1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:21,240 Speaker 1: on Apple car Play or Android Auto with the Bloomberg 4 00:00:21,320 --> 00:00:24,880 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:25,280 --> 00:00:27,240 Speaker 1: or watch us live on YouTube. 6 00:00:27,640 --> 00:00:30,720 Speaker 2: Unfortunately he's been driving this salweek. Richard claiit with us 7 00:00:30,720 --> 00:00:36,159 Speaker 2: now his work at Columbia University definitive on fancy economics 8 00:00:36,200 --> 00:00:40,560 Speaker 2: called dynamic stochastic general equilibrium theory holding court at the 9 00:00:40,600 --> 00:00:44,199 Speaker 2: FEDS Vice Chairman, I'm not going to mince words in 10 00:00:44,320 --> 00:00:48,680 Speaker 2: frankly a professor Claret, are you still at Columbia? 11 00:00:48,880 --> 00:00:49,280 Speaker 3: I am? 12 00:00:49,360 --> 00:00:51,199 Speaker 2: You get a piece of chalk out every See. The 13 00:00:51,240 --> 00:00:55,040 Speaker 2: problem is Xavier Sally Martin wouldn't allow Ai in the class. 14 00:00:55,320 --> 00:00:58,440 Speaker 2: You would allow Ai in a freshman class to make 15 00:00:58,480 --> 00:00:59,560 Speaker 2: the kids smarter. 16 00:00:59,440 --> 00:01:03,920 Speaker 4: Right, I don't teach a freshman anymore. 17 00:01:03,320 --> 00:01:05,440 Speaker 5: But would you let Ai in the class? 18 00:01:05,480 --> 00:01:09,080 Speaker 4: Well, not in the classroom, but when I teach, I 19 00:01:09,120 --> 00:01:11,640 Speaker 4: assume the students are making reference to it, which is 20 00:01:11,640 --> 00:01:13,960 Speaker 4: why I've actually put a focus on having. 21 00:01:13,760 --> 00:01:15,120 Speaker 5: In class presentations. 22 00:01:15,640 --> 00:01:18,880 Speaker 4: There you go, there you gold fashion Socratic dialogue. 23 00:01:18,920 --> 00:01:21,760 Speaker 6: I'm going to cut to the Chase Socratic Dialogue. You 24 00:01:22,040 --> 00:01:24,640 Speaker 6: saved Jerome Pale, Folks. I'm not going to mince words 25 00:01:24,680 --> 00:01:28,920 Speaker 6: about it. It's called a dual engine leadership mode model. 26 00:01:29,200 --> 00:01:31,840 Speaker 6: And it was Clarida's vice chairman and a guy from 27 00:01:31,840 --> 00:01:34,920 Speaker 6: Wall Street's chairman. And when he came in you allowed 28 00:01:35,000 --> 00:01:39,520 Speaker 6: him to relax and grow with your prodigious academic abilities. 29 00:01:39,959 --> 00:01:42,640 Speaker 6: Does Chairman worsh need a clarity? 30 00:01:43,880 --> 00:01:47,120 Speaker 4: Well, that that'll be his decision. I enjoyed my four years, 31 00:01:47,160 --> 00:01:50,000 Speaker 4: That's that's for sure. But there are a lot of 32 00:01:50,000 --> 00:01:51,720 Speaker 4: good people at the FAT and I think that's a 33 00:01:51,760 --> 00:01:54,200 Speaker 4: decision he'll he'll make. He's got a very good advice 34 00:01:54,280 --> 00:01:58,320 Speaker 4: chair right now and Phil Phil Jefferson. But at some 35 00:01:58,440 --> 00:02:01,120 Speaker 4: point there will be a vice chair vacancy. 36 00:02:01,240 --> 00:02:03,240 Speaker 2: Is that something that the committee when he goes in 37 00:02:03,240 --> 00:02:05,480 Speaker 2: front of these tough guys in the Hill, they can 38 00:02:05,600 --> 00:02:10,240 Speaker 2: demand you have a vice chair of the academic skills. 39 00:02:11,160 --> 00:02:13,440 Speaker 4: Well, it's not clear that that's what would be on 40 00:02:13,480 --> 00:02:14,760 Speaker 4: their wish list, but. 41 00:02:17,360 --> 00:02:20,200 Speaker 5: Possibility, I suppose. I mean they could request that. 42 00:02:20,280 --> 00:02:24,640 Speaker 7: Certainly, Kevin Warrish has called for a new accord with 43 00:02:24,720 --> 00:02:26,880 Speaker 7: the Treasury Department. Yeah, what does you mean by that? 44 00:02:27,400 --> 00:02:29,480 Speaker 4: Well, you know, this is one of those things where 45 00:02:31,040 --> 00:02:34,720 Speaker 4: this is what they call in DC very big tent language. 46 00:02:35,120 --> 00:02:37,760 Speaker 4: It means different things to different people. The one accord 47 00:02:37,800 --> 00:02:40,280 Speaker 4: that we do know about, which is the one that 48 00:02:40,360 --> 00:02:43,040 Speaker 4: was struck in nineteen fifty one between the Treasury and 49 00:02:43,080 --> 00:02:46,560 Speaker 4: the FED, was a signal moment and Fed independence because 50 00:02:46,560 --> 00:02:48,800 Speaker 4: they got the FED out of the business of essentially 51 00:02:48,800 --> 00:02:51,280 Speaker 4: camping treasure yels. In fact is I'd like to teach 52 00:02:51,320 --> 00:02:54,560 Speaker 4: my students. We all know that World War Two ended 53 00:02:54,560 --> 00:02:56,880 Speaker 4: in nineteen forty five, but the FED didn't get the 54 00:02:56,919 --> 00:03:00,240 Speaker 4: memo till nineteen fifty one because the Truman administry from 55 00:03:00,280 --> 00:03:02,320 Speaker 4: pressure to the FED to keep a cap on rates, 56 00:03:02,520 --> 00:03:06,919 Speaker 4: the FED declare independence in the accord. I think now 57 00:03:06,960 --> 00:03:09,160 Speaker 4: if there is a Treasury Fed accord, it would not 58 00:03:09,240 --> 00:03:11,600 Speaker 4: be so much focused on that. It would be focused 59 00:03:11,639 --> 00:03:14,200 Speaker 4: on for example, should the FED a whole two trillion 60 00:03:14,280 --> 00:03:17,880 Speaker 4: dollars in mortgage backed securities? Should the FED the composition 61 00:03:17,919 --> 00:03:20,760 Speaker 4: of the Fed' portfolio really be tilted toward tea bills 62 00:03:21,240 --> 00:03:24,320 Speaker 4: unless from holding ten and thirty year treasury So I 63 00:03:24,320 --> 00:03:26,239 Speaker 4: think there are a lot of conversations to have, and 64 00:03:26,360 --> 00:03:28,760 Speaker 4: even during my time on the FED there were discussions 65 00:03:28,800 --> 00:03:34,720 Speaker 4: before the pandemic about rethinking the Fed' portfolio composition, So 66 00:03:34,760 --> 00:03:37,080 Speaker 4: I think that's entirely appropriate. But I think we're a 67 00:03:37,080 --> 00:03:40,680 Speaker 4: long way away from any formal accord. 68 00:03:40,960 --> 00:03:44,240 Speaker 7: So what do you expect this Federal Reserve to do 69 00:03:44,960 --> 00:03:46,240 Speaker 7: in County your twenty six? 70 00:03:47,200 --> 00:03:51,560 Speaker 5: Well, first we have to get the chair confirmed. He 71 00:03:51,760 --> 00:03:53,240 Speaker 5: that's not a foregone conclusion, right. 72 00:03:53,240 --> 00:03:55,880 Speaker 4: I think once he has a hearing, he will get 73 00:03:55,920 --> 00:04:00,000 Speaker 4: confirmed because he's very well qualified, but it may be 74 00:04:00,480 --> 00:04:01,600 Speaker 4: maybe a while before he. 75 00:04:01,600 --> 00:04:03,080 Speaker 5: Has a hearing. 76 00:04:03,800 --> 00:04:06,480 Speaker 4: I think it's important to note that the pal FED 77 00:04:06,800 --> 00:04:10,040 Speaker 4: in December when they release those dots, those famous or 78 00:04:10,080 --> 00:04:13,280 Speaker 4: infamous dots, the pal FED, or at least a majority 79 00:04:13,320 --> 00:04:16,240 Speaker 4: of the FED in December, thought at least one rate 80 00:04:16,279 --> 00:04:18,839 Speaker 4: cut this year would be appropriate, and I think eight 81 00:04:19,160 --> 00:04:20,240 Speaker 4: folks thought maybe. 82 00:04:20,040 --> 00:04:21,400 Speaker 5: Two rate cuts would be appropriate. 83 00:04:21,839 --> 00:04:25,080 Speaker 4: So I do think that when Warsh gets in, if 84 00:04:25,120 --> 00:04:27,760 Speaker 4: the economic data play out the way that I and 85 00:04:27,839 --> 00:04:30,400 Speaker 4: others expect, I think he'll be able to persuade the 86 00:04:30,440 --> 00:04:32,840 Speaker 4: committee to continue to cut rates down. 87 00:04:32,920 --> 00:04:34,760 Speaker 5: Describe around three percent? 88 00:04:34,839 --> 00:04:37,520 Speaker 2: Okay, Richard Claarterer with this, folks, the former vice chairman 89 00:04:37,600 --> 00:04:40,320 Speaker 2: of the FED, hugely visible does a great job helping 90 00:04:40,400 --> 00:04:43,480 Speaker 2: us on the FED day. The FED decides, thrilled he 91 00:04:43,520 --> 00:04:45,599 Speaker 2: could be in studio with us for you across the 92 00:04:45,680 --> 00:04:48,640 Speaker 2: nation and around the world. Thank you for your attendance. 93 00:04:48,680 --> 00:04:53,960 Speaker 2: On YouTube, subscribe to bloomberg A podcasts. I look at 94 00:04:54,000 --> 00:04:57,599 Speaker 2: all this, I look at the parlor game, and just 95 00:04:57,680 --> 00:05:00,520 Speaker 2: what it comes down to is staggering from me from 96 00:05:00,560 --> 00:05:04,960 Speaker 2: meeting when mister Wartz joins, do we have a theory 97 00:05:05,200 --> 00:05:09,120 Speaker 2: of monetary policy? Or is it every president and governor 98 00:05:09,160 --> 00:05:09,919 Speaker 2: for themselves? 99 00:05:11,160 --> 00:05:15,320 Speaker 4: Tom fantastic question, because I do think that based upon 100 00:05:15,400 --> 00:05:18,960 Speaker 4: what Kevin has said with his very voluminous paper trail 101 00:05:19,240 --> 00:05:23,440 Speaker 4: over the last fifteen years, will I think that will 102 00:05:23,480 --> 00:05:26,520 Speaker 4: be a discussion. I think Kevin has expressed some skepticism 103 00:05:26,720 --> 00:05:30,400 Speaker 4: for reliance on what he believes are flawed models, too 104 00:05:30,480 --> 00:05:33,080 Speaker 4: much of a backward looking approach. 105 00:05:33,120 --> 00:05:34,600 Speaker 5: What I would point out, at least during my. 106 00:05:34,640 --> 00:05:39,240 Speaker 4: Four years is the palfed and certainly declared device chair. 107 00:05:39,279 --> 00:05:41,280 Speaker 4: It was not handcuffed to the models, even though I 108 00:05:41,320 --> 00:05:42,880 Speaker 4: developed many of them. 109 00:05:43,040 --> 00:05:46,039 Speaker 2: I give you great credit, Paul can I Editorial, I 110 00:05:46,080 --> 00:05:48,400 Speaker 2: give you great credit for this. You are the one 111 00:05:48,480 --> 00:05:51,200 Speaker 2: person who could have said we'd go for the models. 112 00:05:50,880 --> 00:05:54,240 Speaker 4: Well, and in fact my first speech in October of 113 00:05:54,320 --> 00:05:58,000 Speaker 4: twenty eighteen, I basically made the case that the economy 114 00:05:58,000 --> 00:06:01,479 Speaker 4: appeared to have stronger growth potential and a potential for 115 00:06:01,560 --> 00:06:04,640 Speaker 4: lower unemployment than the FED models thought, and that the 116 00:06:04,680 --> 00:06:07,840 Speaker 4: Powerfed should be willing if the labor market was continuing 117 00:06:07,839 --> 00:06:10,160 Speaker 4: to blossom and inflation didn't appear. 118 00:06:10,160 --> 00:06:11,279 Speaker 5: To allow that to happen. 119 00:06:11,320 --> 00:06:13,760 Speaker 4: In fact, I think I said, you know, monetary policy 120 00:06:13,920 --> 00:06:16,760 Speaker 4: is not a problem if too many people are working, right, 121 00:06:16,800 --> 00:06:19,680 Speaker 4: And indeed the Powerfed cut rates in twenty nineteen with 122 00:06:19,760 --> 00:06:22,600 Speaker 4: an unemployment rate out of fifty year low. So I 123 00:06:22,600 --> 00:06:25,640 Speaker 4: think the FED has probably been less handcuffed to models 124 00:06:25,720 --> 00:06:30,840 Speaker 4: than Kevin's remarks might suggest. But I certainly think based 125 00:06:30,920 --> 00:06:34,000 Speaker 4: upon that there will be a discussion of the best 126 00:06:34,000 --> 00:06:37,960 Speaker 4: way to incorporate modeling into FED analysis. 127 00:06:38,360 --> 00:06:41,080 Speaker 7: What happens to j Powell when he does step down 128 00:06:41,120 --> 00:06:43,800 Speaker 7: from FIT? Does he stay on at the FED? Does 129 00:06:43,839 --> 00:06:46,760 Speaker 7: he leave? Typically they ride off into the sunset? 130 00:06:46,880 --> 00:06:47,880 Speaker 5: Right they do. 131 00:06:47,960 --> 00:06:50,719 Speaker 4: In fact, there's only one example in FED history of 132 00:06:50,760 --> 00:06:53,080 Speaker 4: a chair that did not write off into the sunset, 133 00:06:53,160 --> 00:06:56,360 Speaker 4: and a very important FED chair gentleman named marinell Eckles, 134 00:06:56,360 --> 00:06:57,240 Speaker 4: so important as. 135 00:06:57,160 --> 00:06:58,320 Speaker 5: A building angles form. 136 00:06:58,360 --> 00:07:03,159 Speaker 4: There you go, and Eccles was an FDR appointee and 137 00:07:03,200 --> 00:07:05,719 Speaker 4: when Harry Truman came in, Harry Truman wanted a different 138 00:07:05,760 --> 00:07:08,440 Speaker 4: FED share, but Eckles stayed on for four years as 139 00:07:08,480 --> 00:07:10,880 Speaker 4: governor and actually turned out to be a real thorn 140 00:07:11,760 --> 00:07:13,600 Speaker 4: and Harry Truman's side. 141 00:07:13,800 --> 00:07:15,400 Speaker 5: But fast forward to Pal. 142 00:07:15,720 --> 00:07:18,680 Speaker 4: You know j pal'sman asked many times and including at 143 00:07:18,680 --> 00:07:22,160 Speaker 4: the most recent press conference, what his intentions are when 144 00:07:22,200 --> 00:07:25,120 Speaker 4: his term is chair is up, and he's really not commented. 145 00:07:25,200 --> 00:07:28,440 Speaker 4: So there's the possibility he could stay on. I myself 146 00:07:28,600 --> 00:07:31,240 Speaker 4: think that it's unlikely that he stays on for the 147 00:07:31,280 --> 00:07:34,200 Speaker 4: remainder of his term, which goes through twenty twenty eight. 148 00:07:34,640 --> 00:07:37,840 Speaker 2: Richard clarieda with this. So we did a Bloomberg function. 149 00:07:37,880 --> 00:07:39,760 Speaker 2: It was great Michael when Key organized it. It was all 150 00:07:39,800 --> 00:07:42,520 Speaker 2: these worthies in the audience. Catherine Maine comes up and 151 00:07:42,520 --> 00:07:44,920 Speaker 2: gives me a hug to Queen of Descent over at. 152 00:07:44,880 --> 00:07:48,440 Speaker 6: The Bank of England, what's wrong with us being like 153 00:07:48,480 --> 00:07:49,360 Speaker 6: the Bank of England? 154 00:07:49,640 --> 00:07:51,600 Speaker 5: And they come out like a Supreme Court decision. 155 00:07:51,960 --> 00:07:54,840 Speaker 2: Oh no, it's a FED meeting five to four and 156 00:07:54,880 --> 00:07:56,960 Speaker 2: the chairman voted against the majority. 157 00:07:57,160 --> 00:07:59,680 Speaker 5: Is that a bad thing. I don't think it's a 158 00:07:59,680 --> 00:08:00,240 Speaker 5: bad thing. 159 00:08:00,920 --> 00:08:03,680 Speaker 4: I think the back of England really beginning under Mervyn 160 00:08:03,960 --> 00:08:08,040 Speaker 4: King's tangents actually viewed it as a feature, not a bug, 161 00:08:08,160 --> 00:08:12,520 Speaker 4: to have close votes encourage thoughtful dissent. And as I recall, 162 00:08:12,680 --> 00:08:15,280 Speaker 4: the governor has been on losing sight on some votes. 163 00:08:15,560 --> 00:08:18,840 Speaker 4: There unusual in FED history. In fact, I did prepare 164 00:08:18,880 --> 00:08:21,160 Speaker 4: for your show. I went back and looked. Saint Louis 165 00:08:21,200 --> 00:08:24,560 Speaker 4: FED has a great database on this, and you'd have 166 00:08:24,600 --> 00:08:27,960 Speaker 4: to go back to nineteen thirty nineteen thirty nine the 167 00:08:28,080 --> 00:08:30,880 Speaker 4: last time a chair actually lost an FMC vote, and 168 00:08:30,880 --> 00:08:31,960 Speaker 4: that was Mariner Eccles. 169 00:08:32,360 --> 00:08:35,480 Speaker 5: But Jane William Miller and Paul Volker lost votes on 170 00:08:35,559 --> 00:08:39,000 Speaker 5: discount rate adjustments. But again we're going back forty to 171 00:08:39,080 --> 00:08:40,040 Speaker 5: fifty years. 172 00:08:40,160 --> 00:08:40,679 Speaker 8: Did you hear? 173 00:08:40,720 --> 00:08:42,920 Speaker 3: What do you prepare for the show? 174 00:08:44,080 --> 00:08:50,319 Speaker 5: Are you kidding me? You'd be the only one, Richard? 175 00:08:50,360 --> 00:08:53,439 Speaker 7: What's the FED focusing on now? Is it the labor market? 176 00:08:53,760 --> 00:08:56,240 Speaker 7: Is it inflation? Where's the balance? 177 00:08:56,320 --> 00:08:57,040 Speaker 9: These days? 178 00:08:57,559 --> 00:09:00,959 Speaker 4: They've been pretty consistent for a while that inflation is 179 00:09:01,000 --> 00:09:03,600 Speaker 4: too high. It's been above target for five years, it'll 180 00:09:03,600 --> 00:09:05,160 Speaker 4: probably be above target this year. 181 00:09:05,200 --> 00:09:06,000 Speaker 5: For six years. 182 00:09:06,880 --> 00:09:09,720 Speaker 4: But the FAT has a dual mandate, and the unemployment 183 00:09:09,800 --> 00:09:12,760 Speaker 4: rate is basically right now at a point that they 184 00:09:12,800 --> 00:09:17,080 Speaker 4: think is consistent with a healthy labor market. But they 185 00:09:17,120 --> 00:09:20,400 Speaker 4: are noticing that payroll employment gains have been very modest. Indeed, 186 00:09:20,400 --> 00:09:23,200 Speaker 4: when we get the revisions later this week, it actually 187 00:09:23,200 --> 00:09:26,480 Speaker 4: may show negative payroll gains in the second half of 188 00:09:26,600 --> 00:09:32,320 Speaker 4: the year. And so I do think that I take 189 00:09:32,320 --> 00:09:34,120 Speaker 4: them at their word when they say they would not 190 00:09:34,280 --> 00:09:38,000 Speaker 4: welcome any additional rise in the unemployment rate, and I 191 00:09:38,000 --> 00:09:41,040 Speaker 4: think they would react to that. But so long as 192 00:09:41,040 --> 00:09:45,160 Speaker 4: the economy sort of turns along as people expect, I 193 00:09:45,200 --> 00:09:48,599 Speaker 4: think they are trying to balance that against their concerns 194 00:09:48,640 --> 00:09:50,320 Speaker 4: about elevated inflation. 195 00:09:50,640 --> 00:09:53,360 Speaker 2: Paul Sweeney with Richard Clarita right now, can I ask, 196 00:09:53,600 --> 00:09:54,640 Speaker 2: can we go NERD right now? 197 00:09:55,200 --> 00:09:59,920 Speaker 5: Monday freezing money? Okay? Did you recruit Woodford to Columbia? 198 00:10:00,480 --> 00:10:01,280 Speaker 3: Was that you're trying? 199 00:10:01,559 --> 00:10:05,480 Speaker 4: I was not sure when Mike was recruited that. I 200 00:10:05,559 --> 00:10:09,640 Speaker 4: certainly was enthusiastic and worked hard on getting him to Columbia, 201 00:10:09,679 --> 00:10:11,720 Speaker 4: which was a huge appointment for Columbia. 202 00:10:11,800 --> 00:10:13,120 Speaker 5: Now twenty two years ago, I. 203 00:10:13,040 --> 00:10:15,640 Speaker 2: Told you, Michael Woodford, folks, it's a thousand page book. 204 00:10:15,679 --> 00:10:19,199 Speaker 2: Everybody owns it, Martin Felt saying once said Tom, no one's. 205 00:10:18,880 --> 00:10:22,080 Speaker 5: Ever read it cover to cover. Clarida had, Yeah. 206 00:10:22,240 --> 00:10:24,960 Speaker 2: But the bottom line, and I'm bringing this up, folks, 207 00:10:24,960 --> 00:10:27,000 Speaker 2: because we had an Ezra Prosade the other day from 208 00:10:27,000 --> 00:10:29,920 Speaker 2: Cornell with his wonderful important books out Doom the Doom 209 00:10:30,000 --> 00:10:33,679 Speaker 2: Look really important book. And the bottom line is we 210 00:10:33,760 --> 00:10:39,000 Speaker 2: assume Woodford like Oiler equations, they come down to a 211 00:10:39,040 --> 00:10:43,120 Speaker 2: point of stability, and within the system there's stability. The 212 00:10:43,440 --> 00:10:47,000 Speaker 2: result is stability. And Professor Presada is saying, no, it's 213 00:10:47,080 --> 00:10:49,439 Speaker 2: not they're going to go out on the X axis 214 00:10:49,520 --> 00:10:50,960 Speaker 2: and be unstable. 215 00:10:51,400 --> 00:10:57,120 Speaker 4: Discuss well, okay, I think at a thirty thousand foot 216 00:10:57,200 --> 00:11:01,679 Speaker 4: level in thirty seconds, all macro models, or almost all 217 00:11:01,720 --> 00:11:07,760 Speaker 4: macro models, really your best thought of as approximations typically 218 00:11:07,800 --> 00:11:10,160 Speaker 4: linear in a neighborhood of where you want to be, 219 00:11:11,520 --> 00:11:13,880 Speaker 4: and the real world can be a lot messier and 220 00:11:14,080 --> 00:11:16,400 Speaker 4: very nonlinear, a term that I know pomps up on 221 00:11:16,440 --> 00:11:18,760 Speaker 4: this show, and I think, what I'm just beginning to 222 00:11:18,800 --> 00:11:21,760 Speaker 4: read his book but he's been highlighting is we could 223 00:11:21,800 --> 00:11:26,200 Speaker 4: be in a prolonged period of very nonlinear market and 224 00:11:26,280 --> 00:11:28,360 Speaker 4: economic development. 225 00:11:27,840 --> 00:11:32,320 Speaker 2: And geopolitical development. Yeah, so if you're halfway through the book. 226 00:11:32,360 --> 00:11:35,240 Speaker 2: He sold the movie, right, ye, DiCaprio is playing. I 227 00:11:35,280 --> 00:11:38,200 Speaker 2: mean it's a gloomy book. It's shockingly gloomy. 228 00:11:38,320 --> 00:11:38,680 Speaker 5: Yeah. 229 00:11:38,800 --> 00:11:41,959 Speaker 4: Yeah, again, I have not I've not I've not worked 230 00:11:41,960 --> 00:11:46,520 Speaker 4: through it, but I certainly must read for me, So 231 00:11:46,520 --> 00:11:47,600 Speaker 4: I'll wait till I finish it. 232 00:11:47,600 --> 00:11:50,559 Speaker 5: Before I wait, Hey, Richard worked. 233 00:11:50,800 --> 00:11:55,000 Speaker 7: We're thirteen months into this whole tariff thing. I'm going 234 00:11:55,080 --> 00:11:58,160 Speaker 7: to look back on and say, boy, this was nothing. 235 00:11:58,360 --> 00:12:00,240 Speaker 7: It didn't seem to be that big of an isi you. 236 00:12:01,400 --> 00:12:03,280 Speaker 7: And that's not when I heard it. Early on. I 237 00:12:03,360 --> 00:12:04,720 Speaker 7: heard a lot of folks saying, boy, this is going 238 00:12:04,760 --> 00:12:06,720 Speaker 7: to be inflationary and so on and so forth. We 239 00:12:06,880 --> 00:12:09,840 Speaker 7: just haven't seen it. So with a little bit of hindsight, yeah, yeah, 240 00:12:09,840 --> 00:12:10,600 Speaker 7: what's happened. 241 00:12:10,679 --> 00:12:13,600 Speaker 4: So let me reinforce what you said when we eventually, 242 00:12:13,679 --> 00:12:17,360 Speaker 4: when we get the data for twenty twenty five, it 243 00:12:17,440 --> 00:12:20,440 Speaker 4: may show GDP growth the same as it was in 244 00:12:20,480 --> 00:12:23,720 Speaker 4: twenty twenty four, maybe down to tenth. It will likely 245 00:12:23,760 --> 00:12:30,000 Speaker 4: show inflation unchanged from twenty twenty four, And so a 246 00:12:30,000 --> 00:12:33,200 Speaker 4: future historian may well say what you just said, which 247 00:12:33,240 --> 00:12:35,320 Speaker 4: is what was the big deal GDP. 248 00:12:35,480 --> 00:12:39,240 Speaker 5: Growth didn't move, inflation didn't move. I think a couple 249 00:12:39,240 --> 00:12:39,680 Speaker 5: of things. 250 00:12:39,840 --> 00:12:42,560 Speaker 4: One is that the ultimate tariffs put in place were 251 00:12:42,640 --> 00:12:45,400 Speaker 4: a lot lower than the Liberation Day levels, and his 252 00:12:45,520 --> 00:12:50,880 Speaker 4: best and has emphasized that was part of the negotiating strategy. Secondly, 253 00:12:51,280 --> 00:12:53,920 Speaker 4: you know, there's a saying in baseball sometimes you'd rather 254 00:12:53,960 --> 00:12:56,360 Speaker 4: be lucky than good. I think the other thing that 255 00:12:56,440 --> 00:12:59,240 Speaker 4: happened is whatever headwind there might have been from tariff's 256 00:12:59,240 --> 00:13:05,000 Speaker 4: counterfactually was offset by the buoyant capax spending, especially by 257 00:13:05,040 --> 00:13:08,000 Speaker 4: the tech companies, and the fact that the stock market 258 00:13:08,160 --> 00:13:11,720 Speaker 4: is very optimistic on this story, so that generates a 259 00:13:11,760 --> 00:13:16,000 Speaker 4: wealth effect and an investment effect. And then thirdly, US 260 00:13:16,040 --> 00:13:23,920 Speaker 4: companies absorbed more of the tariff hit in somewhat reduced margins, 261 00:13:24,600 --> 00:13:26,080 Speaker 4: and you know, in the area they did have that 262 00:13:26,160 --> 00:13:28,880 Speaker 4: room profit margins have been very healthy, and they didn't 263 00:13:28,880 --> 00:13:31,600 Speaker 4: pass it through to the consumer. And again, of course, 264 00:13:31,640 --> 00:13:34,880 Speaker 4: we have the IEPA decision the Supreme Court is about 265 00:13:34,920 --> 00:13:39,280 Speaker 4: to release, and that may further lead to LOWERJUS. Put 266 00:13:39,280 --> 00:13:41,560 Speaker 4: it this way, I think if you calculate the actually 267 00:13:41,880 --> 00:13:44,920 Speaker 4: the tariff revenue we're collecting divided by imports, it's coming 268 00:13:44,920 --> 00:13:47,640 Speaker 4: in in about ten percent, and Liberation Day was like 269 00:13:47,679 --> 00:13:48,640 Speaker 4: thirty five percent. 270 00:13:48,679 --> 00:13:50,320 Speaker 5: So that's sort of the order of magnitude. 271 00:13:50,400 --> 00:13:51,520 Speaker 3: I got eight other questions. 272 00:13:51,559 --> 00:13:55,120 Speaker 2: I got to squeeze us in to be responsible or 273 00:13:55,280 --> 00:13:58,400 Speaker 2: zeg and pose and creating a firestorm with an idea 274 00:13:58,440 --> 00:14:02,680 Speaker 2: of resilient higher rate or even driving higher rates somewhat 275 00:14:02,760 --> 00:14:05,920 Speaker 2: due to the surprise of higher wages. Right, it's up 276 00:14:05,920 --> 00:14:09,440 Speaker 2: at the Peterson Institute. Do you and PIMCO worry about 277 00:14:09,559 --> 00:14:11,160 Speaker 2: price down yield up? 278 00:14:12,880 --> 00:14:14,680 Speaker 5: Well, you know, we get paid to worry about it. 279 00:14:14,920 --> 00:14:17,319 Speaker 4: What we do observe, at least in the treasure rate 280 00:14:17,400 --> 00:14:21,920 Speaker 4: market is the fact which is really since the last 281 00:14:21,920 --> 00:14:24,000 Speaker 4: FED rate hike, which was two and a half years ago, 282 00:14:25,120 --> 00:14:27,160 Speaker 4: ten your treasure yields have been in a pretty tight 283 00:14:27,280 --> 00:14:29,880 Speaker 4: range four and three quarters at the high end, three 284 00:14:29,880 --> 00:14:34,560 Speaker 4: and three quarters at the low end. Now that also 285 00:14:35,640 --> 00:14:38,480 Speaker 4: you also need to note that underlying real rates, which 286 00:14:38,480 --> 00:14:41,840 Speaker 4: we can see from the inflation index bond market, are 287 00:14:41,920 --> 00:14:45,840 Speaker 4: much higher than they were in twenty nineteen, and so 288 00:14:45,920 --> 00:14:47,720 Speaker 4: we're going to have a steeper yield curve than we 289 00:14:47,760 --> 00:14:50,040 Speaker 4: did pre pandemic, which is a good thing. I think 290 00:14:50,440 --> 00:14:56,000 Speaker 4: we're going to probably have elevated somewhat elevated volatility relative 291 00:14:56,040 --> 00:14:59,120 Speaker 4: to the decade before the pandemic, in which rate volatility 292 00:14:59,200 --> 00:15:00,600 Speaker 4: was suppressed through. 293 00:15:00,560 --> 00:15:02,840 Speaker 5: A zero negative humor. At one point, I think in 294 00:15:02,880 --> 00:15:03,480 Speaker 5: Europe there was. 295 00:15:03,400 --> 00:15:07,120 Speaker 4: Like eighteen trillion dollars of negative yielding sovereign DUTs. So 296 00:15:08,440 --> 00:15:10,400 Speaker 4: we do pay attention to it, but we think a 297 00:15:10,440 --> 00:15:13,640 Speaker 4: lot of the repricing that needed to happen because of 298 00:15:13,680 --> 00:15:17,000 Speaker 4: the fiscal outlook has basically already happened and is in 299 00:15:17,000 --> 00:15:17,440 Speaker 4: the price. 300 00:15:17,720 --> 00:15:20,400 Speaker 2: I am begging when you get through the doom loop, 301 00:15:20,760 --> 00:15:24,200 Speaker 2: When I get through the doomop, I would be honored 302 00:15:24,200 --> 00:15:27,280 Speaker 2: to have you and Prisadon in the same studio together. 303 00:15:28,160 --> 00:15:32,160 Speaker 2: Would be like a service to a lot of people 304 00:15:32,200 --> 00:15:35,200 Speaker 2: thinking about this. His public service to the nation at 305 00:15:35,240 --> 00:15:36,720 Speaker 2: the Federal Reserve System. 306 00:15:36,840 --> 00:15:37,680 Speaker 5: Richard Clarday. 307 00:15:37,760 --> 00:15:41,160 Speaker 3: He is Global Economic Advisor at pimcof. 308 00:15:42,360 --> 00:15:46,560 Speaker 2: Stay with us more from Bloomberg Surveillance coming up after this. 309 00:15:53,760 --> 00:15:57,360 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 310 00:15:57,440 --> 00:16:00,440 Speaker 1: weekday afternoons from seven to ten am. E's durn Listen 311 00:16:00,520 --> 00:16:04,040 Speaker 1: on Applecarplay and Android Otto with the Bloomberg Business app, 312 00:16:04,240 --> 00:16:06,320 Speaker 1: or watch US Live on YouTube a. 313 00:16:06,560 --> 00:16:09,280 Speaker 2: I am hate because it's bringing back all my quant nightmares. 314 00:16:09,440 --> 00:16:12,680 Speaker 2: I actually study this like I look at Kurtosis and 315 00:16:12,720 --> 00:16:16,320 Speaker 2: it's like E equals x minus ux squared and. 316 00:16:16,280 --> 00:16:19,280 Speaker 3: The y item is well, lots of mew in there. 317 00:16:19,400 --> 00:16:22,200 Speaker 5: Yes, it's very MEWI as well, joining us out of 318 00:16:22,200 --> 00:16:23,200 Speaker 5: the Queen of Greek letters. 319 00:16:23,200 --> 00:16:27,360 Speaker 2: Amy wou Silverman had a derivative strategy at RBC Capital Markets. 320 00:16:27,520 --> 00:16:29,880 Speaker 2: If you take your world and it's goussy and like 321 00:16:29,880 --> 00:16:32,800 Speaker 2: a bell curve like our high school the height of 322 00:16:32,840 --> 00:16:36,000 Speaker 2: our high school class, and then you transfer it over 323 00:16:36,080 --> 00:16:39,200 Speaker 2: to the oddities of log normal or even to ta 324 00:16:39,320 --> 00:16:43,480 Speaker 2: lab in place saus. You can't use that material now, 325 00:16:43,560 --> 00:16:46,320 Speaker 2: can you, Because the dispersion is stupid. 326 00:16:46,520 --> 00:16:46,760 Speaker 5: Right. 327 00:16:47,760 --> 00:16:50,320 Speaker 10: The duck is quacking tom so you know, I know 328 00:16:50,440 --> 00:16:53,200 Speaker 10: we've beaten this analogy to death of this duck. On 329 00:16:53,240 --> 00:16:55,040 Speaker 10: the surface of the lake, it looks calm, I mean, 330 00:16:55,080 --> 00:16:57,600 Speaker 10: a little choppier now, but those little duck feet are 331 00:16:57,680 --> 00:17:00,880 Speaker 10: even more violent underneath when we think aboutsion. So just 332 00:17:00,920 --> 00:17:06,600 Speaker 10: the difference between average single stock volatility and index level volatility. 333 00:17:06,600 --> 00:17:09,720 Speaker 10: You know, there's a reason why VIX even though it's eighteen, 334 00:17:09,760 --> 00:17:12,360 Speaker 10: it's still sub twenty that's kind of crazy. But then 335 00:17:12,400 --> 00:17:15,520 Speaker 10: go over to something like VXN your nastac vall that 336 00:17:15,680 --> 00:17:18,280 Speaker 10: spreads through the roof, because we got a little zigging, 337 00:17:18,320 --> 00:17:20,159 Speaker 10: but we got a lot of zagging. They tend to 338 00:17:20,200 --> 00:17:23,360 Speaker 10: cancel each other out. But that average single stock move 339 00:17:23,560 --> 00:17:24,240 Speaker 10: has been mindful. 340 00:17:24,280 --> 00:17:27,920 Speaker 5: Where's the opportunity then? Right now Monday morning, it's nuts. 341 00:17:28,160 --> 00:17:31,040 Speaker 2: We had that huge up Friday, right Paul room Jemmy, 342 00:17:31,200 --> 00:17:34,679 Speaker 2: that was like a thousand points up fifty thousand. Now 343 00:17:35,000 --> 00:17:38,600 Speaker 2: Amy was silber, and where's the opportunity now given wacko dispersion? 344 00:17:39,160 --> 00:17:41,320 Speaker 10: So I think the big question right now is we're 345 00:17:41,320 --> 00:17:44,360 Speaker 10: at a crossroads. Does this dispersion continue? I can tell 346 00:17:44,400 --> 00:17:47,280 Speaker 10: you everyone's piled into the dispersion trade, But the question 347 00:17:47,400 --> 00:17:49,240 Speaker 10: is do we at some point just get a lift 348 00:17:49,240 --> 00:17:52,880 Speaker 10: of correlation. Everything all goes risk off at the same time, 349 00:17:52,960 --> 00:17:55,360 Speaker 10: you know, and then that duck's falling off a waterfall 350 00:17:55,480 --> 00:17:57,560 Speaker 10: or something. That's the big question that hasn't happened a 351 00:17:57,560 --> 00:18:00,919 Speaker 10: long time. I think there's more nervousness could occur. 352 00:18:01,960 --> 00:18:04,600 Speaker 7: Last week, last ten days when we saw the selloff 353 00:18:04,680 --> 00:18:09,680 Speaker 7: in the tech names generally software in particular, it felt 354 00:18:09,880 --> 00:18:13,320 Speaker 7: panicky to me. It felt like something unusual. Did you 355 00:18:13,320 --> 00:18:16,160 Speaker 7: see that in the options markets, in the derivatives markets? 356 00:18:16,359 --> 00:18:18,880 Speaker 10: Yeah, And one big question I get now is what 357 00:18:19,080 --> 00:18:22,440 Speaker 10: is IGV volatile? They kind of telling you since then, 358 00:18:22,760 --> 00:18:25,159 Speaker 10: so I can tell you that pickup and skews that 359 00:18:25,160 --> 00:18:27,959 Speaker 10: that demand for hedges has faded. So it's not like 360 00:18:28,000 --> 00:18:31,000 Speaker 10: people are betting that we're going to see further downside there. 361 00:18:31,040 --> 00:18:33,960 Speaker 10: You're actually seeing a decent amount of dispersion just within IGV. 362 00:18:34,480 --> 00:18:37,560 Speaker 10: But the question is, you know, how frequently will we 363 00:18:37,640 --> 00:18:40,359 Speaker 10: continue to have retail save the day? That's what happened again, 364 00:18:40,400 --> 00:18:41,200 Speaker 10: that's your playbook? 365 00:18:41,320 --> 00:18:42,439 Speaker 7: Is that what happened since April? 366 00:18:42,520 --> 00:18:46,480 Speaker 10: Second? Yeah, overall, you know you saw that Friday, and 367 00:18:47,240 --> 00:18:50,120 Speaker 10: to be fair, they won the last few rounds. And 368 00:18:50,400 --> 00:18:52,439 Speaker 10: the question is that does that like at the stool 369 00:18:52,520 --> 00:18:54,399 Speaker 10: continue or does something. 370 00:18:54,200 --> 00:18:56,960 Speaker 7: Just abou ETF phenomena. Is it more pronounced today than 371 00:18:57,000 --> 00:18:59,680 Speaker 7: it was in the past because ETFs have so much 372 00:19:00,240 --> 00:19:04,119 Speaker 7: money that retail maybe has a bigger play in the market. 373 00:19:04,280 --> 00:19:07,560 Speaker 10: It's a great question. I think there's just overall democratization. 374 00:19:07,800 --> 00:19:10,000 Speaker 10: There's there's ease in how you trade. You can trade 375 00:19:10,040 --> 00:19:13,080 Speaker 10: a fractional option, you can go on your iPhone or 376 00:19:13,320 --> 00:19:16,480 Speaker 10: smartphone and do it. But you know, we're seeing a 377 00:19:16,480 --> 00:19:19,200 Speaker 10: lot of flows. I spoke with our ETF team into 378 00:19:19,240 --> 00:19:22,000 Speaker 10: something like Voo, which is tends to be more retail heavy. 379 00:19:22,000 --> 00:19:25,120 Speaker 10: ETF just historic and flows there. And then you see 380 00:19:25,119 --> 00:19:28,399 Speaker 10: them again saying like we believe in the AI theme. 381 00:19:28,480 --> 00:19:30,480 Speaker 10: We're going to go back at it. We won that 382 00:19:30,520 --> 00:19:33,040 Speaker 10: liberation day round. There's no reason we don't believe by 383 00:19:33,040 --> 00:19:34,520 Speaker 10: the DIP continues to work. 384 00:19:34,640 --> 00:19:35,080 Speaker 3: And it was. 385 00:19:35,080 --> 00:19:37,800 Speaker 2: Silverman with this head of derivative strategy at RBC, a 386 00:19:37,880 --> 00:19:42,480 Speaker 2: quant template over the equity market. How can people in 387 00:19:42,560 --> 00:19:46,440 Speaker 2: boring four oh one ks use your work? You talk 388 00:19:46,520 --> 00:19:50,879 Speaker 2: to fancy people with fancy Greek letters, but mere mortals 389 00:19:50,880 --> 00:19:53,320 Speaker 2: like I'm in a tutel one cage because I'm triple 390 00:19:53,400 --> 00:19:56,720 Speaker 2: leveraged all cash fun John Tucker, are you in a 391 00:19:56,800 --> 00:19:58,880 Speaker 2: five oh one k like because you loaned the boat 392 00:19:58,960 --> 00:19:59,640 Speaker 2: on Nvidia. 393 00:20:00,280 --> 00:20:03,560 Speaker 5: No, No, it's you know, it's done remarkably well. 394 00:20:03,800 --> 00:20:07,000 Speaker 7: Yeah, exactly. 395 00:20:07,440 --> 00:20:08,840 Speaker 5: No, that doesn't mean I'm retiring. 396 00:20:09,000 --> 00:20:11,439 Speaker 7: Don't panic, but there might be a work don't appear. 397 00:20:11,600 --> 00:20:18,639 Speaker 9: I'm thinking, yeah, could be nice, sat tied up to 398 00:20:18,680 --> 00:20:21,720 Speaker 9: the Atlantic Highlands work there amy. 399 00:20:21,920 --> 00:20:25,119 Speaker 3: How can people with their mere mortals use your work. 400 00:20:25,600 --> 00:20:27,960 Speaker 10: Yeah, I can tell you they they already are. So 401 00:20:28,040 --> 00:20:32,160 Speaker 10: the growth in income funds, for instance, where your your 402 00:20:32,240 --> 00:20:34,920 Speaker 10: long and index or your long stocks, and then your 403 00:20:35,240 --> 00:20:38,760 Speaker 10: your your favorite word time you're harvesting volatility, you're selling 404 00:20:39,359 --> 00:20:41,399 Speaker 10: yield to collect a little bit more yield. You know, 405 00:20:41,440 --> 00:20:44,560 Speaker 10: those are some of the biggest strategies that are growing. 406 00:20:45,200 --> 00:20:47,680 Speaker 10: Folks like it, and they tend to like it even 407 00:20:47,720 --> 00:20:50,000 Speaker 10: in years like twenty twenty two where the market drew 408 00:20:50,040 --> 00:20:52,520 Speaker 10: down twenty percent, and they like it in years where 409 00:20:52,520 --> 00:20:54,160 Speaker 10: the market is something they give up the. 410 00:20:54,160 --> 00:20:57,240 Speaker 3: Game if they're harvesting a hedge to. 411 00:20:57,320 --> 00:21:00,399 Speaker 10: Get so obviously, yeah, so obviously there's that risk of 412 00:21:00,440 --> 00:21:02,679 Speaker 10: your limiting upside. I think for a lot of people 413 00:21:02,840 --> 00:21:05,800 Speaker 10: it's more about that yield collection is attractive. Depending on 414 00:21:05,840 --> 00:21:08,320 Speaker 10: where they are in their time horizon, that might make 415 00:21:08,440 --> 00:21:11,800 Speaker 10: more sense, and they're okay with that, especially if they 416 00:21:11,840 --> 00:21:14,200 Speaker 10: think we're getting kind of heady in terms of evaluations. 417 00:21:14,480 --> 00:21:16,240 Speaker 7: Well, I would think your desk is writing a lot 418 00:21:16,240 --> 00:21:18,879 Speaker 7: of business because boy, if I were a salesperson, I 419 00:21:18,880 --> 00:21:21,399 Speaker 7: could do the one if here, what if here the 420 00:21:21,440 --> 00:21:23,560 Speaker 7: AI trade is ending and so on and so forth. 421 00:21:23,760 --> 00:21:26,560 Speaker 7: You can't be out of this market, be writing options 422 00:21:26,560 --> 00:21:27,280 Speaker 7: all over the place. 423 00:21:28,359 --> 00:21:30,760 Speaker 10: It's been you know, I will tell you the volume 424 00:21:30,800 --> 00:21:33,800 Speaker 10: and options has been really busy. I think last last 425 00:21:33,880 --> 00:21:37,159 Speaker 10: week in XLP so the staples we saw more than 426 00:21:37,200 --> 00:21:40,520 Speaker 10: a million trade on the put side. I mean, just stunning. 427 00:21:40,600 --> 00:21:44,200 Speaker 10: And what you would arguably say is a boring defensive industry. 428 00:21:45,160 --> 00:21:48,000 Speaker 10: It's very active. And the other thing is, you know, 429 00:21:48,080 --> 00:21:51,200 Speaker 10: there's also the Trump tweeter risk. That's my bad joke 430 00:21:51,280 --> 00:21:53,439 Speaker 10: of you know, Twitter risk from Trump at any moment 431 00:21:53,880 --> 00:21:57,080 Speaker 10: can just shift the game geopolitical risk. It's one reason 432 00:21:57,160 --> 00:21:59,919 Speaker 10: we still think geldv All makes sense on the upside. 433 00:22:00,280 --> 00:22:04,640 Speaker 2: Okay, very importantly, Amy was San Folks is our surveillance. 434 00:22:04,760 --> 00:22:08,440 Speaker 2: Taylor ts correspondent here. Should Taylor do the super Bowl? 435 00:22:09,720 --> 00:22:13,440 Speaker 10: I think she's busy planning. Sure, yeah, yes, she's She's 436 00:22:13,520 --> 00:22:17,600 Speaker 10: transcended the Supervislin, my husband's nursing is Patriots loss. So 437 00:22:18,119 --> 00:22:23,360 Speaker 10: you know it hasn't been great for us. 438 00:22:21,800 --> 00:22:24,560 Speaker 3: Amy or Silverman, thank you so much, really really appreciate it. 439 00:22:24,560 --> 00:22:29,800 Speaker 2: With RBC Capital Markets, stay with us. More from Bloomberg 440 00:22:29,880 --> 00:22:31,960 Speaker 2: surveillance coming up after this. 441 00:22:39,200 --> 00:22:42,760 Speaker 1: You're listening to the Bloomberg surveillance podcast. Catch US live 442 00:22:42,840 --> 00:22:46,000 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 443 00:22:46,080 --> 00:22:49,720 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 444 00:22:49,880 --> 00:22:51,480 Speaker 1: watch US live on YouTube. 445 00:22:51,800 --> 00:22:54,680 Speaker 2: This is the best research real estate note i've seen. 446 00:22:54,880 --> 00:22:57,240 Speaker 2: Thank you, John Tucker Richel with this global had of 447 00:22:57,280 --> 00:22:58,439 Speaker 2: real estate strategy. 448 00:22:58,880 --> 00:23:02,119 Speaker 6: Your note is a brand fresh air because it's not 449 00:23:02,200 --> 00:23:03,480 Speaker 6: a monolithic note. 450 00:23:03,520 --> 00:23:06,200 Speaker 3: There's all sorts of nuance in that. 451 00:23:06,680 --> 00:23:10,840 Speaker 6: For an investor right now, is a general statement, I 452 00:23:10,960 --> 00:23:13,000 Speaker 6: need to acquire reach shares. 453 00:23:13,440 --> 00:23:17,040 Speaker 3: Does that make sense now? Given the cacophony of your note, 454 00:23:17,160 --> 00:23:17,800 Speaker 3: So it doesn't. 455 00:23:17,800 --> 00:23:18,240 Speaker 8: It doesn't. 456 00:23:18,280 --> 00:23:21,040 Speaker 11: So let me explain what I mean by that. Reads 457 00:23:21,080 --> 00:23:23,240 Speaker 11: have been out of favor for the past several years, 458 00:23:23,480 --> 00:23:25,560 Speaker 11: and I get it right. We've been a high growth environment, 459 00:23:25,600 --> 00:23:27,639 Speaker 11: we've been a rising interest rate environment, and that's not 460 00:23:27,720 --> 00:23:28,720 Speaker 11: conducer for reads. 461 00:23:29,119 --> 00:23:30,280 Speaker 8: But you were talking about. 462 00:23:30,080 --> 00:23:33,560 Speaker 11: A rotation that we're seeing previously, and reads are participating 463 00:23:33,560 --> 00:23:36,439 Speaker 11: in that rotation. They're now up five percent year to 464 00:23:36,520 --> 00:23:38,480 Speaker 11: date to the sixth best sector of the S and 465 00:23:38,520 --> 00:23:41,200 Speaker 11: P five hundred, after being the worst sector last year. 466 00:23:41,720 --> 00:23:45,200 Speaker 11: But commercial real estate is not a singular asset class. 467 00:23:45,240 --> 00:23:49,160 Speaker 11: It's actually eighteen different subsectors. That do something very differently 468 00:23:49,200 --> 00:23:51,679 Speaker 11: at different points in time. And I think that's our 469 00:23:51,800 --> 00:23:55,439 Speaker 11: key view here. This is not a single sector beta 470 00:23:55,520 --> 00:23:58,120 Speaker 11: trade that we're seeing for commercial real estate. We think 471 00:23:58,119 --> 00:24:01,040 Speaker 11: this is a cycle for dispersion, where we're seeing significant 472 00:24:01,080 --> 00:24:05,119 Speaker 11: dispersion and returns across property types, markets, and even fun vehicles. 473 00:24:05,560 --> 00:24:07,879 Speaker 11: We think that's a market that's right for alpha. But no, 474 00:24:08,080 --> 00:24:09,840 Speaker 11: this is not a market where you're supposed to be 475 00:24:09,920 --> 00:24:10,760 Speaker 11: just buying everything. 476 00:24:11,440 --> 00:24:13,399 Speaker 7: That was my mistake commercial real estate. I used to 477 00:24:13,440 --> 00:24:15,960 Speaker 7: think that was just office. Now I know better, it's 478 00:24:16,040 --> 00:24:18,520 Speaker 7: you know, it's retail, it's you know, it's all these 479 00:24:18,560 --> 00:24:20,879 Speaker 7: other places, data centers and all that kind of stuff. 480 00:24:21,520 --> 00:24:23,920 Speaker 7: Where is the value today in commercial real estate? Where 481 00:24:23,920 --> 00:24:26,320 Speaker 7: are the opportunities? Where are you guys allocating capital to say? 482 00:24:26,440 --> 00:24:26,720 Speaker 3: Sure? 483 00:24:26,920 --> 00:24:29,800 Speaker 11: Well, we like to say themes still matter, but they 484 00:24:29,880 --> 00:24:33,160 Speaker 11: require hyper focus. So one of the things that we're 485 00:24:33,160 --> 00:24:35,480 Speaker 11: talking about, I always like to start with the housing market, 486 00:24:35,480 --> 00:24:38,520 Speaker 11: because the housing market is everyone's favorite sector. Right now, 487 00:24:38,920 --> 00:24:41,439 Speaker 11: You've heard this statistic thrown out all the time that 488 00:24:41,480 --> 00:24:44,120 Speaker 11: the US is under house five million, seven million, eight 489 00:24:44,160 --> 00:24:48,200 Speaker 11: million homes. That's mathematically true, but it's actually the wrong discussion. 490 00:24:48,200 --> 00:24:50,679 Speaker 11: It's the wrong debate. We think we have a housing 491 00:24:50,720 --> 00:24:53,399 Speaker 11: mismatch in the United States. We've built too many homes 492 00:24:53,400 --> 00:24:56,320 Speaker 11: of certain types in some markets and not enough homes 493 00:24:56,359 --> 00:24:59,280 Speaker 11: and other of types and other markets. So we actually 494 00:24:59,359 --> 00:25:02,080 Speaker 11: might have a convince class a multi family over supply 495 00:25:02,160 --> 00:25:04,800 Speaker 11: problem in the United States. But we haven't built enough 496 00:25:04,800 --> 00:25:07,760 Speaker 11: affordable housing in the United States. We haven't built enough 497 00:25:07,920 --> 00:25:10,160 Speaker 11: middle class housing in the United States. And you can't 498 00:25:10,160 --> 00:25:12,680 Speaker 11: move a house from a high growth market in Texas 499 00:25:13,000 --> 00:25:16,720 Speaker 11: to someplace in the Midwest. By the way, Chicago, Illinois 500 00:25:16,880 --> 00:25:19,240 Speaker 11: the number one apartment market in the United States right now. 501 00:25:19,640 --> 00:25:21,800 Speaker 7: So how do we get to a place where we are? 502 00:25:22,760 --> 00:25:27,080 Speaker 7: We do have this lack of housing here. My contention 503 00:25:27,200 --> 00:25:29,840 Speaker 7: is if I'm Toll Brothers or whomever, I'm building a 504 00:25:29,840 --> 00:25:32,320 Speaker 7: million dollar McMansion because I've got a nice fat margin 505 00:25:32,400 --> 00:25:35,159 Speaker 7: on that, I don't have the same margin building a 506 00:25:35,720 --> 00:25:38,639 Speaker 7: two or three or four hundred thousand dollars starter home 507 00:25:38,920 --> 00:25:42,119 Speaker 7: or something like that. But that's just the economics of 508 00:25:42,160 --> 00:25:44,119 Speaker 7: the marketplace. How do you change that? 509 00:25:44,320 --> 00:25:48,120 Speaker 11: Yeah, so you're absolutely right, it doesn't cost really anything 510 00:25:48,359 --> 00:25:51,280 Speaker 11: less or more to do a conventional class a versus 511 00:25:51,359 --> 00:25:52,159 Speaker 11: affordable housing. 512 00:25:52,280 --> 00:25:54,400 Speaker 8: All you're talking about is the difference than the amenities. 513 00:25:54,640 --> 00:25:57,440 Speaker 11: So as a result, people only built it by new 514 00:25:58,040 --> 00:26:02,320 Speaker 11: pretty building commercial real state properties and homes. It is 515 00:26:02,440 --> 00:26:05,480 Speaker 11: very hard to buy to build affordable housing without government 516 00:26:05,560 --> 00:26:08,520 Speaker 11: subsidies of some sort. But I think the market's changing 517 00:26:08,520 --> 00:26:10,800 Speaker 11: where we're going to do this with lower cost price 518 00:26:10,840 --> 00:26:12,600 Speaker 11: points like manufactured housing insense. 519 00:26:12,880 --> 00:26:16,000 Speaker 2: Richel, with his principal asset management glob I, had a 520 00:26:16,040 --> 00:26:19,679 Speaker 2: real estate as strategy with a really really nuanced note 521 00:26:19,960 --> 00:26:22,080 Speaker 2: about what to do what not to do as well. 522 00:26:22,359 --> 00:26:25,240 Speaker 2: So off your note. I looked at hotels. We all 523 00:26:25,280 --> 00:26:28,960 Speaker 2: know in this room hotel prices are nuts. You go 524 00:26:29,000 --> 00:26:32,439 Speaker 2: around the world, it's absolutely nuts. I look at host HST, 525 00:26:32,640 --> 00:26:36,159 Speaker 2: which is I guess a fancy hotel property read and 526 00:26:36,200 --> 00:26:38,639 Speaker 2: it's not given me the returns that I'm seeing in 527 00:26:38,680 --> 00:26:41,720 Speaker 2: those price per nights in those luxury hotels. 528 00:26:41,760 --> 00:26:42,320 Speaker 5: Why is that? 529 00:26:42,520 --> 00:26:42,720 Speaker 2: Yeah? 530 00:26:42,760 --> 00:26:45,800 Speaker 11: Sure, So we think there is a case shaped recovery 531 00:26:45,800 --> 00:26:47,680 Speaker 11: occurring in the US economy right now. 532 00:26:47,840 --> 00:26:49,400 Speaker 8: What that basically means is high. 533 00:26:49,240 --> 00:26:52,000 Speaker 11: Endcome earners are doing really well, middle income earners are 534 00:26:52,040 --> 00:26:54,120 Speaker 11: not doing as well, and low income owners are really 535 00:26:54,119 --> 00:26:57,200 Speaker 11: struggling right now. You can see that in autodelinquency rates, 536 00:26:57,240 --> 00:27:02,639 Speaker 11: student student student delinquency rate, credit card delinquency rates. The 537 00:27:03,400 --> 00:27:06,879 Speaker 11: high income portion of hotels are doing really well and 538 00:27:07,040 --> 00:27:09,560 Speaker 11: some other portions of hotels are not doing so well. 539 00:27:09,760 --> 00:27:12,680 Speaker 11: So there's this real interesting mismatch going on where RevPAR 540 00:27:13,119 --> 00:27:16,320 Speaker 11: so rooms per night, where the highest income cohort is 541 00:27:16,359 --> 00:27:19,160 Speaker 11: accelerating while everything else is flapped slightly down. 542 00:27:21,320 --> 00:27:24,080 Speaker 7: So what are we doing here in commercial real estate? 543 00:27:24,720 --> 00:27:26,760 Speaker 7: Is it all data centers? Is that where I'm putting 544 00:27:26,760 --> 00:27:30,240 Speaker 7: my money? Because it seems like a data center read 545 00:27:30,359 --> 00:27:32,159 Speaker 7: there's got to be an ECF for a reader or 546 00:27:32,160 --> 00:27:33,480 Speaker 7: something there. 547 00:27:32,720 --> 00:27:36,160 Speaker 11: There are data center rates see, and they've been around 548 00:27:36,200 --> 00:27:39,200 Speaker 11: for almost a decade now, but we think data centers 549 00:27:39,240 --> 00:27:41,680 Speaker 11: are becoming a really nuanced asset class. 550 00:27:41,960 --> 00:27:45,320 Speaker 8: So maybe ten years ago everyone was bullishly. 551 00:27:44,760 --> 00:27:45,920 Speaker 5: Optimistic about them. 552 00:27:46,160 --> 00:27:47,400 Speaker 8: Now people have maybe turned. 553 00:27:47,240 --> 00:27:50,000 Speaker 11: A little bit too bearishly to barish on them. 554 00:27:50,040 --> 00:27:51,560 Speaker 8: But there's three types of data centers. 555 00:27:51,600 --> 00:27:54,440 Speaker 11: There's cloud data centers, there's AI and FEMS data centers, 556 00:27:54,440 --> 00:27:58,160 Speaker 11: and there's general AI. Cloud is really attractive because we're 557 00:27:58,240 --> 00:28:00,320 Speaker 11: using cloud right now. Cloud's been around for or it's 558 00:28:00,359 --> 00:28:03,800 Speaker 11: not going away. We actually like AI in ferns because 559 00:28:03,840 --> 00:28:06,720 Speaker 11: when we go on chat g GPT that uses cloud. 560 00:28:06,440 --> 00:28:08,520 Speaker 8: In ferns or AI in fernce. Excuse me. 561 00:28:08,840 --> 00:28:12,800 Speaker 11: Generative AI is when you're training models for future unknown 562 00:28:12,840 --> 00:28:13,520 Speaker 11: AI demand. 563 00:28:13,760 --> 00:28:14,480 Speaker 8: That's where a lot of the. 564 00:28:14,440 --> 00:28:16,080 Speaker 11: Supplies coming, and that's where a lot of the spec 565 00:28:16,119 --> 00:28:16,760 Speaker 11: buildings coming. 566 00:28:17,000 --> 00:28:20,119 Speaker 8: We're cautious on those, but we like these segments here. 567 00:28:20,240 --> 00:28:21,920 Speaker 8: We don't like these segments here. 568 00:28:22,000 --> 00:28:23,280 Speaker 5: The market's evolving. 569 00:28:23,320 --> 00:28:26,399 Speaker 2: Away from principal asset management. With what you've done Conen 570 00:28:26,440 --> 00:28:28,800 Speaker 2: Steers and all over the year you work at Georgetown 571 00:28:29,359 --> 00:28:32,719 Speaker 2: years ago, when you're at a super Bowl party and 572 00:28:32,800 --> 00:28:36,520 Speaker 2: somebody says to you, Rich, what do you do about 573 00:28:36,600 --> 00:28:40,479 Speaker 2: the housing crisis in America? Our kids can't afford it. 574 00:28:40,800 --> 00:28:44,760 Speaker 2: The average the average first time home buyer now is 575 00:28:44,840 --> 00:28:47,160 Speaker 2: what John seventy two, seventy three. 576 00:28:47,520 --> 00:28:49,120 Speaker 5: Yeah, No, that's just about how do. 577 00:28:49,080 --> 00:28:51,479 Speaker 3: You answer this national question we have. 578 00:28:51,800 --> 00:28:54,240 Speaker 8: The first question is you have to acknowledge it. It's 579 00:28:54,480 --> 00:28:55,080 Speaker 8: very real. 580 00:28:55,680 --> 00:28:58,480 Speaker 11: Housing pressure for a lot of people across the United 581 00:28:58,480 --> 00:28:59,800 Speaker 11: States is very, very high. 582 00:29:00,360 --> 00:29:01,440 Speaker 8: What do I think you have to do? 583 00:29:01,760 --> 00:29:02,040 Speaker 6: Well? 584 00:29:02,200 --> 00:29:06,000 Speaker 11: The easy answer to say government, public private partnerships. That's 585 00:29:06,000 --> 00:29:08,440 Speaker 11: probably easier said than done. I think what we need 586 00:29:08,480 --> 00:29:11,200 Speaker 11: to do is take a queue from the manufactured housing market. 587 00:29:11,320 --> 00:29:14,800 Speaker 11: So that's markets that's firmly known as mobile homes, where 588 00:29:14,800 --> 00:29:20,840 Speaker 11: you're building really nice homes with relatively cheap or inexpensive products. 589 00:29:21,040 --> 00:29:22,720 Speaker 11: I think if we can find a way to use 590 00:29:22,760 --> 00:29:25,360 Speaker 11: manufactured homes technology for a lack of better term, and 591 00:29:25,400 --> 00:29:27,640 Speaker 11: go vertical with it, that would be a long way 592 00:29:27,680 --> 00:29:30,560 Speaker 11: to solve that affordable housing crisis in the United States. 593 00:29:31,120 --> 00:29:33,520 Speaker 7: Office real estate, New York City. Where are we today? 594 00:29:33,560 --> 00:29:36,280 Speaker 11: Yeah, So I like to tell people that the leading 595 00:29:36,320 --> 00:29:38,800 Speaker 11: indicator for a rebound in the office market is what 596 00:29:38,880 --> 00:29:40,240 Speaker 11: is happening in the debt markets. 597 00:29:40,600 --> 00:29:41,840 Speaker 8: The commercial mortgage backed. 598 00:29:41,680 --> 00:29:44,840 Speaker 11: Security market so cnbs boomed for New York City office 599 00:29:44,840 --> 00:29:46,920 Speaker 11: in twenty twenty five, and it's often a pretty good start. 600 00:29:46,960 --> 00:29:48,000 Speaker 8: In twenty twenty. 601 00:29:47,720 --> 00:29:52,320 Speaker 11: Six, commercial mortgage lending was back to historical averages for office. 602 00:29:52,840 --> 00:29:56,600 Speaker 11: The market likes gateway coastal markets like New York City 603 00:29:56,640 --> 00:29:58,760 Speaker 11: and San Francisco. Right now, we actually might have already 604 00:29:58,760 --> 00:30:00,920 Speaker 11: missed the bottom in San Francisco, it's back that much. 605 00:30:01,400 --> 00:30:03,600 Speaker 8: So this is a market of have and have nots. 606 00:30:03,680 --> 00:30:06,240 Speaker 8: We don't have an office problem in the United States. 607 00:30:06,280 --> 00:30:08,040 Speaker 8: We have a Class B and C office problem. 608 00:30:08,400 --> 00:30:10,880 Speaker 11: That's too many office buildings built in the nineteen seventies 609 00:30:10,880 --> 00:30:13,160 Speaker 11: and nineteen eighties that didn't put any capecks into them 610 00:30:13,200 --> 00:30:14,440 Speaker 11: over the past several decades. 611 00:30:14,960 --> 00:30:19,120 Speaker 8: No one wants those buildings new properties. They're great challenges. 612 00:30:19,200 --> 00:30:22,000 Speaker 11: We have ninety percent of office vacancy focused on thirty 613 00:30:22,040 --> 00:30:22,400 Speaker 11: five percent. 614 00:30:22,560 --> 00:30:24,680 Speaker 3: We got to go, do you bulldoze those properties? 615 00:30:25,280 --> 00:30:25,600 Speaker 8: You do? 616 00:30:26,280 --> 00:30:30,480 Speaker 11: Because it's actually it's actually just as expensive to rebuild 617 00:30:30,480 --> 00:30:30,800 Speaker 11: as it is. 618 00:30:31,000 --> 00:30:32,560 Speaker 3: Are you based in New York? I don't even know. 619 00:30:32,640 --> 00:30:35,640 Speaker 8: Yeah, I work just a couple walks down. 620 00:30:35,440 --> 00:30:37,880 Speaker 5: You don't want to say that because we'll call you everything. 621 00:30:38,960 --> 00:30:40,640 Speaker 5: I am always having to be come up. Oh time. 622 00:30:40,720 --> 00:30:42,680 Speaker 5: It's such a drive. It was so hard to get. 623 00:30:43,200 --> 00:30:44,480 Speaker 5: This is fabulous. Richell. 624 00:30:44,520 --> 00:30:47,920 Speaker 2: Don't be as stranger with principal asset manager Richell Global 625 00:30:48,000 --> 00:30:49,320 Speaker 2: had a real estate strategy. 626 00:30:50,720 --> 00:30:51,680 Speaker 5: Stay with us. 627 00:30:51,680 --> 00:30:54,960 Speaker 2: More from Bloomberg Surveillance coming up after this. 628 00:31:02,160 --> 00:31:05,760 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 629 00:31:05,840 --> 00:31:08,960 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 630 00:31:09,040 --> 00:31:12,720 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 631 00:31:12,880 --> 00:31:14,480 Speaker 1: watch us live on YouTube. 632 00:31:14,760 --> 00:31:18,240 Speaker 2: I'm going to go somewhere where I'm curious and I 633 00:31:18,320 --> 00:31:20,920 Speaker 2: really don't think it's front center. But Lindsay Newman's going 634 00:31:20,960 --> 00:31:25,600 Speaker 2: to brief us here, absolutely phenomenal geopolitical risk expert at 635 00:31:25,600 --> 00:31:32,360 Speaker 2: G zero Media at King's College, London, Iran doctor Newman. 636 00:31:33,320 --> 00:31:36,480 Speaker 2: I guess there's this idea of X number of our 637 00:31:36,600 --> 00:31:40,800 Speaker 2: fleet in the vicinity of Iran. How do you interpret 638 00:31:41,280 --> 00:31:46,120 Speaker 2: the movement reports of US military assets in the Middle East? 639 00:31:47,520 --> 00:31:51,040 Speaker 12: K job warning, Yes, well, we how we interpret this 640 00:31:51,200 --> 00:31:54,480 Speaker 12: is to say that no surprise here, the Trump administration 641 00:31:54,720 --> 00:31:57,480 Speaker 12: is pulling all levers simultaneously. So just at the end 642 00:31:57,520 --> 00:31:59,880 Speaker 12: of last week, of course, there were these indirect bilot 643 00:32:00,240 --> 00:32:04,320 Speaker 12: talks between the US Iran. We also sell simultaneously. Not 644 00:32:04,400 --> 00:32:07,560 Speaker 12: well reported that the administration issued a new executive order 645 00:32:07,640 --> 00:32:11,360 Speaker 12: assessing the threat of Iran and extending the national emergency 646 00:32:11,400 --> 00:32:15,000 Speaker 12: that Iran poses to America in order to open the 647 00:32:15,000 --> 00:32:17,760 Speaker 12: door for more secondary tariffs. So this is the key 648 00:32:17,840 --> 00:32:21,720 Speaker 12: economic leverage piece that we expect that the administration will pursue. 649 00:32:21,800 --> 00:32:24,400 Speaker 12: And then, of course this time around the second from administration, 650 00:32:24,480 --> 00:32:28,080 Speaker 12: it's also all about force and force posturing. So we know, 651 00:32:28,240 --> 00:32:30,920 Speaker 12: as you've said, that the administration has moved a massive 652 00:32:30,960 --> 00:32:34,040 Speaker 12: amount of kit into the area. It includes a strike 653 00:32:34,120 --> 00:32:37,520 Speaker 12: carrier wars. It also includes naval destroyers, some other aircraft, 654 00:32:37,880 --> 00:32:41,280 Speaker 12: as well as anti aircraft defense systems, which will be 655 00:32:41,280 --> 00:32:43,880 Speaker 12: critical in the event that the US decides to pursue 656 00:32:43,880 --> 00:32:47,280 Speaker 12: some military action in Iran and Iran decides, of course, 657 00:32:47,320 --> 00:32:52,160 Speaker 12: to retaliate against US assets in the region or more adventurism. 658 00:32:51,600 --> 00:32:55,360 Speaker 7: In the region, Doctor Newman, what type of agreement is 659 00:32:55,400 --> 00:32:56,680 Speaker 7: the US pushing for? 660 00:32:58,400 --> 00:33:00,840 Speaker 12: Yeah, I mean, the big question, this is the question Paul, right, 661 00:33:00,840 --> 00:33:04,120 Speaker 12: because last week we saw that talks were scheduled to 662 00:33:04,160 --> 00:33:06,480 Speaker 12: go ahead in Turkey and they were going to be multilateral, 663 00:33:06,520 --> 00:33:09,160 Speaker 12: and then the talks were called off, and then they 664 00:33:09,160 --> 00:33:12,600 Speaker 12: were rescued in to be relocated in Oman, and they 665 00:33:12,600 --> 00:33:17,080 Speaker 12: were indirect bilateral talks, as they said. And the sort 666 00:33:17,080 --> 00:33:19,280 Speaker 12: of back and forth even on the location shows that 667 00:33:19,360 --> 00:33:21,600 Speaker 12: these two sides are not in alignment. They're not alignment 668 00:33:21,640 --> 00:33:23,320 Speaker 12: about where they're willing to talk, who they're willing to 669 00:33:23,320 --> 00:33:25,240 Speaker 12: have in the room, and they're certainly not in alignment 670 00:33:25,320 --> 00:33:27,960 Speaker 12: about what they're even talking about. Iran has been very 671 00:33:28,000 --> 00:33:31,200 Speaker 12: clear that the conversation is only about its nuclear capabilities. 672 00:33:31,240 --> 00:33:34,720 Speaker 12: It's not even about enrichment. It's only about reassurances that 673 00:33:34,760 --> 00:33:38,720 Speaker 12: their nuclear capabilities are for non military purposes. But the 674 00:33:38,840 --> 00:33:41,320 Speaker 12: US has been very clear and this was again stated 675 00:33:41,400 --> 00:33:44,040 Speaker 12: last week by Secretary of State Rubio also in the 676 00:33:44,040 --> 00:33:46,920 Speaker 12: Executive Order, to say that the conversation the US is 677 00:33:46,960 --> 00:33:49,680 Speaker 12: intending to have is about all nuclear capabilities there cannot 678 00:33:49,680 --> 00:33:52,680 Speaker 12: be in nuclear ron. It's also about ballistic missiles. It's 679 00:33:52,720 --> 00:33:56,840 Speaker 12: also about Iran's regional proxy support, and even a bit 680 00:33:56,880 --> 00:33:59,560 Speaker 12: more about what's going on at home in Iran. The 681 00:34:00,000 --> 00:34:02,720 Speaker 12: two sides do not have the same level of items 682 00:34:02,760 --> 00:34:05,560 Speaker 12: on the table, and that means that any so called 683 00:34:05,600 --> 00:34:08,759 Speaker 12: deal that can be reached feels very sort of out 684 00:34:08,800 --> 00:34:09,120 Speaker 12: of rain. 685 00:34:10,160 --> 00:34:12,919 Speaker 7: What is the current nuclear capabilities of Iran right now? 686 00:34:14,280 --> 00:34:16,399 Speaker 12: I mean, you know, I think it's anyone's guest, Paul. 687 00:34:16,400 --> 00:34:19,920 Speaker 12: I mean, we know that over the last several years, 688 00:34:20,239 --> 00:34:23,800 Speaker 12: there was an Operation Midnight Hammer, where the US pursued 689 00:34:23,840 --> 00:34:27,560 Speaker 12: strike action against three nuclear facilities in Iran. Following you, 690 00:34:28,000 --> 00:34:31,719 Speaker 12: Israeli also action against the facilities. But we know that 691 00:34:32,320 --> 00:34:34,520 Speaker 12: sort of inspectors have not been allowed in of late. 692 00:34:35,560 --> 00:34:38,799 Speaker 12: Estimates are that those strikes last year definitely degraded some 693 00:34:38,920 --> 00:34:41,799 Speaker 12: enrichment capabilities, but you know it's really a sort of 694 00:34:41,800 --> 00:34:42,800 Speaker 12: black box issue. 695 00:34:42,960 --> 00:34:46,880 Speaker 2: Ludcy Newman with this geopolitical risk expert at G zero Media, 696 00:34:47,160 --> 00:34:50,480 Speaker 2: with all of the abilities of King's College, London, they 697 00:34:50,480 --> 00:34:55,720 Speaker 2: have been definitive on the study of conflict and or lindsay, 698 00:34:55,960 --> 00:34:58,360 Speaker 2: I'm absolutely fair, and I say this with a mens respect. 699 00:34:58,360 --> 00:35:00,320 Speaker 2: Did you watch the Super Bowl or the be beginning 700 00:35:00,320 --> 00:35:02,200 Speaker 2: of the Super Bowl from London? 701 00:35:02,239 --> 00:35:05,960 Speaker 12: Doctor Newman, you know I didn't watch the beginning, but 702 00:35:06,040 --> 00:35:08,440 Speaker 12: I will tell you that my sons insisted on watching 703 00:35:08,520 --> 00:35:10,440 Speaker 12: it this morning, so we watched it at six am. 704 00:35:10,560 --> 00:35:14,240 Speaker 12: In the replay. I didn't get a chance to watch 705 00:35:14,360 --> 00:35:17,040 Speaker 12: the halftime show. I'm very intrigued to watch it, but 706 00:35:17,200 --> 00:35:19,080 Speaker 12: my day has not allowed yet for me to watch 707 00:35:19,080 --> 00:35:21,279 Speaker 12: the halftime show. I did see it was resplendent and 708 00:35:21,320 --> 00:35:22,400 Speaker 12: people seem excited about it. 709 00:35:22,400 --> 00:35:23,640 Speaker 5: We expect to report. 710 00:35:23,320 --> 00:35:27,359 Speaker 2: From jeezuro Media on bad BENETI and doctor Newman all 711 00:35:27,440 --> 00:35:31,080 Speaker 2: kidding aside, Doctor Newman, we have a method in America 712 00:35:31,120 --> 00:35:35,120 Speaker 2: of showing the flag, showing the military. We have a 713 00:35:35,160 --> 00:35:38,000 Speaker 2: Budweiser commercial with an eagle coming off the back of 714 00:35:38,040 --> 00:35:41,880 Speaker 2: the horse and it's obligatory that at these big events 715 00:35:42,320 --> 00:35:48,320 Speaker 2: six or seven fancy military aircraft fly over in that. Okay, 716 00:35:48,360 --> 00:35:51,680 Speaker 2: well that's fine, but we have to deploy our resources 717 00:35:51,680 --> 00:35:56,120 Speaker 2: to the Pacific, deploy our resources to the Middle East. 718 00:35:56,480 --> 00:36:00,000 Speaker 2: A pro like you, how do you respond to America 719 00:36:00,000 --> 00:36:04,360 Speaker 2: considered comfortable about five airplanes flying over football stadium? 720 00:36:04,680 --> 00:36:08,440 Speaker 3: But are we ready to offense and defense in the 721 00:36:08,480 --> 00:36:09,120 Speaker 3: Middle East? 722 00:36:10,320 --> 00:36:10,560 Speaker 6: Yeah? 723 00:36:10,600 --> 00:36:13,200 Speaker 12: Tom, I mean, we know the polling shows that seventy 724 00:36:13,239 --> 00:36:16,240 Speaker 12: percent of Americans are not in support of this idea 725 00:36:16,360 --> 00:36:19,840 Speaker 12: of seeing the US engaged in military action in Iran, 726 00:36:20,360 --> 00:36:23,360 Speaker 12: whether it's in support of the protesters that you know, 727 00:36:23,760 --> 00:36:26,400 Speaker 12: the thousands have died and not those still left in Iran, 728 00:36:27,239 --> 00:36:30,319 Speaker 12: or if it's even about Iran's nuclear capabilities. Those are 729 00:36:30,360 --> 00:36:32,799 Speaker 12: stark numbers, right. So only thirty percent, less than a 730 00:36:32,800 --> 00:36:35,600 Speaker 12: third of Americans really want to see the US engaged 731 00:36:35,600 --> 00:36:38,480 Speaker 12: in military action. And that's because we know there's a 732 00:36:38,520 --> 00:36:41,239 Speaker 12: long history of getting involved in forever wars. You know, 733 00:36:41,560 --> 00:36:44,080 Speaker 12: as you raised with me the last time. Laurence Freedman 734 00:36:44,120 --> 00:36:46,279 Speaker 12: has talked about this recently. You know, this idea of 735 00:36:46,280 --> 00:36:48,400 Speaker 12: the fallacy of a short war, that there could be 736 00:36:48,440 --> 00:36:50,920 Speaker 12: some you know, ambition that it would be surgical and 737 00:36:51,239 --> 00:36:54,680 Speaker 12: focused but you can't control with the other side once 738 00:36:54,719 --> 00:36:57,520 Speaker 12: you take any sort of action. So Americans have been 739 00:36:57,560 --> 00:36:59,520 Speaker 12: clear that you don't really want to see the US 740 00:36:59,560 --> 00:37:03,440 Speaker 12: involved in ongoing conflicts like that. But the Trump administration 741 00:37:03,480 --> 00:37:05,320 Speaker 12: has been clear that it's going to apply all forms 742 00:37:05,360 --> 00:37:05,840 Speaker 12: of pressure. 743 00:37:09,040 --> 00:37:11,200 Speaker 7: What do you think Iran wants at this point in 744 00:37:11,239 --> 00:37:12,880 Speaker 7: these negotiations. 745 00:37:13,719 --> 00:37:17,960 Speaker 12: Well, Iran wants to see some sort of negotiation to 746 00:37:18,040 --> 00:37:21,160 Speaker 12: negotiate continue. We know last year there were five runs 747 00:37:21,160 --> 00:37:24,200 Speaker 12: of negotiations that then the administration in the US said well, 748 00:37:24,239 --> 00:37:26,200 Speaker 12: this isn't we're not reaching a deal, so we're going 749 00:37:26,239 --> 00:37:29,360 Speaker 12: to pursue force. Aaran just wants to see de escalation 750 00:37:29,480 --> 00:37:33,440 Speaker 12: and punt this whole latest blip in the escalatory cycle 751 00:37:33,560 --> 00:37:37,080 Speaker 12: down down, down the road, because it hopes that it 752 00:37:37,120 --> 00:37:40,280 Speaker 12: can sort of lead to just an ongoing, more permanent 753 00:37:40,360 --> 00:37:44,840 Speaker 12: de escalation. I think that that's a hard scenario to 754 00:37:45,320 --> 00:37:48,280 Speaker 12: imagine happening. I think that the US has been pretty 755 00:37:48,280 --> 00:37:50,320 Speaker 12: clear in saying, you know, if you're a US citizen 756 00:37:50,320 --> 00:37:52,879 Speaker 12: in Iran, get out or otherwise stockpile. That's a very 757 00:37:52,920 --> 00:37:56,800 Speaker 12: stark indicator to watch for. But Iran is certainly hoping 758 00:37:56,920 --> 00:37:59,840 Speaker 12: that it can convince the US administration to just keep talking. 759 00:38:00,360 --> 00:38:03,399 Speaker 2: Lindsey, Thanks so much. Lindsey Newman with US Today, Geopolitical 760 00:38:03,480 --> 00:38:07,520 Speaker 2: Risks Expert G zero Media at King's College in London. 761 00:38:07,640 --> 00:38:12,480 Speaker 1: This is the Bloomberg Surveillance Podcast, available on apples, Spotify, 762 00:38:12,600 --> 00:38:16,880 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 763 00:38:17,000 --> 00:38:20,440 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 764 00:38:20,560 --> 00:38:24,560 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 765 00:38:24,600 --> 00:38:27,960 Speaker 1: can also watch us live every weekday on YouTube and 766 00:38:28,160 --> 00:38:29,920 Speaker 1: always on the Bloomberg terminal