon was really struggling badly, went up to a higher 787 00:43:53,680 --> 00:43:55,920 Speaker 9: market cap. And I can tell you there was champagne 788 00:43:56,040 --> 00:43:59,200 Speaker 9: corks in the corridors of San Romano when Chevron. If 789 00:43:59,239 --> 00:44:01,799 Speaker 9: you think about the his but today, you know, would 790 00:44:01,800 --> 00:44:03,640 Speaker 9: Exon do another big deal? I think the main thing 791 00:44:03,680 --> 00:44:08,240 Speaker 9: here is Thomas is the Trump. You know, would Trump 792 00:44:08,280 --> 00:44:12,480 Speaker 9: be more ready to allow Exon for Conico, Phillips, you 793 00:44:12,520 --> 00:44:15,319 Speaker 9: know some of these mega deals that they sort of 794 00:44:15,360 --> 00:44:17,840 Speaker 9: have to do now because it doesn't look like oil 795 00:44:17,920 --> 00:44:19,920 Speaker 9: is going to get much out of a call it 796 00:44:20,000 --> 00:44:23,000 Speaker 9: sixty to eighty range. And really the thing for these 797 00:44:23,000 --> 00:44:25,799 Speaker 9: companies to do is to merge and create synergies and 798 00:44:25,840 --> 00:44:26,640 Speaker 9: increase returns. 799 00:44:26,680 --> 00:44:28,680 Speaker 2: I got eight ways to go here, I got time 800 00:44:28,719 --> 00:44:31,080 Speaker 2: for one question is as simply as I camp Paul 801 00:44:31,160 --> 00:44:36,360 Speaker 2: Sank for our American audience, what is our biggest misconception 802 00:44:36,880 --> 00:44:40,919 Speaker 2: of oil production and the Persian golf? After we all 803 00:44:41,000 --> 00:44:44,680 Speaker 2: read Daniel Jurgen's surprise, what's a thing we get wrong? 804 00:44:44,760 --> 00:44:45,000 Speaker 3: Now? 805 00:44:45,160 --> 00:44:46,880 Speaker 9: I think the single biggest thing people get wrong is 806 00:44:46,920 --> 00:44:49,560 Speaker 9: they think that, you know, there's there's more environmentally friendly 807 00:44:49,600 --> 00:44:52,200 Speaker 9: alternative to oil. When ail is naturally occurring, always say 808 00:44:52,200 --> 00:44:54,640 Speaker 9: it's liquid solar power. So the big idea is oil 809 00:44:54,760 --> 00:44:56,680 Speaker 9: just has a very bad public image. It's actually, if 810 00:44:56,719 --> 00:44:59,200 Speaker 9: we could if gas was announced as an invention today, 811 00:44:59,480 --> 00:45:01,840 Speaker 9: the word world would celebrate that we found the solution 812 00:45:01,880 --> 00:45:05,520 Speaker 9: to our energy problems that are environmental problems, and US 813 00:45:05,600 --> 00:45:08,680 Speaker 9: emissions are down based on our increased use of natural gas. 814 00:45:08,719 --> 00:45:11,160 Speaker 9: It's as simple as that. That's how we've actually reduced 815 00:45:11,200 --> 00:45:14,520 Speaker 9: CO two over time. The biggest misconception in the Gulf, 816 00:45:14,560 --> 00:45:16,560 Speaker 9: I think, is that they're all much more friendly and 817 00:45:16,640 --> 00:45:18,960 Speaker 9: talking to each other than you realize. You know, you 818 00:45:19,000 --> 00:45:21,000 Speaker 9: see all these back channels, and you can see that 819 00:45:21,080 --> 00:45:23,839 Speaker 9: even the US is talking to Iran. So I think 820 00:45:23,840 --> 00:45:27,600 Speaker 9: there's you know, a whole different level here for conspiracy theorists, 821 00:45:27,600 --> 00:45:29,760 Speaker 9: which is that you know, a lot of these guys 822 00:45:30,320 --> 00:45:32,440 Speaker 9: are much more trying to sort this out. And I'm 823 00:45:32,440 --> 00:45:34,960 Speaker 9: actually believing I'm not quite optimistic here, Tom, because I 824 00:45:35,000 --> 00:45:37,480 Speaker 9: believe that if you can actually have some sort of 825 00:45:37,520 --> 00:45:40,360 Speaker 9: transition in Iran, and that's going to be a terrible challenge. 826 00:45:40,400 --> 00:45:42,840 Speaker 9: You know, you're going to be in a Venezuela situation 827 00:45:42,960 --> 00:45:47,040 Speaker 9: quite possibly. In the seventy nine revolution, there was significant 828 00:45:47,120 --> 00:45:49,640 Speaker 9: civil war fighting in Iran for at least a year 829 00:45:49,760 --> 00:45:52,280 Speaker 9: or two posts the revolution. I mean that they continue 830 00:45:52,320 --> 00:45:55,080 Speaker 9: to basically fight within Iran, and at the moment there's 831 00:45:55,080 --> 00:45:58,240 Speaker 9: no opposition nor opposition leader in Iran, So you worry 832 00:45:58,280 --> 00:46:01,080 Speaker 9: that it's likely to go to the Revolutionary Guard, who 833 00:46:01,120 --> 00:46:04,160 Speaker 9: are effectively not just a military force, there an economic force. 834 00:46:04,239 --> 00:46:06,880 Speaker 9: So they run the u at the Iranian economy. And 835 00:46:06,960 --> 00:46:09,000 Speaker 9: as a result, the thing I'd be watching for is 836 00:46:09,040 --> 00:46:10,840 Speaker 9: for a split in the Revolutionary Guard. 837 00:46:11,520 --> 00:46:13,600 Speaker 2: Right at the time I got to ask how attached 838 00:46:13,719 --> 00:46:17,120 Speaker 2: is a revolutionary regard to Ayotola. 839 00:46:17,880 --> 00:46:20,240 Speaker 9: I mean, that's their job. Their job is not military, 840 00:46:20,239 --> 00:46:23,480 Speaker 9: their job is to protect the revolution, and they've turned 841 00:46:23,520 --> 00:46:26,719 Speaker 9: that into a massive, sort of corrupt they're sort of 842 00:46:26,760 --> 00:46:30,160 Speaker 9: like a cartel. They're like a government cartel that they're crooks, 843 00:46:30,160 --> 00:46:32,120 Speaker 9: their criminals. All these guys should be out, you know, 844 00:46:32,200 --> 00:46:33,880 Speaker 9: we've got to get rid of them. And I just 845 00:46:33,920 --> 00:46:35,840 Speaker 9: hope the Iranian people, who, as you said, have a 846 00:46:35,920 --> 00:46:37,279 Speaker 9: wonderful culture, can come through it. 847 00:46:37,320 --> 00:46:40,319 Speaker 2: So wrong, be a stranger your weekend note, You tore 848 00:46:40,440 --> 00:46:44,480 Speaker 2: apart me, you tore apart financial media. You said you'd 849 00:46:44,520 --> 00:46:47,799 Speaker 2: done seventeen things. Will you come back or. 850 00:46:47,760 --> 00:46:49,920 Speaker 3: Are we like you lumping us in with everyone? So 851 00:46:50,040 --> 00:46:50,960 Speaker 3: you're on a special list. 852 00:46:51,040 --> 00:46:53,680 Speaker 9: Man, you're on the yes every time. But you know 853 00:46:53,840 --> 00:46:56,080 Speaker 9: you don't pay me, So if you want to pay me, 854 00:46:56,160 --> 00:47:02,920 Speaker 9: may I'll come a day, Okay, I think Lisa likes, 855 00:47:02,960 --> 00:47:03,359 Speaker 9: get them. 856 00:47:03,280 --> 00:47:05,040 Speaker 3: A case of Kirkling hot dogs. 857 00:47:05,600 --> 00:47:10,320 Speaker 5: Can we dogs. 858 00:47:08,120 --> 00:47:10,120 Speaker 9: Have a quarter hot dog every morning, so I'm always 859 00:47:10,160 --> 00:47:11,320 Speaker 9: in the market for hot dogs. 860 00:47:11,640 --> 00:47:13,040 Speaker 3: Thank you, thank you, thank. 861 00:47:12,880 --> 00:47:14,160 Speaker 2: You so much for joining us. 862 00:47:14,480 --> 00:47:19,320 Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, 863 00:47:19,440 --> 00:47:23,720 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 864 00:47:23,840 --> 00:47:27,359 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 865 00:47:27,400 --> 00:47:31,440 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You 866 00:47:31,480 --> 00:47:34,840 Speaker 1: can also watch us live every weekday on YouTube and 867 00:47:35,040 --> 00:47:36,760 Speaker 1: always on the Bloomberg terminal