WEBVTT - Bloomberg Surveillance TV: January 2nd, 2026 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.880 Terminal and the Bloomberg Business App. 0:00:36.360 --> 0:00:39.320 Jeff You of bn Y and writing investors are navigating 0:00:39.320 --> 0:00:43.120 a market that feels both familiar and fundamentally different. Growth 0:00:43.200 --> 0:00:46.120 is uneven, but still has room to run. Jeff joins 0:00:46.200 --> 0:00:48.720 us now for more. Jeff, good morning, Happy new year. 0:00:48.800 --> 0:00:49.680 Wonderful to see you. 0:00:50.080 --> 0:00:52.560 I want to start with something that you said in 0:00:52.640 --> 0:00:55.640 your latest report, which is sometimes it's better to ask 0:00:55.680 --> 0:00:59.040 good questions than to have answers. Right now, what are 0:00:59.080 --> 0:01:01.640 the key questions looking at heading into this year. 0:01:02.960 --> 0:01:05.440 I think from client's point of view, the questions are, 0:01:05.480 --> 0:01:08.160 you know, sustainability. As you've have said, we've had three 0:01:08.680 --> 0:01:11.240 good years of double digit returns. You it, can we 0:01:11.280 --> 0:01:14.959 extend that to a fourth and overall, it's if I 0:01:15.000 --> 0:01:18.160 am concerned about valuations and the like and there is 0:01:18.240 --> 0:01:19.800 going to be a bit more of a volatile path, 0:01:20.120 --> 0:01:23.240 what are some of the defensive positions, how do I diversify? 0:01:23.480 --> 0:01:25.160 I think those are one of the questions As a 0:01:25.240 --> 0:01:28.520 responsible investor, you stay the course. You know, if it 0:01:28.560 --> 0:01:31.000 ain't break, don't fix it. But you need to know 0:01:31.040 --> 0:01:33.400 where some of the pitfalls are, look at them in advance, 0:01:33.600 --> 0:01:37.400 and identify the insurance someplays. I think that comprehensive of 0:01:37.440 --> 0:01:40.280 that comprehensive approach is going to be the key question 0:01:40.520 --> 0:01:42.680 as we ask allocate you're heading into twenty twenty six. 0:01:42.760 --> 0:01:45.520 Yeah, one of the key questions about diversification is what 0:01:45.560 --> 0:01:49.000 are you diversifying against? Is it inflation risk or is 0:01:49.000 --> 0:01:52.360 it the risk of recession? Because the potential diversifiers are 0:01:52.400 --> 0:01:54.760 completely different depending on that answer. 0:01:55.600 --> 0:01:57.520 I totally agree with you, and I think it's different 0:01:57.560 --> 0:02:00.840 diversifiers for different markets and also different regions. If I 0:02:00.880 --> 0:02:04.520 look at the run of European data that we've had 0:02:04.560 --> 0:02:07.520 this morning, I'm afraid it's looking a bit more stagflationary. 0:02:07.560 --> 0:02:09.720 So if we're going to worry about inflation and worry 0:02:09.760 --> 0:02:12.520 about stagflation environment. I probably worry more about Europe than 0:02:12.560 --> 0:02:15.240 the US for this year. If I look at APAC 0:02:15.280 --> 0:02:18.720 for example, you know, Asian bourses are doing quite well, 0:02:19.040 --> 0:02:21.680 so there's a bit of a tech run too, So 0:02:21.760 --> 0:02:24.160 you can that actually take place, but not at the 0:02:24.200 --> 0:02:27.720 expense of my tech positioning in the US and elsewhere. 0:02:27.800 --> 0:02:29.560 And how do I defend against, you know, further trade 0:02:29.600 --> 0:02:32.359 volatility up ahead. So I think all of these aspects 0:02:32.440 --> 0:02:34.960 are important, but look at it on an individual market basis, 0:02:35.200 --> 0:02:37.680 rather than you think that there's one insurance play that 0:02:37.720 --> 0:02:40.400 can defend against everything. I don't think that works anymore. 0:02:40.560 --> 0:02:42.720 What about the broadening out, Jeff, that we've heard so 0:02:42.840 --> 0:02:43.359 much about. 0:02:43.400 --> 0:02:45.360 There's been a lot of head fakes. You know. 0:02:45.400 --> 0:02:48.680 We finished the year with all of the high bandwidth 0:02:48.960 --> 0:02:52.440 d ram makers winning the S and P five hundred, 0:02:52.480 --> 0:02:56.640 Western Digital, sand Disc, Seagate all the biggest winners in 0:02:56.720 --> 0:02:59.560 terms of the individual stocks, and then Robin Hood, New 0:02:59.680 --> 0:03:03.880 mine Land Research, Palanteer. Those are exactly the same stocks 0:03:03.919 --> 0:03:05.519 that are up today in the pre market. 0:03:05.639 --> 0:03:07.200 Are we going to see it broadening out or. 0:03:07.160 --> 0:03:09.440 Is it just going to be the same top twenty 0:03:09.480 --> 0:03:11.800 stocks pushing this rally into twenty six. 0:03:12.960 --> 0:03:15.720 I think that goes into a broader question about the 0:03:15.720 --> 0:03:19.720 broader economy. So can that K shape and growth that 0:03:19.760 --> 0:03:21.519 we're seeing not just in the US, and but I 0:03:21.520 --> 0:03:24.720 think other economies can sympathize as well. Can that actually 0:03:24.840 --> 0:03:27.760 narrow a bit so that K sort of converges the 0:03:27.919 --> 0:03:31.280 two arms of the K into more balanced to growth. 0:03:31.280 --> 0:03:34.400 And here's where we get a multiplier effector into the 0:03:34.440 --> 0:03:37.560 broader economy. So can main street benefit as well? If 0:03:37.560 --> 0:03:39.880 I look at our underlying positioning data, yes, tech has 0:03:39.880 --> 0:03:44.120 done well, but consumer related segments have really softened, and 0:03:44.400 --> 0:03:46.320 that points to a margin story. You know that that 0:03:46.440 --> 0:03:48.880 points to the demand story as well. So can we 0:03:49.160 --> 0:03:51.720 have that nurse the so called trickle down effect into 0:03:51.760 --> 0:03:53.600 main street? If that can happen, then we can see 0:03:53.600 --> 0:03:56.320 a broadening out from the tech stocks which are overheld 0:03:56.360 --> 0:03:58.480 of course you're heading into twenty twenty six, but into 0:03:58.560 --> 0:04:00.960 some of the consumer oriented stocks as well in the 0:04:01.040 --> 0:04:03.520 US and also in EM. I think that is a 0:04:03.520 --> 0:04:07.360 consensus view for the years allocation into EM into EM tech, 0:04:07.400 --> 0:04:10.040 but for China, you know, for Japan and for the rest, 0:04:10.080 --> 0:04:12.880 can we see EM consumer stocks do well? Are we 0:04:12.960 --> 0:04:16.279 going to see a fiscal push benefit consumer. So globally 0:04:16.360 --> 0:04:18.600 it really is about main street. If main Street can 0:04:18.640 --> 0:04:21.200 pick up, then we'll see that broadening out. But I 0:04:21.200 --> 0:04:23.680 think on the fiscal side, markets are waiting to be 0:04:23.720 --> 0:04:24.600 convinced you're. 0:04:24.520 --> 0:04:25.760 Here in the US. 0:04:25.800 --> 0:04:29.080 Of course, everybody in markets wants to see or everybody, 0:04:29.120 --> 0:04:32.240 I guess long stocks wants to see FED cuts. Is 0:04:32.279 --> 0:04:34.839 that going to continue and will that help main Street? 0:04:34.920 --> 0:04:35.240 Jeff? 0:04:35.279 --> 0:04:38.320 Is that going to be able to bring down mortgage 0:04:38.400 --> 0:04:41.200 rates and auto lawn rates which so far haven't responded 0:04:41.279 --> 0:04:43.280 very well to one hundred and seventy five basis points 0:04:43.279 --> 0:04:43.760 of cuts. 0:04:44.960 --> 0:04:47.880 So I think the question is as the FED cuts rates, 0:04:47.920 --> 0:04:49.479 and I think that that is going to be a 0:04:49.520 --> 0:04:51.960 consensus view. Of course, your cash flow improves on the 0:04:51.960 --> 0:04:54.479 liability side. What main street wants to see not just 0:04:54.520 --> 0:04:57.240 in the US but around the world. Can real incomes 0:04:57.560 --> 0:05:00.760 grow and if it can grow, can expectations pick up. 0:05:00.800 --> 0:05:02.799 You look at the UK for example, as Governor Bailey 0:05:02.800 --> 0:05:05.520 has highlighted, wage growth is very strong, but you're seeing 0:05:05.640 --> 0:05:07.640 savings rates go up as well. It looks like the 0:05:07.720 --> 0:05:09.640 UK is going to run a double digit savings rate 0:05:09.680 --> 0:05:12.160 on a sustained basis, which is unheard of, right, So 0:05:12.400 --> 0:05:15.240 what is it that's holding back the consumer in the 0:05:15.320 --> 0:05:18.040 US and the UK and elsewhere and also in APAC 0:05:18.040 --> 0:05:20.160 there're sitting on high savings where they're not spending, they're 0:05:20.200 --> 0:05:22.360 not pushing it into the broader economy. So I think 0:05:22.640 --> 0:05:26.440 that requires more stability in terms of their expectations. Yes, 0:05:26.560 --> 0:05:29.400 wage growth is firm right now, can that be maintained? 0:05:29.480 --> 0:05:32.000 And the US economy there's no far, no higher economy. 0:05:32.160 --> 0:05:34.839 Let's move into a more hiring economy. I think that's 0:05:34.880 --> 0:05:37.479 what's needed to get mainStreet going and to lift the 0:05:37.480 --> 0:05:38.280 consumer segment. 0:05:38.480 --> 0:05:40.599 Right now, the consensus is that the dollar will weaken 0:05:40.800 --> 0:05:43.600 even if you do have stronger growth, and say in Europe, 0:05:43.640 --> 0:05:46.360 and it's because of the rate cuts that are expected. 0:05:46.720 --> 0:05:48.120 What do you think is going to be the main 0:05:48.200 --> 0:05:51.599 driver for the currency the actual growth rate or the 0:05:51.680 --> 0:05:54.040 expected rate cuts by the Federal Reserve With the rest 0:05:54.080 --> 0:05:56.360 of the central banks around the world largely sitting on 0:05:56.400 --> 0:05:58.440 their hands, so. 0:05:58.440 --> 0:06:00.400 I think it is going to be policy different at 0:06:00.440 --> 0:06:01.719 the end of the day. So as long as we 0:06:01.800 --> 0:06:06.440 go through this so called hawkish cuts approach with the Fed, 0:06:06.480 --> 0:06:08.640 I think, you know, dollar downside is going to be 0:06:08.680 --> 0:06:11.320 a bit more limited. Yes, there will be hedging, and 0:06:11.360 --> 0:06:13.680 the costom of hedging will factor into that, you know, 0:06:13.800 --> 0:06:16.560 as a rate differentials shift around. But if I look 0:06:16.560 --> 0:06:19.640 at APAC right now, APAC FX is where we see 0:06:19.680 --> 0:06:22.000 the most capacity for strength against the dollar. 0:06:22.000 --> 0:06:23.040 It's not going to be in Europe. 0:06:23.160 --> 0:06:26.279 I've been wrong on europe dollar last year, so this 0:06:26.360 --> 0:06:28.920 year I still think Euro's looking a bit stagflation rea. 0:06:29.000 --> 0:06:31.200 So I think Euro's strength is going to be the 0:06:31.440 --> 0:06:33.320 dollar weakness against the lights of the rim and b 0:06:33.400 --> 0:06:35.560 against the lights of the end. That is the consensus view, 0:06:35.600 --> 0:06:37.720 but I'd be a bit more cautious there too. Yes, 0:06:37.800 --> 0:06:41.640 APAC currencies will rally in real terms, but in nominal terms, 0:06:41.680 --> 0:06:44.000 I'd be a bit more careful. If China, for example, 0:06:44.040 --> 0:06:46.880 can shift PPI from negative two point two percent two 0:06:46.880 --> 0:06:50.880 point five percent, that's the expect the values right now 0:06:50.960 --> 0:06:54.200 towards positive to positive three that kind of real effective 0:06:54.200 --> 0:06:57.240 exchange rate appreciation is something that they would probably be 0:06:57.279 --> 0:07:00.960 more happy with. So position for your dollar very very carefully. 0:07:01.040 --> 0:07:03.039 If there's going to be dollar weakness, I'll probably see 0:07:03.040 --> 0:07:05.200 it more against APAC rather than European currencies. 0:07:05.279 --> 0:07:09.840 Speaking, of China and US versus China dynamics, jjimping over 0:07:09.920 --> 0:07:13.000 in China had this New Year's message that he gave 0:07:13.040 --> 0:07:14.920 in an address. China has become one of the world's 0:07:15.000 --> 0:07:19.480 fastest rising economies in terms of innovative capacity, giving a 0:07:19.560 --> 0:07:22.840 nodge that the war in terms of AI prowess between 0:07:23.040 --> 0:07:25.720 US and China, Do you have a sense of who 0:07:25.800 --> 0:07:27.520 is going to come out ahead at the end of 0:07:27.520 --> 0:07:28.400 twenty twenty six? 0:07:30.240 --> 0:07:34.520 So I think the direction for innovation and AI, if 0:07:34.520 --> 0:07:37.560 we look at the application for example, is a bit divergent. 0:07:37.680 --> 0:07:40.240 So I think both can lead in terms of one 0:07:40.240 --> 0:07:42.880 as consumer facing and the US side on the industrial side. 0:07:42.880 --> 0:07:45.200 That's what's China's focusing on. But what investors, what the 0:07:45.240 --> 0:07:48.200 positioning is looking at is can we see AI proess 0:07:48.200 --> 0:07:52.200 in China and also beyond translate into higher margins, in 0:07:52.320 --> 0:07:55.280 higher earnings growth and that can lift the consumer that 0:07:55.320 --> 0:07:56.960 seems to be in the missing link and as allocation 0:07:57.040 --> 0:07:58.680 right now, that having said that, a lot of savings 0:07:58.720 --> 0:08:02.320 are being pushed into AI stocks and APAK. We've seen 0:08:02.360 --> 0:08:05.600 the IPOs are the reaction over the last twenty four 0:08:05.600 --> 0:08:08.320 hours of trading war. So hence that theme is going 0:08:08.360 --> 0:08:12.280 to play out in their different fields of course, but again, 0:08:12.360 --> 0:08:16.200 can that translate into growth into mainStreet earnings and wages 0:08:16.520 --> 0:08:20.440 and lift Chinese consumer spending as well. That will require 0:08:20.560 --> 0:08:22.720 not just on the corporate side, but on the fiscal side. 0:08:22.720 --> 0:08:23.920 I think that's going to be one of the big 0:08:23.960 --> 0:08:27.680 pushes for em growth this year, and we'll have positive 0:08:28.000 --> 0:08:29.520 benefits of for the rest of the world as well. 0:08:29.840 --> 0:08:31.400 If you look at Europe, for example, it wants to 0:08:31.400 --> 0:08:34.560 see stronger Chinese demand. Bat trade deficit certainly needs houring. 0:08:35.840 --> 0:08:39.520 Stay with us more Blomberg surveillance coming up after this. 0:08:48.400 --> 0:08:48.640 Data. 0:08:48.679 --> 0:08:52.040 Peterson of the Conference Board, writing twenty twenty five is 0:08:52.200 --> 0:08:56.120 ending on a confusing note for markets, economists and central 0:08:56.160 --> 0:08:59.880 bankers alike. So we should not completely ignore the data, 0:09:00.080 --> 0:09:01.880 joins us now, happy new year. Thank you so much 0:09:01.920 --> 0:09:04.400 for being with us data. Let's start with the data 0:09:04.440 --> 0:09:07.280 that we have gotten. Why is it so noisy? How 0:09:07.280 --> 0:09:10.240 should people look at it? Considering that people do view 0:09:10.280 --> 0:09:12.400 it as somewhat noisy, but also. 0:09:12.320 --> 0:09:16.360 They can't ignore it exactly, you can't ignore these data. 0:09:16.720 --> 0:09:20.800 We did have data for the third quarter. Certainly the 0:09:20.840 --> 0:09:24.800 GDP came in a lot stronger than expected, and certainly 0:09:24.960 --> 0:09:28.240 consumption was a lot stronger even though we did have data. 0:09:28.360 --> 0:09:31.360 It shows that the Fed, I mean the federal resert Sorry, 0:09:31.400 --> 0:09:34.640 it shows that the federal government probably had more data 0:09:35.440 --> 0:09:40.680 in between releases and certainly after the shutdown. But I 0:09:40.720 --> 0:09:43.880 think the key thing is that inventories and trade were 0:09:44.000 --> 0:09:48.080 very confusing. And indeed, when you add up the inventories, well, 0:09:48.120 --> 0:09:51.520 when you add up the imports plus the consumption, the 0:09:51.559 --> 0:09:54.280 inventory's numbers just don't make sense. So we really need 0:09:54.320 --> 0:09:57.400 to get data next week on inventories as well as 0:09:57.400 --> 0:10:01.800 international trade, business sense, and then and also employment. I 0:10:01.840 --> 0:10:04.520 think we really need to see more data to get 0:10:04.559 --> 0:10:07.080 a handle on what happened in the third quarter and 0:10:07.120 --> 0:10:08.840 also what happened in the fourth quarter. 0:10:09.200 --> 0:10:09.480 Data. 0:10:09.640 --> 0:10:12.560 We are going to get some data come next week 0:10:12.600 --> 0:10:14.520 that is going to be important, including the non farm 0:10:14.520 --> 0:10:17.800 payils as well as some of the manufacturing aspects that 0:10:17.840 --> 0:10:20.880 you're talking about. Nonetheless, we have a host of other 0:10:21.000 --> 0:10:24.400 information out there that people keep pointing to. Whether it's ADP, 0:10:24.679 --> 0:10:27.160 whether it's earnings, whether it's the rudderic coming out of 0:10:27.160 --> 0:10:29.400 a lot of companies, or whether it's retail sales. I mean, 0:10:29.760 --> 0:10:32.040 is there some sort of conclusion that you can take 0:10:32.400 --> 0:10:33.720 even amid the noise. 0:10:35.880 --> 0:10:39.040 Well, I think, you know, certainly the stock market does 0:10:39.080 --> 0:10:41.960 not reflect the real economy, so we can't look to that. 0:10:42.520 --> 0:10:45.040 And also people who most people don't own stocks, so 0:10:45.080 --> 0:10:48.360 they're not really benefiting from that. We do have lots 0:10:48.360 --> 0:10:52.400 of sentiment data. Of course, our consumer sentiment data has 0:10:52.440 --> 0:10:56.680 shown that consumers are less sanguine about the current conditions 0:10:56.720 --> 0:11:00.679 as well as having some concerns about the future. You know, 0:11:00.800 --> 0:11:03.679 retail sales at all we have really is the end 0:11:03.679 --> 0:11:06.600 of the third quarter, and they were weaker. So I 0:11:06.640 --> 0:11:10.000 think that we just need more information, and you can't 0:11:10.040 --> 0:11:13.440 look at these things and try to estimate what the 0:11:13.480 --> 0:11:15.400 government data is going to tell us. 0:11:16.120 --> 0:11:22.000 I'm looking at the Conference Board Consumer Confidence Index and 0:11:22.559 --> 0:11:24.840 it hasn't been this low since the pandemic. 0:11:25.360 --> 0:11:27.040 So what does that tell us. 0:11:26.920 --> 0:11:32.120 About you know, inflation, growth, spending. 0:11:33.840 --> 0:11:38.439 Well, I think the inflation bit has yet to hit us. Remember, 0:11:38.520 --> 0:11:42.760 the tariffs that were implemented were delayed twice and also 0:11:42.880 --> 0:11:45.920 they were raised and lowered several times. So many businesses 0:11:46.320 --> 0:11:49.800 are still waiting to see if there's any certainty with 0:11:49.880 --> 0:11:55.320 respect to tariffs. Yes, we've had a number of deals established, 0:11:55.320 --> 0:11:58.640 but there's still a lot that's unknown. And so with 0:11:58.720 --> 0:12:02.280 businesses uncertain, it doesn't mean that it just means that 0:12:02.280 --> 0:12:05.520 we're not going to see much hiring. We're not seeing layoffs. 0:12:05.000 --> 0:12:05.679 Which is good. 0:12:06.080 --> 0:12:08.520 Most people still are working, but those who do get 0:12:08.600 --> 0:12:11.679 laid off are finding it very difficult to find jobs. 0:12:12.120 --> 0:12:15.560 And even though most consumers are working and they actually 0:12:15.600 --> 0:12:18.760 are spending, the type of spending that they're engaged with 0:12:19.000 --> 0:12:22.679 is very different. They're buying things that they need, and 0:12:22.760 --> 0:12:26.160 when it comes to especially with goods and services, and 0:12:26.200 --> 0:12:29.680 when it does come to things that are entertaining, they're 0:12:29.679 --> 0:12:33.520 buying cheap things right, cheap thrills like streaming instead of 0:12:33.600 --> 0:12:35.800 going to the movies and paying, you know, over one 0:12:35.880 --> 0:12:38.560 hundred dollars for a family of four. And so I 0:12:38.559 --> 0:12:41.760 think we need to really get beyond the first quarter 0:12:41.840 --> 0:12:43.920 of this year to really see what's happening, because I 0:12:43.960 --> 0:12:46.760 think that's when we're going to see the bigger effects 0:12:46.760 --> 0:12:50.320 of tariffs on inflation and consumers really pull back. 0:12:50.559 --> 0:12:50.800 Dana. 0:12:50.800 --> 0:12:54.120 I've been trying to pin down how workers' wages have 0:12:54.280 --> 0:12:56.680 kept up with inflation, as I've been saying, you know, 0:12:56.720 --> 0:12:59.200 Torsten Slot put out a six year average showing that 0:12:59.240 --> 0:13:03.120 wages are doing better than inflation. But Mark Chandler, whom 0:13:03.120 --> 0:13:07.040 we just spoke with from Vandenbrooks, says in his household 0:13:07.040 --> 0:13:10.360 that certainly isn't the case, and he doesn't think that 0:13:10.800 --> 0:13:13.400 it looks like a great picture for consumers. 0:13:13.440 --> 0:13:14.320 How do you see it? 0:13:15.720 --> 0:13:20.480 Well, Yes, wage growth and compensation have been slowing from 0:13:20.559 --> 0:13:25.680 the peaks that we saw during the pandemic, certainly the 0:13:25.720 --> 0:13:27.520 later portion of the pandemic when we were trying to 0:13:27.559 --> 0:13:29.840 get everybody back into the labor market and you need 0:13:29.840 --> 0:13:34.840 to entice them and also keep workers with compensation. But still, 0:13:34.880 --> 0:13:37.960 I mean, I would say that wages are still growing 0:13:38.000 --> 0:13:40.880 at a pace that's above where we were between the 0:13:40.920 --> 0:13:45.800 Great Financial Crisis and the pandemic. But I would look 0:13:45.840 --> 0:13:49.520 at the last GDP data where we saw real disposable 0:13:49.600 --> 0:13:54.720 income grow at zero point zero percentage points annualized in 0:13:54.760 --> 0:13:57.520 the third quarter. That's not a good sign. And so 0:13:58.160 --> 0:14:02.520 we definitely do see slowing in wages, and for some 0:14:02.679 --> 0:14:05.040 people it may be faster than others. 0:14:06.040 --> 0:14:09.360 Stay with US multile Impax. Savannah's coming up off to. 0:14:09.440 --> 0:14:21.440 This under surveillance this morning, Locked and loaded, President Trump 0:14:21.480 --> 0:14:25.040 saying the US is ready to rescue Iranian protesters if 0:14:25.040 --> 0:14:29.040 they are attacked by authorities, protests escalating over the countries, 0:14:29.160 --> 0:14:32.200 deepening economic crisis. And Andrew Bishop of Signal Global Joys 0:14:32.240 --> 0:14:34.440 is now for more. Andrew, what do you make of 0:14:34.480 --> 0:14:36.320 this locked and loaded comment? Do you think that there 0:14:36.400 --> 0:14:40.040 actually are plans in place to intervene by the US 0:14:40.280 --> 0:14:40.760 in Iran? 0:14:42.000 --> 0:14:43.680 So I don't think the plan is to intervene. I 0:14:43.720 --> 0:14:48.120 think this should be read mainly as attempting to give 0:14:48.160 --> 0:14:50.880 the protesters a chance right, so to essentially tell the 0:14:50.920 --> 0:14:53.840 regime there should be a red line not to cross, 0:14:53.880 --> 0:14:57.600 and that is quote unquote violently killed. I think it 0:14:57.640 --> 0:15:00.920 is interesting and a been gruesome interesting the way that 0:15:00.920 --> 0:15:05.600 the president choses words that essentially supposes that if they 0:15:05.640 --> 0:15:08.920 are killed, but perhaps not shot out during protest, but 0:15:08.960 --> 0:15:12.760 instead arrested and you know, disappeared, that would be a 0:15:12.760 --> 0:15:16.920 little less sort of crossing the president's red lines. Also 0:15:17.000 --> 0:15:20.280 potentially out shot at with rubber bullets. We know that 0:15:20.320 --> 0:15:23.520 in previous protests the regime used that to blind protesters. 0:15:23.800 --> 0:15:26.760 These are gruesome details, but I think that they actually 0:15:26.840 --> 0:15:29.600 should be read in the context of the present's choice 0:15:29.600 --> 0:15:30.200 of words. 0:15:30.880 --> 0:15:34.200 So, what would we do with people if we save 0:15:34.280 --> 0:15:37.600 them there. Does that mean we'd bring them here as refugees? 0:15:37.960 --> 0:15:38.480 No, no, no. 0:15:38.880 --> 0:15:40.800 I think what would happen if the present were to 0:15:40.840 --> 0:15:43.520 intervene in the conflict is that the US would essentially 0:15:43.640 --> 0:15:47.440 target the security apparatus. So we would essentially launch I 0:15:47.440 --> 0:15:51.040 mean's put very simply at Tomahawk missiles on ira GC 0:15:51.760 --> 0:15:57.240 domestic facilities, especially besiege sort of the more hardcore security 0:15:57.240 --> 0:16:00.760 forces meant to keep control of the situation. We would 0:16:00.840 --> 0:16:03.720 essentially attack those and hope that the protesters can can 0:16:03.760 --> 0:16:06.920 then have a chance at overwhelming the regime security apparatus. 0:16:07.000 --> 0:16:08.600 I thought it was interesting that, you know, we've been 0:16:08.760 --> 0:16:13.440 chasing this oil tanker below, one which came out of Iran, 0:16:13.720 --> 0:16:15.680 went to Venezuela and is now. 0:16:15.520 --> 0:16:17.280 Headed I guess to Russia. 0:16:17.400 --> 0:16:20.640 The Russians have claimed this tanker, and it looks like 0:16:20.800 --> 0:16:23.880 maybe we'll give them a little leeway because it's Russia. 0:16:23.920 --> 0:16:27.400 At the same time we're sanctioning Chinese and Hong Kong 0:16:28.080 --> 0:16:30.680 based tankers. Are we giving Russia a little bit more 0:16:30.760 --> 0:16:33.600 leeway because we want to get a truce or an 0:16:33.720 --> 0:16:36.360 end to this conflict in Ukraine? 0:16:36.680 --> 0:16:38.920 Yes, But I would say the bigger difference between Russia 0:16:38.920 --> 0:16:41.800 and China is the fact that the US, you know, 0:16:41.920 --> 0:16:44.240 really doesn't have the ability to put any pressure on 0:16:45.120 --> 0:16:48.360 China at all. So, you know, we we sort of 0:16:48.520 --> 0:16:51.360 are in the kabuki dance phase with China where we 0:16:51.440 --> 0:16:55.160 pretend to both sanctions, but they don't actually bite. So 0:16:55.200 --> 0:16:56.800 I think that's that's the biggest difference. 0:16:57.720 --> 0:16:58.800 So what will we do? 0:16:58.920 --> 0:17:03.080 I mean, President Trump started this trade war with China 0:17:03.440 --> 0:17:06.600 in his first term. President Biden actually carried it on 0:17:06.680 --> 0:17:08.919 in a sense, But now it looks like the Chinese 0:17:08.960 --> 0:17:12.640 have realized that their access and refining capabilities of their 0:17:12.680 --> 0:17:15.120 earth minerals gives them a massive advantage. 0:17:15.280 --> 0:17:18.760 Is there anything we can do? Not in the short term. 0:17:19.119 --> 0:17:21.840 I think in the short term, the US and this 0:17:21.840 --> 0:17:25.000 administration have come to realize that there really is nothing 0:17:25.000 --> 0:17:28.240 that the US can do to minimize China's overwhelming leverage 0:17:28.280 --> 0:17:30.439 over the US. And that's why we're seeing the President 0:17:30.520 --> 0:17:33.200 take such a soft, dubbish approach to China. Yes, he's 0:17:33.200 --> 0:17:34.919 a deal maker, but some of the deals that he's 0:17:34.920 --> 0:17:37.920 struck over the past a few months with China are 0:17:38.280 --> 0:17:41.159 borderline humiliating, I think from an a political standpoint, right, 0:17:41.240 --> 0:17:45.399 this famous sort of high end chips in exchange for soybeans. 0:17:45.440 --> 0:17:48.160 It's pretty much from a bipartisan perspective, I think it's 0:17:48.200 --> 0:17:49.960 fair to say that's not a great deal for the US, 0:17:50.960 --> 0:17:54.000 and that's just a recognition of the US's weaker hand 0:17:54.080 --> 0:17:55.000 in the short term. 0:17:55.080 --> 0:17:57.040 How much is this the reason why China is doing 0:17:57.040 --> 0:17:59.000 these drills around Taiwan right now? 0:18:00.320 --> 0:18:01.760 So it isn't. 0:18:01.800 --> 0:18:05.040 It isn't China would probably be conducting these drills. It's 0:18:05.040 --> 0:18:08.360 conducted drills like these every year, sometimes twice a year, 0:18:08.440 --> 0:18:10.760 for the past several years. So in that sense, it's 0:18:10.800 --> 0:18:14.520 not particularly surprising. I don't think it's necessarily a result 0:18:14.560 --> 0:18:19.000 of the president's sort of soft approach to China. What's interesting, 0:18:19.600 --> 0:18:23.359 or what's maybe more political, is China's takeaways from the 0:18:23.359 --> 0:18:26.680 President's reaction to the drills. Right I think the State 0:18:26.720 --> 0:18:30.679 Department's press release yesterday that sort of condemned the drills 0:18:30.680 --> 0:18:33.959 and took a harsher tone was an attempt to not 0:18:34.000 --> 0:18:36.800 send the wrong message to China. But the president's decision 0:18:36.840 --> 0:18:39.040 to essentially say, you know, President season being hasn't talked 0:18:39.080 --> 0:18:41.000 to me about this, it's not a big deal. That 0:18:41.119 --> 0:18:43.920 is the kind of thing that she notes down writes 0:18:43.960 --> 0:18:47.320 down and potentially, let's be very clear about it, potentially 0:18:47.320 --> 0:18:50.120 factors into his decision to attack Taiwan for good at 0:18:50.119 --> 0:18:50.639 some point. 0:18:50.880 --> 0:18:54.240 So there's sort of a panoply of potential risks geopolitically 0:18:54.240 --> 0:18:56.680 that people are looking at for next year. On one hand, 0:18:56.720 --> 0:18:58.720 you've got the China Taiwan issue. On the other hand, 0:18:58.720 --> 0:19:01.160 you've got rushed to Ukraine. You of course also have Iran, 0:19:01.200 --> 0:19:03.240 as we were just talking about. Then you have Venezuela 0:19:03.280 --> 0:19:06.760 that has also been increasingly ground zero for a proxy 0:19:06.880 --> 0:19:11.000 between the US and China, with China getting increasingly influential 0:19:11.359 --> 0:19:14.080 in South America. Which of those do you think is 0:19:14.119 --> 0:19:16.840 going to be the most significant heading into this year. 0:19:19.280 --> 0:19:24.920 So on the question of likelihood, it's Venezuela, because there 0:19:25.000 --> 0:19:27.760 is a real chance for the US to essentially ensure 0:19:27.760 --> 0:19:30.159 that Maduro is no longer in power, whether that's you know, 0:19:30.240 --> 0:19:33.159 kinetic actions, CiU, covid ops, etc. When can debate or 0:19:33.200 --> 0:19:35.479 even striking a deal with him. But let's put it 0:19:35.480 --> 0:19:38.120 like this, I think the odds of Maduro being out 0:19:38.119 --> 0:19:40.160 of power at the end of the year are well 0:19:40.160 --> 0:19:43.159 above fifty percent. And that's not something that can be 0:19:43.200 --> 0:19:45.919 said about the Iran situation, or about an end of 0:19:45.920 --> 0:19:47.679 the war in Ukraine and so on and so forth, 0:19:48.040 --> 0:19:51.000 just because those situations are far more complicated. Right, So 0:19:51.040 --> 0:19:53.879 in Iran, for example, these process have legs. But to 0:19:53.960 --> 0:19:57.119 really go from this to actually toppling the regime, it 0:19:57.160 --> 0:20:00.200 requires a lot of steps. The security forces have to defect, 0:20:00.280 --> 0:20:03.080 they then have to take over the hardliners and win 0:20:03.160 --> 0:20:05.360 and so on and so forth. That's much harder than 0:20:05.400 --> 0:20:09.119 just essentially taking out Maduro. So from a likelihood perspective, 0:20:09.119 --> 0:20:12.040 I would say Maduro. From an impact perspective, it would 0:20:12.040 --> 0:20:16.320 definitely be Iran. I mean Iran, you know, turning into 0:20:16.359 --> 0:20:19.240 a different regime would have massive regional implications. 0:20:20.080 --> 0:20:23.399