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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at

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Speaker 1: noon and five pm Eastern on Applecarclay and Android Auto

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Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: We follow the Friday trade on a triple witching Friday,

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Speaker 2: which could mean a lot more volatility volume and hopefully

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Speaker 2: not tougher numbers as we get closer to the close.

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Speaker 2: The matter of Iran is also, of course, making many

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Speaker 2: traders reluctant to go along into the weekend, and we'll

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Speaker 2: keep tabs on this session as it unfolds throughout the

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Speaker 2: day on a triple witching Friday, as I mentioned, and

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Speaker 2: a president of the United States pushing back on criticism

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Speaker 2: over this whole operation, even as the Strait of hor

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Speaker 2: moves remains closed, and reports today by a number of

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Speaker 2: organizations including Axios, that the White House is eyeing karg

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Speaker 2: Island as its next stop, knowing that we are trying

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Speaker 2: to pulverize the coast of Iran with the Strait of

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Speaker 2: Hormuz in mind. General Dan Kine, the Chairman of the

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Speaker 2: Joint Chiefs telling reporters here that we are using heavily

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Speaker 2: armed A ten warplanes, the warthogs that have massive guns

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Speaker 2: aboard them, and Apache attack helicopters over the straight southern

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Speaker 2: coast of Iran, going after boats Iranian naval vessels, shooting

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Speaker 2: down Iranian drones. But it could indeed be carg Island

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Speaker 2: that comes next, that oil processing facility about fifteen miles

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Speaker 2: off the coast of Iran, which would likely require the

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Speaker 2: use of ground troops, something that we have been talking

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Speaker 2: about extensively here on Bloomberg over the past couple of days.

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Speaker 2: Knowing that the President is not kept the help in

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Speaker 2: most cases that he was asking for in opening the strait,

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Speaker 2: taking to truth social to call our NATO allies cowards

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Speaker 2: and refer to NATO as a paper tiger. Appearing before

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Speaker 2: reporters and onlookers earlier today, and an unrelated ceremony at

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Speaker 2: the White House in which she expressed nothing but good

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Speaker 2: news for what it's worth in this military operation.

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Speaker 3: Listen to the President from earlier today.

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Speaker 4: I want to begin by just saying we're doing extremely

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Speaker 4: well in Iran. The difference between them and US is

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Speaker 4: they had a navy two weeks ago.

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Speaker 5: They have no navy anymore.

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Speaker 3: So at the bottom of the sea.

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Speaker 4: Fifty eight chips knocked down in two days, and we

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Speaker 4: have the greatest navy anywhere in the world.

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Speaker 5: It's not even close. So but we are doing really well.

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Speaker 4: We're not going to let them have nuclear weapons because

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Speaker 4: if they had them, they'd use them, and we're not

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Speaker 4: going to let that happen.

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Speaker 2: So very similar rhetoric to what we have been hearing

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Speaker 2: for the past couple of weeks. Here on day twenty

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Speaker 2: one of these strikes, we start at the White House

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Speaker 2: to get us rolling this hour. Christopher Smart will be

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Speaker 2: with us in a moment, but Tyler Kendall joins us

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Speaker 2: from the North Lawn on a gorgeous day here in

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Speaker 2: the Capitol for the latest on all of this. Tyler,

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Speaker 2: the President, I'm assuming has pretty much wrapped up his

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Speaker 2: public events here for the week. I don't know if

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Speaker 2: there's going to be another opportunity many maybe when he

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Speaker 2: leaves for Palm Beach later on today. But what is

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Speaker 2: the narrative coming out of the White House aside from

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Speaker 2: we've won or we.

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Speaker 6: Are winning well, Joe, As you heard, President Trump started

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Speaker 6: his public remarks today by reiterating what we have heard,

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Speaker 6: including that the US will not allow Iran to obtain

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Speaker 6: a nuclear weapon. He then went on to suggest that

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Speaker 6: he would be willing to talk with Iran, but in

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Speaker 6: his words, said that there is nobody left to talk to.

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Speaker 3: President Trump also.

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Speaker 6: Today taking aim at NATO allies, as you mentioned, as

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Speaker 6: those disruptions through the Strait of Hermus do continue, and

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Speaker 6: there is reporting that this administration could be mulling a

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Speaker 6: potential takeover or blockade of carg Island, Axios reporting that

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Speaker 6: any potential operation would only take place after the US

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Speaker 6: further degrades Iran's military capabilities. Of course, one week ago today,

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Speaker 6: last Friday, the Trump administration had confirmed that it hit

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Speaker 6: military targets on the critical export hub, but refrained from

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Speaker 6: taking hits on any of the energy targets. And I

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Speaker 6: bring that up because the broader backdrop of today, Joe,

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Speaker 6: is that this White House and Israel have both vowed

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Speaker 6: to not hit energy infrastructure going forward, after we saw

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Speaker 6: Israel take responsibility overnight for what was that large scale

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Speaker 6: strike on Iran's largest natural gas field that set off

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Speaker 6: this wave of retaliation by Iran. But even as we

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Speaker 6: get this pledge from the White House in Israel, Iran

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Speaker 6: has continued it strikes against regional partners including Kuwait, the UAE,

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Speaker 6: and Saudi Arabia, taking aim at energy infrastructure. Because Joe,

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Speaker 6: at the end of the day, this is really coming

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Speaker 6: down to the White House's efforts to try to secure

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Speaker 6: the straight energy is really at the center of this conflict.

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Speaker 6: You mentioned how the Joint Chief of Staff Dan Cain

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Speaker 6: did confirm that the US has started this new wave

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Speaker 6: of operation with these attack planes and helicopters over the

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Speaker 6: straight up remosal also put on your raidar The Wall

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Speaker 6: Street Journal reporting earlier today that the Trump the administration

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Speaker 6: is now deploying three naval warships and thousands of marines

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Speaker 6: to the region, in a sign at this moment that

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Speaker 6: there's no let up in the conflict.

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Speaker 2: All right, Tyler, there's a headlines breaking as you and

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Speaker 2: I speak, and one of them just went red on

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Speaker 2: the terminal. Iran said to stick to hardline position on

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Speaker 2: the strait of horror moves. This is not good news

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Speaker 2: if you're in the energy market today. Iran is unwilling

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Speaker 2: to discuss horror moves while under attack. According to an

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Speaker 2: official briefed on private talks. Commenting on Iran's position here,

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Speaker 2: I'm looking back to the oil pits WTI West Texas

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Speaker 2: Intermediate now jumping above ninety nine dollars a barrel. We're

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Speaker 2: up over three percent here, ninety nine thirty six, having

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Speaker 2: seen triple digits since the start of this, and of

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Speaker 2: course Brent's been there for some time. Brent now at

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Speaker 2: one hundred nine dollars, up one percent, approaching one ten.

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Speaker 3: It's at nine sixty four.

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Speaker 2: And of course the reaction that we've seen in the

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Speaker 2: bond market somewhat based on this, but also with our

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Speaker 2: eyes on the Fed and interest rates ten years at

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Speaker 2: four to three seven, the S and P five hundred

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Speaker 2: is down fifty five points. Tyler, this is not the

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Speaker 2: news the White House wants to.

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Speaker 6: Hear, no Joe, not at all, and it also probably

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Speaker 6: spells trouble for the message that President Trump has for

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Speaker 6: our allies, particularly NATO allies, as he renewced his criticism

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Speaker 6: when it comes to a potential naval escort through the Strait.

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Speaker 6: Just to give context here about why this is such

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Speaker 6: a critical area, about ninety percent of Iranian crewed exports

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Speaker 6: go through this waterway, and imagery analyzed recently by Bloomberg

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Speaker 6: News shows that for the most part, since this conflict started,

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Speaker 6: those loadings have really continued unabated. Now we know yesterday

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Speaker 6: President Trump was in discussions with Japan about potential mind

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Speaker 6: sweeping options, and we did get this statement from seven

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Speaker 6: other US allies pledging that they would be interested in

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Speaker 6: a potential coalition, But we haven't really gotten details about

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Speaker 6: what that would really look like and on what timeline,

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Speaker 6: as many of our allies have said that they would

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Speaker 6: need to see a ceasefire in place first, Joe. This

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Speaker 6: is also going to spell trouble for the White House's

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Speaker 6: push when it comes to combat those higher prices. We

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Speaker 6: heard from the Treasury Secretary yesterday floating the idea that

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Speaker 6: we could see some sanctions eased on Iranian crude barrels

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Speaker 6: that are already at sea, after the administration had already

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Speaker 6: taken similar measures when it came to Russian crude barrels

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Speaker 6: at sea. And we know there are a few other

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Speaker 6: options on the table here, including potentially tapping the spr

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Speaker 6: again or maybe asking Congress for a federal gas tax holiday.

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Speaker 2: By Tyler, thank you let us know if the President

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Speaker 2: might take some questions in the driveway when he's leaving

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Speaker 2: later on. Well, of course, I'll be watching and listening

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Speaker 2: live from the White House. Tyler Kendall, Washington correspondent here

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Speaker 2: at Bloomberg. Indeed, this is something else ninety nine dollars

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Speaker 2: WTI just below one hundred and ten right now on Brent,

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Speaker 2: following the news that Iran is unwilling to even discuss

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Speaker 2: horror moves while under attack. The whole idea was using

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Speaker 2: military pressure to bring Iran to the table and relent.

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Speaker 2: Remember unconditional surrender. That was some time ago, as we

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Speaker 2: turned to Christopher Smart for insights. I'm a big fan

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Speaker 2: of Christopher Smart at our growth group, which is why

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Speaker 2: we bring him back here for advice on a lot

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Speaker 2: of issues here to share insights based on his experience

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Speaker 2: on the National Economic Council and the Obama administration. But

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Speaker 2: there's nothing more attractive, at least in my opinion, than

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Speaker 2: someone saying when they're wrong. And this is the top

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Speaker 2: of Christopher Smart's substack dated March eighteen. Getting it wrong

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Speaker 2: and correcting bad predictions on the Iran war just in

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Speaker 2: case sounds a lot like Christopher Waller from earlier this

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Speaker 2: morning on a different network. There was a feeling twenty

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Speaker 2: one days ago that this in fact could be pretty quick.

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Speaker 2: But even if you didn't necessarily believe that or trust

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Speaker 2: in that narrative, that the markets would somehow look beyond this,

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Speaker 2: not unlike the FED looking through as it said, oil prices.

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Speaker 2: The market was looking beyond this because of the Trump put,

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Speaker 2: because of the Taco because of so many other factors

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Speaker 2: that have become ingrained in our habits here in the

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Speaker 2: first year of this Trump two point zero.

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Speaker 3: But things have changed. The market is certainly reflecting that.

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Speaker 2: Christopher smart Is as well, the founder and managing partner

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Speaker 2: at our growth group, is back with us here on

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Speaker 2: Bloomberg TV and radio. What has darkened the picture in

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Speaker 2: the last couple of days here, Christopher, that's brought you

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Speaker 2: and the likes of so many others to this conclusion.

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Speaker 5: Well, thanks, Joe, great to be with you. And you know,

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Speaker 5: maybe it's Christopher Waller, it's also John Maynard Kaines. When

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Speaker 5: the facts change, I changed my mind. What do you do?

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Speaker 5: When I was on with your colleague Kelly Lines a

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Speaker 5: few weeks ago, it really did seem like this was

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Speaker 5: going to be a fairly focused operation, that the navy

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Speaker 5: on the US side would have no trouble at all

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Speaker 5: defeating the navy on the Iranian side. But I think

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Speaker 5: what was not clear to me, and maybe should have

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Speaker 5: been clear, but is certainly clear now, is that Iran

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Speaker 5: will continue to fight on even after having suffered immense

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Speaker 5: military law. The political leadership still seems to be in place,

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Speaker 5: still seems to be repentant and unwilling to negotiate. And

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Speaker 5: we've seen currently and through history where a less able

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Speaker 5: military force is able to harass and undermine the goals

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Speaker 5: of a much more able military force. And if it's

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Speaker 5: in a narrow strait of water with a lot of

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Speaker 5: oil going back and forth, this thing could go on

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Speaker 5: for a long time.

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Speaker 3: A long time.

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Speaker 2: Indeed, as the White House prepares to ask for two

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Speaker 2: hundred billion dollars in this report on potentially occupying carg

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Speaker 2: Island might require another two to four weeks.

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Speaker 3: It's interesting.

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Speaker 2: We just saw a tweet from one of our colleagues

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Speaker 2: in London who's also a little bit concerned about all

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Speaker 2: of this. I don't know if we can find that

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Speaker 2: tweet from Javier bloss Once again here, James, because it's

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Speaker 2: pretty important here when we consider the hardware that's being

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Speaker 2: sent to the region, and it could take another month

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Speaker 2: or so to try to pulverize the Iranian coast to

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Speaker 2: prepare it, or to prepare carg Island for troops to

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Speaker 2: occupy the region. Javier Blass on Twitter, thank you James

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Speaker 2: with a photograph, retweeting warship cam Christopher the USS boxer

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Speaker 2: just leaving San Diego for the Middle East. Considering she

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Speaker 2: only left two days ago, she will not be near

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Speaker 2: the Persian Gulf until mid April. If the reinforcements are

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Speaker 2: intended to reopen the Straight of Four Moves, the oil

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Speaker 2: market faces a very long way, Christopher.

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Speaker 3: This is why you're worried, right.

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Speaker 5: Well, it's that, but it's also just the recent history

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Speaker 5: of the Utie attacks on shipping through the Gulfielder call.

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Speaker 5: The US Navy did a whole lot to try and

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Speaker 5: take out their positions and reduce their capabilities, but it's

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Speaker 5: really only a diplomatic agreement with them to stand down

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Speaker 5: that has kept shipping going up until this recent war.

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Speaker 5: And so if the Iranians don't want to stand down,

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Speaker 5: or at least some parts of them want to continue

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Speaker 5: to harass shipping, it will be a passage that will

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Speaker 5: have risk attached to it for the foreseeable future, and

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Speaker 5: maybe the navy can escort ships through. Maybe there will

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Speaker 5: be a resumption of that traffic, but it won't be

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Speaker 5: the traffic that we had before, it won't be with

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Speaker 5: the same risks that we've had before, and that all

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Speaker 5: has to get priced in. The one thing I would

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Speaker 5: just say quickly about the price of oil today, I

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Speaker 5: think most people are still thinking within the next two

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Speaker 5: or three weeks there will be flows of oil open

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Speaker 5: up again, and that may be the base case that

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Speaker 5: we should all accept, But there is this downside case

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Speaker 5: where we're stuck with a pattern of much less soil

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Speaker 5: getting through at a much higher risk, which will keep

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Speaker 5: this price of oil much higher for a longer time until,

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Speaker 5: of course, there's a global recession which will bring demand

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Speaker 5: down and bring the right price back down, so it

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Speaker 5: never stays at one hundred and fifty dollars for too long.

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Speaker 5: But that would be the worst possible outcome from an

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Speaker 5: economic point of view.

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Speaker 2: And of course it comes through on the consumer end.

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Speaker 2: With three dollars and ninety one cent gas today, that's

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Speaker 2: the average, the national average according to Triple A all

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Speaker 2: the while, Christopher Smart, Russia is cash and checks making

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Speaker 2: money here thanks to looser sanctions and now feeling emboldened

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Speaker 2: by what it's watching. And many believe that China is

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Speaker 2: the biggest winner in the end. How about you, Well,

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Speaker 2: I think.

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Speaker 5: That's those are the unintended consequences of war like this,

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Speaker 5: where Russia not only benefits from the higher oil price,

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Speaker 5: it benefits from patriot and defense equipment that would be

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Speaker 5: going to Ukraine or might be going to Ukraine now

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Speaker 5: being diverted to the Middle East for the foreseeable future.

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Speaker 5: And it I think feels like perhaps it has less

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Speaker 5: reason to push for a quick to be pushed into

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Speaker 5: a quick cease fire with Donald Trump and the White

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Speaker 5: House tied up and distracted elsewhere. I think from China's perspective,

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Speaker 5: China has very large arge oil reserves, large coal and

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Speaker 5: clean energy sources which will help cushion the blow from

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Speaker 5: lost oil from the Gulf. Meanwhile, again, it's not such

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Speaker 5: bad news from China's perspective that all of these naval

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Speaker 5: assets in the South China Sea have been diverted to

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Speaker 5: the Middle East. And if and when the summit does

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Speaker 5: get back on the calendar, when Donald Trump does go

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Speaker 5: to Beijing to negotiate whatever the future trading relationship is

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Speaker 5: with China, I think Xijiping will feel like he's got

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Speaker 5: a few extra cards in his hand against a president

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Speaker 5: who really does will be looking for a diplomatic victory

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Speaker 5: of some sort and a trade deal of some sort,

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Speaker 5: and probably will have to pay a little bit more,

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Speaker 5: a little bit of a higher price for it when

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Speaker 5: he gets to China.

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Speaker 3: What are you making of this market here?

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Speaker 2: I know it's triple witching, but the vis is close

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Speaker 2: to twenty six Christopher. Obviously, stocks are lower and seeing

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Speaker 2: that day after day, but we're also seeing metals fall

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Speaker 2: out of bed. Gold is lower, the miners are down,

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Speaker 2: and you've got interest rates taken higher the ten years

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Speaker 2: at four three seven basically right now? What do you

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Speaker 2: make of this sell everything moment that we appear to

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Speaker 2: be in.

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Speaker 5: You know, I think as soon as you get headlines

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Speaker 5: around US troops deploying for any kind of land action

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Speaker 5: in Iran and reinforcements coming from halfway around the world

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Speaker 5: to help out in a few weeks or months time,

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Speaker 5: you start really wondering about the scenario that I and

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Speaker 5: others bought into at the very beginning of this conflict,

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Speaker 5: and even that, you know, our hope and expectation that

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Speaker 5: it might start dwindling down in the next couple of weeks.

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Speaker 5: You know, you start looking at those scenarios where it's months,

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Speaker 5: months or even more of a conflict, and that's the

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Speaker 5: kind of uncertainty that hits consumer confidence, consumer sentiment. And

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Speaker 5: you know, you point out the gasoline prices were coming

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Speaker 5: into the US driving season. That's always the big hit

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Speaker 5: on US US spending, and so I think that's the

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Speaker 5: beginning of what's being priced in there. On the treasury side,

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Speaker 5: of course, it's probably worries about inflation and some of

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Speaker 5: these other pressures where the Fed has never been able

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Speaker 5: to get back towards its two percent target, has been

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Speaker 5: struggling to get back towards two percent target, and now

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Speaker 5: these headwinds are going to push at the other direction.

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Speaker 2: Yeah, it's great to have you back, Christopher Smart. Always

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Speaker 2: a great pleasure our growth group. My regards to the

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Speaker 2: great city of Boston and everyone listening on ninety two

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Speaker 2: nine today, Christopher, thank you so much. I'm Joe, Matthew

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Speaker 2: and Washington will assemble our political panel next and we'll

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Speaker 2: hear from our friend David Weston, the host of Wall

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Speaker 2: Street Week, who spent some time with Randy Quarrels talking

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Speaker 2: about uncertainty in this market. With much more to follow

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Speaker 2: here on the fastest show in politics, Stay.

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Speaker 3: With us on Balance of Power. We'll have much more

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Speaker 3: coming up after this.

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Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

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Speaker 1: us live weekdays at noon and five pm Eastern on

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Speaker 1: flagship New York station Just Say Alexa played Bloomberg eleven thirty.

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Speaker 2: Welcome to the Friday edition of Balance of Power Live

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Speaker 2: from Washington. As we keep our connection to New York,

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Speaker 2: we're going to bring in David Weston in a moment

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Speaker 2: here with breaking news on the terminal that went read

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Speaker 2: immediately as we were talking to Tyler Kendall on the

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Speaker 2: North lawn of the White House, and oil prices snapped higher,

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Speaker 2: with official saying that Iran is unwilling to negotiate even

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Speaker 2: talk about reopening the Strait of Horror moves as long

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Speaker 2: as it is under attack by the US and Israel.

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Speaker 2: Of course, there'd be a reaction in the oil pits

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Speaker 2: on a day like this. We had Doubti just south

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Speaker 2: of one hundred dollars a barrel a couple of minutes ago.

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Speaker 2: It's at ninety eight ninety three right now, and Brent

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Speaker 2: is charging higher up now above one hundred and ten

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Speaker 2: dollars a barrel WTI. That's a three percent jump in Brent,

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Speaker 2: showing a two percent increase here. Stocks are lower, and

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Speaker 2: you know what the conversation has been not only about

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Speaker 2: the potential impact on inflation, but the potential for stagflation.

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Speaker 2: There is great uncertainty over this market, with a VIS

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Speaker 2: approaching twenty six now and an S and P five

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Speaker 2: hundred that's pointing lower, with likely another losing week here

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Speaker 2: in the cards, and we could see some acceleration and

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Speaker 2: losses as we get closer to the bell. We'll find

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Speaker 2: out together here on a triple witching Friday that is

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Speaker 2: also bringing investors to a new point of reluctance to

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Speaker 2: go long into the weekend.

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Speaker 3: Good thing we have David Weston with us, the host.

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Speaker 2: Of Bloomberg Wall Street Week who's seen a couple of

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Speaker 2: these before, is joining us now from world headquarters in

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Speaker 2: New York, David, how does the market get its head

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Speaker 2: around this other than sell everything?

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Speaker 3: That's what I keep hearing.

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Speaker 7: Well, I must say, I really want to thank you

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Speaker 7: for that cheerful introduction. I'm feeling really good about things

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Speaker 7: after that, Joe, not that it's Friday dying what you said.

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Speaker 3: Yeah.

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Speaker 7: So one thing that seems clear to me at least

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Speaker 7: is this is not going quite as fast as President

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Speaker 7: Trump thought.

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Speaker 3: I guess we're all.

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Speaker 7: Learning something he's learning, which is it's sometimes easier to

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Speaker 7: start to more than to stop one. And right now

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Speaker 7: it's not clear where it all ends up. And as

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Speaker 7: you say, there's a lot of uncertainty in the market.

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Speaker 7: We're seeing it from minutes to minute, not from day

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Speaker 7: to day. A lot of uncertainly in the market. And

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Speaker 7: against that backdrop, of course, the FED had to meet

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Speaker 7: this week and tell us what they're going to do

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Speaker 7: with monetary policy. Jpil did his best. He talked about

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Speaker 7: uncertainty repeatedly. So we talked with Randy Corrals, he's a

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Speaker 7: former vice chair of the FED, about how the FED

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Speaker 7: deals with this, and particularly something we'd hear something about

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Speaker 7: is at what point does the energy prices and other

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Speaker 7: disruption cause what is called demand destruction. And this is

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Speaker 7: what part of what Randy Corals had to say to us.

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Speaker 8: You're going to start seeing responses pretty quickly to higher

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Speaker 8: energy prices in consumer spending and you know, and again

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Speaker 8: because of the uncertainty about the future macro environment and

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Speaker 8: business investment. If that's relatively short, if we're talking a

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Speaker 8: resolution in a month, even in Tuma, then that's from

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Speaker 8: the point of view of the FED, which looks over

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Speaker 8: long arcs of time, a blip. If it goes on

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Speaker 8: longer than that, you know, then you'll start to see

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Speaker 8: you'll start to see reaction. But on the flip side

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Speaker 8: of that, which is partly why I think you're not

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Speaker 8: going to see a a hike in interest rates, but

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Speaker 8: you're not going to see a low lower interest rates either.

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Speaker 8: Those are effects that slow the economy. But higher energy

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Speaker 8: prices feed into higher prices generally, and that's inflation. Ay,

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Speaker 8: I think a lot of the other drivers of the economy.

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Speaker 8: The fiscal stimulus that you have from the One Big

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Speaker 8: Beautiful Bill Act, which I thought was that I thought

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Speaker 8: was excellent legislation. It provides the right incentives for the economy,

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Speaker 8: but it is stimulative and pushing upward on inflation in

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Speaker 8: the short term. So I think the balance over the

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Speaker 8: course of the next several months is likely to be

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Speaker 8: in favor of no moves either down or up.

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Speaker 3: So there you have a show.

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Speaker 7: That's from Randy krorls Ur, a vice chair the FED,

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Speaker 7: now runs sin a share an investment company for his family.

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Speaker 7: Basically no moves up or down. He thinks they're getting

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Speaker 7: just about right. At the same time, there's a lot

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Speaker 7: of pressure on the FED and a lot of uncertainty.

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Speaker 7: We just don't know where we're going at this point.

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Speaker 2: We just don't know where we're going. As the headline

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Speaker 2: it seems of the day here. You've got a great

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Speaker 2: view on this, David, not only from the investment community

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Speaker 2: on Wall Street Week, but from your history is a

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Speaker 2: news executive. You spent a good deal of time in

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Speaker 2: the Middle East, in some cases dealing with the very

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Speaker 2: parties who have their hands on the tiller right now.

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Speaker 2: And I'm just wondering your thoughts as we consider a

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Speaker 2: longer and prolonged conflict. A president of the United States

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Speaker 2: who is talking about carg Island back in nineteen eighty eight.

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Speaker 3: David, history is echoing here somehow well.

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Speaker 7: Okay, I must say I reacted when you heard the

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Speaker 7: Secretary of Defense Hegseth talk about of course we knew

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Speaker 7: about the straight of horror moves. Even I knew about

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Speaker 7: the straight of horror moves, not knowing nothing about this,

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Speaker 7: and I thought, it's good that you knew about it.

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Speaker 7: What was your plan? And is this going going to plan?

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Speaker 7: Because it seems not to be helping the whole globe

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Speaker 7: from going back to my experience, which doesn't mean it's

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Speaker 7: true this time. Two things. Number one is the Middle

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Speaker 7: East is fiendishly complicated, and if you think you understand it,

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Speaker 7: then you don't, because there's always wheels within wheels. You

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Speaker 7: don't know where it's going, and it spins out of

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Speaker 7: control very easily. As I said at the beginning, it's

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Speaker 7: easier to get into these things than get out of them,

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Speaker 7: I will say, And this will be editorializing a little bit. Joe,

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Speaker 7: I'm sorry. I'm old enough to remember the war, the

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Speaker 7: First Gulf War, when President George Herbert Walker Bush went in.

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Speaker 7: Remember how much time he took to get that coalition

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Speaker 7: together and how much time he spent with those coalition partners,

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Speaker 7: and also having a very specific objective. We're going to

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Speaker 7: get the sound, We're going to get their rockies out

438
00:22:50,680 --> 00:22:53,680
Speaker 7: of Kuwait. And once it was done, he left. It

439
00:22:53,720 --> 00:22:56,000
Speaker 7: is in my mind, at least, a sharp contrast with

440
00:22:56,000 --> 00:22:58,200
Speaker 7: what we're seeing this time. I hope this works great

441
00:22:58,240 --> 00:23:00,520
Speaker 7: for the United States, great for the world, But boy,

442
00:23:00,560 --> 00:23:01,080
Speaker 7: it's different.

443
00:23:02,200 --> 00:23:05,000
Speaker 2: You know, his son had some experience assembling what they

444
00:23:05,040 --> 00:23:07,479
Speaker 2: call the Coalition of the Willing when he had his

445
00:23:07,560 --> 00:23:10,760
Speaker 2: turn as well and David. Both presidents addressed the American

446
00:23:10,800 --> 00:23:13,760
Speaker 2: people about their plans. We still haven't seen that formal

447
00:23:13,800 --> 00:23:14,919
Speaker 2: speech from Donald Trump.

448
00:23:15,000 --> 00:23:16,119
Speaker 3: Is that just quaint now?

449
00:23:16,480 --> 00:23:18,000
Speaker 2: I mean he's talking under the wing and in the

450
00:23:18,119 --> 00:23:20,760
Speaker 2: driveway every day anyway. Is that that matter to people

451
00:23:20,800 --> 00:23:21,960
Speaker 2: in their living rooms anymore?

452
00:23:22,000 --> 00:23:24,280
Speaker 7: Well, I'm old fashioned. I'm used to the Oval Office

453
00:23:24,320 --> 00:23:26,280
Speaker 7: address when we go to war, where the president comes

454
00:23:26,320 --> 00:23:27,280
Speaker 7: and says, why are we doing this?

455
00:23:27,320 --> 00:23:28,200
Speaker 3: And what's the objective?

456
00:23:28,280 --> 00:23:31,240
Speaker 7: Yes, going back to you covered it so well the

457
00:23:31,280 --> 00:23:33,200
Speaker 7: State of the Union dress, there wasn't much on and

458
00:23:33,280 --> 00:23:35,359
Speaker 7: Ron as I recall, there wasn't a whole lot to

459
00:23:35,359 --> 00:23:37,240
Speaker 7: talk about it. So we haven't heard much for the

460
00:23:37,240 --> 00:23:40,240
Speaker 7: president other than some posts, of course, and we've heard

461
00:23:40,240 --> 00:23:43,760
Speaker 7: of pharamount from Secretary of Defense Egsath on this, But

462
00:23:43,800 --> 00:23:46,920
Speaker 7: we haven't had a lot of explanation. I mean, it's

463
00:23:46,960 --> 00:23:49,119
Speaker 7: going to be interesting to see what happened comes midterms.

464
00:23:49,640 --> 00:23:51,680
Speaker 7: You know what, the American people are going to be saying, saying,

465
00:23:51,760 --> 00:23:53,159
Speaker 7: why did we do this? And what do we get

466
00:23:53,160 --> 00:23:55,040
Speaker 7: out of it? As I say, I hope it works

467
00:23:55,080 --> 00:23:58,080
Speaker 7: beautifully and by then we're all really happy and celebrating.

468
00:23:58,440 --> 00:24:00,480
Speaker 7: But boy, there's going to be some ex plaining to

469
00:24:00,520 --> 00:24:02,960
Speaker 7: do if things don't sit together.

470
00:24:04,080 --> 00:24:06,800
Speaker 2: Well, God, everyone wants this to work beautifully. We just

471
00:24:06,840 --> 00:24:08,159
Speaker 2: also want to address reality.

472
00:24:08,240 --> 00:24:09,199
Speaker 3: David. It's great to see you.

473
00:24:09,600 --> 00:24:11,119
Speaker 2: Thank you so much, and we'll be looking forward to

474
00:24:11,160 --> 00:24:13,240
Speaker 2: Wall Street Week coming up at six pm Eastern time,

475
00:24:13,640 --> 00:24:16,040
Speaker 2: Wall Street Time, as they say at World Headquarters in

476
00:24:16,040 --> 00:24:17,919
Speaker 2: New York. That's right after the late addition to Balance

477
00:24:17,920 --> 00:24:20,440
Speaker 2: the Power. So make sure you spend some time here

478
00:24:20,480 --> 00:24:22,560
Speaker 2: A little bit later on today with some very insightful

479
00:24:22,600 --> 00:24:25,399
Speaker 2: conversation on Bloomberg TV and Radio, let's assemble our panel

480
00:24:25,440 --> 00:24:28,520
Speaker 2: for their take on everything we just heard. Bloomberg Politics

481
00:24:28,520 --> 00:24:31,719
Speaker 2: contributor Genie Shanzano is back with US Democracy visiting fellow

482
00:24:31,960 --> 00:24:35,200
Speaker 2: at Harvard Kennedy School's Ash Center and Republican strategist Mara

483
00:24:35,280 --> 00:24:40,160
Speaker 2: Gillespie Bluestack Strategies founder and veteran of John Bayner's Speaker's Office.

484
00:24:40,200 --> 00:24:43,680
Speaker 2: Great to see you both here, Genie. The economic side

485
00:24:43,680 --> 00:24:47,720
Speaker 2: of this could get very difficult if this does become

486
00:24:47,840 --> 00:24:51,639
Speaker 2: protracted and the market is forecasting that right now. David

487
00:24:51,680 --> 00:24:56,960
Speaker 2: Weston just invoked midterm campaigns once we start getting through

488
00:24:56,960 --> 00:24:59,239
Speaker 2: the primary cycle here or getting into the bulk of it.

489
00:25:00,080 --> 00:25:02,359
Speaker 2: To see Democrats and Republicans both sing in the same

490
00:25:02,400 --> 00:25:07,800
Speaker 2: tune on inflation, on the economy.

491
00:25:06,160 --> 00:25:07,679
Speaker 9: We should he is, he is.

492
00:25:07,880 --> 00:25:09,840
Speaker 10: I love him for doing that, Joe. You know, we

493
00:25:09,880 --> 00:25:13,879
Speaker 10: love elections, so thank you, David Weston. You know, the

494
00:25:14,000 --> 00:25:17,600
Speaker 10: problem politically, in addition to everything else, is that, as

495
00:25:17,720 --> 00:25:21,320
Speaker 10: Ron Klan used to say, when gas prices go this

496
00:25:21,520 --> 00:25:24,440
Speaker 10: high and we are now what a dollar over what

497
00:25:24,520 --> 00:25:27,160
Speaker 10: they were when the war began three weeks ago, they

498
00:25:27,200 --> 00:25:31,040
Speaker 10: are you know, hovering around three ninety on average in

499
00:25:31,080 --> 00:25:33,600
Speaker 10: the US for a gallon could go as much as

500
00:25:33,640 --> 00:25:36,760
Speaker 10: four dollars or more. That is like putting a political

501
00:25:36,800 --> 00:25:40,280
Speaker 10: billboard and everybody's you know, the end of everybody's street

502
00:25:40,400 --> 00:25:43,919
Speaker 10: saying we are in a red zone danger zone. So

503
00:25:44,000 --> 00:25:46,080
Speaker 10: when you talk about the midterm and you talk about

504
00:25:46,080 --> 00:25:49,119
Speaker 10: the politics of this thing, that is a problem. And

505
00:25:49,200 --> 00:25:51,920
Speaker 10: of course it is exacerbated by what you and David

506
00:25:51,960 --> 00:25:54,640
Speaker 10: were talking about, which is the fact that no one

507
00:25:54,720 --> 00:25:58,880
Speaker 10: has yet explained in coherent terms what the goal is,

508
00:25:58,960 --> 00:25:59,920
Speaker 10: what the end game is.

509
00:26:00,560 --> 00:26:02,520
Speaker 9: So people are suffering.

510
00:26:02,600 --> 00:26:05,920
Speaker 10: Certainly military families are suffering, but people are suffering. Gas

511
00:26:05,960 --> 00:26:09,200
Speaker 10: prices and other prices increasing, and no one has yet

512
00:26:09,240 --> 00:26:12,840
Speaker 10: explained to them why that is why they should be

513
00:26:13,080 --> 00:26:16,440
Speaker 10: in pain this way. Except yesterday, as the President noted

514
00:26:16,520 --> 00:26:18,560
Speaker 10: a he didn't think it was all so bad. So

515
00:26:19,040 --> 00:26:22,439
Speaker 10: that is a problem politically, and the GOP knows it.

516
00:26:23,920 --> 00:26:27,239
Speaker 2: Maura, it was interesting to hear David Weston reflect on

517
00:26:27,960 --> 00:26:30,920
Speaker 2: George HW Bush and his invasion of Iraq. You remember

518
00:26:30,960 --> 00:26:34,639
Speaker 2: Desert Shields, of course, is followed by Operation Desert Storm.

519
00:26:34,680 --> 00:26:36,679
Speaker 2: By the time we got into nineteen ninety one, his

520
00:26:36,760 --> 00:26:40,560
Speaker 2: approval ratings were like ninety one percent. I mean, he

521
00:26:40,680 --> 00:26:44,240
Speaker 2: was just cruising to a second term until the economy

522
00:26:44,240 --> 00:26:47,240
Speaker 2: got on the way and the recession that followed completely

523
00:26:47,280 --> 00:26:51,040
Speaker 2: destroyed his approval ratings. And he is of course now

524
00:26:51,480 --> 00:26:54,760
Speaker 2: will go down as a one term president. Even with

525
00:26:54,920 --> 00:26:58,520
Speaker 2: success in Iran, there could still be economic reverberations that

526
00:26:58,680 --> 00:27:03,400
Speaker 2: cause a recess that could bring out stagflation. How much

527
00:27:03,440 --> 00:27:06,159
Speaker 2: of a concern should that be for Republicans in this cycle.

528
00:27:07,720 --> 00:27:10,280
Speaker 11: Well, it's concerned in terms of not only the economic

529
00:27:10,640 --> 00:27:13,359
Speaker 11: outlook and what happens in the next roughly seven to

530
00:27:13,359 --> 00:27:16,159
Speaker 11: eight months, but it also a matter of why we

531
00:27:16,200 --> 00:27:18,239
Speaker 11: were here in the first place. There wasn't necessarily a

532
00:27:18,280 --> 00:27:22,120
Speaker 11: galvanizing four something to get behind in a patriotic way

533
00:27:22,160 --> 00:27:24,160
Speaker 11: like in the past, or there's been something that happened

534
00:27:24,200 --> 00:27:27,280
Speaker 11: to then us to garner a response. I also think

535
00:27:27,320 --> 00:27:29,479
Speaker 11: that something to be on the lookout for that's not

536
00:27:29,520 --> 00:27:33,960
Speaker 11: being talked about necessarily is this potential for more troops

537
00:27:34,560 --> 00:27:36,760
Speaker 11: going over We already saw it today forty five hundred

538
00:27:36,800 --> 00:27:39,280
Speaker 11: in the Navy, or heat it over. And so if

539
00:27:39,280 --> 00:27:41,880
Speaker 11: there's more ground troop, or if there is ground troop,

540
00:27:42,400 --> 00:27:46,760
Speaker 11: you know, deployments, you're going to see a visceral reaction

541
00:27:46,880 --> 00:27:50,159
Speaker 11: from many Americans, but especially those Republican base voters for

542
00:27:50,400 --> 00:27:52,920
Speaker 11: the trub administration who don't want to see that happen.

543
00:27:53,119 --> 00:27:54,320
Speaker 9: I also have to point out.

544
00:27:54,160 --> 00:27:57,720
Speaker 11: That in the NDAA that was passed in December, there

545
00:27:57,800 --> 00:28:01,480
Speaker 11: was the automatic Select service implemented that goes into effect

546
00:28:01,520 --> 00:28:04,320
Speaker 11: in December. So some of the people, the d of

547
00:28:04,320 --> 00:28:06,360
Speaker 11: the day voters, they care about what happens to them directly,

548
00:28:06,480 --> 00:28:08,480
Speaker 11: what's going to impact their day to day lives. The

549
00:28:08,520 --> 00:28:10,520
Speaker 11: economy is the first thing that's going to impact their

550
00:28:10,600 --> 00:28:13,560
Speaker 11: day to day lives. And second to that is if

551
00:28:13,840 --> 00:28:15,600
Speaker 11: the draft is still on the table. I think you know,

552
00:28:15,640 --> 00:28:17,879
Speaker 11: Caroline Levett two weeks ago, when she was asked directly

553
00:28:17,880 --> 00:28:20,160
Speaker 11: about it, she said that the president would not take

554
00:28:20,200 --> 00:28:23,000
Speaker 11: off any options from the table, leaving them all on there.

555
00:28:23,359 --> 00:28:25,640
Speaker 11: I do think that when you talk to people about

556
00:28:25,680 --> 00:28:27,800
Speaker 11: what's going to impact their day to day lives, that's

557
00:28:27,840 --> 00:28:30,920
Speaker 11: going to really drive whether they decide to turn out

558
00:28:30,920 --> 00:28:34,359
Speaker 11: for the vote in November for the midterms or to

559
00:28:34,480 --> 00:28:37,119
Speaker 11: vote against what the administration is doing. And so Republicans

560
00:28:37,160 --> 00:28:39,040
Speaker 11: in Congress need to be very conscious of that.

561
00:28:40,320 --> 00:28:41,960
Speaker 3: So then in the end, Genie, we've got about a

562
00:28:41,960 --> 00:28:42,520
Speaker 3: minute left.

563
00:28:42,800 --> 00:28:45,560
Speaker 2: The economy is still decided on or the election I

564
00:28:45,560 --> 00:28:48,520
Speaker 2: should say still decided on the economy, whether it's being

565
00:28:48,520 --> 00:28:50,400
Speaker 2: impacted by war or some other force.

566
00:28:51,960 --> 00:28:55,040
Speaker 10: Absolutely, it is the number one issue on voters' minds,

567
00:28:55,080 --> 00:28:57,840
Speaker 10: and I'll tell you on the GOP side, it is

568
00:28:57,960 --> 00:29:01,920
Speaker 10: complicated by this push for this Save America Vote Act

569
00:29:02,320 --> 00:29:06,040
Speaker 10: because the President is talking about how people can't trust

570
00:29:06,080 --> 00:29:10,120
Speaker 10: elections at a time when Republicans are not as enthusiastic

571
00:29:10,160 --> 00:29:13,160
Speaker 10: as Democrats. So all of that is complicated. And of

572
00:29:13,200 --> 00:29:16,120
Speaker 10: course what we're voters told before the twenty four election,

573
00:29:16,600 --> 00:29:19,640
Speaker 10: as jd Vance said to Tim Dillon days before the election,

574
00:29:20,040 --> 00:29:21,840
Speaker 10: We're not going to go to war in Iran. It

575
00:29:21,840 --> 00:29:25,920
Speaker 10: would be a huge distraction, waste of resources and massively expensive.

576
00:29:26,240 --> 00:29:28,360
Speaker 10: He was right on that, And now they've got to

577
00:29:28,400 --> 00:29:29,520
Speaker 10: explain why we're there.

578
00:29:30,640 --> 00:29:33,600
Speaker 2: Really sharp panel today with great analysis. Jeanie Shanzano and

579
00:29:33,600 --> 00:29:36,040
Speaker 2: Morag Gillespie. Thank you both for being with us here,

580
00:29:36,080 --> 00:29:39,040
Speaker 2: and thanks again to David Weston for setting up our conversation.

581
00:29:39,320 --> 00:29:41,480
Speaker 3: Stay with us on Balance of Power. We'll have much

582
00:29:41,520 --> 00:29:42,720
Speaker 3: more coming up after this.

583
00:29:48,080 --> 00:29:51,560
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

584
00:29:51,680 --> 00:29:54,640
Speaker 1: is live weekdays at noon and five pm Eastern on

585
00:29:54,800 --> 00:29:58,000
Speaker 1: Alma Cocklay and Android Auto with the Bloomberg Business App.

586
00:29:58,200 --> 00:30:01,680
Speaker 1: Listen on demand wherever you get your or watch us

587
00:30:01,720 --> 00:30:02,680
Speaker 1: live on YouTube.

588
00:30:04,240 --> 00:30:07,719
Speaker 2: Triple Witching Friday, So we've got a good dose of volatility.

589
00:30:07,720 --> 00:30:09,440
Speaker 2: There's a lot of volume and a reluctance to go

590
00:30:09,480 --> 00:30:11,680
Speaker 2: along into the weekend, which is not a great combination

591
00:30:11,800 --> 00:30:15,560
Speaker 2: of Vicks of twenty six and this whole sell everything

592
00:30:15,720 --> 00:30:18,520
Speaker 2: vibe that seems to be sparing very few. Although I

593
00:30:18,560 --> 00:30:21,160
Speaker 2: guess if you're FedEx, you're living in a world of

594
00:30:21,200 --> 00:30:21,680
Speaker 2: your own.

595
00:30:22,120 --> 00:30:23,720
Speaker 3: Let's get with Nora right now.

596
00:30:23,760 --> 00:30:25,840
Speaker 2: Of course, watching the markets with us every day as

597
00:30:25,880 --> 00:30:28,320
Speaker 2: Bloomberg's Markets correspondent in New York.

598
00:30:28,360 --> 00:30:32,400
Speaker 3: It's great to see in Nora. This is getting a little.

599
00:30:32,160 --> 00:30:34,720
Speaker 2: Bit scary for investors as they look at not only

600
00:30:34,760 --> 00:30:37,800
Speaker 2: oil prices but just the headline risk that's coming out

601
00:30:37,800 --> 00:30:38,440
Speaker 2: of the Middle East.

602
00:30:38,480 --> 00:30:40,560
Speaker 3: What are you hearing, Well, we were really.

603
00:30:40,400 --> 00:30:42,680
Speaker 12: Trying to figure out where to be in this market.

604
00:30:42,720 --> 00:30:44,280
Speaker 12: I mean, we're looking at an S and P five

605
00:30:44,400 --> 00:30:47,040
Speaker 12: hundred that's lower than Nazaq one hundred, lower by more

606
00:30:47,080 --> 00:30:49,600
Speaker 12: than one percent. We see the broader market, the S

607
00:30:49,640 --> 00:30:52,720
Speaker 12: and P five hundred heading for a fourth straight week of losses.

608
00:30:52,920 --> 00:30:55,920
Speaker 12: If the S and P five hundred holds these losses

609
00:30:56,040 --> 00:30:58,960
Speaker 12: at the closing bell, we'll see its longest weekly drop

610
00:30:59,320 --> 00:31:01,920
Speaker 12: in a year. So we are really seeing a streets

611
00:31:01,960 --> 00:31:04,200
Speaker 12: some size and scope theres You are seeing a bit

612
00:31:04,240 --> 00:31:06,840
Speaker 12: of people anxious about where to be. We've been talking

613
00:31:06,880 --> 00:31:09,680
Speaker 12: so much about the idea of higher energy prices really

614
00:31:09,680 --> 00:31:13,200
Speaker 12: pushing up inflation fears. A lot of people also concern

615
00:31:13,280 --> 00:31:16,120
Speaker 12: that this could potentially change the rate cut trajectory that

616
00:31:16,160 --> 00:31:18,120
Speaker 12: so many people have been waiting for. They've been waiting

617
00:31:18,160 --> 00:31:21,120
Speaker 12: to see rights come down lower, but it seems as

618
00:31:21,160 --> 00:31:23,960
Speaker 12: though with the escalating tensions in the Middle East, it

619
00:31:24,040 --> 00:31:26,480
Speaker 12: might actually delay that longer than anticipate it. So you're

620
00:31:26,480 --> 00:31:28,479
Speaker 12: seeing a bit of that activity not only putting out

621
00:31:28,480 --> 00:31:30,880
Speaker 12: in the bond market, but equity markets as we're really trying.

622
00:31:30,680 --> 00:31:31,720
Speaker 3: To figure out where to be.

623
00:31:31,760 --> 00:31:33,800
Speaker 12: You see energy as the best performing group in the

624
00:31:33,880 --> 00:31:36,320
Speaker 12: S and P five hundred and some of those tech names,

625
00:31:36,320 --> 00:31:39,280
Speaker 12: the bigger growth of your names falling on the day.

626
00:31:40,840 --> 00:31:41,719
Speaker 3: Yeah, well, I'll tell you.

627
00:31:41,760 --> 00:31:43,440
Speaker 2: I mentioned FedEx and I'd love to hear from you

628
00:31:43,480 --> 00:31:45,400
Speaker 2: on this because we had a beaten raised last night,

629
00:31:45,680 --> 00:31:48,520
Speaker 2: you know, very strong earning US report and the stock

630
00:31:48,600 --> 00:31:52,120
Speaker 2: is poppin'. I'm just I'm really taken by this whole

631
00:31:52,200 --> 00:31:55,160
Speaker 2: narrative today because we're looking at jet fuel prices going

632
00:31:55,200 --> 00:31:59,000
Speaker 2: through the roof a potential consumer slow down. People are

633
00:31:59,000 --> 00:32:04,040
Speaker 2: talking out loud about the possibility of stagflation in this economy,

634
00:32:04,480 --> 00:32:07,560
Speaker 2: and this is a company that would be impacted by

635
00:32:07,560 --> 00:32:08,000
Speaker 2: all of these.

636
00:32:08,080 --> 00:32:08,240
Speaker 13: Right.

637
00:32:08,280 --> 00:32:10,520
Speaker 3: As goes FedEx, so it goes the nation, right.

638
00:32:10,560 --> 00:32:12,880
Speaker 12: I mean, we've always thought about FedEx as a barometer

639
00:32:13,000 --> 00:32:15,640
Speaker 12: for the economy. People love to parse through their report,

640
00:32:15,920 --> 00:32:17,480
Speaker 12: but it does seem to be going in a different

641
00:32:17,520 --> 00:32:19,560
Speaker 12: direction than the majority of the rest of the market.

642
00:32:19,600 --> 00:32:21,960
Speaker 12: I'm looking at shares of FedEx right now high about

643
00:32:22,000 --> 00:32:24,920
Speaker 12: one zero point eight percent as we speak, pairing some

644
00:32:25,000 --> 00:32:27,720
Speaker 12: earlier gains. But we did see the stock earlier seeing

645
00:32:27,760 --> 00:32:30,520
Speaker 12: its biggest intro to gain, and ten months we know

646
00:32:30,600 --> 00:32:33,760
Speaker 12: this is after it raised its full year profit guide.

647
00:32:33,800 --> 00:32:36,200
Speaker 12: And we're really seeing the company having some plans to

648
00:32:36,280 --> 00:32:40,720
Speaker 12: restructure its delivery network, and that still continues the gain

649
00:32:40,840 --> 00:32:43,200
Speaker 12: traction despite the fact that we are seeing all these

650
00:32:43,240 --> 00:32:45,959
Speaker 12: different macroeconomic woes. But I mean, take a look at

651
00:32:45,960 --> 00:32:47,720
Speaker 12: the year to day scope and the stock is up

652
00:32:47,720 --> 00:32:50,360
Speaker 12: about twenty five percent, So it's interesting to see some

653
00:32:50,360 --> 00:32:53,120
Speaker 12: of these idiosyncratic moves despite the fact that we always

654
00:32:53,120 --> 00:32:56,280
Speaker 12: think about this as maybe a sense of some sort

655
00:32:56,320 --> 00:32:58,320
Speaker 12: of indication about where the economy stands.

656
00:32:59,160 --> 00:33:01,600
Speaker 2: Yeah, bounced right off to fifty and looking pretty good.

657
00:33:01,920 --> 00:33:03,960
Speaker 2: On the other side of that coin is super Micro?

658
00:33:04,480 --> 00:33:07,800
Speaker 2: Is this something, Nora? The headlines remarkable. It really stopped

659
00:33:07,800 --> 00:33:10,360
Speaker 2: me on my tracks when I saw this last night.

660
00:33:10,400 --> 00:33:13,320
Speaker 2: Three individuals associated with this company that was already dealing

661
00:33:13,320 --> 00:33:16,480
Speaker 2: with some accounting issues that made for a tough year

662
00:33:16,480 --> 00:33:23,680
Speaker 2: earlier indicted for allegedly conspiring to provide in Vidio Blackwell

663
00:33:23,760 --> 00:33:27,160
Speaker 2: chips illegally to China. Investors have no time for this,

664
00:33:27,280 --> 00:33:28,440
Speaker 2: do they at all?

665
00:33:28,480 --> 00:33:30,320
Speaker 12: I mean this is the stock has already been pressured

666
00:33:30,360 --> 00:33:32,480
Speaker 12: much of this year. Take a look at the year

667
00:33:32,480 --> 00:33:35,360
Speaker 12: to date'sco stock is down about twenty six percent. But

668
00:33:35,480 --> 00:33:38,280
Speaker 12: important to point out the activity that we're seeing today.

669
00:33:38,320 --> 00:33:40,280
Speaker 12: The stock is down right now as we speak, almost

670
00:33:40,320 --> 00:33:44,600
Speaker 12: thirty percent, and these headlines are really ricocheting through this

671
00:33:44,840 --> 00:33:47,160
Speaker 12: company and how investors are really thinking about where they

672
00:33:47,240 --> 00:33:50,120
Speaker 12: want to be as relates to super Micro. I mean,

673
00:33:50,160 --> 00:33:52,560
Speaker 12: of course, we know the US charging a co founder

674
00:33:52,880 --> 00:33:57,040
Speaker 12: with illegally smuggling billions of dollars in Nvidia powered chips

675
00:33:57,280 --> 00:34:00,560
Speaker 12: to China, So that's really weighing on Senemi here as

676
00:34:00,600 --> 00:34:04,080
Speaker 12: we think about where investors are viewing this company, especially

677
00:34:04,120 --> 00:34:05,720
Speaker 12: given the fact that they're getting a lot of pressure

678
00:34:05,760 --> 00:34:08,399
Speaker 12: from the United States. Super Micro has said that they

679
00:34:08,440 --> 00:34:12,120
Speaker 12: are cooperating with US authorities, but it doesn't change the

680
00:34:12,160 --> 00:34:15,160
Speaker 12: fact that it's a major overhang for a live investors

681
00:34:15,160 --> 00:34:17,080
Speaker 12: that have already been a bit cautious about this stock.

682
00:34:18,200 --> 00:34:19,320
Speaker 3: Boy, isn't that the truth?

683
00:34:19,480 --> 00:34:21,440
Speaker 2: This is a stock that topped out almost one hundred

684
00:34:21,440 --> 00:34:24,879
Speaker 2: and nineteen dollars almost exactly one year ago, and it's

685
00:34:24,960 --> 00:34:27,920
Speaker 2: now selling for twenty one dollars, down thirty percent.

686
00:34:28,080 --> 00:34:29,080
Speaker 3: An incredible move.

687
00:34:29,160 --> 00:34:31,360
Speaker 2: Nora, thank you so much. It's great to see and

688
00:34:31,360 --> 00:34:33,120
Speaker 2: I hope you have a good weekend. Noramal Linda with

689
00:34:33,200 --> 00:34:36,440
Speaker 2: us live from New York, with our eyes on the

690
00:34:36,440 --> 00:34:38,359
Speaker 2: market today. For a lot of different reasons. These are

691
00:34:38,360 --> 00:34:40,600
Speaker 2: really important stories, but so is Iran, and that seems

692
00:34:40,600 --> 00:34:43,319
Speaker 2: to be captivating the market here as a whole. The

693
00:34:43,360 --> 00:34:45,520
Speaker 2: S and P five hundred is now down seventy one points,

694
00:34:45,520 --> 00:34:47,640
Speaker 2: so we're looking at new lows here one percent decline

695
00:34:47,680 --> 00:34:49,400
Speaker 2: for the S and P. The Nasdaq is down three

696
00:34:49,480 --> 00:34:52,239
Speaker 2: hundred and sixty four points, more than one and a

697
00:34:52,280 --> 00:34:56,279
Speaker 2: half percent, with headline risk is I keep pointing in

698
00:34:56,640 --> 00:35:00,600
Speaker 2: this case, a number of reports today suggesting ground troops

699
00:35:00,800 --> 00:35:04,200
Speaker 2: will in fact be required to achieve to achieve the

700
00:35:04,200 --> 00:35:07,520
Speaker 2: objectives of this administration. And that's something that we talked

701
00:35:07,560 --> 00:35:10,240
Speaker 2: to leon Panetta about. Of course, the former Defense Secretary

702
00:35:10,239 --> 00:35:12,560
Speaker 2: of the former director of the CIA, spent time as

703
00:35:12,840 --> 00:35:15,000
Speaker 2: a White House chief of staff and a member of Congress,

704
00:35:15,080 --> 00:35:17,600
Speaker 2: ran the budget office and understands all of the different

705
00:35:17,600 --> 00:35:20,560
Speaker 2: angles on this story. Listen to what he said, But.

706
00:35:20,600 --> 00:35:22,600
Speaker 13: That's going to be one of the tough issues that

707
00:35:22,719 --> 00:35:25,719
Speaker 13: has to be looked at because it may require some

708
00:35:25,840 --> 00:35:29,239
Speaker 13: boots on the ground in order to initially secure that

709
00:35:29,360 --> 00:35:34,400
Speaker 13: era would require a tremendous amount of air surveillance, it

710
00:35:34,440 --> 00:35:39,359
Speaker 13: would require a tremendous amount of targeting whatever capabilities they

711
00:35:39,440 --> 00:35:40,680
Speaker 13: have within that area.

712
00:35:41,360 --> 00:35:44,880
Speaker 3: And as expectively be a no fly zone, Secretary.

713
00:35:45,040 --> 00:35:47,880
Speaker 13: Exactly, you've got to have a total no fly zone

714
00:35:48,040 --> 00:35:52,360
Speaker 13: and we have to totally in the air one hundred

715
00:35:52,360 --> 00:35:55,360
Speaker 13: percent of the time in order to make sure that

716
00:35:55,480 --> 00:35:59,840
Speaker 13: it remains secure. It's not easy, it's tough, and obviously

717
00:36:00,000 --> 00:36:01,239
Speaker 13: he's going to expand the war.

718
00:36:02,600 --> 00:36:08,840
Speaker 2: The idea of reopening the Strait of Hormuz militarily. The

719
00:36:08,880 --> 00:36:12,320
Speaker 2: Secretary speaking about the idea of troops on the coast

720
00:36:12,520 --> 00:36:15,399
Speaker 2: fifty miles in each direction one hundred miles deep would

721
00:36:15,400 --> 00:36:17,480
Speaker 2: be required, not to mention boots on the ground on

722
00:36:17,560 --> 00:36:20,640
Speaker 2: carg Island, which the White House has now reported the

723
00:36:20,680 --> 00:36:23,160
Speaker 2: eyeing fifteen miles off the coast of Iran, the big

724
00:36:23,200 --> 00:36:26,399
Speaker 2: transfer station that the President has been talking about since

725
00:36:26,480 --> 00:36:29,359
Speaker 2: long before he was president. Well a nineteen eighty eight

726
00:36:29,400 --> 00:36:32,400
Speaker 2: interview from The Guardian emerging in which he was clearly

727
00:36:33,560 --> 00:36:38,200
Speaker 2: concerned with this crown jewel, as he called it, of Iran,

728
00:36:38,400 --> 00:36:43,399
Speaker 2: saying that they've been beating us psychologically, making us look

729
00:36:43,440 --> 00:36:46,719
Speaker 2: like a bunch of fools. One bullet shot at one

730
00:36:46,719 --> 00:36:48,840
Speaker 2: of our men or ships, and I do a number

731
00:36:48,880 --> 00:36:53,080
Speaker 2: on carg Island. Fast forward to twenty twenty six, and

732
00:36:53,120 --> 00:36:55,719
Speaker 2: here we are. I'm really glad to say that we

733
00:36:55,719 --> 00:36:58,800
Speaker 2: can spend some time with Jen Gavito today, senior advisor

734
00:36:58,840 --> 00:37:02,080
Speaker 2: with the Coen Group, former Acting Principal Deputy Assistant Secretary

735
00:37:02,160 --> 00:37:06,080
Speaker 2: of State for Near Eastern Affairs in the Biden administration,

736
00:37:06,160 --> 00:37:10,600
Speaker 2: has been a great help with us since before this began. Jen,

737
00:37:10,719 --> 00:37:12,239
Speaker 2: It's great to see you, and I want to go

738
00:37:12,360 --> 00:37:14,279
Speaker 2: back a couple of weeks from when you talk to us,

739
00:37:14,280 --> 00:37:15,680
Speaker 2: because you've got a lot of people.

740
00:37:15,440 --> 00:37:17,120
Speaker 3: Talking here in the newsroom.

741
00:37:17,200 --> 00:37:21,560
Speaker 2: As you described a millennia old empire, right, and the

742
00:37:21,680 --> 00:37:27,120
Speaker 2: prospect of toppling the Ayatola. Every simulation you said the

743
00:37:27,160 --> 00:37:29,839
Speaker 2: military has done is that if you took out the Ayatola,

744
00:37:30,080 --> 00:37:34,759
Speaker 2: you empower the IRGC. I know that you're a sage, Jen,

745
00:37:35,760 --> 00:37:38,920
Speaker 2: but I could also ask you if we've simply forgotten

746
00:37:39,000 --> 00:37:40,360
Speaker 2: some of the lessons of the past.

747
00:37:42,440 --> 00:37:44,080
Speaker 14: First of all, Jay, thanks for having me back. It's

748
00:37:44,080 --> 00:37:47,759
Speaker 14: great to see you. You know, this is a circumstance

749
00:37:47,760 --> 00:37:49,680
Speaker 14: in which I wish I had not been right, but

750
00:37:49,920 --> 00:37:52,239
Speaker 14: I do think that that is in fact what we

751
00:37:52,280 --> 00:37:55,040
Speaker 14: are seeing. A lot of intention is of course being

752
00:37:55,040 --> 00:37:58,560
Speaker 14: paid to the lines of succession, particularly as various regime

753
00:37:58,640 --> 00:38:03,680
Speaker 14: figures are killed in US and Israeli strikes, but particularly

754
00:38:03,719 --> 00:38:10,080
Speaker 14: with the with the naming of Musha commany excuse me,

755
00:38:11,480 --> 00:38:14,799
Speaker 14: you know, whether whatever state he may be in, all

756
00:38:14,880 --> 00:38:17,439
Speaker 14: reports are that this was an installation more or less

757
00:38:17,440 --> 00:38:19,319
Speaker 14: by the IRGC. So I do think we're seeing that

758
00:38:19,360 --> 00:38:20,480
Speaker 14: consolidation of power.

759
00:38:21,560 --> 00:38:23,239
Speaker 2: What do you think of the talk of troops on

760
00:38:23,360 --> 00:38:26,920
Speaker 2: karg island, occupy that position and use it as leverage

761
00:38:26,960 --> 00:38:27,960
Speaker 2: to reopen the Strait.

762
00:38:28,000 --> 00:38:29,160
Speaker 3: Is this something that could work?

763
00:38:30,520 --> 00:38:32,359
Speaker 9: I mean, certainly not on its own.

764
00:38:33,640 --> 00:38:36,279
Speaker 14: As Secretary Panetta said, I think that, you know, you

765
00:38:36,320 --> 00:38:40,840
Speaker 14: would have to secure parts of the Iranian border itself,

766
00:38:40,920 --> 00:38:43,719
Speaker 14: in order along the along the Gulf, in order to

767
00:38:43,880 --> 00:38:47,120
Speaker 14: or along the Straight, in order to really secure a passage.

768
00:38:47,920 --> 00:38:50,000
Speaker 14: I would note that the reason one of the many

769
00:38:50,040 --> 00:38:53,240
Speaker 14: reasons that this has not been undertaken in the past,

770
00:38:53,480 --> 00:38:58,239
Speaker 14: despite decades of I think US administrations Israeli a government's

771
00:38:58,320 --> 00:39:02,640
Speaker 14: wanting to dislodge the this regime is precisely for this reason,

772
00:39:03,120 --> 00:39:07,480
Speaker 14: because the ability of Iran to disrupt the Strait has

773
00:39:07,560 --> 00:39:10,200
Speaker 14: been well known and always seen as you know, no

774
00:39:10,280 --> 00:39:13,160
Speaker 14: pun intended, but the nuclear option, and that does seem

775
00:39:13,160 --> 00:39:15,040
Speaker 14: to be where we are at now, and getting it

776
00:39:15,080 --> 00:39:17,080
Speaker 14: back open is proving, I think, to be every bit

777
00:39:17,120 --> 00:39:18,760
Speaker 14: as difficult as everyone feared.

778
00:39:19,920 --> 00:39:20,160
Speaker 3: Boy.

779
00:39:21,120 --> 00:39:24,720
Speaker 2: So the Secretary also talked about what would be required

780
00:39:24,760 --> 00:39:27,360
Speaker 2: to keep the Straight open, the number of troops involved,

781
00:39:27,360 --> 00:39:31,440
Speaker 2: and we've already started to pulverize their military capability in

782
00:39:31,440 --> 00:39:34,759
Speaker 2: that area. General dan Kane said, a ten warthogs are

783
00:39:34,800 --> 00:39:37,359
Speaker 2: at it. We've got a patchy helicopters at it. If

784
00:39:37,360 --> 00:39:41,960
Speaker 2: this continued for some more time, another month, even, would

785
00:39:41,960 --> 00:39:45,960
Speaker 2: that be an easier exercise or is it simply just

786
00:39:46,040 --> 00:39:48,239
Speaker 2: not acceptable to be wrong once If you have an

787
00:39:48,320 --> 00:39:51,480
Speaker 2: errant attack coming off a speedboat that hits a cargo vessel,

788
00:39:51,520 --> 00:39:55,000
Speaker 2: then all of this is for not exactly you.

789
00:39:54,960 --> 00:39:59,120
Speaker 14: Know, it's not just about air or land superiority. It's

790
00:39:59,200 --> 00:40:03,280
Speaker 14: the fact that it doesn't take a lot for Iran

791
00:40:03,360 --> 00:40:06,640
Speaker 14: to continue to disrupt, whether it's drones, whether it's minds

792
00:40:07,719 --> 00:40:09,640
Speaker 14: you know exactly as you say, whether it's a speedboat

793
00:40:09,680 --> 00:40:12,440
Speaker 14: passing by. And so now that this has been unleashed,

794
00:40:13,480 --> 00:40:15,879
Speaker 14: convincing you know, and it's not about going on TV

795
00:40:16,000 --> 00:40:18,400
Speaker 14: and telling people that it is now safe for transit,

796
00:40:18,760 --> 00:40:22,600
Speaker 14: but it's about insurance companies and transit lines having that

797
00:40:22,719 --> 00:40:26,680
Speaker 14: confidence and so restoring the confidence that Iran will not

798
00:40:27,400 --> 00:40:29,560
Speaker 14: utilize those tactics in the future.

799
00:40:29,640 --> 00:40:31,360
Speaker 9: I think is going to be a very.

800
00:40:31,360 --> 00:40:35,200
Speaker 14: Very hard sell, regardless of what we do militarily. And

801
00:40:35,239 --> 00:40:37,040
Speaker 14: the other thing I would note to that is, you know,

802
00:40:37,080 --> 00:40:39,319
Speaker 14: I think there's no doubt that there have been significant

803
00:40:39,680 --> 00:40:43,960
Speaker 14: tactical successes through this, and yet we still keep we

804
00:40:44,000 --> 00:40:48,160
Speaker 14: still keep attacking, right, which says that, despite the President's assertions,

805
00:40:48,480 --> 00:40:52,200
Speaker 14: we have not in fact taken out all of their capabilities,

806
00:40:52,640 --> 00:40:56,960
Speaker 14: and so those can continue over time to be rebuilt, reasserted.

807
00:40:57,080 --> 00:41:00,879
Speaker 14: And so, you know this, it really muddy the water

808
00:41:00,960 --> 00:41:03,480
Speaker 14: as far as what an off ramp to this could

809
00:41:03,520 --> 00:41:04,560
Speaker 14: in reality look like.

810
00:41:05,880 --> 00:41:09,319
Speaker 2: When you were acting a principal deputy Assistant Secretary of

811
00:41:09,360 --> 00:41:13,040
Speaker 2: State for Near Eastern affairs, what would your thought have

812
00:41:13,160 --> 00:41:17,280
Speaker 2: been right now on a potential regional conflict? How close

813
00:41:17,320 --> 00:41:21,720
Speaker 2: are Iran's neighbors to engaging So I think.

814
00:41:21,560 --> 00:41:25,080
Speaker 14: We are continuing to see them do everything in their power.

815
00:41:25,160 --> 00:41:27,600
Speaker 14: I mean, they take hit after hit and are clearly

816
00:41:27,640 --> 00:41:32,640
Speaker 14: resisting what is a very understandable instinct to hit back

817
00:41:32,719 --> 00:41:35,360
Speaker 14: out of concerns that the damage that we've seen so

818
00:41:35,520 --> 00:41:39,640
Speaker 14: far just expands if they engage in this conflict in

819
00:41:39,680 --> 00:41:43,920
Speaker 14: an offensive way. That being said, you know, as you've

820
00:41:43,920 --> 00:41:49,400
Speaker 14: alluded to, the economic and global economic damage globally but

821
00:41:49,520 --> 00:41:53,320
Speaker 14: certainly to the Gulf States and their long term economic

822
00:41:53,400 --> 00:41:59,279
Speaker 14: visions cannot be overstated. It is catastrophic, and so I

823
00:41:59,320 --> 00:42:02,279
Speaker 14: am watching that carefully. How long can they endure this

824
00:42:02,840 --> 00:42:05,120
Speaker 14: without feeling like they need to take a more direct

825
00:42:05,200 --> 00:42:05,799
Speaker 14: role in it.

826
00:42:07,000 --> 00:42:08,440
Speaker 2: Well, that would be a big deal, and I can

827
00:42:08,480 --> 00:42:11,440
Speaker 2: only imagine the market reaction. What's two hundred billion dollars?

828
00:42:11,480 --> 00:42:14,440
Speaker 2: Tell you Jen before you leave us today. That's the

829
00:42:14,440 --> 00:42:17,359
Speaker 2: figure we're expecting for a supplemental budget request, and people

830
00:42:17,400 --> 00:42:19,960
Speaker 2: are trying to read into that. Does that mean restocking

831
00:42:20,000 --> 00:42:22,040
Speaker 2: all of the supplies we gave to Ukraine or is

832
00:42:22,080 --> 00:42:25,880
Speaker 2: this implying some sort of anticipation of a longer conflict.

833
00:42:25,920 --> 00:42:27,360
Speaker 3: What do you buy with two hundred billion?

834
00:42:28,480 --> 00:42:29,799
Speaker 9: You buy a lot with two hundred billion.

835
00:42:29,840 --> 00:42:32,799
Speaker 14: There's no question that our stockpiles do need to be replenished.

836
00:42:33,239 --> 00:42:35,960
Speaker 14: And so from that angle, I think that those numbers

837
00:42:36,280 --> 00:42:39,160
Speaker 14: are not as stunning as one might think. But it

838
00:42:39,200 --> 00:42:43,120
Speaker 14: also does suggest that this conflict, you know, which initially

839
00:42:43,160 --> 00:42:46,040
Speaker 14: was described as very short, we're now several weeks in.

840
00:42:47,440 --> 00:42:50,120
Speaker 9: I don't see a resolution to this in the next.

841
00:42:50,000 --> 00:42:53,120
Speaker 14: Two or three two or three weeks at least, And

842
00:42:53,600 --> 00:42:56,640
Speaker 14: you know, if you do insert boots on the ground,

843
00:42:56,920 --> 00:43:00,359
Speaker 14: whether whether on card Island or on the the coast

844
00:43:00,400 --> 00:43:05,960
Speaker 14: of Iran itself, that complicates certainly what the outlook is

845
00:43:06,000 --> 00:43:08,839
Speaker 14: for them pulling them back and for this conflict really

846
00:43:08,840 --> 00:43:12,120
Speaker 14: coming to resolution, so I think the two hundred billion

847
00:43:12,200 --> 00:43:12,640
Speaker 14: number is.

848
00:43:14,280 --> 00:43:14,800
Speaker 9: Concerning.

849
00:43:16,040 --> 00:43:17,840
Speaker 3: Yeah, Jenna, it's great to see you and great to

850
00:43:17,840 --> 00:43:18,200
Speaker 3: have you back.

851
00:43:18,280 --> 00:43:20,919
Speaker 2: Jen Gavito at the Cohen Group, thank you so much

852
00:43:20,960 --> 00:43:23,320
Speaker 2: for the insights with an S and P five hundred

853
00:43:23,360 --> 00:43:26,759
Speaker 2: down sixty five points and all time highs today for

854
00:43:26,880 --> 00:43:28,759
Speaker 2: Exxon Mobile and Chevron.

855
00:43:30,920 --> 00:43:33,360
Speaker 3: Thanks for listening to the Balance of Power podcast.

856
00:43:33,960 --> 00:43:37,120
Speaker 2: Make sure to subscribe if you haven't already an Apple, Spotify,

857
00:43:37,200 --> 00:43:39,799
Speaker 2: or wherever you get your podcasts, and you can find

858
00:43:39,840 --> 00:43:42,640
Speaker 2: us live every weekday from Washington, DC at New Time

859
00:43:42,719 --> 00:43:44,840
Speaker 2: Eastern at Bloomberg dot com.