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Speaker 3: One of the largest market cap companies in the world.
Speaker 4: Okay, it's about to celebrate its fiftieth anniversary on April
Speaker 4: Fool's Day.
Speaker 5: Okay, And yet and yet one.
Speaker 4: Of the big questions hanging over it, Tim, is who
Speaker 4: will take over the rains next.
Speaker 5: It's something that the current CEO doesn't really like to
Speaker 5: talk about. Yet it is today's Bloomberg A big take,
Speaker 5: and Mark German highlights Apple's nice guy era apparent from
Speaker 5: more Let's head to Bloomberg News as La Bureau and
Speaker 5: a Bloomberg News Managing editor for Global Consumer Tech market.
Speaker 3: The big build you We're just going to tell you.
Speaker 5: We just like to do that, John Turnas. It's not
Speaker 5: a name that a lot of people outside of like
Speaker 5: the you know, immediate Apple ecosystem, were super familiar with
Speaker 5: a couple of years ago, but he's been at Apple
Speaker 5: for twenty five years. Why is he in the position
Speaker 5: in your view to be the heir apparent to Tim Cook?
Speaker 6: There are a few main reasons. One, and this is,
Speaker 6: you know, an interesting one. He's fifty years old, which
Speaker 6: makes him fifteen years younger than Tim Cook and at
Speaker 6: least ten years younger than the rest of Apple's executive
Speaker 6: team people who would be in position to take the
Speaker 6: CEO role. Tim Cook is not going anywhere eminently, right.
Speaker 6: I still think it's going to be at least another
Speaker 6: year to go before he's no longer CEO, maybe two
Speaker 6: to five years, who knows at this point, right, I mean,
Speaker 6: everything in his world is Apple, So it's a hard
Speaker 6: position to move on from. And that means that the
Speaker 6: rest of the executives who could take over are going
Speaker 6: to be even older, right, And so you need someone
Speaker 6: in the role who could take over and be in
Speaker 6: that position for ten to twenty years. And that really
Speaker 6: leaves you only with John Turnis. Aside from that, he's
Speaker 6: the only person on the executive team who has successfully
Speaker 6: launched hardware software integrated products. He is essentially in charge
Speaker 6: of their products, which generate eighty percent of revenue for
Speaker 6: the company. He's known for his political acumen. He's known
Speaker 6: for empowering leaders under him at Apple. He's known for
Speaker 6: getting into the weeds on the technical side. He would
Speaker 6: be a different type of CEO for Apple right Steve
Speaker 6: Jobs was an innovator, a designer, a product genius, really
Speaker 6: a visionary. Tim Cook was a visionary when it came
Speaker 6: to operations in sales and finances and turnus in his
Speaker 6: own right is a maestro of engineering, solving hard problems,
Speaker 6: bringing devices to market, drumming up new products. So that's
Speaker 6: going to be a different type of CEO, But I
Speaker 6: still think it would be a continuity pick in the
Speaker 6: sense that he's worked under Tim for a very long time,
Speaker 6: well north of a decade. He's been a senior VP
Speaker 6: at Apple for about five years at this point, and
Speaker 6: he's someone Apple has been pushing to the forefront in
Speaker 6: its marketing and its keynotes, meetings with government regulators, meetings
Speaker 6: with press, local in different jurisdictions around the world, different
Speaker 6: Apple campuses and offices globally. So this is someone who's
Speaker 6: at the forefront of the CEO race at Apple.
Speaker 4: Right now, you know Mark so much here at Bloomberg,
Speaker 4: but we'll talk about when we're going through a different
Speaker 4: economic or market cycle. Is that, you know, when it
Speaker 4: comes to like a fed chair, we need like the
Speaker 4: right fed chairman for the era, like I think about
Speaker 4: during the Great Financial Crisis, during COVID and just so
Speaker 4: on and so forth, our goal all the way back
Speaker 4: to Vulgar when we were dealing with inflation.
Speaker 3: What is it?
Speaker 4: Because you talk about the youth or being younger turnus,
Speaker 4: you talk about continuity, being an insider, is that is
Speaker 4: that what really Apple needs to mean?
Speaker 3: What does it really need? And what Apple needs right now?
Speaker 6: Apple needs a shakeup. Apple need someone who's more AI
Speaker 6: centric And the board knows this, and you know, in
Speaker 6: the conversations they're having within the board, the question is
Speaker 6: do we really want the continuity pick or do we
Speaker 6: want sort of a someone who's an outlier or an
Speaker 6: outsider who could shake things up on the AI side.
Speaker 6: And you know, what you keep coming back to is
Speaker 6: the fact that Apple is a hardware center company. They're
Speaker 6: a hardware platform that all these AI and other services.
Speaker 5: Run on top of.
Speaker 6: And you can't really run the AI unless you have
Speaker 6: the hardware they are at the forefront, right, and so
Speaker 6: the hardware picture, at least for now, it does work.
Speaker 6: But let's see if someone else emerges in the next
Speaker 6: few years. I don't think that's going to happen. Apple
Speaker 6: is such a unique culture and a unique company that
Speaker 6: you really can't bring in an outsider. So all signs
Speaker 6: point to Turnis.
Speaker 5: Well on on Turnas's track record mark. One thing that
Speaker 5: surprised me and I kind of let out this audible
Speaker 5: yelp in the newsroom when I got to this part
Speaker 5: of your story was the missteps that he's had have
Speaker 5: been very prominent. I mean, two things that Apple moved
Speaker 5: away from that were as widely seen as mistakes happened
Speaker 5: under Turnas's tenure. Talk about the keyboard, the Butterfly keyboard
Speaker 5: issue in the touch bar.
Speaker 6: Yeah, he's not had a good run in the mid
Speaker 6: twenty tens with keyboard related items. You had the Butterfly keyboard,
Speaker 6: which was a disaster and kept breaking for typing. You
Speaker 6: had the touch bar. Now, the thing let's say about
Speaker 6: the touch bar and the Butterfly keyboard. He was the
Speaker 6: engineering implementer of these ideas. These were two things that
Speaker 6: were pushed heavily by the design team and Apple at
Speaker 6: the time, and so he was really executing on the
Speaker 6: vision that they pushed him to execute on the design team,
Speaker 6: and Apple is in a different era. They are in
Speaker 6: lockstep now with the engineering team run by John Turnas
Speaker 6: because he also oversees the design teams now both hardware
Speaker 6: and software. So I think that it's a bit of
Speaker 6: a different situation right now. Since he became senior VP,
Speaker 6: Apple's product have improved dramatically in terms of quality and features.
Speaker 6: I mean, you see the macook Airs and the Maclook
Speaker 6: pros and the iPhones these days, the durability is just insane.
Speaker 6: So I do think that, you know, that was ten
Speaker 6: years ago. Those are notable missteps under his watch when
Speaker 6: he was running Mac Hardware engineering, but certainly there's been
Speaker 6: a lot of improvement since that time.
Speaker 4: So, you know, I want to go back to how
Speaker 4: you started. You said, Tim Cook, it could be next year,
Speaker 4: it could be two.
Speaker 3: To five years. I mean, if it's longer, it.
Speaker 4: Actually gives you know, Cook some more time to kind
Speaker 4: of figure out and maybe also continue to kind of
Speaker 4: guide the strategy of the company.
Speaker 3: I mean a lot can happen, you.
Speaker 4: Know, in two, three, four or five years. So I'm
Speaker 4: just wondering, how how much is you know, turnus a
Speaker 4: sure thing.
Speaker 6: Well, the longer that Tim Cook is CEO, the odds
Speaker 6: go up that Turnus is a sure thing because everyone
Speaker 6: else around Tim Cook on the executive team is just
Speaker 6: going to get older and older, you know, and so
Speaker 6: that is going to leave turn It's like, if Tim
Speaker 6: Cook steps down in five years, Turnus will be fifty five,
Speaker 6: still giving him fifteen years potentially in the CEO seat.
Speaker 6: Maybe longer than that, everyone else will have aged out.
Speaker 6: I mean, you have EDDIEQ who runs services. He's pushing
Speaker 6: over sixty. Greg Joswek runs marketing over sixty. You have
Speaker 6: software engineering chief Craig Federigi who's in his late fifties
Speaker 6: and has already declared publicly that he shouldn't and does
Speaker 6: not want to be CEO of Apple. You have a
Speaker 6: new CFO who's relatively young around Turnus's age, but Apple's
Speaker 6: not going to make a CFO their CEO. You have
Speaker 6: a new COO who's about sixty and at this point
Speaker 6: he's going to be too old to become CEO as well,
Speaker 6: and so all of your options are gone. You had
Speaker 6: people talk about Jeff Williams. For many years, he was
Speaker 6: the COO. They had been putting him in the driver's
Speaker 6: seat as a successor by giving him more product and
Speaker 6: design responsibility, but he retired at the end of last year,
Speaker 6: so he's no longer an option. There was all sorts
Speaker 6: of speculation about Angela Ernce, you know, six years ago
Speaker 6: when she was running retail. She's out of the company
Speaker 6: as of twenty nineteen, so she's no longer an option.
Speaker 6: So basically, you're out of You're out of options unless
Speaker 6: Apple's going to go external, which would be a massive shock.
Speaker 3: Well that's what I was going to ask you.
Speaker 4: What's the chance that they go external or what's the
Speaker 4: chance that they bring back somebody who left but who
Speaker 4: also knows the culture.
Speaker 6: Apple has a remarkably bad track record bringing in executives
Speaker 6: from the outside. Nearly everyone who they've brought in has
Speaker 6: been a failure from an outsider's perspective. They had their
Speaker 6: Chief People officer, Carol Surfis, who was out in two years.
Speaker 6: I mentioned Angela Errence, the retail chief, she was out
Speaker 6: in five years. There's some other examples there as well,
Speaker 6: but it has not worked out. Pretty for them from
Speaker 6: an Apple cultural standpoint, and John Turnis having been there
Speaker 6: for twenty five years makes it a lot simpler for
Speaker 6: him to be in the role. Lots of people at Apple. Oh,
Speaker 6: the other example I should give, by the way, is
Speaker 6: John jin Andrea, who was the aichief. He came from
Speaker 6: Google and that was a complete disaster. Right, So the
Speaker 6: track record on outsiders has been extremely poor, to say
Speaker 6: the least. Apple's run like a family business, right for
Speaker 6: keeping in the family. It's run by the family, the
Speaker 6: same people who've been around for a very long time,
Speaker 6: and so they're going to pass it on to the
Speaker 6: next member of the family.
Speaker 5: I think, Mark, we don't want to give the entire
Speaker 5: story away. It is one of the most read stories
Speaker 5: on the Bloomberg terminal. It is today's big take. Everybody
Speaker 5: should check it out. It's not all you have on
Speaker 5: the terminal today. A couple other stories we wanted to highlight.
Speaker 5: A scoop from you about adding search advertising to Apple
Speaker 5: Maps in a push to make services even bigger. What
Speaker 5: is Apple planning on doing to our maps?
Speaker 6: Yeah, similar to Google and Yelp, restaurants brands stores to
Speaker 6: bid on search query. So for example, coffee shop in
Speaker 6: your area wants to bid on the term coffee. Probably
Speaker 6: that'll cost them a lot of money. But if they're
Speaker 6: the highest bidder and you search coffee at locale, they'll
Speaker 6: pop up first as an AD on the search results,
Speaker 6: and that's an AD. So big advertising expansion for Apple. Obviously,
Speaker 6: Apple Maps is extraordinarily visible. They've been pushing ads for
Speaker 6: years now in the app store, search ads included. They've
Speaker 6: been pushing advertising within the Apple News app and the
Speaker 6: news section in the Stocks application. So definitely this is
Speaker 6: a big lever that they're pulling here to try to
Speaker 6: generate more revenue. The estimates are they made eight million
Speaker 6: from in iOS ads or they're going to across twenty
Speaker 6: twenty six. Putting it in Maps is probably going to
Speaker 6: double that pretty quickly.
Speaker 3: Hey, speaking of pulling a lever, you've got another story, man,
Speaker 3: I mean he.
Speaker 5: Still has time for us.
Speaker 3: What's the other story?
Speaker 6: I already forgot.
Speaker 3: App just started to AI comeback bid. Oh yeah, because
Speaker 3: the doctors.
Speaker 4: That what's coming up this Worldwide Developers Conference and what
Speaker 4: we might get in terms of AI levers.
Speaker 6: Yeah, as they reported, I think first first week of
Speaker 6: January or second week of January. They're going to revamp
Speaker 6: Serie as a chatbot to compete with chat gipt uh
Speaker 6: in Claude in Gemini and what have you. So all
Speaker 6: the focus will be on Siri and AI.
Speaker 3: Is this right that they report on? Oh yeah, may first.
Speaker 3: I think that's an estimate they.
Speaker 6: Will, that's an estimate.
Speaker 5: That's estimate, okay, So Mary, Yeah, timeframes typically WWC's typically
Speaker 5: for developers. I mean that's that's the whole point of that.
Speaker 5: You get unveiling a well, iOS, the announce.
Speaker 6: The new OS is right, so they'll announce iOS twenty seven,
Speaker 6: the other new operating systems and so yeah, developers got
Speaker 6: a bunch of new frameworks and tools, and consumers got
Speaker 6: a bunch of new features. But this year is going
Speaker 6: to be lighter than usual. This is all the all
Speaker 6: the features are going to be about AI this year.
Speaker 6: Everything else is going to be pretty minimal.
Speaker 3: So we're gonna like Siri.
Speaker 6: Now, I have no idea. I mean, I know, I
Speaker 6: know what the features are going to be, but I
Speaker 6: couldn't tell you if they're going to work properly or not.
Speaker 6: And I couldn't tell you if consumers are going to
Speaker 6: like them. But I think if they work to an
Speaker 6: effective rate of eighty five percent ninety percent, that platform
Speaker 6: of over two billion users is going to pull in a.
Speaker 7: Lot of people.
Speaker 5: Okay, before we let you go shameless plug, you and
Speaker 5: I are doing a live Q and A for Bloomberg subscribers.
Speaker 5: It's on Thursday, March twenty six. It starts at eleven
Speaker 5: am Eastern time. Mark German. It's an Ask you anything
Speaker 5: of Mark Erhaman. You can send him questions ahead of time.
Speaker 5: You can get in touch with us anything, anything, anything
Speaker 5: people do. We love it.
Speaker 4: It's a fun time, all right, looking forward to Hey, Mark,
Speaker 4: thank you so much as always are Mark Gerhm in there.
Speaker 5: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 5: up after this.
Speaker 2: You are listening to the Bloomberg Business Weekdaily podcast. Catch
Speaker 2: us live weekday afternoons from two to five pm Eastern
Speaker 2: Listen on Apple CarPlay and Android Auto with the Bloomberg
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Speaker 4: Just looking at our live blog on the US war
Speaker 4: in Iran, we have President Trump saying that the straight
Speaker 4: of hormones to reopen soon under a joint control with
Speaker 4: the United States Iranian media. Nine negotiations have taken place.
Speaker 4: We mentioned Brent crude falling back, we mentioned WTI creed
Speaker 4: falling back as well, and then President Trump suspended threatened
Speaker 4: strikes on energy infrastructure, citing talk.
Speaker 3: So this is kind of the latest on our blog.
Speaker 4: Meantime, maybe we'll ask our next guest about what we
Speaker 4: have else on the blog.
Speaker 5: OK, we can't leave it there, kay, So I'm going
Speaker 5: to just read from this because Jennifer Welch, if you
Speaker 5: watch our program, if you listen to our program, you
Speaker 5: know her well. At this point, she's chief geo economic
Speaker 5: sanalist for Bloomberg Economic, she writes, and several explanations could
Speaker 5: account for the contradictory messages from President Trump and Iran
Speaker 5: over talks to end the war. The most likely explanation
Speaker 5: is the US is pursuing negotiations as the President searches
Speaker 5: for an off ramp, but exaggerating progress in an attempt
Speaker 5: to reassure markets.
Speaker 4: All right, So that might explain, right the contradictions that
Speaker 4: we were seeing. Hey, we wanted to get We're going
Speaker 4: to get a view from the White House in just
Speaker 4: a moment, and really the national security aspect from the
Speaker 4: United States. But right now we want to get a
Speaker 4: view from the region. We had to Istanbul and to
Speaker 4: Bloomberg News Middle East and North Africa managing editor on
Speaker 4: our aunt. He oversees editorial direction and newsroom operations across
Speaker 4: the region, and so delighted to have him with us
Speaker 4: on our Thank you so much. And a little bit later,
Speaker 4: where you are, we are trying to understand exactly kind
Speaker 4: of what feels like contradictory statements from the White House
Speaker 4: the US versus what's coming out of Iran set the
Speaker 4: record straight.
Speaker 3: What do we know?
Speaker 1: Well, we know that US President Donald Trump back down
Speaker 1: from his earlier threat to strike Iran's energy sites if
Speaker 1: straight or foremost is not reopened by the end of
Speaker 1: his forty eight hour deadline, which he started on Saturday evening,
Speaker 1: So basically in about six or seven hours that deadline
Speaker 1: would have expired. But earlier today, very early in the
Speaker 1: morning in the US, all of a sudden, we have
Speaker 1: seen that present Trump posting several messages on social media,
Speaker 1: followed by his in person remarks to reporters in the
Speaker 1: US where he said, unlike what he had said before,
Speaker 1: that he was talking to Iranian officials and that a
Speaker 1: deal was possible and therefore he gave Iran a five
Speaker 1: day reprieve, basically promising not to hit any energy assets
Speaker 1: in the Islamic Republic until Saturday. Those remarks were followed
Speaker 1: by repeated claims by Iranian media that said such talks
Speaker 1: never really happened. Iran, in fact, did not respond to
Speaker 1: US requests for negotiations, and the fact that Trump backed
Speaker 1: down from his earlier threats was basically down to the
Speaker 1: Iranian response to earlier US and Israeli threats in the region,
Speaker 1: and basically a function of how the war has so
Speaker 1: far unfolded that those are the sort of two emerging
Speaker 1: main narratives coming out of the US and Iran over
Speaker 1: the last few hours.
Speaker 5: So then how do we how do we explain the
Speaker 5: public statements differing from what we know is happening privately,
Speaker 5: and the differences that we're hearing from Iran saying wait
Speaker 5: a second, no, we are not having any discussions.
Speaker 1: It's not extremely surprising. Obviously, there is this one marginal
Speaker 1: possibility that everything that's coming out of the mouth of
Speaker 1: the US president is completely false and a lie. It's plausible,
Speaker 1: but it's not very likely. What is more likely is
Speaker 1: the fact that what's happening now is a continuation of
Speaker 1: what we have seen so far during the conflict and
Speaker 1: even before the conflict. Iran and Iran's administration sees this
Speaker 1: war as an existential one and they do not want
Speaker 1: to project any sign of weakness to their own public.
Speaker 1: So even if there is a back channel negotiation going
Speaker 1: on with the US, which seems to exist judging by
Speaker 1: all the reporting that we have done over the last
Speaker 1: few hours, they do not want to portray this as
Speaker 1: a negotiation between Islamic state and its adversaries in an
Speaker 1: axidentual war. But instead they would like to portray this
Speaker 1: as a case where Iran has retaliated so violently and
Speaker 1: so strongly to previous US and Israeli attacks since the
Speaker 1: war began about twenty four days ago, that right now
Speaker 1: the US is forced to sort of backtrack it's earlier
Speaker 1: threats and steps in the war, putting Iran in this
Speaker 1: position of power and superiority in the war. So that's
Speaker 1: where I think the inconsistency is mainly coming from.
Speaker 4: No last few want I want to ask you because
Speaker 4: as you said, I think it's safe to say that
Speaker 4: many would would point out that on both sides you
Speaker 4: could question the messaging.
Speaker 3: And what is fact?
Speaker 4: What is maybe a little bit of a massaging of
Speaker 4: the message and the same thing out of Iran. How
Speaker 4: do we trust what we're hearing out of Iran as well?
Speaker 1: Okay, it's not very easy, and we have been very
Speaker 1: adamant in our efforts to filter out propaganda from the
Speaker 1: actual messaging. That said, today, immediately after Trump's social posts
Speaker 1: that said that he was in box with the Iranian leadership,
Speaker 1: we have seen a concerted effort by Iranian state linked
Speaker 1: media outlets trying to counter that message with the message
Speaker 1: sue that I just explained a couple of minutes ago.
Speaker 1: This is clearly centralized. So yes, we are trying to
Speaker 1: filter out the propaganda, but there is a clear emerging
Speaker 1: pattern in Erani media today that shows the messaging coming
Speaker 1: out of Tehran was highly centralized and it is a
Speaker 1: closely choreographed place. We cannot talk about a free media
Speaker 1: that is free to report on anything it wants.
Speaker 5: So let's say that we do see an end to
Speaker 5: the conflict in the coming days, what does Iran look
Speaker 5: like host this war?
Speaker 1: That is a very difficult question to answer, but I
Speaker 1: will do my best according to what the US Israeli
Speaker 1: Alliance said since the beginning of the war on February
Speaker 1: twenty eight, thousands more than more likely more than seven thousands,
Speaker 1: seven thousand targets in Iran have been hit. Now, they
Speaker 1: have spared the energy assets for most part of the war,
Speaker 1: but we know that administrative buildings, civilian infrastructure has been
Speaker 1: heavily targeted. So on the one hand, you have a
Speaker 1: country where the infrastructure has been very heavily degraded. On
Speaker 1: the other hand, though, if the war unfolds pretty much
Speaker 1: in a similar way to how it has so far,
Speaker 1: and if there is no conclusive peace agreement, that would
Speaker 1: that would allow Trump and also is really Prime Minister
Speaker 1: Natanielle to say that they have managed to take or
Speaker 1: extract every single concession they wanted to going into this war.
Speaker 1: It will make Iran look like a victorious look like
Speaker 1: the victorious side after this war, and therefore will allow
Speaker 1: it to maintain a sense of legitimacy in the as
Speaker 1: of its own people and also regionally after the war
Speaker 1: is concluded.
Speaker 4: One last thing, just quickly, this is crossing the Bloomberg
Speaker 4: terminal coming from the New York Times. At the Pentagon,
Speaker 4: officials are weighing deployment of air troops to on and
Speaker 4: the New York Times citing Defense officials on that troop deployment.
Speaker 3: If we see that, would it be assumed to be
Speaker 3: seen as an escalation on the part of Iran?
Speaker 4: And then what would that mean maybe in terms of
Speaker 4: this war just quickly.
Speaker 1: I guess that would depend on where exactly those troops
Speaker 1: are going to be landed if that happens. There are
Speaker 1: known we have seen over the last couple of weeks
Speaker 1: that there are certain areas where the US thinks it
Speaker 1: may land its troops, such as the carg Island, which
Speaker 1: is a key export terminal for Iran. Such a move
Speaker 1: would allow the US to maintain leverage that would allow
Speaker 1: it to force the Uranian government to come to terms
Speaker 1: on some of the key issues such as uranium or
Speaker 1: their ties to proxy forces in the region. So really
Speaker 1: depends a lot on where those troops might be headed
Speaker 1: and what the task of ject all that Midge operation
Speaker 1: might be.
Speaker 4: Every day, it feels like in this war, it feels
Speaker 4: like so many questions right as stuff comes across and
Speaker 4: headlines are known.
Speaker 3: Our thank you so much.
Speaker 4: I know it's later over there and you've had a
Speaker 4: busy day already, but thank you so much for sticking
Speaker 4: around and informing our audience at this hour.
Speaker 3: Own our aunt.
Speaker 4: He is Middle East and North Africa Managing editor at
Speaker 4: Bloomberg News.
Speaker 5: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 5: up after this.
Speaker 2: If you're listening to the Bloomberg Business Weekdaily podcast, catch
Speaker 2: us live weekday afternoons from two to five pm Eastern.
Speaker 2: Listen on Apple CarPlay and Android Auto with the Bloomberg
Speaker 2: Business app, or watch us live on YouTube.
Speaker 4: Our Bloomberg team watching global currency markets, writing earlier this
Speaker 4: morning that cross asset relationships that macro traders rely on
Speaker 4: have been rewired since the US War and Iran started,
Speaker 4: and the old playbook is no longer a guide to
Speaker 4: currency moves and tim This is all happening as we've
Speaker 4: seen the dollar backtrack falling sharply after President Trump said
Speaker 4: he would postpone strikes against Iranian energy targets for five days.
Speaker 4: Is something we kicked off this hour talking about He
Speaker 4: cited the president that is, citing quote good and productive
Speaker 4: talks and ending the war. There's some debate about what
Speaker 4: exactly is going on and before Trump's President Trump's remarks
Speaker 4: the green back had touched the highest level since December
Speaker 4: on fears of a possible escalation in the Middle East. Again,
Speaker 4: based in our conversations, it sounds like that could still happen.
Speaker 5: We'll see, we just don't know. Who knows. I want
Speaker 5: to bring in Jat Bardoise. She's head of FX strategy
Speaker 5: at TED Security. She joins us here in the Bloomberg
Speaker 5: Business Week studio. The headlines that have been happening today,
Speaker 5: that back and forth, the whiplash that we've seen in markets,
Speaker 5: How are you making sense of that from an FX perspective?
Speaker 7: First all, thank you so much for having me back.
Speaker 7: But I think it's a very clear sign that markets
Speaker 7: are purely now hinged on the duration, on the extent
Speaker 7: of the conflict. Everyone's just reading for signs of that.
Speaker 7: But it did show very clear sign that markets are
Speaker 7: also very happy and willing to fade the moves you've
Speaker 7: seen in the last couple of weeks, and they're looking
Speaker 7: for that glimmer of pope and optimism and hopefully the
Speaker 7: good headlines you've seen come over the know in the morning.
Speaker 7: Hopefully if they get dragged out, then potentially could see
Speaker 7: maybe outside of the oil market, other acid prices could
Speaker 7: go back to where they were. Oil markets are potentially
Speaker 7: the only ones where we see some permanent risk premium
Speaker 7: will remain embedded given some of the energy infrastructure which
Speaker 7: has been destroyed. Maybe the new baseline for oil prices
Speaker 7: is not sixty anymore, but closer to eighty. But outside
Speaker 7: of that, acid prices other than that might be able
Speaker 7: to go back.
Speaker 5: You said permanent risk premia, I.
Speaker 7: Mean a little bit more medium term, not in the center.
Speaker 7: It could remain, yes, but it will likely remain for
Speaker 7: a few years, especially because some of the energy infrastructure
Speaker 7: the destroy it. It will take time in years to
Speaker 7: rebuild that. And even if there's a ceasefire, think about it, like,
Speaker 7: you cannot do away with the risk of Iran feeling
Speaker 7: imboldened and then the cataking again.
Speaker 3: Can we go there?
Speaker 4: Because I think it's safe to say any of us
Speaker 4: to remember eleven or just think about the region as
Speaker 4: a whole. And you think about Iran's history with the
Speaker 4: United States. It's not been a good one for a
Speaker 4: long time. And you do wonder do you leave a country,
Speaker 4: an entity, a regime that is even angrier at the
Speaker 4: United States, And I don't know that we can get
Speaker 4: a read on that yet. I think even the President
Speaker 4: was talking earlier, did we overhear him saying something like
Speaker 4: that maybe he and whoever the next leader would be
Speaker 4: kind of having say and what happens.
Speaker 3: In Iran next.
Speaker 4: So there's just a lot of interesting things going on.
Speaker 4: But are we wrong to think about have we created
Speaker 4: a bigger enemy here and maybe some disconnect too with
Speaker 4: the region as a whole beyond Israel, who probably maybe
Speaker 4: weren't prepared for all of this fallout and destruction.
Speaker 7: The way we're seeing risk scenarios right now, there's only
Speaker 7: two probable outcomes. One is potentially a continuation of the
Speaker 7: good headlines you've seen, or potentially both sides have some
Speaker 7: sort of a cease fire, like come to some terms
Speaker 7: and agreements on the basis of that, and both sides
Speaker 7: will be able to claim victory from that. I'm sure
Speaker 7: the US will say that we have eliminated part of
Speaker 7: the supreme leaders there, but Iran will also be able
Speaker 7: to claim victory in a certain sense. So both sides
Speaker 7: get that Asset prices come down in that environment. We
Speaker 7: actually expect a good amount of selling pressure on the
Speaker 7: dollar to resume.
Speaker 3: That's one scenario. What's the other one.
Speaker 7: The other one is, potentially if the talks to not
Speaker 7: go well, potentially this becomes a much bigger conflict, potentially
Speaker 7: bringing in a little bit more of the peers who've
Speaker 7: currently stayed on the sidelines. You bring in more peers,
Speaker 7: get them involved, and this becomes a very long term
Speaker 7: strategic battle. Then it's not just short term, but it
Speaker 7: becomes a much more long term strategic point. And that's
Speaker 7: where a nuclear chain reaction potentially sets off. Because right
Speaker 7: now markets have take outside of oil prices and then
Speaker 7: rates last week, equities and effects have been relatively very
Speaker 7: well contained. You've not seen the classic risk off even
Speaker 7: to this state play out, and then that is something
Speaker 7: that actually plays out, and then you know rex havoc
Speaker 7: on the market.
Speaker 5: Why haven't we seen that classic risk Why wouldn't we
Speaker 5: see that play out?
Speaker 7: I think it's because of the nature of the way
Speaker 7: the shocks started out. I'm sure a lot of people
Speaker 7: were expecting it to be quick, one and done, like Venezuela.
Speaker 7: I'm sure even the US administration was expecting that, and
Speaker 7: nobody was expecting Iran to retaliate the way they have
Speaker 7: or even expecting the kind of military strength that they
Speaker 7: have showed that nobody knew that they had all of that.
Speaker 7: So in that environment, even now, people given that this
Speaker 7: is a midterm election year, Trump has wanted the FED
Speaker 7: to cut interest rates, the inflation price and you know,
Speaker 7: prices shooting higher is not good for the administration both geopolitically.
Speaker 7: You know, obviously NATO has declined to help. I think
Speaker 7: that's a very strong sign. So there's weak support both
Speaker 7: domestically and globally, which is why people were hoping that
Speaker 7: potentially this is something which is like Israel Iran back
Speaker 7: in June twenty twenty five, where you had a shock
Speaker 7: to prices, but that lasted only a few weeks and
Speaker 7: then everything came back down. Right now, when I'm speaking to,
Speaker 7: investors are extremely split. There's a good chunk of them
Speaker 7: still in that baseline, and some of them have moved
Speaker 7: to that bad case scenario. But given the massive amounts
Speaker 7: of uncertainty, people are just sick, stuck in the middle,
Speaker 7: and they have not been able to put on active
Speaker 7: risk behind any of those scenarios.
Speaker 3: So where do you investors want to go?
Speaker 4: I mean, we've been watching you know, the US style
Speaker 4: or really really closely, which we've seen under pressure, and
Speaker 4: then we saw a rally coming off of this war.
Speaker 3: So I don't know, do you have a long and
Speaker 3: short or short long term.
Speaker 4: Yes thought on it, and how much conviction do you
Speaker 4: have on those or again it goes back to these
Speaker 4: two scenarios.
Speaker 7: In the short run, remain defensive, you know, keep the dollars,
Speaker 7: should remain tactically bid. You know, it's not just because
Speaker 7: dollar is a safe haven, and there's still a big
Speaker 7: question as to whether it has been behaving like a
Speaker 7: safe haven or not. But the nature of the shock
Speaker 7: allows the dollar to behave like a safe haven because
Speaker 7: the US is geographically insulated from all of this energy independent,
Speaker 7: not as driven by tourism or supply chain interlinkages with
Speaker 7: the Middle East compared to the European Union. So the
Speaker 7: nature of the shock should allow the dollar to behave
Speaker 7: like a safe haven tactically. But I'm still not convinced
Speaker 7: that this dollar bound to turn into an outright rally.
Speaker 7: And one very interesting evidence which I point out to
Speaker 7: in that is if you just pull up the dollar
Speaker 7: charts since the start of the year, look at the
Speaker 7: dollar sell off, which happened when Trump and the US
Speaker 7: only threatened to invade Greenland, did not even invaded, and
Speaker 7: with the FED did the rate check on behalf of
Speaker 7: the Ministry of Finance in Japan. The dollar sell off
Speaker 7: you saw in that time was still much stronger than
Speaker 7: any dollar rally you've seen with this actual conflict in
Speaker 7: the Middle East in the last three three plus week
Speaker 7: So if all of this, you know, if you get
Speaker 7: that off ramp through the war in the summer, imagine
Speaker 7: the amount of dollar selling pressure which will come back
Speaker 7: with a lot more intensity because the hedge of America
Speaker 7: trade will be back with a lot more reasons to
Speaker 7: justify it.
Speaker 5: Now Jat, We're going to be speaking on our program
Speaker 5: at a little after four o'clock to Ed Harrison about gold.
Speaker 5: But you mentioned the dollar potentially acting as a safe haven.
Speaker 5: We've seen the opposite from gold over the past few weeks.
Speaker 3: Why is that the door.
Speaker 7: That's actually very intriguing question, and I love to answer
Speaker 7: it because the dollar the gold. We do know that
Speaker 7: retail investors did get very active in participating in that market,
Speaker 7: particularly in December and January, which was responsible for the
Speaker 7: massive chunks of movie you saw then FX markets to
Speaker 7: this state have still been the most macro fundamentally driven market,
Speaker 7: untouched by retail investors or speculative moves as much. That's
Speaker 7: why FX markets to me have been the most macro
Speaker 7: moving markets in all of this, which is I think
Speaker 7: is a very good sign for me to make sense
Speaker 7: of when things are moving, when things look too.
Speaker 3: Straight, a better indicator of what's going.
Speaker 7: Because the move in gold did have retail investor participation,
Speaker 7: the euphoria, the momentum, the four more trades at sometimes,
Speaker 7: but that was never seen in FX.
Speaker 5: She's saying, the smart money goes to effects.
Speaker 3: Well, it isn't that in front of a gold.
Speaker 4: But it's such a massive market, right, it can tell
Speaker 4: you so much about the different trades.
Speaker 3: Such good stuff. Thank you so much, really appreciate it.
Speaker 1: JT.
Speaker 3: Bardoirse. She is head of FX Strategy of at TD Securities.
Speaker 3: Joining us right here in studio. Have a good week,
Speaker 3: say week.
Speaker 5: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 5: up after this.
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Speaker 5: I do want to bring back to sid and fill up,
Speaker 5: chief correspondent for Global Aviation for Bloomberg News, he joins
Speaker 5: us here in the Bloomberg Interactive Brokers studio, you were
Speaker 5: moving from studio to studio, so you didn't just pull
Speaker 5: disclosure to everybody. You didn't might not have gotten to
Speaker 5: hear every single part of this press conference as you
Speaker 5: were moving between studios. What did you learn new from
Speaker 5: the Secretary of Transportation.
Speaker 8: So I think the fact that the staffing levels were
Speaker 8: not quite as bad as we expected, I mean that
Speaker 8: sort of does sort of show you that there is
Speaker 8: sort of they have made progress in terms of stuffing.
Speaker 8: At the same time, it's like, I mean, the fact
Speaker 8: that obviously the NTSB will have to pull over the
Speaker 8: data and figure out what really went wrong and why
Speaker 8: the fire truck was a lot across the own way
Speaker 8: at a time when the plane was also approaching is
Speaker 8: obviously that's something we'd really be looking to hear in
Speaker 8: terms of future steps and future in terms of future
Speaker 8: changes for this industry. I mean, given the fact that
Speaker 8: aviation is constantly evolving and there's obviously changes I mean,
Speaker 8: we've seen changes in DCA posts that in the crash
Speaker 8: where military aircraft are now they sort of separated from
Speaker 8: aircraft coming into DCA, And so we will sort of
Speaker 8: see recommendations from the NTSB, and that will only post
Speaker 8: the analytics of what really went wrong and why that
Speaker 8: fire truck was where it was.
Speaker 4: You know, there's a thing everybody makes mistakes, but you
Speaker 4: also when you're dealing with airplanes, runways, limitations and things
Speaker 4: that have to be very very carefully regulated. I mean,
Speaker 4: could it just come out to being that there is
Speaker 4: nothing to really address it was just a miss and
Speaker 4: I don't know whether I don't know can we even
Speaker 4: go there or can we assume that there was something
Speaker 4: where somebody didn't look and either you know, calculate the
Speaker 4: timing of a plane hitting a runway going one hundred
Speaker 4: miles an hour and how quickly and you know this
Speaker 4: help me understand.
Speaker 3: We all do make mistakes.
Speaker 4: You don't want to hear it for those of us
Speaker 4: who fly a lot, I don't want to hear about mistakes,
Speaker 4: but walks through it.
Speaker 8: I think the I think the investigation will determine one
Speaker 8: what when I mean, given the fire truck drivers are
Speaker 8: they survived the incident, They will be sort of vital
Speaker 8: in piecing together what happened. It will also be imperative
Speaker 8: to understand whether warning indicators that are automatic on the
Speaker 8: runway that did tell you whether the runway is clear
Speaker 8: or not, we're working or not. It will be there's
Speaker 8: loads of systems that are also work in tandem with
Speaker 8: the air traffic controllers, and that's all. That will all
Speaker 8: be part of the analysis from the NTSB and part
Speaker 8: of the investigation, and then we will something in terms
Speaker 8: of what went wrong. Was it human error, was it
Speaker 8: some sort of mix up? Was it all sort of
Speaker 8: I mean, we we saw we've seen runway collisions before.
Speaker 8: I mean there was the Japan Airlines in Tokyo where
Speaker 8: we had the Coast gud plane that entered the runway
Speaker 8: mistakenly and got hit by the eight three fifty from
Speaker 8: Japan Airlines.
Speaker 5: You know, we the press conference is ended by the
Speaker 5: way and the officials have walked away from the podium
Speaker 5: at LaGuardia side one and I don't have I don't
Speaker 5: have Secretary of Duffy's words right in front of me,
Speaker 5: But there was an element to this where he talked
Speaker 5: about this is this is not political. That said, we
Speaker 5: are trying to update and modernize. We don't know if
Speaker 5: modern equipment made in the US would have had a
Speaker 5: difference in the outcome in this case. He was clear
Speaker 5: to say that. But is there a technology upgrade question
Speaker 5: here based on what we've seen thus far?
Speaker 8: I mean, obviously we still too early to figure out
Speaker 8: what really went wrong. And I mean the FA has
Speaker 8: talked about how the equipment at various US airports is outdated.
Speaker 8: I mean they've mainly talked about it from an air
Speaker 8: space perspective in terms of air space being affected. But
Speaker 8: then we've also seen incidences like this morning where in
Speaker 8: Newark they had to stop operations for a couple of
Speaker 8: hours because there was an elevator that had smoke and
Speaker 8: essentially they were not sure if there was a fire
Speaker 8: or not, so there was. I mean, essentially, there is
Speaker 8: a lot of antiquated infrastructure in the US, and Secretary
Speaker 8: Duffees talked about how they're working to upgrade it. I mean,
Speaker 8: the question is one how quickly it happens, and two
Speaker 8: whether it addresses these various shortcomings.
Speaker 4: Well, listen, like, we really appreciate you walking us through
Speaker 4: everything that we know so far, and obviously, as we
Speaker 4: heard from the Transportation Secretary, it's going to take some
Speaker 4: time to get all of the specific details. But you
Speaker 4: do think if you know anything about aviation, like the Times,
Speaker 4: there'll be able to piece this together exactly, no doubt
Speaker 4: about it, and we'll know a little bit more. But
Speaker 4: we are thinking about all of the people were certainly
Speaker 4: impacted in the lives that.
Speaker 3: Were lost as a result of this. Sid, thank you
Speaker 3: so much.
Speaker 4: Sid, Phil you bet Chief correspondent Global Aviation here at
Speaker 4: Bloomberg News.
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