00:00:00 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 00:00:11 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie Hordert. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business App. Julian and Manuel of Evercore maintaining a seventy seven fifty s and P year end price target, writing stocks have become more volatile as the wall of worry is large around AI adoption, spend, regulation, profits, the sustainability and capital raised. Julian joined us now for more. Junin Good morning, Good morning. We often say on this program, you can learn something about the data, and you can learn something from how the market responds to the data. This mor owning numbers from Samsung fantastic record quarterly profits, stock gets hammered. What can you learn from that this morning? 00:01:06 Speaker 3: So what you can learn is the sentiment around the AI trade, in our view, is probably as cautious as it was in the first quarter of the year coming into the reporting season in April. That actually caused the market to pivot higher. It really is this every one of these aspects has now become a glass half empty type of view. But at the end of the day, what we think that this earning season will show is that, like this report last night, there is incredible strength and you know, if positioning gets to one way, it gets taken off. 00:01:46 Speaker 4: But the longer term trend. 00:01:49 Speaker 3: The fact that these stocks and this theme is driving financial markets in the global economy higher in. 00:01:57 Speaker 2: The shortter, medium term, it does feel like there's been a term though off the back of the micro numbers eighty five percent march in, Samsung, record quarterly profits, and yet the market is punishing some of those stories and you're start to see a rotation back to the big spenders, the hyperscalets. We've heard from multiple people in the last twenty four hours that's the trait they like now, leading into the so called Lag seven, not the Mac seven part of the market that has struggled METSA, Microsoft and leaning away from some of the chip makers, which you make of. 00:02:23 Speaker 4: That cool, I'm going to have to use that one. 00:02:24 Speaker 2: It's not mine. 00:02:25 Speaker 4: It's not mine for what. I kind of like that. 00:02:29 Speaker 3: If you look at the last two and a half years, as particularly in the earning season, it's much more about positioning in terms of short term reactions. 00:02:40 Speaker 4: And in that. 00:02:41 Speaker 3: Respect, Look, we know where all the money and all the profit has been this last two or three months. Look at some of these names, how much they've run up two hundred and three hundred percent off of the March thirtieth low. This kind of digestion is completely normal, and frankly, we'd argue it's healthy, as is the rotation into some of these names which are going to report stellar earnings and oh, by the way, because they've been punished so much our training at pretty reasonable valuations. 00:03:11 Speaker 1: On top of that, you have the headwind of higher oil prices now put to the side, right because oil prices have made a round trip back to where they were before the start of the Iran war. How positive of a talking point is that going to be for the companies and sectors outside of tech. 00:03:26 Speaker 3: I think it's very underappreciated as a profound positive. We went back and we looked at you know, we started the war in March by doing this analysis of when oil price went above the twenty four month moving average by thirty or forty percent, that that would be a market disruption event. The retreat back to seventy dollars in below is almost one of the fastest spike on wines on record, and it's absolutely unequivocally positive. The market average is seventeen percent gains in the twelve months following that return to earth of the oil got here, it's. 00:04:06 Speaker 1: A huge relief for the consumer, especially since we had seen pressure on the consumer, both high income as well as lower income. I'm curious to get your take on whether the change in oil makes the Fed minutes that we're going to get next tomorrow almost obsolete, because you know, we're not going to get a whole lot of information anyway from Kevin Marsh, because he's not one to be totally communicative. But does it matter as much what the Fed says now that oil prices have come down so much. 00:04:33 Speaker 4: It matters less. 00:04:35 Speaker 3: But what will be interesting is how much of a read we get or don't get into that closed door family fight that share Warsh keeps talking about Look, but in our view, we don't think the FED is going to move this year, and we don't think that there are hold why. 00:04:55 Speaker 4: Two things. 00:04:55 Speaker 3: Number one, the oil price can have very salutary, disinfled zationary effects throughout the rest of the economy. Look, we saw the world's largest retailer make that announcement. Whether it was prompted or not prompted, but that did happen and that is real. And then the other aspect of it is is the AI driven inflation is something if you listen to Share Walsh, he said, we're going to give it time. 00:05:23 Speaker 4: We're going to you know, we. 00:05:25 Speaker 3: Don't want to make the mistake that was made in late nineteen ninety nine by assessing the technological revolution as a bubble and raising rates when it wasn't. 00:05:35 Speaker 2: Necessarily raises a good question the disconnect Deltcha Bank's written about it in the last twenty four hounds. That still is a bit of a disconnect here. We've had a reset in crude prices from triple digits down to the sixties on WTI Brent in the low seventies, but we haven't reset the FED hike debate. In fact, this market is still primed for FED hikes. What's going on there and why? 00:05:54 Speaker 3: I think it is this sort of getting used to the discomfort of less transparency, less communication from the fact, do. 00:06:06 Speaker 2: You see at tension reduced communication equally increased talkishness? Is that the right way to look at this. I've heard pushback from some people to that. 00:06:14 Speaker 4: In our mind it isn't. 00:06:16 Speaker 3: But given the fact that that initial press conference used, you know, was really a primer on fighting inflation and the concept of price stability being you know, number one mandate, it's understandable. But again in our view, the market's misreading the intention and I like it more to the Green Spanner era. 00:06:41 Speaker 4: Which a lot of people talked about the. 00:06:44 Speaker 3: Concept of jaw owning the markets into where you wanted them to go. 00:06:49 Speaker 1: Or does a decreased communication lead to increased volatility? The Vicks closing below sixteen for a second straight day, but we might get more volatility in the rates market, which will then of course trickle into the equity market. 00:07:01 Speaker 3: Well, there's a lot of things going on, of course, and I think again oil where it is, certainly helps the rest of asset market volatility. It's also the summer where we're digesting the markets rotating. And then the other part of this volatility is the fact that even though you're seeing more volatility in the tech sector, you're seeing less volatility elsewhere. In fact, you're seeing an entire cohort of stocks on a day to day basis move inversely to the S and P five hundred, the likes of which we haven't seen in twenty five years. 00:07:36 Speaker 2: Negative mita stokest it's been a call for you wok us through it. 00:07:40 Speaker 3: So basically what it means is it's a variety of industries. 00:07:45 Speaker 4: Energy. 00:07:46 Speaker 3: You can understand intuitively why it would move inversely to the S and P five hundred, utilities, consumer staples, and strangely enough, insurance stocks. 00:07:57 Speaker 4: We scratch our heads as to why. 00:07:59 Speaker 3: But if you look at the last six months and a day in and day out basis, this group of stocks, a number larger than you've seen in twenty five years, move inversely to the S and P five hundred. Last Thursday, with NAZAC selling off, you had all of those sectors that I mentioned. Insurance stocks were up three percent yesterday the exact opposite happened. But what it tells you is a people are trying to diversify the fact that AI is everywhere now, it's in bonds, it's in gold, it's in emergent I mean, is Korea an emerging market anymore? 00:08:37 Speaker 4: We don't know. 00:08:37 Speaker 3: These still measures by some measures, but it also tells you that the demand for stocks remains very high. 00:08:45 Speaker 2: Feel's not one trade in the market right now, which is what you're getting out, and people are looking for alternatives increasingly as well. Typically we'd sit on the programming like this and we'd say, the market is not the economy. The economy is not the market, but the economy increasingly is find on one. 00:08:56 Speaker 5: Engine is the same thing at the moment, and that's the problem for investors really, and that's why again, these negative beta stocks are getting as much attention as they are because you do want to you know, portfolio theory tells. 00:09:13 Speaker 3: You you don't want to put all. 00:09:15 Speaker 4: Your eggs in one basket. 00:09:17 Speaker 3: Nevertheless, the market has gravitated, as has the economy, to putting most of its eggs in the AI basket. We think there's more room to run, to be clear, but again, you know, diversified portfolio is something most investors are hoping to achieve. 00:09:36 Speaker 2: Jill the geopolitics. Ukraine was a market story three four years ago. It's not anymore. The Middle East was a market story three four months ago. It's not anymore. Have we been conditioned to ignore all of this is a question asked to Mike Wilson and Morgan Stanley just yesterday. It feels that way you condition just to ignore whatever happens in the next twenty four hours. 00:09:56 Speaker 3: Well, it goes back to the bigger picture of equity markets and investing is earnings driven. We know that we're very fond of showing the S and P five hundred versus earnings going back thirty years in the correlation. There are years where it doesn't work, but in general it works very well, and there are times when in terms of valuation, in terms of volatility, geopolitics matters. I mean, could we have been having this conversation in the middle of March. 00:10:28 Speaker 4: I don't think so. 00:10:30 Speaker 3: But then again, oil was one hundred and ten dollars a barrow at that point, and now we're at a price where we know that the economy can function perfectly well. And in fact, when you think of something like the rally that we've seen in small cap stocks, much more sensitive to macroeconomic inputs like the price of oil, and much more of price takers than price makers. It really tells you that geopolitics is on the back burner. Now that's not to say that it won't. And look, we've got midterms coming up in November. We won't talk about those. That's a famous line there, But again you will have bouts of volatility surrounding both politics and geopolitics. 00:11:20 Speaker 4: And as much as we love the. 00:11:21 Speaker 3: Summer, we remember what tends to happen in September and October. 00:11:25 Speaker 1: Anyway, geopolitics matter for earnings of defense companies. 00:11:28 Speaker 6: We've seen that in Europe. 00:11:29 Speaker 1: Does it matter for defense companies in the US because increasingly you're seeing the European countries choose to buy local, and you know. 00:11:38 Speaker 3: Given the dialogue and the difficulty of the relationship, it certainly makes sense. But again, remember that the president is you know, actively, I think he tweeted it last night about building the defense budget here and we know they're going to be buying from US defense companies. 00:12:00 Speaker 1: So going forward, how do you see the strong dollar affecting defense companies their ability to sell to overseas customers. 00:12:08 Speaker 3: Well, again, this goes back to the whole, you know, the geopolitical relationship, and to your point that people will probably have a tendency to buy local currency. It's one of these kind of odd times where currency has really been taken out of the equation for for the meantime, yes, it's rallied a little, but if you look back, it's essentially gotten nowhere for a year at the broader dollar index level. And we think that the down trend that started a year and a half ago is intact. But with the dollar, you know, things don't tend to move in a straight line. 00:12:49 Speaker 2: You want to finish on the banks record highs the close yesterday, that will reporting this time, next way, this time, next way. 00:12:55 Speaker 6: That's all. 00:12:55 Speaker 2: We'll be talking about the financials once that trade's starting to work outside of goverment, outside of and Stanley for the others, because. 00:13:03 Speaker 3: Again there's this understanding that people are at the moment taking chips off the table in AI and oh, by the way, the earnings power of financial companies is just absolutely record and the valuations look, the valuations and a lot of things are stretched by historical standards, but relatively there's plenty of attractive operatity. 00:13:25 Speaker 2: We found that strange that the financials didn't keep pace with the text story for much of this year. It was odd to me because they were making so much money from the text story, from the IPOs, from the amount of money being raised. 00:13:35 Speaker 3: But again, if you're an active manager looking for multi week or month two month performance, you're going to have a tendency to go with where the momentum has been. And actually, if you read about some of the hedge front performance in the last few days, you actually use shorts where. 00:13:56 Speaker 4: The negative momentum has been. 00:13:58 Speaker 3: There's been a lot of a lot added churn in the markets within the context of this ongoing Ballmark. 00:14:04 Speaker 2: Jillian going to see it, stay with us more Bloomberg Surveillance coming up after this. Apollo noting a lack of profit margin gains due to AI outside of the tech sector. Torston's slock of Apollo, writing, there's a mismatch between current earnings expectations and the actual time firms need to generate ROI on AI investments, and it could have significant implications for many AI company valuations. Torston joins us now for more Torston can want and good to see you. Let's build on that quote. What are you tracking right now, what do you think. 00:14:43 Speaker 7: Well, what's really really important to this discussion is, of course profit minders have been phenomenal in the Magnificent seven, but what really is critical is that now we need to see profit margers grow up outside the Magnificent seven. In other words, what's going. 00:14:55 Speaker 6: On with this in p. 00:14:55 Speaker 7: Four ninety three becomes very very critical because at this point profit manders is a P. 00:15:00 Speaker 6: Four ninety three have just not gone up. 00:15:02 Speaker 7: So therefore, one very important conclusion, and one very important place to look for signs of AI beginning to have an impact is to look at what's going on in earnings growth, profit margins, and overall the health of this. 00:15:14 Speaker 2: In p. 00:15:14 Speaker 7: Four ninety three, as a result of the technological improvements we're seeing at the moment. 00:15:18 Speaker 2: METS are also making a call potentially as well that the ROI on selling access capacity might be hard in using it internally. Does that reinforce some of this message for you? 00:15:28 Speaker 6: Well, the issue, of. 00:15:28 Speaker 7: Course is that there is a huge of course built out of capacity and compute, and there will literally be unlimited demand for compute. 00:15:35 Speaker 6: The question is just at what price and who will. 00:15:37 Speaker 7: The bias be and where is that capacity coming from and the big picture still remains that AI is a very revolutionary technology. 00:15:44 Speaker 6: Everyone agrees on that. 00:15:45 Speaker 7: But the key question now is how long time is it going to take before this shows up, especially in profit margins outside the Magnificent seven, Because if there's a P four ninety three, let's say that it takes several years before profit margins begin to go up. The question is whether the implicit earnings assumptions in the Magnificent seven are too high or too fast relative to what's actually going to happen. So that mismatch between are we going to see profit margins earnings growth go up outside this the Magnificent seven? 00:16:13 Speaker 6: Is that going to come slower? Is it going to come faster? 00:16:16 Speaker 7: Is absolutely critical for a conversation about what should the value be of the Magnificent seven Today. 00:16:21 Speaker 1: In exactly one week's time, as John was reminding us, the big banks begin reporting earning, so we have the kickoff of the earning season. There's going to be a lot of discussion on AI and what it means for jobs in the banking sector. How do you parse through what the companies say to really understand what it means in terms of whether they're going to cut jobs or not. 00:16:39 Speaker 7: What's really challenging about this is to talk about AI exposure because there's a lot of different studies already that look at what is the exposure meaning AI exposure in different occupations two these markets, these two studies fall into different markets of one saying what is the actual exposure in terms of actual AI usage? So this is trying to menas a say, what are people using clode for what tasks and what request did they get and therefore measuring and quantifying the actual uses of AI. Another bucket is studies that look at, well, let's theoretically assume what is the economist exposure to AI and then try to match that with occupations and figure out what is employment. 00:17:18 Speaker 6: In those sexes. 00:17:19 Speaker 7: And those studies, of course, are what you call more theoretical. So the challenge is that there is not an agreement about what does AI exposure mean. So that's raising all these questions around, well, what does it even mean when we say that a certain part of the economy is exposed to AI, because that's just not at this point in the studies that look at this a really good way to quantify what AI exposure means, and that means also for the financials, that means for legal. 00:17:40 Speaker 6: Services, that means for consultants. 00:17:42 Speaker 7: That we're having some challenges figuring out how do we even quantify what is the impact of AI. We all know that it's going to make a big difference, but to speak with which this difference comes along? How many people is impacting today, next month, next year. It becomes absolutely critical when you again to think about that company valuations today are the net present value of the cashflows that these companies get in the future. 00:18:02 Speaker 1: We're also hearing a changing story, a changing narrative from AI companies themselves. There's a Wall Street Journal story about how the narrative has shifted, at least from open AI and anthropic, from these doomsday scenarios to a future where workers actually keep their jobs but just do it better thanks to AI. 00:18:16 Speaker 6: What does that tell you? 00:18:17 Speaker 7: Yeah, and Ramp had a really interesting study over the last week that they put out where they basically look at what has been the cost and the spending on AI among different companies and what they did that they looked at, well, what was the job growth in those companies that had more spending on AI? And they did indeed find that more spending on AI, it actually resulted in more job growth. So one way of looking at this is one dimension of saying, what's the actual spending relative to the more theoretical matching of occupations with what's been going on with job growth in those sectors that also have been spending on AI. 00:18:49 Speaker 2: To listen to your points for this all together, this is a potential risk of valuations, which is an obvious market risk. Is it a macro risk as well? In Central Portugal I believe you were there big conversation about this. We've got a story in the market right now that feels like one trade and increasingly a story in the economy. The fils like we're firing on one engine. How much is it one and the other? 00:19:08 Speaker 6: Absolutely, it's actually three different things. 00:19:10 Speaker 7: First of all, it's of course everywhere in markets because the concentration to the AI story is so strong. 00:19:15 Speaker 6: Think about it. 00:19:15 Speaker 7: For the last fifteen years, the main lesson in finance is factor investing, and now we're staring at one factor that's driving all financial markets. 00:19:22 Speaker 6: In equities, the concentration is very high in AI. 00:19:25 Speaker 7: You also look at IG issuance, high yield issuance, even venture capusal. 00:19:29 Speaker 6: The concentration in AI is very very strong. 00:19:31 Speaker 7: So in markets, let's just agree the AI exposure or the AI factor plays a. 00:19:35 Speaker 6: Very very critical role at the moment when it comes to the economy. 00:19:38 Speaker 7: Also, if you look at actual spending on data centers and energy, if you add up what that contributes to GDP this year, it's roughly about zero point seven percent out of a two percent GDP growth this year. 00:19:48 Speaker 6: If you add about zero. 00:19:48 Speaker 7: Point three coming from the wealth effect because of I stock. 00:19:51 Speaker 6: Prices, that's also very important. 00:19:53 Speaker 7: And finally, let's also not forget that the hyperscalers are issuing so much IG corporate debt that this is crowding out in and for US treasuries. Because if you are bunt manager and investment great credit, you could either buy sovereigns US treasuries. You can buy financials, that's what you've been doing for a long time, but now you can also buy seven hundred billion hyperscalers. 00:20:11 Speaker 6: So it's not. 00:20:12 Speaker 7: Only that it has an impact on markets overall and has an impact on GDP, but it actually also has an impact on demain for treasury. So yes, the conversation and the panel Amazon in CenTra was exactly around this risk that AI is indeed now and more and more prominent factor basically not only the economy but also in financial markets. 00:20:28 Speaker 2: What's the consensus on how to manage that risk? 00:20:30 Speaker 6: Well, the challenge is page one in your finance textbook. 00:20:33 Speaker 7: And if there's one factor you're trying to avoid is to try to pick another factor. But the question is what is that other factor of momentum? 00:20:39 Speaker 6: Is a growth? Is a value? 00:20:41 Speaker 7: Value has some opportunities because it's not growth. 00:20:44 Speaker 6: So that's why ways of looking. 00:20:46 Speaker 7: At parts of the private markets, public markets that is value investing is indeed one place to hide, but it has to be value investing that's indeed protecting you against the downside risk. 00:20:55 Speaker 6: That come along if AI does not deliver in the. 00:20:59 Speaker 2: End, stay with us Multiple impact surveillance coming up after this. 00:21:12 Speaker 8: President Trump has arrived here on the tarmac and Turkey preparing for those meetings of thirty two leaders of those NATO allies. Were very pleased to be joined by one of them, the Prime Minister Sweden Wolf Christmerson. Thank you so much for us speaking to us here on the sidelines of the NATO summit. As we've just been saying, President Trump has just landed here in Turkey. What is the message from the European arm of NATO to the President of the United States. 00:21:34 Speaker 9: Well, the basic message, I believe and I hope is to confirm what we decided last year. We're all committed to an increase in European defense investments, this burden shifting in an orderly way, but very decisive way. That we can prove that decisions have been made already and we see good result from it. As one I hope is to confirm our commitment to Ukraine. Ukraine is not losing this war, but they still need our help to be able to win. 00:22:10 Speaker 4: A decent piece. 00:22:12 Speaker 9: And of course what we've discussing today to increase the not at least the European capabilities of having a big, a good defense industrial base, which we have proven quite significantly here today. 00:22:25 Speaker 8: And of course there are things that can go wrong in these meetings, as they offer, they sometimes do. I mean, one of the things that has been highlighted by the US administration is that not everybody is necessarily moving at the same case in terms of that burden sharing. The United States has indicated that potentially you could get a tiered system within NATO of rewards and consequences for those that don't. Do you agree with that in terms of a sort of method to put pressure for NATO allies to reach those targets. 00:22:49 Speaker 9: I think everybody expects a quite thorough assessment of how well we have achieved what we decide did last year, and there are no secrets behind you between NATAL members, so I think that would be a bit tough discussions on that, but that's that's the name of the game. But still I think that Mark Rutez, the General Secretary General's basic message is that we are stepping up, but we are doing it decisively, and Europe is and Canada we are taking a big share of the of the overall responsibility, which we should. 00:23:26 Speaker 8: And of course, one of the issues that the President of United States has demonstrated some dissatisfaction with was NATO's role in any sort of way on the conflict and Iran. We now have had this news crossing that a tanker has been shipped hit, a Katari tanker that obviously has great consequences. 00:23:41 Speaker 4: For the Europeans. 00:23:42 Speaker 8: Do you believe that the Europeans should be playing a role at this stage? 00:23:44 Speaker 6: Here? 00:23:45 Speaker 8: Is this a conversation that will be fleshed out for the President of the United States. 00:23:49 Speaker 9: I'm not that sure that that will be a discussion having here, but you've obviously had it over the last months, and Sweden is among the many European countries said that we are willing and able to to do efforts to safeguard freedom of navigation after reasonable ceasefire has been has been reached and we are committed to that. 00:24:13 Speaker 8: Can you say a little bit more about what those things could include and what and how you know, because obviously we're in a ceasefire now, it's not exactly a piece. At what stage you think the Europeans would be willing to engage me, Well, that is an ongoing discussion between different European partners, so I cannot be too precise on that, but we have different capabilities that could be could be well used in that region, and of course for all European. 00:24:37 Speaker 9: Countries, freedom of freedom of navigation is an extremely important virtue in itself, so we we fully acknowledge that we also have a responsibility into that and. 00:24:47 Speaker 8: Of course, as you mentioned, the conflict in Ukraine still top of the agenda for the Europeans. 00:24:51 Speaker 4: Olenski will be speaking. 00:24:52 Speaker 8: With President Trump trying to bring that up the agenda for the President of the United States. There's a real sense that there's a momentum shift on the battlefield st deep within Russia, a sense that we could maybe a little bit more on the ropes, particularly economically, given that opportunity. What is it appropriate for Europe to do to try to escalate that pressure and try to help. 00:25:11 Speaker 9: Yeah, honestly, to step up, because what we are doing other basically the right things, supporting Ukraine and pressurizing Russia. 00:25:19 Speaker 4: And we should not. 00:25:21 Speaker 9: Take these the latest success for Ukraine as a reason to decrease our support. Quite the opposite, you know, to make it super clear for Russia that time is not on their side. With a ninety billion euros loan from Europe to Ukraine, that also creates a trustworthy long term commitment for Ukraine. So I think we are on the right track. What we see right now is actually increasing Russia, increasing their attacks on big cities like Kiev. That also gives us a good reason to provide more of the kind of air defense needed in Ukraine to be able for them to defend themselves while they also are defending themselves. 00:26:14 Speaker 8: On Russian soil, And there's been an increasing debate about diplomatic engagement on the European side with the Russians. 00:26:20 Speaker 4: Where do you fall on the debate? 00:26:21 Speaker 8: Do you think that we're any more closer at the European side have a collective person willing to put forward in a really sort of serious engagement with the Russians. 00:26:30 Speaker 9: While I normally think that discussion starts at the wrong place to speak, It starts with who should represent I mean, the big thing is that Russia Ukraine is willing to negotiate a decent peace Europe, both EU Europe and broader Europe. 00:26:46 Speaker 2: We are perfectly. 00:26:48 Speaker 9: Willing to support Ukraine in that difficult task. It is obviously Russia who is not willing to in any way in nego shape. They have a maximalistic view on the war against Ukraine. And as long as Russia is the is the obstacle for negotiations. 00:27:09 Speaker 4: The question needs to be to Russia. 00:27:11 Speaker 9: Of course, if the situation comes where Russia is willing to negotiate on decent preconditions, Ukraine wants to negotiate and they want the European support for that, then we will sort that out. 00:27:23 Speaker 8: And also thinking about the pressure that is building on Russia. We've had more and more warnings and discussions from European leaders concerned that there could be a direct confrontation between Europe and Russia. 00:27:33 Speaker 6: Where do you sort of put. 00:27:34 Speaker 8: That in sort of the risk assessment as today, particularly as the newest member of NATO. 00:27:41 Speaker 9: Well, nothing new really. We all realize that Russia. There is a battle of pressure on Russia. They are having very very little success on the battlefield. They have a severely hit economy, and they refuse to negotiate. What would they do? And right now they increase their attacks on Kiev. All the countries in Russia's neighborhoods or in the region are well prepared for different kind of hybrid threats against our countries. They can take a variety of forms. I think Russia is very well aware of that attacking in native country will be an extremely bad idea. We don't see any science of that, but we do see a lot of signs of different kinds of hybrid threats and activities. Undersea cables being destroyed and the Russian shadow Fleet acting in a reckless way, and all of these things. I think we have never been as well prepared as we are right now. 00:28:45 Speaker 2: This is the Bloomberg Sevenments podcast, bringing you the best in market economics, antient politics. You can watch the show live on Bloomberg TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business opp 00:29:08 Speaker 7: Mm hmm