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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Leye. We bring

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Speaker 1: you insight from the best and economics, finance, investment, and

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Speaker 1: international relations. Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg

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Speaker 1: dot Com, and of course, on the Bloomberg terminal. Joan

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Speaker 1: Bavan joining us now the head of the black Rock

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Speaker 1: Investment Institute. Jean Barvon, your words, this is a restop,

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Speaker 1: not a recovery. John, What do you mean by that?

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Speaker 1: And why is it important? This has been you know,

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Speaker 1: our mentor from the last almost two years now, and

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Speaker 1: I think that's pretty crucial and important. We've seen after

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Speaker 1: stopping the economy for the virus restart, we've been in

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Speaker 1: that process for the last few quarters. And it's not

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Speaker 1: our usual recovery. This is not the determined aided by

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Speaker 1: the continence of the consumers. It's not about investment sentiment

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Speaker 1: and animal spirit. It's really about like people being back

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Speaker 1: to being able to back to their activity. Uh, turning

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Speaker 1: on companies. It's about like turning on lights. Um and um.

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Speaker 1: You know that can happen very quickly. Um. That's from

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Speaker 1: point number one and point number two. It's uh, it's

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Speaker 1: a lot easier to restart demand than it is to

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Speaker 1: restart supply, so that creates mismatch. That's where the inflation

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Speaker 1: is coming from. And that's very, very, very different from

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Speaker 1: the type of inflation we've seen, like in twenty fifteen

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Speaker 1: or in other cycles. So the dygnostic yere I think

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Speaker 1: it's pretty crucial for what you make of it. John

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Speaker 1: John was focused on the restart line. What easier in

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Speaker 1: on on your note is the idea that monetary policy

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Speaker 1: can't simultaneously stabilize inflation and growth it has to choose

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Speaker 1: between them. Is the FED, because of its stellar laser

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Speaker 1: focus focus on inflation right now at risk of hiking

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Speaker 1: aggressively into weakness. And therefore we're talking in theory about

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Speaker 1: a recession downline. So let's let me just take one

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Speaker 1: thing out of the way, just to be clear. Is

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Speaker 1: UM you know it's a restart on the recovery and

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Speaker 1: real that restart doesn't really need any stimulus. I mean,

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Speaker 1: it's really about lifting uh, you know, constraints. UM. So

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Speaker 1: on that on that front, it makes complete sense to

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Speaker 1: try to start normalizing policy. UM doesn't need that stimulus,

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Speaker 1: and that's in line with what they're starting to do,

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Speaker 1: which uh, you know, I think makes complete sense. I

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Speaker 1: think where it becomes uh, you know, concerning is when

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Speaker 1: this is motivated or sold as an attempt to tame inflation. Uh.

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Speaker 1: And that's a completely different thing because this inflation, as

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Speaker 1: I mentioned, is caused by its really shaped by supply,

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Speaker 1: and we haven't seen that indicates really that kind of environment.

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Speaker 1: And in an environment like this, uh, you know, you

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Speaker 1: have you have a choice. You need to decide whether

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Speaker 1: you're gonna stabilize inflation or growth. Uh. And if you

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Speaker 1: decide to go hard for inflation, it's going to be

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Speaker 1: very costly in terms of grow. You literally have to

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Speaker 1: destroy the mend to really tame inflation. So this choice

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Speaker 1: is a lot of starker and not warranted. I thinking

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Speaker 1: at the stage, John, do you think that that's where

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Speaker 1: the FED is going and that we're going to see

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Speaker 1: a material slow down and even discussion of a recession

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Speaker 1: later this year. I don't think that's where they're going.

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Speaker 1: If we go by you know, the cumulative rate of

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Speaker 1: of hikes that they're envisioning, until it's still very muted. Uh.

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Speaker 1: You know, it's going to be the most spetid response

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Speaker 1: in history. So that's in line with what you should

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Speaker 1: be doing the restart, lift the foot of the accelerator,

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Speaker 1: but not hit the brake. What I'm concerned about, however,

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Speaker 1: is they're not explicitly or or actively you know, framing

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Speaker 1: in the way of just talking about and so that

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Speaker 1: leaves opened the door that it could be interpreted as

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Speaker 1: slamming the brake, and the market is certinly primed to

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Speaker 1: do that. And I think this is where we can

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Speaker 1: get for a while, you know, pretty bumpy, right, But

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Speaker 1: I think ultimately, even if they don't they were to

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Speaker 1: try to do slamming the brake, I think they will

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Speaker 1: be dissuaded pretty quickly. The frequently you're more comfortable right

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Speaker 1: now looking outside of the US, I've just had so

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Speaker 1: many concerns from you right now in the last five

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Speaker 1: minutes or so, at the moment you're more comfortable doing

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Speaker 1: so I'm looking outside the US. Concern I've express I

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Speaker 1: think are really near terms. So I think if you

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Speaker 1: take a trading perspective, I think this is more concerning

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Speaker 1: a lot more surprise and so on. Just to be clear,

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Speaker 1: from an investment and longer term investment perspective. I think

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Speaker 1: it's a bumpy ride, but the fundamentals are not pretty change,

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Speaker 1: you know, it's I think it's remarkable and I think

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Speaker 1: we should all red remind ourselves of that that you know,

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Speaker 1: people now are expecting markets like five hikes, right, Um,

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Speaker 1: it took only a couple of months to get there

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Speaker 1: from zero or even one. And what changed that It's

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Speaker 1: not the economic track. It's really like interpretation of what

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Speaker 1: the FED was was saying. So I think that interpotation

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Speaker 1: can change. And ultimately I think this is from a

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Speaker 1: long perspective like still constructive. You know, we need to

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Speaker 1: take down risk of it, but it's constructive. Even the

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Speaker 1: US we uh we think, you know, emerging markets uh

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Speaker 1: continued to be uh, you know, an interesting area, an

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Speaker 1: industring space, and it's useful to to look at this area.

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Speaker 1: But within the DM world, no strong preferences for Europe,

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Speaker 1: Japan or or the US at this stage. We're kind

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Speaker 1: of overweight modestly but equally, I guess at this stage,

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Speaker 1: I think I think it's shaped by this. This restart

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Speaker 1: across the globe genre really interesting as always. Sir Jean

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Speaker 1: Bavana of the Black Rock Investment Institute. Sarah matic Wanting

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Speaker 1: Us now chief investment officer at New FAD. Sarah, let's

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Speaker 1: talk about this secuity market. You came into twenty two.

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Speaker 1: You like the energy story, even I talked about it

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Speaker 1: quite a lot through last year. It's delivered gains of

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Speaker 1: as a group on the SMP in four weeks. Sarah,

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Speaker 1: as a PM, what do you do now? The three

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Speaker 1: key drivers for energy are still in place. That supply

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Speaker 1: tight supply, strong demand, and producer discipline in terms of

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Speaker 1: being disciplined in terms of volume growth. But let's talk

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Speaker 1: about these returns and how we're positioning from a global

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Speaker 1: point of view. Look at miners, this is an area

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Speaker 1: that's lagged versus E n P. Refiners lagged for a reason,

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Speaker 1: and that's because they're more based on barrel growth rather

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Speaker 1: than high oil prices. So a company like the Valero

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Speaker 1: is looking interesting to us right now. They just reported

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Speaker 1: the quarter very well positioned, also focusing on renewable diesel

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Speaker 1: and and their discipline. They're returning forty of cash flow

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Speaker 1: from operations. As shareholders, they're focusing on paying down debt,

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Speaker 1: but they still have more upside than other energy stocks.

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Speaker 1: The part of the strong year to day returns, even

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Speaker 1: though it is our number one sector for the year,

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Speaker 1: is due to the rush of Ukraine situation, so as

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Speaker 1: that if that starts to settle, that could settle energy prices,

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Speaker 1: but that elongated cycle based on the type supply demand

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Speaker 1: balance and producer discipline should stay in place. And that

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Speaker 1: does keep his bullish on energy, but more selective looking

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Speaker 1: for the laggards and for the rest of Sarah, how

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Speaker 1: actively are you managing that energy portfolio given the increase

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Speaker 1: in prices and given the fact that we might have

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Speaker 1: already brought forward a lot of the games. But for us,

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Speaker 1: it's about remaining overweight energy, but switching around with in

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Speaker 1: the sector. So even though we like our e MP names,

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Speaker 1: let's look for the ones that have been laggards, like

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Speaker 1: the refiner. So it's not about moving in and out

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Speaker 1: of energy as a sector. It's we're bullish. We think

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Speaker 1: there's going to be a long cycle here where long

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Speaker 1: term investors in that sense, but making sure within the

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Speaker 1: sector that we're finding value and adding into those areas.

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Speaker 1: When we think about finding value, valuations have come down

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Speaker 1: in other areas of the market. We've seen a move

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Speaker 1: in the numerator in the P part. When it comes

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Speaker 1: to the E part, what are your expectations for what's

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Speaker 1: going to happen to multiples? Given that earnings don't really

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Speaker 1: seem to matter for the equity market, but the theory

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Speaker 1: they make a difference when we're talking about how much

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Speaker 1: you have to pay for these companies. Oh, are you

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Speaker 1: on twenty two that earnings will start to matter more

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Speaker 1: because that's going to be the key to driving markets

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Speaker 1: higher this year. We're not counting on valuations, we think

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Speaker 1: those will be flat down on the year, but earnings

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Speaker 1: just start to shine through, and we're seeing that with

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Speaker 1: these companies like Apple today. You know the other key

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Speaker 1: for the years, of course, what is the Fed doing?

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Speaker 1: Their hawkish but that doesn't necessarily mean that it's the

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Speaker 1: end of the bull market. Even with fortified rate hikes,

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Speaker 1: the economy and strong earnings should be able to shine through.

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Speaker 1: From a portfolio positioning point of view, you need to

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Speaker 1: be selective in this sense. Look for those companies in

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Speaker 1: those type supply demand sectors like energy, and then to

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Speaker 1: drive those earnings. The main level is going to be

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Speaker 1: pricing power. Companies which have the pricing power to overcome

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Speaker 1: inflation will be able to drive those earnings and they

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Speaker 1: should get rewarded. This year. It's not going to be

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Speaker 1: a year of a rising tide lifting all boats. It's

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Speaker 1: going to be a volatil year. We've already seen that.

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Speaker 1: But overall we're still moderately bullish based on earnings growth. Sarah,

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Speaker 1: can we talk a little more about the luxury players

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Speaker 1: Alpha MH in the news this morning? It's negative on

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Speaker 1: the session. It was positive at the open last year.

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Speaker 1: It had a massive year, up more than forty and

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Speaker 1: in some ways the numbers today validate some of that move.

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Speaker 1: Fantastic numbers. Sarah, Can you talk to me about the

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Speaker 1: luxury names and whether you're positive, optimistic, constructive on that

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Speaker 1: view going forward. We are positive in the luxury names.

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Speaker 1: I think we've talked about Carrying in the past. You know,

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Speaker 1: we think gliobill luxury driven by consumer balance sheets, which

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Speaker 1: are very strong, is going to be a sector that

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Speaker 1: plays out for many years. One thing that we like

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Speaker 1: about companies like Carrying and other global luxury players is

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Speaker 1: it helps you dip your toe into China, which could

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Speaker 1: be bottoming at this point, without having to directly invest

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Speaker 1: into China. They have a large exposure to the Chinese consumer,

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Speaker 1: which you see as a growing area. So these are

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Speaker 1: companies not only dominant brands with a lot of brand heat,

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Speaker 1: but exposure to the right regions of the world. But

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Speaker 1: you have that backstop of that strong brand name that

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Speaker 1: you'd continue to do well. So although we saw today

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Speaker 1: even after their earnings, LVMH is struggling and struggled to

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Speaker 1: hold on to gains is now negative. You saw with Apple,

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Speaker 1: Apple shares also struggling to hold onto gains, down more

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Speaker 1: than half from the peaks of in the interday session.

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Speaker 1: So how do you view this? When do you start

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Speaker 1: to rethink your thesis on where your price target is

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Speaker 1: given the fact that the macro backdrop is so dominant. Yeah,

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Speaker 1: I mean the macro headwind on companies like Apple with

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Speaker 1: the NASDAC down double digits here to date is going

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Speaker 1: to be an issue. The other thing with Apple for

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Speaker 1: us is the short term versus a long term. This

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Speaker 1: might be what investors are somewhat starting to focus on.

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Speaker 1: They've had blowout growth during COVID with strong iPhone sales,

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Speaker 1: iPad sales, mac but if you look at the long term,

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Speaker 1: normalized growth rate for Apple, these these products actually sell

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Speaker 1: it much lower growth rates even in the load amid

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Speaker 1: single digit. So how much demand has been pulled forward

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Speaker 1: into by these consumers in terms of Apple due to COVID.

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Speaker 1: I think that's the issue now on the other side

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Speaker 1: of that two billion cash on the balance sheet, spending

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Speaker 1: over twenty billion on R and D, just look at

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Speaker 1: the metaverse for them. We expect their handset to come

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Speaker 1: out headset to come out next year, which could be

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Speaker 1: priced around two thousand dollars and have an elongated demand cycle.

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Speaker 1: But you know, for Apple, there's a normalization that's going

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Speaker 1: to happen there and that could be started part of

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Speaker 1: what investors are starting to see. And then of course

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Speaker 1: these macro headwinds from the FED and from the move

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Speaker 1: away from tech socks is a negative for these companies

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Speaker 1: and that's an issue overhanging the markets. We don't think

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Speaker 1: we're through it yet. Saramatic of Nova and Sarah want

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Speaker 1: to photogra through the equity market with you. Thank you,

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Speaker 1: Torsten Slop joint US now chief economists that a polar

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Speaker 1: global management. Let's start with a really big question, Toston,

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Speaker 1: a question that I know you want to try and

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Speaker 1: answer how does this fed engineer a soft landing? I

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Speaker 1: think what the data here is telling us is well,

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Speaker 1: first of all, only chronic in December has probably putting

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Speaker 1: a little bit more quid pressure both on wages and

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Speaker 1: also on inflation. But the big picture here is that

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Speaker 1: as inflation continues to be elevated and will be for

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Speaker 1: a little while longer, it is very critical that the

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Speaker 1: market is beginning to price in so many hikes. If

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Speaker 1: the market does price in four or five six hikes,

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Speaker 1: then of course the likelihood that we will get that

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Speaker 1: soft landing that the FAT is trying to engineer just

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Speaker 1: goes down. What do you say that, Torsten, Because we

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Speaker 1: have seen it so off with respect to equity markets,

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Speaker 1: but it hasn't been completely uncontrollable, and frankly, there hasn't

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Speaker 1: been any sign of malfunctioning in the underlying mechanics of

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Speaker 1: the market. That's correct. But remember very importantly, I mean,

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Speaker 1: what is the goal for the fit with what they're

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Speaker 1: trying to do. The goal really is to try to

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Speaker 1: cool down growth, and that also includ to try to

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Speaker 1: cool down revenue growth in corporate America. And that's very

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Speaker 1: important when we think about it. If I'm an equity

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Speaker 1: and a credit perspective that the fifth goal is to

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Speaker 1: try to cool down aggregate demand, and once you do

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Speaker 1: that with more aggressive rate hikes, then it does raise

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Speaker 1: the risk that in particular and the most cyclical components

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Speaker 1: of GDP, such as housing, where psychology plays a really

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Speaker 1: important role, it does become more challenging to micromanage that

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Speaker 1: soft landing that they're trying to achieve. George Savellos of

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Speaker 1: Deutsche Bank put out a note this morning where he

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Speaker 1: was talking about longer term expectations for where the Fed

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Speaker 1: funds rate will be and actually has come down significantly

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Speaker 1: over the past couple of years that basically people are

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Speaker 1: expecting the rate hikes be packed in and then very

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Speaker 1: slow growth after that. He's saying, the best thing that

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Speaker 1: could happen is for inflation to materially slow down, the

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Speaker 1: labor market to actually improve and growth to pick up.

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Speaker 1: Otherwise we could be hiking into a really weak cycle.

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Speaker 1: What is your opinion on that? Do you sort of

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Speaker 1: see things in the same way. I think that is

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Speaker 1: a risk, but I mean the bottom line still is

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Speaker 1: that the growth at the moment, and I mean clearly

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Speaker 1: when you heard j Paul a few days ago. He

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Speaker 1: did not seem to worry about a slowdown. The signaling

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Speaker 1: from them is clearly that when omicron begins to subside,

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Speaker 1: we will have stronger growth and consumption, stronger growth in capex,

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Speaker 1: small people traveling, more people going to restaurants. All that

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Speaker 1: should be generating more growth in consumer services. And with

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Speaker 1: that backdrop, at least from a fit perspective, it seems

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Speaker 1: quite clear that they do not see a worry on

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Speaker 1: n Cartier in terms of the slowdown. Well, we're assessing

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Speaker 1: this data. We also have to keep in mind we're

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Speaker 1: getting more data later with consumer confidence at ten am

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Speaker 1: Eastern time towards and when we think about the consumer

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Speaker 1: and their propensity to spend in fuel, therefore the American economy,

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Speaker 1: are we going to start to see some demand erosion

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Speaker 1: purely because of reduced sentiment because of inflationary pressures and

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Speaker 1: wages that aren't necessarily keeping up and therefore some of

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Speaker 1: the work will already have been done for the FED. Yeah,

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Speaker 1: this is very importantly. I mean there's really a big

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Speaker 1: difference between how the main street looks at inflation and

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Speaker 1: the impact where how Wall Street and markets look and

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Speaker 1: inflation if you look at inflation and acclixiations in break evens,

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Speaker 1: they are really stabilized and in some of the further

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Speaker 1: rout inflationing accliations come down. Whereas if you look at

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Speaker 1: the University of Michigan consumer sentiment, I mean that is

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Speaker 1: at the lowest level in ten years. And if you

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Speaker 1: look under the hood why that is, it is because

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Speaker 1: people worry about housing become an unaffordable, car prices becoming unaffordable,

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Speaker 1: filling games on your cars becoming unaffordable. So you're right,

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Speaker 1: gayly that at least when it comes to the consumer,

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Speaker 1: higher inflation is at risk of being more contractionary. And

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Speaker 1: that's the challenge, of course that the FAT has here

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Speaker 1: that there are different ways that inflation is feeding in.

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Speaker 1: But if you look also at the New York fet

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Speaker 1: survey of households asking what do you think inflation will

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Speaker 1: be in one years time and in three years time?

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Speaker 1: The answer to that is that also say inflation in

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Speaker 1: three years time will be four percent and in one

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Speaker 1: years time would be six percent. Those numbers tell you

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Speaker 1: that mainstream have estimates of inflation that are substantially above

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Speaker 1: the Fat troopers and target. So there's certainly a difference

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Speaker 1: in terms of how inflation impacts consumers and what the

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Speaker 1: autoga overall in the risk is to your point, that

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Speaker 1: it could begin to become more contraction and that's of

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Speaker 1: course why the FED is going because they don't want

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Speaker 1: inflation to become contractionary consumption and we've been talking a

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Speaker 1: lot to speak about the FED put what the strike

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Speaker 1: prices if it has disappeared entirely, if the FED really

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Speaker 1: cares about turmoil and the equity market, but also to

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Speaker 1: the point of consumers, that's real wealth that is being lost.

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Speaker 1: How does that factor in here? Yeah, I think this

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Speaker 1: is also very important because let's say that the FED

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Speaker 1: began to back off because all markets have gone a

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Speaker 1: little bit in the last three or four weeks, then

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Speaker 1: of course the fear would be that inflation would ultimately

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Speaker 1: run higher. And if inflation does run higher, then the

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Speaker 1: risk would be the consumer confidence was to start to

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Speaker 1: go down even more. So that's why the data here

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Speaker 1: at ten a M is very important and and very

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Speaker 1: interesting because this becomes very relevant exactly for this point

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Speaker 1: and how consumer is going to react if inflation continues

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Speaker 1: to be so high. In the fact also that the

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Speaker 1: mainstream media is also reporting as the first news item

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Speaker 1: on inflation the moment. It's also how critical inflation and

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Speaker 1: invasion apreciations are. So from that perspective, the FAT doesn't

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Speaker 1: have the luxury of doing, if you will, a fit

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Speaker 1: put and holding off and saying, oh, markets are off

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Speaker 1: a little bit so late, wait and see. I think

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Speaker 1: the way the FT looks at this is to look

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Speaker 1: at financial conditions. If I look at my Bloomberg Financial

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Speaker 1: Conditions Index, which is real time on my Bloomberg screen,

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Speaker 1: it still hasn't really tightened that much, so it's actually

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Speaker 1: still positive, meaning is still accomolative and supporting GDPs. So

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Speaker 1: the conclusion in my view still is that the financial

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Speaker 1: conditions haven't really tightened enough clearly for the FIT to worry.

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Speaker 1: That's also what Jay Palm again was saying earlier this week,

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Speaker 1: tells the more towns is about where the neutral, right is?

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Speaker 1: Is that the market that sounds is that or is

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Speaker 1: it the economy? Yes, so I know this is a

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Speaker 1: little bit of a tangent to your question, but if

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Speaker 1: you think about how the news rate on our star

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Speaker 1: is calculated, the models that calculated that, they don't even

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Speaker 1: have a stock market. They don't have credit spreads. But

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Speaker 1: when the FET talks about is financial conditions, they would

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Speaker 1: like to tighten financial conditions again with the goal of

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Speaker 1: slowing down growth in the economy, of slowing our corporate earnings.

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Speaker 1: And the way that our star and the way that

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Speaker 1: we calculate in the academic profession star and what the

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Speaker 1: terminal rate would be does not include those parts of

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Speaker 1: the real world unfultunately. So the answer to your question is,

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Speaker 1: I think the best guidance we get from the terminal

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Speaker 1: rate in the dot plug, which is two and a

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Speaker 1: half and if a funds rate, and that's probably a

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Speaker 1: good guess at the moment, But what really is the

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Speaker 1: case that if invasion really does take off to the upside,

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Speaker 1: we could of course see a much higher number than that.

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Speaker 1: The word calculation implies is some kind of scientific effort,

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Speaker 1: and the word guests, I think Toulston is closer to

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Speaker 1: the truth. Justin Slock of Apollo Global Management. The volatility

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Speaker 1: is just dramatic at a time of such little uncertainty

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Speaker 1: with respect to FED policy right now, also uncertainty on

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Speaker 1: international relations, with the conflict between Russia the US, the

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Speaker 1: alliance between the US and Europe in question joining us.

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Speaker 1: We're so lucky to have Peter Truboutz, Professor of International

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Speaker 1: Relations at London School of Economics and the Chatham House

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Speaker 1: Associate Fellow. You know, I got to say, Peter, I'm

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Speaker 1: looking at all of the noise that we keep getting

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Speaker 1: out of both sides here. What does Vladimir Putin want

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Speaker 1: good to be with you? Lisia? I see this, you know,

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Speaker 1: as a kind of classic Russian move designed to improve

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Speaker 1: its geopolitical position by sewing division um in the West

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Speaker 1: and shoring up domestic legitimacy. You know, Soviet leaders played

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Speaker 1: this card often during the Cold War, but you know,

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Speaker 1: with little international success, and I think that Putin thinks

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Speaker 1: he can do better. And the question is why now?

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Speaker 1: And I think the answer to that is because the

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Speaker 1: West is in a bit of a funk, uh and

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Speaker 1: key Western leaders are in um in political trouble by

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Speaker 1: these approval numbers, as you know, are lousy. Boris Johnson's underwater,

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Speaker 1: facing a possible no confidence vote in the coming days.

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Speaker 1: Frances McCrone is up for a left in April was

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Speaker 1: shaky prospects, and the new German government is internally divided

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Speaker 1: on foreign policy. Matters, including how to deal with Russia.

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Speaker 1: So I had Putin is betting that this is an

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Speaker 1: opportune moment to get at you know, getting greater influence

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Speaker 1: over Ukraine and its neighbors, stoke divisions within NATO and

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Speaker 1: weak in America's position in Europe. I think that's what

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Speaker 1: it's about. Peter. Does he seem to be winning? Um? Well,

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Speaker 1: I mean the first move was very strong and over

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Speaker 1: the top. I think much really right now depends on

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Speaker 1: how he responds to the formal response that he received

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Speaker 1: from Biden and NATO earlier this week. Um uh, you know,

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Speaker 1: to his demand for kind of carte blanche security guarantees,

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Speaker 1: and um you know, he could respond by ratching up

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Speaker 1: diplomatic pressure he could unleash. There's like a lot of

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Speaker 1: chatter about this cyber warfare in the Ukraine, or worse,

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Speaker 1: use the troops. I saw the New York Times today

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Speaker 1: as reporting there's about a hundred and thirty thousand troops

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Speaker 1: now positioned along the border there to launch a full

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Speaker 1: scale military offensive. If he does that, I think it's

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Speaker 1: likely to backfire because in the sense that I think

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Speaker 1: it is likely to unite rather than divide, America, and

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Speaker 1: its European allies. He would make it very difficult for

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Speaker 1: Western leaders to back down, and indeed, in some cases

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Speaker 1: I think actually politically advantageous to stand tall. And this

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Speaker 1: is really why the situation is so fraught, because on

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Speaker 1: both sides they can get themselves boxed in. Biden has

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Speaker 1: to be careful, Putent has to be careful. Well, let's

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Speaker 1: talk about President Biden. Peter, how has he played his

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Speaker 1: hands so far? In your assessment, DAILI, I think so

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Speaker 1: far he's played a pretty difficult hand reasonably. Well, There's

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Speaker 1: been a hiccup or two along the way, but I

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Speaker 1: think import ly, just to go back to the last point,

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Speaker 1: he's been careful not to box in Putin or himself.

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Speaker 1: He's remained open to negotiating with Putin even while he's

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Speaker 1: rejected um demands, and he's put contingency plans of course

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Speaker 1: that you've been reporting about economic sanctions and so forth

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Speaker 1: in place in case the situation rapidly deteriorates. Meanwhile, you know,

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Speaker 1: I think he's consulted widely with you know, America's European alls.

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Speaker 1: So this is a far cry from what happened over

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Speaker 1: Afghanistan back in the summer um and um, and he's

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Speaker 1: he's managed to avoid i think looking too weak or

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Speaker 1: two belligerent. He's kind of you know, he's so far

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Speaker 1: he's found the sweet spot between them. There's some carping

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Speaker 1: by the Republicans, but I think, you know, at least

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Speaker 1: from my London perch, they look too internally divided and

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Speaker 1: as a result, pretty out of position at the moment.

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Speaker 1: But that said, just to go back to the first question,

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Speaker 1: the balls in Potent's court, and we're gonna have to

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Speaker 1: see really how Biden and the Allies handle what is

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Speaker 1: going to be, you know, a return of serf. How

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Speaker 1: do you think China is watching as all of this

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Speaker 1: plays out? Peter watching very carefully and um, you know,

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Speaker 1: in a way, uh, they're they're they're there. I'm sure

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00:22:27,480 --> 00:22:32,440
Speaker 1: they're spending time sizing up the US, the German response,

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Speaker 1: the British response, and what it might mean in another

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00:22:36,000 --> 00:22:39,800
Speaker 1: theater that isn't the in the Asian theater. But I

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00:22:39,840 --> 00:22:42,120
Speaker 1: think in some ways, you know, they're in a kind

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Speaker 1: of the catbirds seat with this because they watch putin,

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Speaker 1: uh do kind of all of the dirty work with

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Speaker 1: respect to kind of trying to divide the Western Alliance

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Speaker 1: and they're able to just kind of sit back and

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Speaker 1: you know, they've kind of got his back. Presumably the

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Speaker 1: more sanctions are imposed and so forth. But I think

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Speaker 1: they're in a position, you know, they probably don't want

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Speaker 1: Booton to do this in the middle of the Olympics.

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00:23:09,160 --> 00:23:12,719
Speaker 1: So he has a record of doing stuff around the Olympics. Um,

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Speaker 1: as he's done, you know, as he's done before. But

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Speaker 1: I think in general, um, I think they're just watching

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Speaker 1: this play out. Um, they're in a position where they

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Speaker 1: get to play kind of the the honest or trying

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Speaker 1: to play the honest broker, and everybody needs to tone

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Speaker 1: down and so forth. So well, Peter Triboitz, thank you

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Speaker 1: so much. Peter Triboitz of the London School of Economics.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Thanks for listening. Join

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