WEBVTT - Fed Decision and Price Pressures 0:00:00.080 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.320 --> 0:00:32.519 Glenn Cubboard had the privilege of stunding under Benjamin Friedman, 0:00:32.560 --> 0:00:37.159 who took our economics and our society and pieced it together. 0:00:37.240 --> 0:00:41.280 Glenn Hubbard definitive at Columbia Business School, his public service 0:00:41.320 --> 0:00:44.400 to the nation as well. I was watching King Charles 0:00:44.520 --> 0:00:48.000 Third Glen Hubbard yesterday and you could feel the calm 0:00:48.040 --> 0:00:52.920 come across Republicans and Democrats. You are affiliated with a 0:00:53.000 --> 0:00:58.160 Republican tendency. What does that Congress that we saw yesterday 0:00:58.560 --> 0:01:02.800 and the Republicans, what do they look like after Trump? 0:01:04.760 --> 0:01:07.080 Well, I think from the King's remarks, you know, good 0:01:07.120 --> 0:01:10.679 policy runs deep. I think the King was calling for 0:01:10.800 --> 0:01:16.240 a return to openness in markets, in trade, in tolerance. 0:01:16.680 --> 0:01:19.840 I think all those things have been a hallmark of conservatism. 0:01:20.160 --> 0:01:23.560 I think there's also a real opportunity to pivot while 0:01:23.640 --> 0:01:27.840 President Trump is here, of course, to growth, to opportunity 0:01:27.880 --> 0:01:30.039 and to full participation in the economy. 0:01:30.440 --> 0:01:33.400 The anger that's out there says that many people are 0:01:33.440 --> 0:01:37.759 not enjoying growth. How do we pull them into growth? 0:01:39.480 --> 0:01:42.360 Well, first, we've got to get growth itself up, and 0:01:42.680 --> 0:01:45.480 that's going to require some things that might be controversial 0:01:45.600 --> 0:01:49.559 right now. More spending on research, more high skilled immigration, 0:01:50.360 --> 0:01:54.160 a better policy toward AI and electricity generation. We need 0:01:54.200 --> 0:01:56.960 all of those things. To get more people into growth 0:01:57.120 --> 0:02:02.360 requires much more investment in people, better training, better resources, 0:02:02.400 --> 0:02:04.320 and better working with companies to do that. 0:02:04.640 --> 0:02:08.880 Nancy Lazar has been brilliant enough. Paul in market economics. 0:02:08.919 --> 0:02:12.320 Professor, the war in the Middle East, it's obviously a 0:02:12.360 --> 0:02:15.840 wreaking havoc on a lot of economic parts of the 0:02:15.880 --> 0:02:19.720 economy here, most notably in the energy markets. Is it 0:02:19.760 --> 0:02:22.560 to the point where you're concerned about its impact on 0:02:22.639 --> 0:02:27.079 global economic growth? Is a recession something that that could 0:02:27.160 --> 0:02:29.799 result from kind of this instability we're seeing. 0:02:30.520 --> 0:02:32.560 Well, it certainly could, but I don't think it's the 0:02:32.800 --> 0:02:37.120 likeliest outcome. Remember, the United States in particular is much 0:02:37.200 --> 0:02:40.840 less energy intensive than in previous shocks. I think what's 0:02:40.960 --> 0:02:44.600 more likely is a slowdown in growth combined with inflation 0:02:44.840 --> 0:02:48.680 being uncomfortably stuck, which is one of the problems the FED. 0:02:48.720 --> 0:02:50.280 Of course we'll have to deal with today. 0:02:51.040 --> 0:02:54.120 What do you expect from the FED today? And then 0:02:54.240 --> 0:02:57.519 I guess, just as importantly from the new Federal Reserve 0:02:58.200 --> 0:02:59.359 Chairman Kevin warsh. 0:03:00.000 --> 0:03:02.840 Well, I don't expect any change in the funds rate today. 0:03:02.840 --> 0:03:04.680 It'll be interesting to see if there's any change in 0:03:04.720 --> 0:03:09.560 the language in the FOMSC statement. I think incoming chairwash 0:03:09.639 --> 0:03:12.040 has been pretty clear he wants to look at all 0:03:12.080 --> 0:03:15.480 of the data. He has a very clear story about 0:03:15.480 --> 0:03:20.120 AI going forward. The time path there though maybe a challenge. 0:03:20.280 --> 0:03:22.480 I don't expect a lot of rate cuts from the 0:03:22.840 --> 0:03:26.000 FED in the very near term, even under a worsh 0:03:26.040 --> 0:03:26.560 FED chair. 0:03:28.160 --> 0:03:32.760 So if the growth story may be slowing, I guess 0:03:32.760 --> 0:03:35.320 probably maybe the bigger concern for the marketplace is just 0:03:35.400 --> 0:03:38.240 inflation out there. Again, we're looking at the cost of energy, 0:03:38.560 --> 0:03:41.280 whether it's gasoline or diesel fuel or jet fuel. And 0:03:41.400 --> 0:03:43.760 again not as big an issue here as it is 0:03:43.800 --> 0:03:46.000 in other parts of the world, but that's going to 0:03:46.040 --> 0:03:46.880 be a concern. 0:03:47.920 --> 0:03:50.400 Yes, but it's more than that. I remember inflation was 0:03:50.440 --> 0:03:53.800 a problem before February twenty eighth. Inflation was well above 0:03:53.840 --> 0:03:57.400 the Fed's target and appeared to be stuck. The energy 0:03:57.440 --> 0:03:59.960 prices may be more of a one off, But the really, 0:04:00.280 --> 0:04:04.880 as many beneficials have commented, is do expectations become unhinged? So, yes, 0:04:04.920 --> 0:04:06.400 inflation is a real problem. 0:04:06.520 --> 0:04:08.960 Is we excidout at Glenn Hubbert? Can I do an audible? 0:04:09.080 --> 0:04:09.320 Sure? 0:04:09.440 --> 0:04:12.240 Let it right, Glenn. I don't think you've gotten nearly 0:04:12.280 --> 0:04:17.240 the credit with Lee Bollinger of the miracle rot at 0:04:17.279 --> 0:04:21.000 the Columbia Business School Rocket, What was it like the 0:04:21.080 --> 0:04:25.520 first meetings where you had a vision to blow it up? 0:04:25.560 --> 0:04:30.000 And by why? To claim Colombia is the juggernaut that 0:04:30.120 --> 0:04:34.760 you and others developed is unparalleled across this nation. How 0:04:34.800 --> 0:04:35.840 did that happen? 0:04:37.080 --> 0:04:38.640 Well, it happened with a lot of people. And first, 0:04:38.680 --> 0:04:41.040 I'd like to give a lot of credit to be Bolinger. Actually, 0:04:41.200 --> 0:04:44.040 his vision for this campus was a big part of it. 0:04:44.080 --> 0:04:47.120 But it's really a story about the business community, about alumni, 0:04:47.279 --> 0:04:50.920 about students, about faculty. It's always been a great school 0:04:50.960 --> 0:04:52.600 and it's come together. I'm very proud of it. 0:04:52.920 --> 0:04:55.120 I mean, did you like have lunch with David Geffen 0:04:55.320 --> 0:04:59.240 and say, David, we've got to do this. No? 0:04:59.240 --> 0:05:02.840 No, He's been very generous to the school. 0:05:03.520 --> 0:05:05.560 Oh, Glenn Aulberd, thank you so much. And all I 0:05:05.560 --> 0:05:08.000 can say, did you hire did you bring Abby Joseph 0:05:08.000 --> 0:05:13.560 Cohen over from Goldacs? Is that your fault? That's my blessing. 0:05:13.880 --> 0:05:16.680 That's wonderful, Glenn Albert, thank you so much, and seriously 0:05:16.680 --> 0:05:20.000 congratulations for those of you across this nation and worldwide 0:05:20.480 --> 0:05:23.720 what the Bolinger Combine at Columbia University did with their 0:05:23.720 --> 0:05:27.280 business school. It's called Manhattanville. Yeah, new buildings. It's right 0:05:27.279 --> 0:05:28.200 in the Hudson River. 0:05:28.320 --> 0:05:29.920 Half of Global Wall Street, I think came out of 0:05:29.920 --> 0:05:30.440 the Columbia. 0:05:30.480 --> 0:05:33.599 Henry Kravis stepped up on this along with mister Geffen 0:05:33.680 --> 0:05:36.840 and others, and they brought in Abby Joseph Cohen and 0:05:36.920 --> 0:05:39.240 we looked sord of speaking to from time to time. 0:05:39.400 --> 0:05:43.400 Glenn Hubbard. There, stay with us. More from Bloomberg Surveillance 0:05:43.440 --> 0:05:44.800 coming up after this. 0:05:52.040 --> 0:05:55.640 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:05:55.680 --> 0:05:58.880 weekday afternoons from seven to ten am Eastern Listen on 0:05:58.920 --> 0:06:02.280 Apple Karplay and Joint Auto with the Bloomberg Business Up, 0:06:02.480 --> 0:06:04.240 or watch us live on YouTube. 0:06:04.480 --> 0:06:07.080 We are so gifted, folks. Got a great conversation today, 0:06:07.120 --> 0:06:11.360 Sea Micheawe. Glenn Hubbard, the giant of Colombian supply side economics, 0:06:11.360 --> 0:06:14.400 will be with He hates when I say that. Probably 0:06:14.440 --> 0:06:16.719 in the car right now, I saying, turn a limo around. 0:06:16.720 --> 0:06:19.000 Michael Ball will be with us. Has been on fire. 0:06:19.360 --> 0:06:21.960 Jeff Cleveland an ain't dollars a gallon gas in LA. 0:06:22.279 --> 0:06:25.159 We're gonna go narrow now. Libby Cantrell's like, what's the 0:06:25.200 --> 0:06:28.719 Fed gonna do? What are the Democrats gonna do? You 0:06:28.760 --> 0:06:30.599 weren't at the steak dinner last night. I was not 0:06:30.600 --> 0:06:33.360 at the same. Okay, I thought you were shortlisted as well. 0:06:33.920 --> 0:06:34.240 I'm sure. 0:06:34.279 --> 0:06:35.039 I'm sure it was. 0:06:35.200 --> 0:06:36.240 I didn't review the list. 0:06:36.680 --> 0:06:38.839 Oh did you some notable folks there or something? Yeah, 0:06:38.839 --> 0:06:41.760 well it's the way. They weren't in a ballroom. No, 0:06:41.920 --> 0:06:44.640 they were not. Lebby. I want to go wicked narrow ready, 0:06:44.680 --> 0:06:50.800 folks three two one. Jacob javetts In nineteen seventy two, 0:06:51.200 --> 0:06:57.039 the world was blowing up in in nineteen seventy three, Watergate, Vietnam, 0:06:57.400 --> 0:07:00.359 the Red Sox were terrible. All of it came together 0:07:00.760 --> 0:07:03.279 and the answer is Jacob Javits and a few others 0:07:03.360 --> 0:07:05.880 said we need to bring back our power the War 0:07:05.960 --> 0:07:09.400 Powers Act? How will that play out May one and beyond. 0:07:10.000 --> 0:07:12.160 Yeah, so this is going to be the big question 0:07:12.400 --> 0:07:16.880 for particular for Republicans. Republicans, of course, have effectively greenlighted 0:07:16.920 --> 0:07:21.880 this conflict in Iran. Publicly, they've supported and endorsed President 0:07:21.880 --> 0:07:27.480 Trump mostly unequivocally. I think privately there's been more skepticism 0:07:27.880 --> 0:07:30.200 and I think there is more growing ambivalence about this 0:07:30.320 --> 0:07:34.200 conflict in terms of what are the strategic objectives, what 0:07:34.320 --> 0:07:37.800 is the endgame? And there will be a vote in Congress, 0:07:37.960 --> 0:07:40.440 and that is because the War Powers Act, it's a 0:07:40.520 --> 0:07:44.560 sixty day requirement per this law that when the president 0:07:44.720 --> 0:07:48.720 has deployed troops that Congress ultimately needs to vote on it. Now, 0:07:48.720 --> 0:07:51.600 there's a thirty day grace period, which most likely the 0:07:52.280 --> 0:07:55.080 president will use that option, if you will, So that 0:07:55.120 --> 0:07:56.760 means that vote will be at the end of May. 0:07:57.120 --> 0:07:59.640 But I think push comes a shove. Congress is actually 0:07:59.640 --> 0:08:01.720 gone to go on the record on this. The other 0:08:01.760 --> 0:08:04.360 one important point here is there's going to be a 0:08:04.400 --> 0:08:07.320 big supplemental request that is different from the one and 0:08:07.360 --> 0:08:09.880 a half trillion dollar budget requests that's for next year. 0:08:10.160 --> 0:08:12.800 The two hundred billion dollars supplemental requests. We haven't gotten 0:08:12.800 --> 0:08:14.560 any details of it. We've just sort of had, you know, 0:08:14.560 --> 0:08:16.600 there's been kind of trial balloons or what have you. 0:08:16.640 --> 0:08:18.520 But that is the other kind of forcing issue, and 0:08:18.520 --> 0:08:21.240 I would say that's probably more important than the War 0:08:21.360 --> 0:08:24.600 Powers Act, which is like more symbolic. But really when 0:08:24.760 --> 0:08:26.559 kind of the rubber meets the road, so to speak, 0:08:26.680 --> 0:08:28.240 is going to be in that funding bill, and I 0:08:28.280 --> 0:08:30.640 think some Republicans will probably support it, but I think 0:08:30.640 --> 0:08:32.240 there's gonna be much more pushback and you'll see that 0:08:32.240 --> 0:08:33.320 probably with Secretary Hegseth. 0:08:33.600 --> 0:08:35.360 Is that funding bill that two hundred million dollars is 0:08:35.400 --> 0:08:38.280 that have implications for the wars. Some of that two 0:08:38.320 --> 0:08:41.079 hundred million earmarked for the warner in So therefore, if 0:08:41.080 --> 0:08:43.400 you your vote on that will be kind of your 0:08:43.480 --> 0:08:44.120 vote on the war. 0:08:44.360 --> 0:08:46.080 Yes, And I think that they're I mean, you know, 0:08:46.080 --> 0:08:48.520 I'm sure the White House will characterize this as just 0:08:49.160 --> 0:08:53.679 trying to restock these depleted ammunitions, and I do think 0:08:53.679 --> 0:08:56.360 that's pretty shocking. Any the American public is sort of 0:08:56.360 --> 0:08:58.880 surprised that we actually don't have this sort of arsenal 0:08:58.960 --> 0:09:01.560 of munitions, and of course we've depleted those through into 0:09:01.559 --> 0:09:03.880 both through Ukraine and through Iran. So I think they'll 0:09:03.880 --> 0:09:07.640 probably characterize this as just trying for preparedness against China 0:09:07.679 --> 0:09:09.959 and what have you. But push comes to schev I 0:09:09.960 --> 0:09:11.520 think this probably will be at least in part, a 0:09:11.520 --> 0:09:14.200 referendum on the Iranian conflict. And I mean two hundred 0:09:14.200 --> 0:09:17.640 million dollars, it's a lot of money. I mean, this 0:09:17.720 --> 0:09:19.760 is not for nothing, even for Washington. I mean these 0:09:19.800 --> 0:09:22.439 one we're kind of a neure to these these numbers. 0:09:22.440 --> 0:09:23.199 But it's a. 0:09:23.160 --> 0:09:24.760 Lot politics here. 0:09:24.960 --> 0:09:27.720 Does the president not really care about politics and the 0:09:27.760 --> 0:09:30.440 fact that it is a mid term election year because 0:09:30.880 --> 0:09:33.800 tariffs don't pull well, the war in Iran is not 0:09:34.280 --> 0:09:38.200 polling well. I would think a lot of Republicans facing 0:09:38.600 --> 0:09:40.880 a race this year would be kind of nervous. 0:09:41.559 --> 0:09:43.400 Yeah, And I think what we've been saying to our 0:09:43.400 --> 0:09:46.079 clients from the beginning of Trump two point zero is 0:09:46.120 --> 0:09:48.160 president Trump if you compare him to one point zero, 0:09:48.160 --> 0:09:51.080 where he was really focused on the approval ratings and 0:09:51.160 --> 0:09:53.400 of you know, Republicans, you know, keeping the House, which 0:09:53.440 --> 0:09:56.520 of course they did not in twenty eighteen. This is different, right. 0:09:56.559 --> 0:09:58.680 He has a sense of urgency, has his view of 0:09:58.760 --> 0:10:02.599 unfinished business. I think Iran, tariffs, Venezuela all kind of 0:10:02.600 --> 0:10:05.320 fit within that framework. So does he care about Republicans? Yes, 0:10:05.360 --> 0:10:07.080 does he want to keep the House, of course, I 0:10:07.080 --> 0:10:10.360 mean everyone likes power and Washington. However, I do think 0:10:10.360 --> 0:10:13.720 he has his eye on this sort of bigger, more 0:10:13.760 --> 0:10:16.520 symbolic legacy making issues. 0:10:16.600 --> 0:10:19.760 I watch every minute I hit the blue button, the 0:10:19.840 --> 0:10:23.640 Detroit Ryons blue Button Lebby Cantrell. I watched every minute 0:10:23.640 --> 0:10:26.920 of the King's speech yesterday, not the movie, the actual speech. 0:10:27.280 --> 0:10:30.160 And in the back when you were in the house, 0:10:30.360 --> 0:10:32.040 were you one of those young interests? 0:10:32.160 --> 0:10:34.679 I was, yes, I usually wasn't on the house floor, 0:10:34.720 --> 0:10:35.920 but were young. 0:10:36.000 --> 0:10:37.000 I know they're very young. 0:10:37.200 --> 0:10:38.040 What do they do? 0:10:39.120 --> 0:10:40.719 Congress, by the way, is run by a bunch of 0:10:40.760 --> 0:10:43.040 twenty year olds, so it seems that way. It's because 0:10:43.080 --> 0:10:45.800 it is now. They're smart twenty year olds. But well, 0:10:45.800 --> 0:10:48.560 those those may be pages, you know, and they're they're 0:10:48.920 --> 0:10:53.320 they're bringing documents, they're bringing coffee to the coffee and peach. 0:10:53.480 --> 0:10:54.560 I mean, yeah, these are, but these. 0:10:54.440 --> 0:10:55.520 Are important jobs, Tom. 0:10:55.679 --> 0:10:58.200 People need to get me to the Capitol grill and 0:10:58.240 --> 0:11:00.520 I want a medium where don't bring in needed. 0:11:00.280 --> 0:11:02.560 To be sustained one thing on that that speech, if 0:11:02.600 --> 0:11:06.000 I may please, I thought it was really important and 0:11:06.200 --> 0:11:10.160 interesting that members of Congress applauded when he talked about NATO. 0:11:10.320 --> 0:11:11.640 And the reason why I think a lot of a 0:11:11.679 --> 0:11:14.200 lot of our clients don't appreciate this is Congress has 0:11:14.240 --> 0:11:17.120 the final vote on a withdrawal from NATO. That was 0:11:17.480 --> 0:11:21.360 Secretary then Senator Rubio's kind of last gasp. He actually 0:11:21.400 --> 0:11:24.040 passed the bill Biden passed into Senate and to start 0:11:24.080 --> 0:11:27.480 into a lot about the Congress needs to authorize NATO withdrawal. 0:11:27.559 --> 0:11:29.040 And so I think that was important that they all 0:11:29.280 --> 0:11:30.840 clapped when he talked about the importance. 0:11:30.840 --> 0:11:33.360 And you missed it. I mentioned this earlier, folks, and 0:11:33.720 --> 0:11:35.439 I will say it again. And I think Liby Will 0:11:35.520 --> 0:11:37.319 you were in the Bentley on her way over. Yeah, 0:11:37.360 --> 0:11:40.000 of course she was tuned the you know Yankees baseball 0:11:40.080 --> 0:11:44.120 or Broncos radio on sirious way and then Libya I 0:11:44.200 --> 0:11:47.520 just said, you have to listen to this speech from 0:11:47.600 --> 0:11:53.120 another time and place, and you could feel the room relaxed, 0:11:54.240 --> 0:12:00.720 all parties, everybody just for a moment relaxed. Don't know 0:12:00.720 --> 0:12:01.800 what it means, but there it was. 0:12:01.880 --> 0:12:03.960 I think it was the most unified Congress has been 0:12:04.360 --> 0:12:08.120 since the beginning of this Congress, right and twenty twenty five. 0:12:08.160 --> 0:12:11.360 So it is it's at of ironic that became. 0:12:11.400 --> 0:12:13.640 I need you bet May six, May seven, May eight, 0:12:13.640 --> 0:12:15.560 as we go past the word powers that let me 0:12:15.600 --> 0:12:20.000 cantrell definitive at pimcos. Stay with us. More from Bloomberg 0:12:20.120 --> 0:12:22.160 Surveillance coming up after this. 0:12:29.400 --> 0:12:33.000 You're listening to the Bloomberg Surveillance podcast. Catch US Live 0:12:33.040 --> 0:12:36.240 weekday afternoons from seven to ten am Eastern Listen on 0:12:36.280 --> 0:12:39.720 Apple Karplay and Android Auto with the Bloomberg Business app, 0:12:39.880 --> 0:12:41.640 or watch US live on YouTube. 0:12:41.720 --> 0:12:44.800 We haven't talked about gold and ages with State s 0:12:44.800 --> 0:12:48.760 Treed Investment Management. Alkharstochi joins US now head of Gold Strategy. 0:12:49.080 --> 0:12:52.440 Just as simple as I can. What are the Chinese doing? 0:12:53.080 --> 0:12:56.679 The Chinese are buying gold as the West was unwinding 0:12:56.679 --> 0:13:01.080 holdings in March. Chinese investors continue to have inflows. The 0:13:01.120 --> 0:13:04.400 PBOC People's Bank of China continued to buy and add 0:13:04.400 --> 0:13:06.880 to their gold reserves, and you saw bar and coin 0:13:06.960 --> 0:13:09.560 demand actually spike up in China. 0:13:09.720 --> 0:13:11.640 Buy it. Do they go down to Singapore? They hang 0:13:11.679 --> 0:13:14.120 out at the raffles hotel over the Fullerton and yeah, 0:13:14.160 --> 0:13:14.559 I'll take that. 0:13:14.640 --> 0:13:16.920 So they buy it in the onshore market, and there's 0:13:16.920 --> 0:13:19.800 been an incentive to export gold from the rest of 0:13:19.800 --> 0:13:23.239 the world into mainland China like they're galleons. 0:13:23.280 --> 0:13:26.240 It's like the Spanish from Batavia are there like boats 0:13:26.280 --> 0:13:28.559 carrying gold. There are boats carrying gold. 0:13:28.640 --> 0:13:31.480 Some comes by airplane as well, and most of it 0:13:31.559 --> 0:13:34.360 clears in the Shanghai Gold Exchange and that market has 0:13:34.360 --> 0:13:38.240 been at a premium to London for the last several weeks, 0:13:38.600 --> 0:13:41.200 and I think that shows that there's very strong local 0:13:41.240 --> 0:13:44.040 demand for gold, even as Western investors were taking some 0:13:44.120 --> 0:13:47.480 profits and liquidating some holdings over the last month or 0:13:47.520 --> 0:13:49.120 so since they're on conflicts started. 0:13:49.440 --> 0:13:51.559 Why is the Bank of China buying gold. 0:13:52.360 --> 0:13:54.360 I think it's part of a long term, medium term 0:13:54.440 --> 0:14:00.000 trend of de dollarization, reserve diversification and really using gold 0:14:00.080 --> 0:14:06.240 old as as a hedge against potential US sanctions policy 0:14:06.280 --> 0:14:10.080 and geopolitical fragmentation, a trend I expect to continue over 0:14:10.120 --> 0:14:10.760 the medium term. 0:14:11.120 --> 0:14:13.640 So it's not so much an investment for them, but 0:14:13.760 --> 0:14:17.800 it has maybe geopolitical bearings to it as well. 0:14:17.840 --> 0:14:21.120 Sure gold can't be sanctioned if it's held in physical form. 0:14:21.280 --> 0:14:24.280 It doesn't actually have any credit risk. It's a bearer asset. 0:14:24.520 --> 0:14:24.760 Tom. 0:14:24.800 --> 0:14:26.520 If we go back to bearer bonds and from the 0:14:26.560 --> 0:14:28.320 nineteen eighties, you could. 0:14:28.240 --> 0:14:28.440 Just go. 0:14:29.920 --> 0:14:33.240 There's three thousand people, look at your next I'm the 0:14:33.280 --> 0:14:34.480 only one that clip Cooper. 0:14:36.160 --> 0:14:40.360 So what's the call here as to the fundamentals of gold? 0:14:40.360 --> 0:14:42.920 How do we think about golden? I know it's a commodity, 0:14:42.960 --> 0:14:46.560 but is it expensive? Is it not expensive? Should I? 0:14:46.840 --> 0:14:47.600 Is there value? 0:14:48.040 --> 0:14:49.480 How did gold investors think about that? 0:14:49.760 --> 0:14:52.280 The SMP five hundred was at levels we were a 0:14:52.360 --> 0:14:55.720 year ago in April of twenty twenty five, then I would. 0:14:55.560 --> 0:14:57.080 Say gold is relatively rich. 0:14:57.160 --> 0:15:00.640 But at seven thousand, as INP five hundred, I think 0:15:00.680 --> 0:15:03.440 gold at forty five hundred still provides you that left tail, 0:15:03.880 --> 0:15:08.880 low volatility reserve asset feel From that standpoint, what's been 0:15:08.920 --> 0:15:13.520 a headwind into quarter end of one Q has been 0:15:13.960 --> 0:15:15.040 higher real yields. 0:15:15.120 --> 0:15:16.880 This war impact has. 0:15:16.800 --> 0:15:19.240 Changed fed pricing. If you look right before the war 0:15:19.320 --> 0:15:21.080 started at the end of February, we were looking at 0:15:21.120 --> 0:15:25.080 fifty eight basis points of cumulative easing for twenty twenty six. 0:15:25.720 --> 0:15:28.080 At one point in March, the third week of March. 0:15:28.080 --> 0:15:29.960 I think we were looking at the fifty to fifty 0:15:30.000 --> 0:15:32.680 potential of a hike. Now we're at a FED that's 0:15:32.720 --> 0:15:35.640 on hold for longer. I think the key for gold 0:15:35.720 --> 0:15:38.840 here is the FED can be on hold so long 0:15:38.880 --> 0:15:41.280 as they're going to cut, gold will do okay. Remember 0:15:41.400 --> 0:15:43.400 last year in twenty twenty five, FED was on hold 0:15:43.480 --> 0:15:46.400 for nine months, gold returned forty three percent. So it's 0:15:46.400 --> 0:15:48.200 a little bit of a push and pull friction what's 0:15:48.200 --> 0:15:52.680 happening right now. Arguably, I think the war enhances the 0:15:52.800 --> 0:15:55.800 case long term for gold because it's adding to debt 0:15:55.840 --> 0:15:59.880 and deficits. The war spending higher yields will add to 0:16:00.080 --> 0:16:03.200 interest costs for governments around the world. And then I 0:16:03.240 --> 0:16:08.040 think on the geopolitical fragmentation point, this can increase the 0:16:08.160 --> 0:16:10.920 risk that emerging market central banks will further want to 0:16:11.200 --> 0:16:12.200 diversify reserves with. 0:16:12.280 --> 0:16:15.680 What does the cultural overlay of the Eastern Mediterranean and 0:16:15.680 --> 0:16:19.920 down to the Middle East of gold given conflict, given war. 0:16:20.520 --> 0:16:23.680 It tends to be quite strong In the East. Gold 0:16:23.760 --> 0:16:26.080 is seen as a store of wealth, it's not just 0:16:26.120 --> 0:16:29.200 a risk off asset. So if GDP is rising, if 0:16:29.240 --> 0:16:33.440 wealth is rising, if consumers are and demographic shifts are 0:16:33.440 --> 0:16:36.320 occurring that are positive. That tends to be positive for 0:16:36.360 --> 0:16:39.000 gold demand. It's not just a risk off story out 0:16:39.040 --> 0:16:39.480 in the East. 0:16:39.960 --> 0:16:42.400 What's your interpretation, I mean, I know gold' you're remat, 0:16:42.440 --> 0:16:47.040 but what's your interpretation of the distillate markets? Are we 0:16:47.080 --> 0:16:51.960 getting visible and clear pricing on all the different oil derivatives? 0:16:52.680 --> 0:16:56.240 You know, that is something that has to be closely 0:16:56.280 --> 0:17:00.720 monitored because as high as oil prices have been, product 0:17:00.760 --> 0:17:04.240 prices have scorched even higher. I think we're in a 0:17:04.440 --> 0:17:08.080 risky regime where twenty twenty six is looking analogous to 0:17:08.119 --> 0:17:11.200 twenty twenty two. I'm surprised equity markets have been this 0:17:11.320 --> 0:17:16.119 strong so far. And how the evolution of oil prices go, 0:17:16.240 --> 0:17:19.240 we'll have a transmission mechanism to other asset markets, particularly 0:17:19.280 --> 0:17:21.280 gold as well through the Fed and dollar channel. 0:17:21.320 --> 0:17:23.440 Real needed this a custos. You thank you so much 0:17:23.520 --> 0:17:27.680 for State Street Investment Management. They're on gold again. Is 0:17:27.840 --> 0:17:31.320 note is absolutely brilliant, Really terse. Look for that from 0:17:31.359 --> 0:17:36.440 State Street Investment Management as we protect their copyright. Stay 0:17:36.480 --> 0:17:40.360 with us. More from Bloomberg Surveillance coming up after this. 0:17:47.600 --> 0:17:51.160 You're listening to the Bloomberg Surveillance podcast. Catch US live 0:17:51.240 --> 0:17:54.399 weekday afternoons from seven to ten am Eastern Listen on 0:17:54.480 --> 0:17:58.119 Applecarplay and Android Auto with the Bloomberg Business app, or 0:17:58.280 --> 0:18:00.119 watch US live on YouTube. 0:18:00.280 --> 0:18:06.080 Suzanne Maloney absolutely definitive at Workings Institute and Foreign Affairs 0:18:06.160 --> 0:18:12.840 Magazine of piecing together where we are in this war? Suzanne, 0:18:12.840 --> 0:18:17.280 what is your uncertainty this morning? And your uncertainty after 0:18:17.359 --> 0:18:21.720 a presidential tweet at four am that frankly could have 0:18:21.760 --> 0:18:24.199 been out of Mad magazine from my childhood. 0:18:26.200 --> 0:18:29.000 Well, you know, I think we're in a very unpredictable 0:18:29.040 --> 0:18:32.960 situation right now. The President and the Iranians appear to 0:18:33.000 --> 0:18:36.520 be in a standoff around who can last longer under 0:18:36.880 --> 0:18:40.119 severe economic pressure. The President is determined to maintain the 0:18:40.119 --> 0:18:45.800 blockade on Iran, preventing them from exporting and earning revenues 0:18:45.840 --> 0:18:48.800 from their oil production, which is the primary source of 0:18:48.920 --> 0:18:51.560 support for the regime and for the country as a whole. 0:18:52.320 --> 0:18:55.320 The Uans are determined to maintain their choke hold on 0:18:55.359 --> 0:18:58.960 the straight of hormones, which we'll have catastrophic implications over time. 0:18:59.040 --> 0:19:01.720 Nowers for oil price, but for the larger global economy. 0:19:01.840 --> 0:19:06.520 Susan, your heritage, I'm going to editorialize is realist foreign 0:19:06.600 --> 0:19:11.360 policy of Robert Gates. It's a big new Brazinski and others. 0:19:11.680 --> 0:19:14.959 Do we have a theory right now a foreign policy? 0:19:15.440 --> 0:19:18.399 Are we realist? Are we something else? I don't know? 0:19:18.840 --> 0:19:21.240 Are we just making it up by tweet? 0:19:22.880 --> 0:19:23.000 Well? 0:19:23.080 --> 0:19:26.480 I think the America First ideology has morphed over time 0:19:26.720 --> 0:19:29.760 under President Trump's first and second terms. At this point, 0:19:29.800 --> 0:19:34.600 it is highly militaristic. It is very much forced first 0:19:34.760 --> 0:19:37.840 as a means of asserting American interests around the world, 0:19:38.000 --> 0:19:43.080 and it is very disinterested in the traditional reliance on 0:19:44.000 --> 0:19:46.679 allies and partners that has been the key to the 0:19:46.720 --> 0:19:50.600 extension of American influence, as well as the broader prosperity 0:19:50.840 --> 0:19:54.280 and piece that we've had in the post World War 0:19:54.320 --> 0:19:56.360 two era Susanne. 0:19:56.400 --> 0:19:59.760 Do we actually know who is running Iran right now? 0:20:00.000 --> 0:20:02.760 And whoever that is, is that a group that can 0:20:03.160 --> 0:20:05.000 really negotiate on behalf of the country. 0:20:06.440 --> 0:20:08.400 I think we have a decent sense of the most 0:20:08.440 --> 0:20:11.720 important figures within the regime. They're largely drawn from the 0:20:11.720 --> 0:20:15.360 Revolutionary Guard, but of course we believe that Mosch Tabahameny, 0:20:15.560 --> 0:20:18.080 the son of the late Supreme Leader who was killed 0:20:18.080 --> 0:20:20.560 on the first day of the war and then elevated 0:20:20.640 --> 0:20:23.760 to his father's position, is still alive and is still 0:20:23.800 --> 0:20:26.840 helping to shape decision making. This is very much a 0:20:26.880 --> 0:20:30.360 system now that is driven by hardliners who have been 0:20:30.400 --> 0:20:34.480 at the forefront of Iran's most damaging and violent policies 0:20:34.520 --> 0:20:37.920 over the course of the past forty seven years. And 0:20:37.960 --> 0:20:42.360 they're not individuals who are particularly prone to compromise or 0:20:42.400 --> 0:20:45.919 to reconciliation with the United States or Israel. 0:20:46.920 --> 0:20:50.960 So President Trump portrays the leadership in Iran is in 0:20:51.040 --> 0:20:57.480 flux failing. Maybe is that accurate? 0:20:57.520 --> 0:20:58.760 Do you think? Again? 0:20:58.960 --> 0:21:01.320 It just kind of goes to the question of ken 0:21:01.359 --> 0:21:04.640 the United States negotiate in good faith with whomever is there. 0:21:06.000 --> 0:21:08.960 Look, Iran has always had a kind of diversity of 0:21:09.000 --> 0:21:12.720 factions within a system and really bociferous debates about both 0:21:12.760 --> 0:21:15.560 its foreign policy and its domestic policy. That isn't new, 0:21:16.040 --> 0:21:18.639 and it's not surprising that in the aftermath of the 0:21:18.680 --> 0:21:22.640 elimination of the senior echelons of the clergy as well 0:21:22.680 --> 0:21:26.359 as the security of bureaucracy, that we're seeing at least 0:21:26.359 --> 0:21:30.359