1 00:00:02,480 --> 00:00:10,480 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. This is Bloomberg business 2 00:00:10,480 --> 00:00:14,640 Speaker 1: Weekdaily reporting from the magazine that helps global leaders stay 3 00:00:14,680 --> 00:00:18,759 Speaker 1: ahead with insight on the people, companies, and trends shaping 4 00:00:18,760 --> 00:00:23,720 Speaker 1: today's complex economy. Plus global business finance and tech news 5 00:00:23,760 --> 00:00:27,760 Speaker 1: as it happens. The Bloomberg Business Week Daily Podcast with 6 00:00:27,880 --> 00:00:32,040 Speaker 1: Carol Masser and Tim Stenebeck. On Bloomberg Radio. 7 00:00:32,520 --> 00:00:36,480 Speaker 2: Amy did the news on Intel worth repeating shares rising 8 00:00:36,520 --> 00:00:38,800 Speaker 2: as much as three point six today. This three point 9 00:00:38,840 --> 00:00:41,040 Speaker 2: six percent today, This after the company said Google has 10 00:00:41,040 --> 00:00:45,720 Speaker 2: committed using future generations of Xeon processors and other chips. 11 00:00:46,040 --> 00:00:48,280 Speaker 2: Ian King is a Bloomberg News US semi conductor reporter. 12 00:00:48,320 --> 00:00:51,120 Speaker 2: He joins us from Bloomberg San Francisco bureau. You know, 13 00:00:51,120 --> 00:00:53,840 Speaker 2: I want to start with the Intel news. The as 14 00:00:53,880 --> 00:00:56,760 Speaker 2: you write in the piece, the terms of this deal 15 00:00:57,160 --> 00:00:59,640 Speaker 2: are unclear. We don't know how much money exchanged hands. 16 00:00:59,720 --> 00:01:02,720 Speaker 2: Still well, investors like to see this chairs of alphabet 17 00:01:02,760 --> 00:01:05,040 Speaker 2: or higher shares Intel or higher? What is this a 18 00:01:05,120 --> 00:01:06,759 Speaker 2: symbol of in Intel's turnaround? 19 00:01:07,520 --> 00:01:09,880 Speaker 3: Yeah, I mean Intel's had a good week as we've seen, 20 00:01:09,880 --> 00:01:12,480 Speaker 3: They're up over twenty percent, and this is another example 21 00:01:12,520 --> 00:01:15,440 Speaker 3: of them saying, hey, remember us, We're still important. We 22 00:01:15,520 --> 00:01:18,720 Speaker 3: have a role to play in this over overall AI 23 00:01:18,880 --> 00:01:22,120 Speaker 3: build out, and Xeon, which was for many years the 24 00:01:22,160 --> 00:01:24,640 Speaker 3: absolute cash care for them, is going to be a 25 00:01:24,680 --> 00:01:28,840 Speaker 3: part of what, you know, one of its major customers 26 00:01:29,120 --> 00:01:32,319 Speaker 3: data centers going forward. So that's a nice affirmation. To 27 00:01:32,360 --> 00:01:36,520 Speaker 3: what extent that is, To what extent this expands or 28 00:01:36,680 --> 00:01:39,600 Speaker 3: just reasserts what was already going to happen, we don't know, 29 00:01:39,760 --> 00:01:42,839 Speaker 3: but it's obviously positive news that you know, and brings 30 00:01:42,880 --> 00:01:45,000 Speaker 3: Intel back into this conversation. 31 00:01:45,200 --> 00:01:47,840 Speaker 4: And important right in terms of the turnaround and what 32 00:01:47,880 --> 00:01:52,160 Speaker 4: they're trying to do in terms of the CEO. I mean, 33 00:01:52,200 --> 00:01:53,800 Speaker 4: these are the things you want to be I'm thinking 34 00:01:53,800 --> 00:01:55,600 Speaker 4: about for investors. I mean, the stock has had quite 35 00:01:55,640 --> 00:01:57,480 Speaker 4: a run ian but this is the kind of thing 36 00:01:57,520 --> 00:01:58,360 Speaker 4: you want to be hearing. 37 00:01:59,440 --> 00:02:01,960 Speaker 3: Yeah, I'm I mean that they have to be parts 38 00:02:01,960 --> 00:02:05,160 Speaker 3: of THEII story. They haven't been so far, and that's 39 00:02:05,200 --> 00:02:09,520 Speaker 3: been obviously involved the concession of tens of billions of 40 00:02:09,560 --> 00:02:12,880 Speaker 3: dollars of revenue that's gone to basically in Vidia, gone 41 00:02:12,880 --> 00:02:15,720 Speaker 3: to AMD to a lesser extent that should have gone 42 00:02:15,760 --> 00:02:18,799 Speaker 3: originally to Intel, because remember, at one point they had 43 00:02:18,919 --> 00:02:23,120 Speaker 3: ninety nine percent market share in data center processes. 44 00:02:24,080 --> 00:02:24,320 Speaker 5: Ian. 45 00:02:24,919 --> 00:02:26,520 Speaker 2: There's so much we want to get to with you, 46 00:02:26,960 --> 00:02:28,959 Speaker 2: but I want to shift gears a little bit and 47 00:02:29,280 --> 00:02:30,880 Speaker 2: just talk because we haven't had a chance to speak 48 00:02:30,919 --> 00:02:32,840 Speaker 2: to you about the straight of horror moves in the 49 00:02:32,840 --> 00:02:34,200 Speaker 2: context of semiconductors. 50 00:02:34,240 --> 00:02:35,240 Speaker 5: And we had this conversation on. 51 00:02:35,280 --> 00:02:39,000 Speaker 2: Our editorial call this morning about the role of helium 52 00:02:39,120 --> 00:02:43,560 Speaker 2: and how that has been really talked about a lot 53 00:02:43,600 --> 00:02:45,960 Speaker 2: in the context of one of the raw materials that 54 00:02:46,040 --> 00:02:48,520 Speaker 2: has been stuck in this choke point as the strait 55 00:02:48,560 --> 00:02:50,560 Speaker 2: of horror moose has been closed. Just big picture before 56 00:02:50,600 --> 00:02:53,240 Speaker 2: we get to the details the strait of horror moose closure. 57 00:02:53,720 --> 00:02:55,600 Speaker 2: Often we talk about it in the context of energy 58 00:02:55,600 --> 00:02:57,280 Speaker 2: and the like, But what has been the effect on 59 00:02:57,320 --> 00:02:59,160 Speaker 2: semiconductors and semiconductor firms. 60 00:03:00,080 --> 00:03:02,799 Speaker 3: Okay, they need this gas. This gas is a by 61 00:03:02,960 --> 00:03:08,240 Speaker 3: product of the manufacturing of liquid and natural gas. So 62 00:03:09,919 --> 00:03:13,040 Speaker 3: because we've obviously seen facilities there shut down in particularly 63 00:03:13,040 --> 00:03:16,680 Speaker 3: in Qatar, and obviously and even if the gas was producer, 64 00:03:16,919 --> 00:03:19,519 Speaker 3: it would be more difficult to ship it out because 65 00:03:19,520 --> 00:03:22,280 Speaker 3: of the closure of the straits. That's created this concern 66 00:03:22,320 --> 00:03:26,560 Speaker 3: that this key part of the manufacturing of semiconductors would 67 00:03:26,760 --> 00:03:30,359 Speaker 3: being shortage, and that would result in a shortage or 68 00:03:30,440 --> 00:03:33,280 Speaker 3: an increasing shortage of manufacturing capabilities. 69 00:03:34,840 --> 00:03:38,480 Speaker 2: Yeah, it's just a time when manufacturing these are so 70 00:03:38,560 --> 00:03:40,800 Speaker 2: easy and everybody's getting the chips that they want. 71 00:03:40,920 --> 00:03:42,560 Speaker 4: Well, you know, Ian, one of the questions we've been 72 00:03:42,600 --> 00:03:46,040 Speaker 4: having a lot is, you know, there's everybody's been talking 73 00:03:46,040 --> 00:03:48,080 Speaker 4: about the duration this war and the impact on everything 74 00:03:48,120 --> 00:03:50,720 Speaker 4: in our world, and it determines the economic outlooks for 75 00:03:50,760 --> 00:03:54,000 Speaker 4: the US globally. But you know, supply chains what happens 76 00:03:54,040 --> 00:03:56,840 Speaker 4: longer term. But I am also thinking about once again 77 00:03:56,920 --> 00:04:00,800 Speaker 4: these wars, these incidents, just like the pen It reminds 78 00:04:00,880 --> 00:04:03,440 Speaker 4: us of these global supply chains and where there are 79 00:04:03,560 --> 00:04:07,240 Speaker 4: concentrations around the world. And I always think about TSMC 80 00:04:07,600 --> 00:04:11,720 Speaker 4: right in Taiwan and just you know that over exposure, 81 00:04:11,840 --> 00:04:15,560 Speaker 4: if you will. Are we seeing global supply chains for 82 00:04:15,640 --> 00:04:19,960 Speaker 4: semiconductors being more spread out? Can they spread out even more? 83 00:04:21,040 --> 00:04:21,240 Speaker 1: Well? 84 00:04:21,279 --> 00:04:24,880 Speaker 3: As you know, there's been a significant attempt to relocate 85 00:04:25,080 --> 00:04:28,040 Speaker 3: or to recreate the chip industry in the United States. 86 00:04:28,040 --> 00:04:32,320 Speaker 3: But you know, going back to helium, this helium that 87 00:04:32,360 --> 00:04:36,320 Speaker 3: we're talking about shortages of effects, TSMC effects Taiwan and 88 00:04:36,400 --> 00:04:41,440 Speaker 3: effects South Korea, and those two areas are absolute concentrations 89 00:04:41,520 --> 00:04:46,360 Speaker 3: of essential chip making, whether it's memory or whether it's 90 00:04:46,640 --> 00:04:50,120 Speaker 3: made toward a production of high end AI semiconductors. So 91 00:04:50,240 --> 00:04:51,279 Speaker 3: this isn't good. 92 00:04:51,360 --> 00:04:53,320 Speaker 5: This is a worry. 93 00:04:53,360 --> 00:04:57,000 Speaker 3: But at the same time, you can't diversify completely because 94 00:04:57,040 --> 00:05:01,599 Speaker 3: specialization is absolutely necessary. This is kind of trade off 95 00:05:01,680 --> 00:05:05,800 Speaker 3: that's happening. And times like this, when we see disruptions 96 00:05:05,800 --> 00:05:09,440 Speaker 3: that creates that sense of like, oh, are we too dependent? 97 00:05:10,120 --> 00:05:12,200 Speaker 3: The chip industry would say, well, no, we're not. We're 98 00:05:12,200 --> 00:05:14,240 Speaker 3: going to go where the economics makes sense. We're going 99 00:05:14,279 --> 00:05:17,520 Speaker 3: to go where the specialization makes sense. But if you 100 00:05:17,560 --> 00:05:20,800 Speaker 3: look at it from a broader geopolitical perspective, perhaps. 101 00:05:20,520 --> 00:05:22,920 Speaker 5: That's the case. Yeah. 102 00:05:23,040 --> 00:05:26,200 Speaker 2: Look, I think we go back to this conversation that 103 00:05:26,240 --> 00:05:28,800 Speaker 2: we had earlier with Edward Fishman who wrote the book 104 00:05:28,880 --> 00:05:32,880 Speaker 2: Choke Points about what he sees as choke points, and 105 00:05:32,920 --> 00:05:37,279 Speaker 2: Carol brought up semiconductors in this notion that we rely 106 00:05:37,520 --> 00:05:40,719 Speaker 2: on other parts of the world for this technology. Has 107 00:05:40,760 --> 00:05:44,039 Speaker 2: the US actually gotten any better ian and made any headway, 108 00:05:44,400 --> 00:05:47,839 Speaker 2: especially in states such as Arizona for example, where TSMC 109 00:05:48,000 --> 00:05:51,400 Speaker 2: is a facility in actually producing this stuff without the 110 00:05:51,400 --> 00:05:52,279 Speaker 2: help of other countries. 111 00:05:52,360 --> 00:05:55,719 Speaker 3: Just very briefly, Yeah, I mean that is years and 112 00:05:55,800 --> 00:05:59,960 Speaker 3: years away. Is this industry, as we've spoken about previous, 113 00:06:00,520 --> 00:06:05,960 Speaker 3: is the absolute poster channel for globalization, for specialization. Everything 114 00:06:06,000 --> 00:06:09,560 Speaker 3: comes from somewhere else, and the US has a major 115 00:06:09,839 --> 00:06:13,039 Speaker 3: role in that that. It's the place where chips get designed, 116 00:06:13,040 --> 00:06:15,680 Speaker 3: where this all of this innovation occurs, but it has 117 00:06:15,720 --> 00:06:17,640 Speaker 3: been made somewhere else. There is an attempt to bring 118 00:06:17,680 --> 00:06:21,240 Speaker 3: that back. If Intel can reassert itself then obviously the 119 00:06:21,320 --> 00:06:24,800 Speaker 3: picture changes because of its facilities being here. But in 120 00:06:24,960 --> 00:06:27,680 Speaker 3: terms of unraveling this, in terms of siloing it again 121 00:06:27,720 --> 00:06:31,480 Speaker 3: on a national or even a continental basis, you're talking absolutely, 122 00:06:32,000 --> 00:06:35,679 Speaker 3: you know, perhaps decades away and multiple billions of dollars 123 00:06:35,720 --> 00:06:37,719 Speaker 3: of investment. That just isn't happening right now. 124 00:06:37,839 --> 00:06:40,000 Speaker 4: Yeah, not an easy thing to do. 125 00:06:40,520 --> 00:06:40,760 Speaker 5: Ian. 126 00:06:40,880 --> 00:06:42,920 Speaker 4: Thank you so much. We've missed you in King Bloomberg 127 00:06:42,920 --> 00:06:45,520 Speaker 4: News US Semiconductor Reporter joining us from the Bloomberg San 128 00:06:45,560 --> 00:06:46,599 Speaker 4: Francisco Bureau. 129 00:06:47,560 --> 00:06:48,320 Speaker 5: Stay with us. 130 00:06:48,400 --> 00:06:51,320 Speaker 2: More from Bloomberg Business Week Daily coming up after this. 131 00:06:55,400 --> 00:06:59,280 Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch 132 00:06:59,320 --> 00:07:02,000 Speaker 1: us live Monday afternoons. From two to five these during 133 00:07:02,000 --> 00:07:04,800 Speaker 1: that listen on Apple Karplay and Android Otto with the 134 00:07:04,880 --> 00:07:08,800 Speaker 1: Bloomberg Business app, or watch us live on YouTube. 135 00:07:09,520 --> 00:07:11,000 Speaker 4: All right, folks, so we've been trying to keep you 136 00:07:11,080 --> 00:07:13,200 Speaker 4: up to date on our live blog, which is tracking 137 00:07:13,520 --> 00:07:17,080 Speaker 4: the latest and greatest. I say that facetiously or obnoxiously 138 00:07:17,560 --> 00:07:19,960 Speaker 4: about the US war in Iran, but Israel has said 139 00:07:19,960 --> 00:07:23,080 Speaker 4: it will hold direct talks with Lebanon the president. President 140 00:07:23,120 --> 00:07:25,480 Speaker 4: Trump said US military to remain in place around Iran 141 00:07:26,160 --> 00:07:28,520 Speaker 4: until the ceasefires firm. And there are no reports of 142 00:07:28,560 --> 00:07:34,440 Speaker 4: strikes on Arab Gulf nations since Wednesday. Okay, so that's 143 00:07:34,480 --> 00:07:37,560 Speaker 4: going on, and the straight of horror moves remains largely closed. 144 00:07:37,840 --> 00:07:38,680 Speaker 5: That's the thing. 145 00:07:38,880 --> 00:07:39,080 Speaker 2: Yeah. 146 00:07:39,120 --> 00:07:42,880 Speaker 4: And we'un saying any ships need army approval, and we 147 00:07:42,920 --> 00:07:46,280 Speaker 4: have talked over and over again how important the Strait 148 00:07:46,320 --> 00:07:50,120 Speaker 4: has been. Iran understands that that is their leverage. 149 00:07:50,160 --> 00:07:52,240 Speaker 2: I think it's fair to say it's an economic weapon 150 00:07:52,360 --> 00:07:54,880 Speaker 2: that's been wielded in this war. 151 00:07:55,000 --> 00:07:57,640 Speaker 4: Yep, it absolutely is. And on that. In a recent 152 00:07:57,680 --> 00:08:00,040 Speaker 4: New York Times op ed, former US State Department and 153 00:08:00,200 --> 00:08:03,600 Speaker 4: Pentagon official Edward Fishman argues that quote by closing the 154 00:08:03,600 --> 00:08:06,720 Speaker 4: strait of horror moves for weeks. Iran has secured sanctions 155 00:08:06,720 --> 00:08:09,360 Speaker 4: relase that in some respects surpasses what it achieved via 156 00:08:09,400 --> 00:08:12,600 Speaker 4: the twenty fifteen nuclear Deal. And while the United States 157 00:08:12,600 --> 00:08:16,080 Speaker 4: has long weaponized the financial system to advance its geopolitical aims, 158 00:08:16,400 --> 00:08:18,360 Speaker 4: Aren has now learned to do the same with the 159 00:08:18,400 --> 00:08:21,520 Speaker 4: world's most vital energy choke point, and it has done 160 00:08:21,520 --> 00:08:25,720 Speaker 4: so by barring a playbook developed by the United States. 161 00:08:25,880 --> 00:08:28,280 Speaker 2: We want to talk about this back with us. Edward Fishman, 162 00:08:28,360 --> 00:08:31,560 Speaker 2: Senior Fellow and Director at the Maurice R. Greenberg Center 163 00:08:31,560 --> 00:08:33,960 Speaker 2: for Geoeconomics at the Council on Foreign Relations, also the 164 00:08:34,000 --> 00:08:36,200 Speaker 2: author of the New York Times best selling book Choke Points, 165 00:08:36,240 --> 00:08:39,400 Speaker 2: American Power in the Age of Economic Warfare. 166 00:08:39,559 --> 00:08:40,240 Speaker 5: You're a lot more. 167 00:08:40,280 --> 00:08:42,200 Speaker 2: I'm not going to read it all because we would 168 00:08:42,200 --> 00:08:44,080 Speaker 2: have no time for an interview, but it's good to 169 00:08:44,120 --> 00:08:47,360 Speaker 2: have you back with us. I want you to remind everybody, 170 00:08:47,360 --> 00:08:48,760 Speaker 2: because you wrote this book Choke. 171 00:08:48,600 --> 00:08:51,520 Speaker 5: Points, before this latest crisis. 172 00:08:52,240 --> 00:08:54,600 Speaker 2: Just remind everybody about the premise of the book and 173 00:08:54,640 --> 00:08:56,479 Speaker 2: this idea of economic warfare. 174 00:08:56,679 --> 00:08:56,959 Speaker 5: Yeah. 175 00:08:57,000 --> 00:08:59,120 Speaker 6: So, the premise of the book is that we are 176 00:08:59,200 --> 00:09:02,839 Speaker 6: living in a new age of economic warfare in which 177 00:09:03,240 --> 00:09:06,760 Speaker 6: these economic and geographic choke points. So an economic choke 178 00:09:06,800 --> 00:09:09,160 Speaker 6: point would be the dollar where ninety percent of all 179 00:09:09,200 --> 00:09:13,040 Speaker 6: foreign exchange transactions go through the single currency, or Chinese 180 00:09:13,120 --> 00:09:15,800 Speaker 6: rare earth minerals where ninety percent of the global supply 181 00:09:16,120 --> 00:09:19,079 Speaker 6: is refined by a single country, or a geographic choke 182 00:09:19,120 --> 00:09:22,160 Speaker 6: point like the Strait of Hormuz where twenty percent of 183 00:09:22,240 --> 00:09:25,360 Speaker 6: global oil and gas goes through every single day. Before 184 00:09:25,360 --> 00:09:29,920 Speaker 6: this war, those have provided countries with unprecedented ability to 185 00:09:29,960 --> 00:09:34,040 Speaker 6: disrupt the global economy. We thought, I think where most 186 00:09:34,040 --> 00:09:36,520 Speaker 6: people thought that these were weapons that only great powers 187 00:09:36,520 --> 00:09:39,040 Speaker 6: could deploy, like the United States and China. What we've 188 00:09:39,040 --> 00:09:41,200 Speaker 6: seen in the last month is even a smaller country 189 00:09:41,280 --> 00:09:44,559 Speaker 6: like Iran can hold the world economy hostage by weaponizing 190 00:09:44,600 --> 00:09:45,520 Speaker 6: one of these choke points. 191 00:09:45,559 --> 00:09:47,880 Speaker 4: What are the impacts of such as that, of something 192 00:09:47,920 --> 00:09:49,280 Speaker 4: like that that kind of switch. 193 00:09:49,320 --> 00:09:52,280 Speaker 5: Yeah, I mean the impacts are quite substantial. That. 194 00:09:52,320 --> 00:09:54,640 Speaker 6: You know, we used to think that in order to 195 00:09:54,679 --> 00:09:58,360 Speaker 6: do hard hitting economic warfare you needed broad international coalitions, 196 00:09:58,440 --> 00:10:00,320 Speaker 6: right you think back to the nineteen nineties when you 197 00:10:00,360 --> 00:10:03,040 Speaker 6: had the sanctions on Saddam Hussein's Iraq. That was the 198 00:10:03,040 --> 00:10:05,640 Speaker 6: whole international community was the UN, and that was a 199 00:10:05,640 --> 00:10:08,480 Speaker 6: pretty high threshold for action, right, because you could only 200 00:10:08,720 --> 00:10:11,040 Speaker 6: you know, do hard hitting economic warfare if you could 201 00:10:11,040 --> 00:10:13,440 Speaker 6: get everybody else to agree to it. What Iran has 202 00:10:13,480 --> 00:10:16,480 Speaker 6: showed is that even a relatively small country now medium 203 00:10:16,480 --> 00:10:20,079 Speaker 6: sized power like Iran, just by closing this straight can 204 00:10:20,200 --> 00:10:22,720 Speaker 6: again hold the global economy hostage. And they're doing it 205 00:10:22,840 --> 00:10:26,960 Speaker 6: relatively inexpensively, right, just using drones that cost about twenty 206 00:10:27,000 --> 00:10:28,240 Speaker 6: or thirty thousand dollars a pop. 207 00:10:28,400 --> 00:10:30,840 Speaker 4: I just let me just you know. You also wrote 208 00:10:30,920 --> 00:10:33,560 Speaker 4: about how the US, not the US, but Iran. You said, 209 00:10:33,559 --> 00:10:35,040 Speaker 4: if either side of this war has pulled off an 210 00:10:35,080 --> 00:10:37,640 Speaker 4: act of jiu jitsu, it is Iran. For the first 211 00:10:37,679 --> 00:10:41,400 Speaker 4: time since nineteen ninety five, Tehran can sell oil directly 212 00:10:41,480 --> 00:10:44,800 Speaker 4: to the United States and use the American financial system 213 00:10:44,840 --> 00:10:47,560 Speaker 4: to collect payment. I mean, this has been a major no. No, 214 00:10:47,679 --> 00:10:49,880 Speaker 4: this has been something the US right has restricted. 215 00:10:49,960 --> 00:10:53,839 Speaker 6: Yes, that's big, right, And I think that in some 216 00:10:53,880 --> 00:10:57,240 Speaker 6: ways there's an interesting echo of the Chinese Rare Earth 217 00:10:57,280 --> 00:11:01,320 Speaker 6: embargo last year. You think about it, China in many 218 00:11:01,360 --> 00:11:04,320 Speaker 6: ways has won the trade war with the United States 219 00:11:04,320 --> 00:11:06,640 Speaker 6: by virtue of cutting off our access to a choke point, 220 00:11:06,920 --> 00:11:09,480 Speaker 6: they retaliated. They showed that if you impose pain on 221 00:11:09,520 --> 00:11:11,960 Speaker 6: the US economy, you might get the US to back 222 00:11:12,000 --> 00:11:14,880 Speaker 6: down even if they're not giving any concessions. Iran, you 223 00:11:15,080 --> 00:11:18,280 Speaker 6: spent years negotiating over its nuclear program. They got some 224 00:11:18,440 --> 00:11:21,360 Speaker 6: sanctions relief right in the twenty fifteen nuclear deal. The 225 00:11:21,440 --> 00:11:24,640 Speaker 6: US waved secondary sanctions, so they allowed you know, European banks, 226 00:11:24,720 --> 00:11:26,920 Speaker 6: Asian banks to go back into Iran, but they didn't 227 00:11:26,960 --> 00:11:30,720 Speaker 6: allow US financial institutions to do so. Iran, by weaponizing 228 00:11:30,720 --> 00:11:32,800 Speaker 6: the straight of horror moves for a few weeks, did 229 00:11:32,840 --> 00:11:35,440 Speaker 6: get the US to actually agree to allow them to 230 00:11:35,520 --> 00:11:37,560 Speaker 6: use the financial system. So you just think about the 231 00:11:37,600 --> 00:11:39,760 Speaker 6: lessons from both the Chinese and bargo and Rare Earth 232 00:11:40,040 --> 00:11:42,520 Speaker 6: and the Iranian cutoff of the straight of Horror moves 233 00:11:42,640 --> 00:11:45,600 Speaker 6: both showed that when you retaliate against the US, when 234 00:11:45,600 --> 00:11:48,040 Speaker 6: you use choke points to try to hurt the US economy, 235 00:11:48,240 --> 00:11:51,199 Speaker 6: you actually might get more concessions than through diplomacy. 236 00:11:51,240 --> 00:11:53,840 Speaker 2: The Iran and the United States have long been at 237 00:11:53,840 --> 00:11:56,280 Speaker 2: odds with one another, and the president likes to talk 238 00:11:56,320 --> 00:11:59,040 Speaker 2: about how you know, he's the first president to do 239 00:11:59,080 --> 00:12:01,680 Speaker 2: this in forty seven years, even though others have wanted to. 240 00:12:01,720 --> 00:12:03,680 Speaker 2: I want you to put your State Department in Pentagon 241 00:12:04,080 --> 00:12:07,400 Speaker 2: hat back on. Do you think that the reason why 242 00:12:07,480 --> 00:12:10,480 Speaker 2: other presidents have not gone after Iran the way that 243 00:12:10,520 --> 00:12:13,560 Speaker 2: this president has is because they knew about the economic 244 00:12:13,600 --> 00:12:17,240 Speaker 2: power that Iran could have over the Straight of hor moves? Oh, yes, yeah, 245 00:12:17,280 --> 00:12:20,160 Speaker 2: I mean, look what motivate invented Iran from being attacked 246 00:12:20,200 --> 00:12:20,679 Speaker 2: in the past. 247 00:12:20,840 --> 00:12:23,520 Speaker 6: Yes, I mean what motivated me to go into government, 248 00:12:23,600 --> 00:12:26,400 Speaker 6: you know, twenty years ago or whatever, was trying to 249 00:12:26,440 --> 00:12:29,400 Speaker 6: come up with a way to curtail Iran's nuclear program 250 00:12:29,400 --> 00:12:31,760 Speaker 6: without the use of military force. That was the goal 251 00:12:31,840 --> 00:12:33,520 Speaker 6: in the Bush administration. It was the goal in the 252 00:12:33,559 --> 00:12:36,960 Speaker 6: Obama administration. What we did through the nuclear deal, we 253 00:12:37,040 --> 00:12:38,360 Speaker 6: got a limited deal with Iran. 254 00:12:38,440 --> 00:12:38,560 Speaker 7: Right. 255 00:12:38,600 --> 00:12:41,440 Speaker 6: It wasn't perfect, right, Iran could still support proxies, they 256 00:12:41,480 --> 00:12:43,480 Speaker 6: could still have missiles. That didn't make us feel good. 257 00:12:43,840 --> 00:12:46,079 Speaker 6: But we didn't fire a single shot, right, We just 258 00:12:46,200 --> 00:12:49,800 Speaker 6: used economic pressure. I think the reason that neither the 259 00:12:49,800 --> 00:12:52,560 Speaker 6: Bush administration nor the Obama administration wanted to start a 260 00:12:52,600 --> 00:12:55,400 Speaker 6: war with Iran was because you knew that it could 261 00:12:55,440 --> 00:12:57,640 Speaker 6: go very wrong, right, and they could close the Straight 262 00:12:57,679 --> 00:12:59,560 Speaker 6: of hormor moves. I think the thing that is most 263 00:12:59,559 --> 00:13:01,840 Speaker 6: surprised in those. Even back then when we thought about 264 00:13:01,880 --> 00:13:04,280 Speaker 6: Iran closing the strait, we thought they would do so 265 00:13:04,600 --> 00:13:07,280 Speaker 6: by virtue of laying hundreds, if not thousands, of these 266 00:13:07,320 --> 00:13:09,560 Speaker 6: sea mines. And when you lay mines, I mean, they 267 00:13:09,559 --> 00:13:12,880 Speaker 6: don't discriminate whether you're carrying Saudi oil or Iranian oil. 268 00:13:12,920 --> 00:13:15,360 Speaker 6: So it would actually shut in Iran's own oil exports. 269 00:13:15,360 --> 00:13:16,840 Speaker 6: And so we had a little bit of comfort that 270 00:13:16,920 --> 00:13:18,839 Speaker 6: Iran might not take that step because it would be 271 00:13:18,880 --> 00:13:21,840 Speaker 6: economically suicidal. But what Iran has done, and what I 272 00:13:21,920 --> 00:13:24,160 Speaker 6: put forward in that New York Times essay, is that 273 00:13:24,320 --> 00:13:27,280 Speaker 6: just by hitting a small number of commercial vessels with 274 00:13:27,320 --> 00:13:30,559 Speaker 6: these cheap drones and missiles, they changed the risk calculus 275 00:13:30,559 --> 00:13:33,480 Speaker 6: of the entire global shipping industry, and so they actually 276 00:13:33,520 --> 00:13:36,760 Speaker 6: asymmetrically closed the strait where no one else's oil gets through, 277 00:13:36,920 --> 00:13:39,800 Speaker 6: but Iran's oil is getting through. You own record numbers 278 00:13:39,800 --> 00:13:40,560 Speaker 6: in the last few weeks. 279 00:13:40,640 --> 00:13:44,160 Speaker 4: So, as a former State Department Pentagon official, was that 280 00:13:44,280 --> 00:13:47,960 Speaker 4: very intelligence bad? Like where where look? 281 00:13:48,000 --> 00:13:49,960 Speaker 6: I mean, the reporting is still coming out on this, 282 00:13:50,040 --> 00:13:52,480 Speaker 6: and you know, I'm excited to read the tell alls 283 00:13:52,600 --> 00:13:55,280 Speaker 6: whenever they are published. From what we know so far, 284 00:13:55,800 --> 00:13:58,600 Speaker 6: it seems like the intelligence actually was pretty good. That 285 00:13:58,720 --> 00:14:00,560 Speaker 6: you know, Dan Kane, the Chairman of the Joint Chiefs 286 00:14:00,559 --> 00:14:04,720 Speaker 6: of Staff, who's a clearly professional, did put the risks 287 00:14:04,760 --> 00:14:07,439 Speaker 6: on the table. My assumption, if I had to, sort 288 00:14:07,480 --> 00:14:09,400 Speaker 6: of having been in the situation room and sort of 289 00:14:09,400 --> 00:14:12,280 Speaker 6: how these things play out, my assumption is that Trump 290 00:14:12,600 --> 00:14:15,120 Speaker 6: was a little overconfident. And by the way, you can 291 00:14:15,200 --> 00:14:18,120 Speaker 6: understand it if you think about his previous two military operations, 292 00:14:18,400 --> 00:14:21,600 Speaker 6: Operation Midnight Hammer last June, where this twelve day war 293 00:14:21,800 --> 00:14:24,360 Speaker 6: no American casualties and you take out large parts of 294 00:14:24,400 --> 00:14:28,240 Speaker 6: Iran's nuclear program, and then even more miraculously earlier this year, 295 00:14:28,640 --> 00:14:31,360 Speaker 6: you know, the operation in Caracas where Nicholas Maduro and 296 00:14:31,360 --> 00:14:33,120 Speaker 6: his wife are picked up and brought a couple of 297 00:14:33,160 --> 00:14:35,960 Speaker 6: miles from here in the Metropolitan Detention Center in Brooklyn. 298 00:14:36,040 --> 00:14:38,400 Speaker 6: I mean, you start thinking maybe that military force is 299 00:14:38,440 --> 00:14:39,320 Speaker 6: like an easy button. 300 00:14:39,640 --> 00:14:41,000 Speaker 5: And so my hunch is. 301 00:14:40,960 --> 00:14:43,440 Speaker 6: That he did get pretty good advice from the Chairman 302 00:14:43,440 --> 00:14:45,240 Speaker 6: of the Joint Chiefs Stankane. I worked for one of 303 00:14:45,240 --> 00:14:48,960 Speaker 6: his predecessors, General Marty Dempsey, and those guys are very professional. 304 00:14:49,160 --> 00:14:51,080 Speaker 6: I think Trump was a little overconfident. 305 00:14:51,760 --> 00:14:54,360 Speaker 2: So, given all of that and what we've seen thus 306 00:14:54,400 --> 00:14:56,480 Speaker 2: far over the last five weeks, what we've seen out 307 00:14:56,480 --> 00:14:58,360 Speaker 2: of Iran and the demands that Iron has versus the 308 00:14:58,400 --> 00:15:01,520 Speaker 2: demands that the US has, is there a chance in 309 00:15:01,560 --> 00:15:04,960 Speaker 2: your view that the US and Israel could exit this 310 00:15:05,080 --> 00:15:10,360 Speaker 2: conflict any ran would stop enrichment of nuclear weapons. 311 00:15:10,720 --> 00:15:12,920 Speaker 6: I don't think so. I think that we're at a 312 00:15:12,960 --> 00:15:15,720 Speaker 6: point right now where the choices are we either cut 313 00:15:15,760 --> 00:15:18,200 Speaker 6: a deal that leaves us worse off than we were 314 00:15:18,320 --> 00:15:22,160 Speaker 6: before the war started, but prevents us from potentially getting 315 00:15:22,280 --> 00:15:25,800 Speaker 6: drawn into a quagmire, or we escalate militarily. I mean, 316 00:15:25,880 --> 00:15:27,920 Speaker 6: you just think about the math for Iran right now. Right, 317 00:15:27,960 --> 00:15:30,040 Speaker 6: they've established control over the Strait of Horror Moves. That's 318 00:15:30,040 --> 00:15:32,800 Speaker 6: something they didn't have before. Right, they're now institutionalizing that, 319 00:15:33,040 --> 00:15:36,080 Speaker 6: charging up to two million dollars a ship. Before this war, 320 00:15:37,040 --> 00:15:38,640 Speaker 6: there was about one hundred and forty ships that went 321 00:15:38,680 --> 00:15:40,080 Speaker 6: through the Straight of horm Moves every day. If you 322 00:15:40,120 --> 00:15:43,080 Speaker 6: do the math, that's about one hundred billion dollars in 323 00:15:43,120 --> 00:15:45,640 Speaker 6: revenue for the Iranian government. They're not going to give 324 00:15:45,640 --> 00:15:49,600 Speaker 6: that up easily. And so my assessment here is that 325 00:15:50,240 --> 00:15:53,000 Speaker 6: perhaps that's okay for the US. Maybe it's better to 326 00:15:53,080 --> 00:15:55,280 Speaker 6: cut and run right now, allow Iran to make one 327 00:15:55,320 --> 00:15:57,520 Speaker 6: hundred billion dollars a year by controlling the world's most 328 00:15:57,560 --> 00:16:00,760 Speaker 6: important geographic joke point, because the alternative might be worse. Right, 329 00:16:00,800 --> 00:16:02,040 Speaker 6: the alternatives a ground invasion. 330 00:16:02,160 --> 00:16:04,400 Speaker 4: Well, is that possibly, you know, we talk about regime 331 00:16:04,520 --> 00:16:07,320 Speaker 4: changes and a new way forward for Oran within the region. 332 00:16:07,560 --> 00:16:09,800 Speaker 4: Is that possibly a way for it to have a 333 00:16:09,840 --> 00:16:12,120 Speaker 4: new way forward or is that just a way to 334 00:16:12,200 --> 00:16:16,720 Speaker 4: fund it's nuclear ambitions. It's weaponry and you know it's 335 00:16:16,840 --> 00:16:18,600 Speaker 4: various terrorist groups. 336 00:16:18,840 --> 00:16:22,960 Speaker 6: Yeah, I do not see the new Iranian government deciding 337 00:16:22,960 --> 00:16:26,560 Speaker 6: they don't want nuclear weapons, if anything. Interestingly enough, it 338 00:16:26,600 --> 00:16:30,840 Speaker 6: was actually iyatol Hameni, the now deceased former Supreme Leader, 339 00:16:30,960 --> 00:16:33,520 Speaker 6: who was always a little bit lukewarm on nuclear weapons. 340 00:16:33,520 --> 00:16:36,040 Speaker 6: He definitely wanted to have an option to nuclearized and 341 00:16:36,040 --> 00:16:38,120 Speaker 6: that's why they had a full scale enrichment program, so 342 00:16:38,160 --> 00:16:40,400 Speaker 6: they were trying to become a threshold nuclear state. But 343 00:16:40,440 --> 00:16:43,480 Speaker 6: there was never an intelligence assessment that he actually decided 344 00:16:43,520 --> 00:16:45,680 Speaker 6: to build weapons, right, I mean, they've got fis on 345 00:16:45,760 --> 00:16:48,400 Speaker 6: material to build ten bombs and they never actually built them. 346 00:16:48,720 --> 00:16:51,120 Speaker 6: I mean, with the younger generation and power now, and 347 00:16:51,160 --> 00:16:54,520 Speaker 6: particularly with the IRGC clearly sort of at the driver's seat. 348 00:16:54,560 --> 00:16:57,000 Speaker 6: I mean, all evidence suggested they're the ones who put 349 00:16:57,000 --> 00:17:00,440 Speaker 6: in Mushtaba Commitee. Right, they're running the show. They do 350 00:17:00,520 --> 00:17:02,840 Speaker 6: want nuclear weapons, and you can understand why. I mean, 351 00:17:02,880 --> 00:17:05,600 Speaker 6: you look at the countries that do have nuclear weapons, 352 00:17:05,640 --> 00:17:09,840 Speaker 6: like North Korea, they don't get bombed by the US. 353 00:17:10,040 --> 00:17:11,880 Speaker 4: Or so they double down potentially from here. 354 00:17:11,960 --> 00:17:14,680 Speaker 6: I think, so, yeah, And that's why I think that 355 00:17:15,359 --> 00:17:18,399 Speaker 6: I'm not resting easy yet that this war's over, because 356 00:17:18,400 --> 00:17:20,359 Speaker 6: I think that the new status quo might be so 357 00:17:20,480 --> 00:17:23,000 Speaker 6: bad that actually might incentivize more attacks from the US 358 00:17:23,000 --> 00:17:23,359 Speaker 6: and Israel. 359 00:17:23,440 --> 00:17:25,479 Speaker 2: Well on the reporting about what led to this, and 360 00:17:25,480 --> 00:17:26,960 Speaker 2: that will come out. There was that great piece in 361 00:17:26,960 --> 00:17:30,800 Speaker 2: the New York Times earlier this week, and it had 362 00:17:30,800 --> 00:17:34,320 Speaker 2: to do with intelligence from Israel that was presented to 363 00:17:34,400 --> 00:17:36,479 Speaker 2: the President of the Situation Room, and part of that 364 00:17:36,520 --> 00:17:41,080 Speaker 2: included the Iranian people rising up and potentially taking control 365 00:17:41,320 --> 00:17:45,920 Speaker 2: of the government. Protests in Iran. Why have they been 366 00:17:46,720 --> 00:17:48,040 Speaker 2: largely silent during this war? 367 00:17:48,400 --> 00:17:51,399 Speaker 6: Look, this is one of the more complicated aspects of 368 00:17:51,440 --> 00:17:53,480 Speaker 6: analyzing this conflict, because I think we need to be 369 00:17:53,520 --> 00:17:56,760 Speaker 6: clear the Iranian regime is awful, right, I mean, just 370 00:17:56,840 --> 00:17:59,159 Speaker 6: earlier this year they killed at least ten thousand of 371 00:17:59,200 --> 00:18:01,840 Speaker 6: their own people who are trum. We're protesting peacefully in 372 00:18:01,880 --> 00:18:02,360 Speaker 6: the streets. 373 00:18:02,440 --> 00:18:03,200 Speaker 5: So we would all be. 374 00:18:03,160 --> 00:18:05,399 Speaker 6: Better off, and Iranian's probably most of all, if you 375 00:18:05,440 --> 00:18:07,760 Speaker 6: could get rid of the Islamic Republic. I think the 376 00:18:07,880 --> 00:18:11,240 Speaker 6: key miscalculation though, that the Israelis, and I guess in turn, 377 00:18:11,320 --> 00:18:14,120 Speaker 6: the US made was to think that the Islamic Republic 378 00:18:14,240 --> 00:18:17,359 Speaker 6: was a rather shallow state, right, that if you just 379 00:18:17,400 --> 00:18:20,520 Speaker 6: took out the top level of the government, everything would collapse. 380 00:18:20,960 --> 00:18:22,680 Speaker 6: I think what they showed is that it's actually quite 381 00:18:22,720 --> 00:18:25,480 Speaker 6: a bit deeper than that. And so I think that 382 00:18:25,560 --> 00:18:29,000 Speaker 6: you know, right now the prospects for regime change look poor. 383 00:18:29,040 --> 00:18:30,800 Speaker 6: And just to quickly answer your question about why you 384 00:18:30,800 --> 00:18:33,080 Speaker 6: don't see more people in the streets, this is a 385 00:18:33,080 --> 00:18:36,520 Speaker 6: common sort of thing that we see when you're under bombardment. 386 00:18:36,600 --> 00:18:37,760 Speaker 6: You have a rally around the flag. 387 00:18:37,760 --> 00:18:39,040 Speaker 5: People don't want to go out of their homes. 388 00:18:39,080 --> 00:18:40,280 Speaker 6: They just want to hunker down. 389 00:18:40,400 --> 00:18:44,920 Speaker 4: Yeah, real quickly, twenty five seconds. Next potential big checkpoint 390 00:18:45,000 --> 00:18:47,040 Speaker 4: is it China, Taiwan semiconductors. 391 00:18:47,359 --> 00:18:49,760 Speaker 6: I think the future choke point that I'm worried about 392 00:18:49,840 --> 00:18:51,879 Speaker 6: right now is actually clean energy technology. I think one 393 00:18:51,920 --> 00:18:54,119 Speaker 6: of the easiest bets coming out of this war is 394 00:18:54,280 --> 00:18:56,280 Speaker 6: American allies in Europe and Asia are going to double 395 00:18:56,320 --> 00:18:58,800 Speaker 6: down on electric vehicles, battery, solar panels. And you guess 396 00:18:58,800 --> 00:19:00,879 Speaker 6: what you know who controls all of those choke points? 397 00:19:00,960 --> 00:19:01,360 Speaker 4: China. 398 00:19:01,480 --> 00:19:04,200 Speaker 6: China come back soon anytime. 399 00:19:04,280 --> 00:19:06,960 Speaker 4: This was fab Eddie Fishman, director of the Center for 400 00:19:07,000 --> 00:19:09,560 Speaker 4: Geoeconomics at the Council on Foreign Relations, the author of 401 00:19:09,600 --> 00:19:12,680 Speaker 4: the book Choke Points. Check it out. We have. That's 402 00:19:12,720 --> 00:19:13,560 Speaker 4: why we have them back. 403 00:19:15,200 --> 00:19:15,960 Speaker 5: Stay with us. 404 00:19:16,040 --> 00:19:19,040 Speaker 2: More from Bloomberg Business Week Daily coming up after this. 405 00:19:23,160 --> 00:19:27,040 Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch 406 00:19:27,080 --> 00:19:29,760 Speaker 1: us live weekday afternoons from two to five e's during 407 00:19:30,000 --> 00:19:33,200 Speaker 1: Listen on Apple Karplay and Android autto with the Bloomberg 408 00:19:33,280 --> 00:19:36,399 Speaker 1: Business app, or watch us live on YouTube. 409 00:19:37,280 --> 00:19:38,240 Speaker 4: So thot's to cover. 410 00:19:38,320 --> 00:19:39,200 Speaker 3: So let's get right to it. 411 00:19:39,280 --> 00:19:41,359 Speaker 4: First, stop the White House and the latest from President 412 00:19:41,440 --> 00:19:44,720 Speaker 4: Trump and his team. When it comes to ending that 413 00:19:44,840 --> 00:19:47,000 Speaker 4: war with Iran. As we've been talking, we do have 414 00:19:47,119 --> 00:19:49,480 Speaker 4: Israel saying it will hold direct talks with Lebanon. This 415 00:19:49,520 --> 00:19:52,919 Speaker 4: has been very very important in terms of making some progress. 416 00:19:52,960 --> 00:19:55,280 Speaker 4: We'll see where we go from here. But President Trump 417 00:19:55,320 --> 00:19:59,240 Speaker 4: also saying that US military or reiterating that US military 418 00:19:59,280 --> 00:20:03,800 Speaker 4: will remain in place around Iran until ceasefire is firmed. So, yeah, 419 00:20:03,880 --> 00:20:05,760 Speaker 4: we've got some important meetings ahead of the weekend. But 420 00:20:05,960 --> 00:20:07,920 Speaker 4: I'm curious about kind of adding it all up. 421 00:20:08,119 --> 00:20:10,600 Speaker 2: Yeah, and look, meantime, just before the top of the hour, 422 00:20:10,680 --> 00:20:13,919 Speaker 2: we did hear an update from Iran's Supreme Leader, Mochabot 423 00:20:13,960 --> 00:20:16,560 Speaker 2: komen A, who said that we did not seek war 424 00:20:17,160 --> 00:20:19,280 Speaker 2: and that they're moving to a new stage in managing 425 00:20:19,280 --> 00:20:21,639 Speaker 2: the horror moves straight. We don't know what that actually 426 00:20:21,680 --> 00:20:24,200 Speaker 2: looks like and what the management looks like, but that's 427 00:20:24,240 --> 00:20:25,160 Speaker 2: the latest out of Iran. 428 00:20:25,280 --> 00:20:27,240 Speaker 4: Yeah, and we've talked about the Strait as being such 429 00:20:27,280 --> 00:20:31,280 Speaker 4: an important leverage point for Iranian officials. All right, let's 430 00:20:31,320 --> 00:20:33,160 Speaker 4: go to the White House, the White House North Lawn 431 00:20:33,160 --> 00:20:35,600 Speaker 4: and to Bloomberg News Washington and White House correspondent Jeff 432 00:20:35,600 --> 00:20:39,480 Speaker 4: Mason he joins us on this Thursday. Jeff, I am curious, 433 00:20:39,560 --> 00:20:41,920 Speaker 4: does the White House feel like they're making progress? Are 434 00:20:41,920 --> 00:20:45,919 Speaker 4: they frustrated? We are looking forward to these weekend meetings, 435 00:20:45,920 --> 00:20:48,199 Speaker 4: so what are you hearing about kind of where we 436 00:20:48,240 --> 00:20:49,560 Speaker 4: are from the US perspective. 437 00:20:50,160 --> 00:20:52,919 Speaker 7: Well, I think the most important development today really is 438 00:20:52,960 --> 00:20:55,720 Speaker 7: the one that you just reference between Israel and Lebanon. 439 00:20:55,840 --> 00:21:01,000 Speaker 7: Certainly the fact that Iran, after seeing the Israeli attacks 440 00:21:01,040 --> 00:21:05,000 Speaker 7: on Lebanon shortly after the President announced the ceasefire, and 441 00:21:05,040 --> 00:21:08,000 Speaker 7: after iron said it had agreed to the ceasefire, then 442 00:21:08,080 --> 00:21:11,520 Speaker 7: calling all of that into question because of the skirmishes 443 00:21:11,600 --> 00:21:14,960 Speaker 7: or the attacks between Israel and Lebanon has been a 444 00:21:15,000 --> 00:21:19,480 Speaker 7: blow to the peace process. So Prime Minister Netanyaho being 445 00:21:19,560 --> 00:21:22,240 Speaker 7: open to or calling now for direct talks is a 446 00:21:22,240 --> 00:21:26,840 Speaker 7: pretty big development, and also interesting that President Trump said 447 00:21:27,240 --> 00:21:30,680 Speaker 7: to NBC that he was asking Netanyahu to scale back 448 00:21:31,320 --> 00:21:34,159 Speaker 7: his attacks and Israel's attacks. That's a little bit of 449 00:21:34,160 --> 00:21:37,400 Speaker 7: a shift from yesterday when the President emphasized that Lebanon 450 00:21:37,480 --> 00:21:39,120 Speaker 7: was not part of the peace deal. So I think 451 00:21:39,119 --> 00:21:42,000 Speaker 7: that's where the focus is today, heading into those really 452 00:21:42,040 --> 00:21:44,199 Speaker 7: really crucial talks over the weekend. 453 00:21:44,320 --> 00:21:46,600 Speaker 2: Well, we're just hearing Jeff, and forgive us because you 454 00:21:46,640 --> 00:21:48,159 Speaker 2: might not have seen this yet. It just crossing the 455 00:21:48,160 --> 00:21:51,400 Speaker 2: Bloomberg terminal in the last couple of minutes. Benjamin Netanyaho 456 00:21:51,440 --> 00:21:54,600 Speaker 2: is saying we're continuing to strike Hasbolah with force. He 457 00:21:54,720 --> 00:21:57,040 Speaker 2: says that we will not stop until northern Israel is 458 00:21:57,080 --> 00:22:00,760 Speaker 2: secure and there is no cease fire in Lebanon. He 459 00:22:00,800 --> 00:22:03,080 Speaker 2: sends you, He says he intends to reach more peace 460 00:22:03,119 --> 00:22:05,080 Speaker 2: accords with Arab nations. 461 00:22:05,119 --> 00:22:06,119 Speaker 5: So is there a. 462 00:22:07,640 --> 00:22:11,480 Speaker 2: Disparity or a mismatch between the rhetoric from Benjamin Netanyahu 463 00:22:11,760 --> 00:22:12,840 Speaker 2: and from the United States. 464 00:22:13,520 --> 00:22:15,920 Speaker 7: Well, there have certainly been mixed signals and that has 465 00:22:15,960 --> 00:22:18,760 Speaker 7: been a characteristic of this war and the rhetoric about 466 00:22:18,760 --> 00:22:21,400 Speaker 7: this war coming from the White House and now from 467 00:22:21,480 --> 00:22:24,840 Speaker 7: Israel since inception more than five weeks ago. So this 468 00:22:24,880 --> 00:22:28,840 Speaker 7: would seem to follow or follow along with that same pattern, 469 00:22:29,280 --> 00:22:32,199 Speaker 7: and that of course raises more questions and raises the 470 00:22:32,240 --> 00:22:35,480 Speaker 7: stakes for the talks this weekend that Vice President Vance 471 00:22:35,560 --> 00:22:37,600 Speaker 7: is going to lead on behalf of the United States 472 00:22:38,080 --> 00:22:39,639 Speaker 7: for a more permanent ceasefire. 473 00:22:40,280 --> 00:22:42,639 Speaker 4: Yeah, we do have another one, Benjamin Netanyah who intending 474 00:22:42,640 --> 00:22:45,000 Speaker 4: to reach more peace accords with Arab nation. So again 475 00:22:45,040 --> 00:22:47,080 Speaker 4: just kind of building on this, And you know, Jeff, 476 00:22:47,080 --> 00:22:49,080 Speaker 4: it makes me wonder like how many fronts are there? 477 00:22:49,160 --> 00:22:52,040 Speaker 4: I mean, I feel like, of course, as US versus Iran, 478 00:22:52,119 --> 00:22:56,119 Speaker 4: there's Israel versus Iran, there's Israel and Lebanon. Like I 479 00:22:56,280 --> 00:23:00,359 Speaker 4: just wonder, you know, is everybody getting close search of 480 00:23:00,400 --> 00:23:02,119 Speaker 4: being on the same page with this. 481 00:23:03,080 --> 00:23:05,800 Speaker 7: Well, it's hard to say that they are if those 482 00:23:05,800 --> 00:23:08,960 Speaker 7: attacks are continuing, but some of the rhetoric indicates that 483 00:23:08,960 --> 00:23:11,800 Speaker 7: that's their aim. And certainly the fact that the President 484 00:23:11,960 --> 00:23:15,640 Speaker 7: is sending the Vice president for talks with Iran this 485 00:23:15,680 --> 00:23:18,840 Speaker 7: weekend suggests that the United States is very eager to 486 00:23:18,880 --> 00:23:21,600 Speaker 7: have a longer term solution. But you're not wrong to 487 00:23:21,600 --> 00:23:24,119 Speaker 7: bring that up if the rest of the region, or 488 00:23:24,119 --> 00:23:26,160 Speaker 7: at least some of the countries in the region, including 489 00:23:26,480 --> 00:23:29,800 Speaker 7: the one country that went to war with the United 490 00:23:29,800 --> 00:23:33,320 Speaker 7: States against Iran, is not fully on board or is 491 00:23:33,320 --> 00:23:36,520 Speaker 7: not supporting that because of their separate strikes in Lebanon. 492 00:23:36,600 --> 00:23:39,119 Speaker 7: That's going to be a sticking point. 493 00:23:39,440 --> 00:23:42,280 Speaker 4: Jeff one quick question thirty seconds. Where's Marko Rubio in 494 00:23:42,320 --> 00:23:44,200 Speaker 4: all of this? Is he not involved in these talks? 495 00:23:45,480 --> 00:23:48,399 Speaker 7: He's not going to be physically present for the talks, 496 00:23:48,440 --> 00:23:53,119 Speaker 7: But certainly that entire national security inner circle is playing 497 00:23:53,119 --> 00:23:55,639 Speaker 7: a role. But that the people who they've said, the 498 00:23:55,680 --> 00:23:58,040 Speaker 7: President is said is going to lead the talks this 499 00:23:58,119 --> 00:24:01,840 Speaker 7: weekend are Vice President Vance and boys Steve Woodkoff and 500 00:24:02,560 --> 00:24:03,760 Speaker 7: son in law Jared Kushner. 501 00:24:03,800 --> 00:24:06,600 Speaker 4: All right, sounds like a busy weekend. A lot of 502 00:24:06,640 --> 00:24:09,560 Speaker 4: them have been busy. Jeff, great stuff, as always, Jeff Mason. 503 00:24:09,600 --> 00:24:12,040 Speaker 4: He's Bloomberg News Washington and White House correspondent. All right, 504 00:24:12,080 --> 00:24:14,159 Speaker 4: that's the latest on the war, at least from the 505 00:24:14,200 --> 00:24:16,360 Speaker 4: US perspective. Let's get to the latest on the US 506 00:24:16,359 --> 00:24:17,280 Speaker 4: economic backdrop. 507 00:24:17,520 --> 00:24:19,760 Speaker 2: Yeah, let's talk a little bit about data on personal 508 00:24:19,760 --> 00:24:22,200 Speaker 2: income and spending, inflation, weekly jobless claims, and. 509 00:24:22,119 --> 00:24:24,200 Speaker 5: More with what you need to know what matters. 510 00:24:24,200 --> 00:24:28,200 Speaker 2: Bloomberg TV and Radio International Economics and Policy correspondent Michael McKee. 511 00:24:28,280 --> 00:24:31,359 Speaker 5: He joins us from Augusta, Georgia. Mike, A slew of data. 512 00:24:31,400 --> 00:24:33,040 Speaker 5: Any surprises that you found in there? 513 00:24:34,960 --> 00:24:38,400 Speaker 8: Probably the biggest surprise was the one that maybe matters 514 00:24:38,440 --> 00:24:42,040 Speaker 8: the least in the sense that it's oldest, the oldest news. 515 00:24:42,200 --> 00:24:46,000 Speaker 8: Fourth quarter GDP falls to just half a percent from 516 00:24:46,200 --> 00:24:50,040 Speaker 8: the initially reported one point seven, which was then revised 517 00:24:50,040 --> 00:24:52,800 Speaker 8: down to point seven. Now we're at point five. As 518 00:24:53,160 --> 00:24:57,880 Speaker 8: consumer spending trailed off in December and did not pick 519 00:24:57,960 --> 00:25:02,359 Speaker 8: up in January, we see the February, personal spending numbers 520 00:25:02,400 --> 00:25:05,680 Speaker 8: now come in just up half a percent, a little 521 00:25:05,680 --> 00:25:09,400 Speaker 8: bit slower than anticipated. In the three month moving average 522 00:25:09,680 --> 00:25:12,760 Speaker 8: has moved down. So what we're seeing basically in all 523 00:25:12,840 --> 00:25:17,600 Speaker 8: these numbers is that consumers are starting to weaken. The 524 00:25:18,560 --> 00:25:22,120 Speaker 8: inflation adjusted spending was up just a tenth of eight percent. 525 00:25:22,640 --> 00:25:26,320 Speaker 8: They've been keeping the economy going, so going into the war, 526 00:25:26,680 --> 00:25:28,960 Speaker 8: we were maybe in a little bit worse position as 527 00:25:28,960 --> 00:25:31,200 Speaker 8: an economy than we thought we were. 528 00:25:31,440 --> 00:25:33,639 Speaker 4: All right, So we got those FED minutes, right. We 529 00:25:33,720 --> 00:25:36,680 Speaker 4: talked about that with you yesterday. You were in d C. Mike. 530 00:25:36,720 --> 00:25:39,639 Speaker 4: You've been a busy gime moving around. But having said that, 531 00:25:39,680 --> 00:25:41,720 Speaker 4: so the FED is on this. I mean, this is 532 00:25:41,800 --> 00:25:44,120 Speaker 4: old data, but it also shows you where the economy 533 00:25:44,200 --> 00:25:47,960 Speaker 4: was before the war, and consumer's weakening is certainly something 534 00:25:48,000 --> 00:25:50,720 Speaker 4: to be concerned about. Yeah. 535 00:25:50,720 --> 00:25:52,840 Speaker 8: The interesting thing is that we did have such a 536 00:25:52,880 --> 00:25:56,359 Speaker 8: strong jobs report for the month of March, and while 537 00:25:56,400 --> 00:25:59,160 Speaker 8: we saw a little bit of an increase in jobless 538 00:25:59,160 --> 00:26:02,640 Speaker 8: claims that week, it's not all that much and it's 539 00:26:02,680 --> 00:26:05,560 Speaker 8: still within the range it's been in, so the labor 540 00:26:05,600 --> 00:26:09,119 Speaker 8: market doesn't seem to be weakening all that quickly. We 541 00:26:09,200 --> 00:26:13,320 Speaker 8: did see in personal income that wages or only rose 542 00:26:13,359 --> 00:26:15,719 Speaker 8: two tens of a percent after rising a half percent 543 00:26:16,080 --> 00:26:19,600 Speaker 8: the last time. But it was really dropping dividend payments 544 00:26:19,760 --> 00:26:24,040 Speaker 8: that pushed down personal income to a negative one tenth 545 00:26:24,119 --> 00:26:29,920 Speaker 8: this past month in February. So right now, it looks 546 00:26:29,920 --> 00:26:33,119 Speaker 8: like the economy is hanging in there, but some of 547 00:26:33,160 --> 00:26:37,440 Speaker 8: the things that have been driving it are beginning to 548 00:26:37,480 --> 00:26:40,119 Speaker 8: look a little worrisome. Maybe like you've driven your car 549 00:26:40,440 --> 00:26:43,280 Speaker 8: and the gas gauge is getting down towards e and 550 00:26:43,320 --> 00:26:46,000 Speaker 8: you're not exactly sure how much farther you have to go. 551 00:26:47,240 --> 00:26:50,520 Speaker 2: It's a good metaphor right now, given das prices. Just 552 00:26:50,520 --> 00:26:54,800 Speaker 2: before we let you go CPI tomorrow, University of Michigan 553 00:26:55,040 --> 00:26:58,720 Speaker 2: sentiment just set us up for what to expect there. 554 00:26:58,840 --> 00:27:02,919 Speaker 8: Very briefly, basically, welcome to the war. We're going to 555 00:27:02,960 --> 00:27:07,280 Speaker 8: see the CPI headline rise quite a bit. Economists think 556 00:27:07,280 --> 00:27:10,400 Speaker 8: by about a full percentage point and go from two 557 00:27:10,440 --> 00:27:13,120 Speaker 8: point four percent to about three point four percent. It's 558 00:27:13,119 --> 00:27:16,320 Speaker 8: going to be basically petroleum and some of the byproducts 559 00:27:16,359 --> 00:27:20,080 Speaker 8: of that still early for it to feed into the 560 00:27:20,080 --> 00:27:23,160 Speaker 8: rest of CPI, but it will get people's attention, and 561 00:27:23,240 --> 00:27:26,240 Speaker 8: one has to assume that the University of Michigan sentiment 562 00:27:26,320 --> 00:27:29,199 Speaker 8: numbers are going to go down. We saw a jump 563 00:27:29,320 --> 00:27:33,280 Speaker 8: in inflation expectations from Michigan last time, and we could 564 00:27:33,320 --> 00:27:37,680 Speaker 8: see another one as people internalize the idea of having 565 00:27:37,680 --> 00:27:39,639 Speaker 8: to pay a lot more for gasolite. 566 00:27:39,280 --> 00:27:41,159 Speaker 4: Ninety bucks to fill my tank. All right, got it, 567 00:27:41,800 --> 00:27:42,720 Speaker 4: totally bike. 568 00:27:42,560 --> 00:27:43,359 Speaker 8: Thank you drive. 569 00:27:44,480 --> 00:27:46,920 Speaker 2: It's not that old hummer, you know, those old hummers 570 00:27:46,960 --> 00:27:47,560 Speaker 2: that they had in the. 571 00:27:47,600 --> 00:27:48,320 Speaker 5: Early two thousand. 572 00:27:48,480 --> 00:27:53,119 Speaker 4: Not omer anyway, moving on, moving on, all right, Michael McKey, 573 00:27:53,160 --> 00:27:56,000 Speaker 4: thank you so much. Safe travels you, Bloomberg TV and 574 00:27:56,080 --> 00:27:58,760 Speaker 4: Radio International Economics and Policy course. Butun at Michael McKey, 575 00:27:58,800 --> 00:28:03,199 Speaker 4: all right, war updateschios, economic data check. Let's get to 576 00:28:03,240 --> 00:28:05,200 Speaker 4: the markets. Joining us at Sara Hunt. She's chief market 577 00:28:05,280 --> 00:28:09,000 Speaker 4: strategist portfolio manager at the asset management from Alpine Saxon Woods. 578 00:28:09,000 --> 00:28:10,760 Speaker 4: They've got about eight hundred and twenty five million in 579 00:28:10,800 --> 00:28:13,719 Speaker 4: assets under manage it. She's here in studio. Welcome, welcome, 580 00:28:13,800 --> 00:28:14,679 Speaker 4: so nice to have you. 581 00:28:14,880 --> 00:28:16,040 Speaker 9: I love coming in the studio. 582 00:28:16,119 --> 00:28:18,480 Speaker 4: Thank you, thank you, we love having you in studio. 583 00:28:18,600 --> 00:28:21,640 Speaker 4: Come as much as you would like. The US war 584 00:28:22,080 --> 00:28:24,600 Speaker 4: in Iran? Has it impacted how you think about portfolio 585 00:28:24,640 --> 00:28:25,760 Speaker 4: management and investing. 586 00:28:26,119 --> 00:28:29,760 Speaker 9: Yet well, I mean, we were starting off this year 587 00:28:29,800 --> 00:28:33,080 Speaker 9: with some concerns about volatility. Anyway, it's certainly exacerbated that 588 00:28:33,320 --> 00:28:36,879 Speaker 9: for obvious reasons. And depending on how much of an 589 00:28:36,960 --> 00:28:39,560 Speaker 9: energy shock this continues to be, it's going to have 590 00:28:39,600 --> 00:28:41,560 Speaker 9: an impact, I think, on earnings, and it's going to 591 00:28:41,560 --> 00:28:44,240 Speaker 9: have an impact on people's ability to spend and everything else. 592 00:28:44,560 --> 00:28:48,440 Speaker 9: From a longer term perspective, things, any kind of conflagration 593 00:28:48,560 --> 00:28:51,440 Speaker 9: is problematic for a million humanitarian reasons. Markets tend to 594 00:28:51,440 --> 00:28:53,440 Speaker 9: look a little bit through it, depending on how badly 595 00:28:53,720 --> 00:28:55,600 Speaker 9: that makes a difference. I think that because the straight 596 00:28:55,640 --> 00:28:57,760 Speaker 9: up hormoz is such a bottleneck for so many things, 597 00:28:57,840 --> 00:29:00,680 Speaker 9: not soil and gas, but fertilizer, helium, there's a number 598 00:29:00,720 --> 00:29:02,640 Speaker 9: of other things there. All of those things come in 599 00:29:02,720 --> 00:29:04,240 Speaker 9: talked about helium ONOV call. 600 00:29:04,160 --> 00:29:06,440 Speaker 4: This morning, because we're going to talk about semachaductive All. 601 00:29:06,320 --> 00:29:07,920 Speaker 9: Those things come into play. And I think that's part 602 00:29:07,960 --> 00:29:09,400 Speaker 9: of the problem of how to figure out how to 603 00:29:09,400 --> 00:29:11,400 Speaker 9: look at this, because you don't know how long this lasts. 604 00:29:11,480 --> 00:29:13,840 Speaker 9: You unbottleneck that and things start to get better, they 605 00:29:13,840 --> 00:29:14,960 Speaker 9: should hopefully rather quickly. 606 00:29:15,400 --> 00:29:17,120 Speaker 5: How quickly though, that's the question. 607 00:29:17,360 --> 00:29:19,200 Speaker 9: And I think that that's a question that I'm not 608 00:29:19,240 --> 00:29:21,520 Speaker 9: even sure everybody who's on the ground saying how long 609 00:29:21,560 --> 00:29:23,480 Speaker 9: it's going to take actually knows, because until you can 610 00:29:23,520 --> 00:29:25,640 Speaker 9: get in there and look at everything and see, I'm 611 00:29:25,680 --> 00:29:26,080 Speaker 9: not sure. 612 00:29:26,120 --> 00:29:26,280 Speaker 5: Well. 613 00:29:26,280 --> 00:29:27,760 Speaker 2: The reason I ask is because it has been almost 614 00:29:27,800 --> 00:29:30,560 Speaker 2: forty eight hours since the President announced, just before is 615 00:29:30,600 --> 00:29:34,240 Speaker 2: eight pm deadline on Tuesday, that there would be some 616 00:29:34,280 --> 00:29:38,200 Speaker 2: sort of fragile ceasefire reached, and we're still not seeing 617 00:29:38,200 --> 00:29:39,760 Speaker 2: the free flow of traffic through the straight I. 618 00:29:39,760 --> 00:29:41,720 Speaker 9: Think the traffic through the strait is I mean, this 619 00:29:41,800 --> 00:29:43,600 Speaker 9: is going to sound crass, but more important than the 620 00:29:43,600 --> 00:29:46,680 Speaker 9: political ramifications of a ceasefire. You need to get things moving. 621 00:29:46,720 --> 00:29:49,080 Speaker 9: They're not moving yet. The argument now is that maybe 622 00:29:49,080 --> 00:29:51,440 Speaker 9: it's because of the Lebanon issue, maybe not, I don't know. 623 00:29:51,520 --> 00:29:53,960 Speaker 9: The point is, until things start to get moving, it's 624 00:29:54,000 --> 00:29:55,680 Speaker 9: hard to say how long it will take for them 625 00:29:55,680 --> 00:29:58,440 Speaker 9: to get moving in a regular way. Obviously, in the beginning, 626 00:29:58,520 --> 00:30:00,720 Speaker 9: like a traffic jam, you're still to be jammed up 627 00:30:00,720 --> 00:30:02,920 Speaker 9: for a while. So how long is that while? And 628 00:30:02,960 --> 00:30:05,040 Speaker 9: what kind of substitutions are people making? Now? What kind 629 00:30:05,080 --> 00:30:07,440 Speaker 9: of substitutions can they make or I don't think anyone's 630 00:30:07,480 --> 00:30:08,520 Speaker 9: completely sure yet, and there. 631 00:30:08,400 --> 00:30:10,000 Speaker 4: Has to be some certainty, Like it's not a case 632 00:30:10,000 --> 00:30:11,560 Speaker 4: of okay, let's start opening it up and all of 633 00:30:11,560 --> 00:30:13,760 Speaker 4: a sudden we start seeing some you know, random firings 634 00:30:13,800 --> 00:30:16,680 Speaker 4: back and forth. It just puts everybody on ease and nervous. Again. 635 00:30:16,720 --> 00:30:18,960 Speaker 9: There needs to be commercial traffic moving through in a 636 00:30:19,000 --> 00:30:21,520 Speaker 9: regular way, and that needs to mean that there's insurance 637 00:30:21,640 --> 00:30:23,840 Speaker 9: capabilities and everything else. A lot of those things are 638 00:30:23,880 --> 00:30:25,760 Speaker 9: all tied together, and right now, I don't think we 639 00:30:25,800 --> 00:30:26,720 Speaker 9: have the answer to that yet. 640 00:30:26,960 --> 00:30:28,800 Speaker 4: You know, what we're all waiting for and answers is 641 00:30:28,840 --> 00:30:32,160 Speaker 4: earnings and valuations and the combination earning season about to 642 00:30:32,160 --> 00:30:34,560 Speaker 4: get underway. We've got the big bank starting it off 643 00:30:34,640 --> 00:30:37,440 Speaker 4: kind of officially, unofficially, what are you expecting me earnings 644 00:30:37,480 --> 00:30:40,080 Speaker 4: and are you anticipating that CEOs are going to be 645 00:30:40,440 --> 00:30:44,160 Speaker 4: comfortable giving outlooks in terms of forecast delta with a 646 00:30:44,200 --> 00:30:48,240 Speaker 4: delta that basically confirmed it but didn't change its forecast. 647 00:30:47,800 --> 00:30:50,720 Speaker 2: Which was the good news for investors right very happy 648 00:30:50,760 --> 00:30:51,120 Speaker 2: about that. 649 00:30:51,160 --> 00:30:53,360 Speaker 4: But we're seeing some of that. So or are we 650 00:30:53,360 --> 00:30:55,440 Speaker 4: going to get multiple scenarios or do you feel like 651 00:30:55,640 --> 00:30:58,240 Speaker 4: the c suite feels confident and knows what's happening next. 652 00:30:58,360 --> 00:31:00,480 Speaker 9: I think it's going to be sector resector because for 653 00:31:00,560 --> 00:31:03,120 Speaker 9: some sectors, this uncertainty on energy priceis is going to 654 00:31:03,120 --> 00:31:05,360 Speaker 9: weigh much more heavily than on other sectors. And I 655 00:31:05,400 --> 00:31:08,400 Speaker 9: think that you've obviously seen a lot of major capex 656 00:31:08,480 --> 00:31:10,240 Speaker 9: announcements and all sorts of things going on in the 657 00:31:10,240 --> 00:31:13,080 Speaker 9: tech sector, which is why that those earnings kept climbing 658 00:31:13,120 --> 00:31:15,040 Speaker 9: up even in the face of some of the other 659 00:31:15,080 --> 00:31:16,960 Speaker 9: things that are going on. The question is going to 660 00:31:17,000 --> 00:31:20,000 Speaker 9: be is the negative impact to an energy and other 661 00:31:20,080 --> 00:31:23,280 Speaker 9: supply shock going to start being a detriment to earnings? 662 00:31:23,320 --> 00:31:25,239 Speaker 9: And so far right now, I don't think people are 663 00:31:25,240 --> 00:31:28,200 Speaker 9: baking it in. It makes it difficult to believe it's. 664 00:31:28,000 --> 00:31:31,560 Speaker 4: This geopolitical or just a general supply shocks. 665 00:31:31,960 --> 00:31:34,680 Speaker 9: The general supply shocks that are going on in both 666 00:31:34,800 --> 00:31:37,320 Speaker 9: energy and as we said, helium and fertilizer and things 667 00:31:37,320 --> 00:31:40,200 Speaker 9: that have become more expensive, those things haven't filtered through yet. 668 00:31:40,200 --> 00:31:41,360 Speaker 9: I don't think you're going to see them in the 669 00:31:41,360 --> 00:31:43,560 Speaker 9: first quarter. I think you're going to see people maybe 670 00:31:43,600 --> 00:31:46,200 Speaker 9: talking about them. I think if this is still ongoing 671 00:31:46,200 --> 00:31:48,520 Speaker 9: in another two three weeks, it's going to be hard 672 00:31:48,520 --> 00:31:51,440 Speaker 9: for people to give guidance and give it specifically, especially 673 00:31:51,520 --> 00:31:53,880 Speaker 9: depending on your industry if you're dependent on that consumer spend. 674 00:31:54,000 --> 00:31:55,480 Speaker 2: I know we say it every quarter, Carol, but we 675 00:31:55,520 --> 00:31:57,239 Speaker 2: always look forward to earning season to get a good 676 00:31:57,280 --> 00:31:58,920 Speaker 2: idea from the consumer. I mean, I'll get some of 677 00:31:58,920 --> 00:32:01,880 Speaker 2: the banks next week looking forward to that. I think 678 00:32:01,880 --> 00:32:03,880 Speaker 2: that also raises the question of what the FED does 679 00:32:03,920 --> 00:32:05,720 Speaker 2: and what the FED does for the remainder of the year. 680 00:32:05,840 --> 00:32:06,920 Speaker 5: If we do indeed. 681 00:32:06,640 --> 00:32:11,120 Speaker 2: See higher prices for a while when it comes to commodities, 682 00:32:11,280 --> 00:32:13,480 Speaker 2: when it comes to what we're paying for things in 683 00:32:13,520 --> 00:32:15,080 Speaker 2: the next couple of quarters, what does it mean for 684 00:32:15,080 --> 00:32:15,880 Speaker 2: the Fed's rate path. 685 00:32:16,200 --> 00:32:18,280 Speaker 9: Well, I think that Chairman Powell was pretty clear the 686 00:32:18,320 --> 00:32:20,240 Speaker 9: other day on saying we're looking at this as a 687 00:32:20,240 --> 00:32:22,600 Speaker 9: temporary shock, because you had started to see people baking 688 00:32:22,760 --> 00:32:25,960 Speaker 9: potential rate rises, and I think that that was something that, 689 00:32:26,000 --> 00:32:29,360 Speaker 9: given all the other uncertainties, was not something that markets 690 00:32:29,400 --> 00:32:31,920 Speaker 9: or investors needed. It's really going to depend again on 691 00:32:32,000 --> 00:32:35,160 Speaker 9: what happens here, because this is not a price rise 692 00:32:35,280 --> 00:32:37,840 Speaker 9: because there's not enough stuff. There's not enough stuff that 693 00:32:37,920 --> 00:32:40,720 Speaker 9: can get places. So you can argue that on the 694 00:32:40,760 --> 00:32:42,640 Speaker 9: oil front, you could see, I mean you saw a 695 00:32:42,680 --> 00:32:44,840 Speaker 9: twenty dollars drop in the price of oil when they 696 00:32:44,840 --> 00:32:46,880 Speaker 9: thought that you were going to start seeing transitting again. 697 00:32:47,040 --> 00:32:48,680 Speaker 9: That just tells you how much is being baked into 698 00:32:48,680 --> 00:32:51,040 Speaker 9: that price. The problem is that the longer things take 699 00:32:51,080 --> 00:32:52,920 Speaker 9: to get to someplace, the higher those prices stay for 700 00:32:52,920 --> 00:32:55,320 Speaker 9: a longer period of time. Right, they're always immediately up 701 00:32:55,360 --> 00:32:57,160 Speaker 9: and very sticky down, and how sticky down. 702 00:32:57,320 --> 00:33:00,440 Speaker 2: Still see higher prices at the six months out on 703 00:33:00,480 --> 00:33:01,120 Speaker 2: the future. 704 00:33:01,000 --> 00:33:02,400 Speaker 4: Birth, which is what I've been looking at. 705 00:33:02,480 --> 00:33:04,120 Speaker 9: And you'll see it at the gas pump too, because 706 00:33:04,120 --> 00:33:07,200 Speaker 9: if I'm a refiner, I'm builing oil today. It's got 707 00:33:07,240 --> 00:33:09,000 Speaker 9: to be refined to get to someplace. So I'm not 708 00:33:09,040 --> 00:33:11,000 Speaker 9: going to cut those prices the minut oil drops. I've 709 00:33:11,000 --> 00:33:12,320 Speaker 9: still got to get it through my system, and I 710 00:33:12,440 --> 00:33:14,960 Speaker 9: paid for the input prices a lot higher. So that 711 00:33:15,080 --> 00:33:17,800 Speaker 9: is very difficult. And that's not a situation that even 712 00:33:17,880 --> 00:33:19,480 Speaker 9: people in the energy patch love. They don't like that 713 00:33:19,560 --> 00:33:20,360 Speaker 9: kind of ludority. 714 00:33:20,480 --> 00:33:22,000 Speaker 4: Do you think we're a bigger risk of a growth 715 00:33:22,000 --> 00:33:24,480 Speaker 4: slowdown or inflation ramp up or maybe both? 716 00:33:26,240 --> 00:33:27,160 Speaker 7: I think strip check. 717 00:33:27,320 --> 00:33:28,840 Speaker 9: I think I think the problem is that you could 718 00:33:28,880 --> 00:33:30,240 Speaker 9: be seeing a little bit of both, and that's not 719 00:33:30,280 --> 00:33:33,280 Speaker 9: what anybody wants to see. Because everybody was banking on 720 00:33:33,320 --> 00:33:35,640 Speaker 9: the fact that this year you were going to see growth, 721 00:33:35,840 --> 00:33:38,120 Speaker 9: and so if it was if inflation hadn't come down 722 00:33:38,120 --> 00:33:39,800 Speaker 9: to the point where people wanted it, it was okay. And 723 00:33:39,840 --> 00:33:42,440 Speaker 9: then you throw this Iranian conflict in and it completely 724 00:33:42,520 --> 00:33:45,440 Speaker 9: changes the math in terms of that inflation trajectory. 725 00:33:45,480 --> 00:33:46,920 Speaker 4: So how do I win in this environment? 726 00:33:48,240 --> 00:33:50,800 Speaker 9: You go back to looking for companies that are throwing 727 00:33:50,800 --> 00:33:53,320 Speaker 9: off cash, that have dividends, that have good balance sheets, 728 00:33:53,320 --> 00:33:55,280 Speaker 9: that don't have to worry about some of the things 729 00:33:55,280 --> 00:33:57,680 Speaker 9: that we're talking about here because they have the staying power. 730 00:33:57,920 --> 00:33:59,720 Speaker 9: And you know, we tend to look a lot at 731 00:33:59,720 --> 00:34:02,280 Speaker 9: cash flow and capital return. Can you pay a dividend, 732 00:34:02,360 --> 00:34:04,160 Speaker 9: can you buy your stock back? Can you do some 733 00:34:04,200 --> 00:34:05,840 Speaker 9: of the things that shows that you are in a 734 00:34:05,880 --> 00:34:08,720 Speaker 9: good spot regardless, And it's going to be sector by sector. 735 00:34:08,760 --> 00:34:10,360 Speaker 9: There's some in every sector that can do that. There 736 00:34:10,360 --> 00:34:12,520 Speaker 9: are some that aren't, but there are some places that 737 00:34:12,560 --> 00:34:14,360 Speaker 9: are going to be more challenged, and the lowering consumers 738 00:34:14,400 --> 00:34:16,000 Speaker 9: can be really challenged with higher gas prices. 739 00:34:16,080 --> 00:34:17,120 Speaker 4: Are you optimistic or not? 740 00:34:17,800 --> 00:34:20,680 Speaker 9: Sometimes there are some days that I'm very optimistic that 741 00:34:20,760 --> 00:34:22,439 Speaker 9: this is actually going to end up in a better place, 742 00:34:22,680 --> 00:34:25,239 Speaker 9: and some days where I don't know what where this 743 00:34:25,440 --> 00:34:28,080 Speaker 9: goes and what that means for the longer term. And 744 00:34:28,120 --> 00:34:29,759 Speaker 9: I think that that's sort of everyone's. I mean, you 745 00:34:29,880 --> 00:34:32,000 Speaker 9: watch the market be you know, up and down and 746 00:34:32,080 --> 00:34:34,480 Speaker 9: up and down. It has the same optimism pessimism swings, 747 00:34:34,520 --> 00:34:37,320 Speaker 9: and it's difficult because it is a psychological reflection. 748 00:34:37,560 --> 00:34:39,960 Speaker 4: I do in many cases, I did sele ut I 749 00:34:40,080 --> 00:34:42,880 Speaker 4: do I do. Sarah Hunt, thank you come back anytime. 750 00:34:42,960 --> 00:34:45,799 Speaker 4: You are so welcome, Chief market strategiest portfolio manager at 751 00:34:45,840 --> 00:34:47,040 Speaker 4: Alpine Saxon Woods. 752 00:34:48,160 --> 00:34:53,600 Speaker 1: This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, 753 00:34:53,800 --> 00:34:57,840 Speaker 1: and anywhere else you get your podcasts. Listen live weekday 754 00:34:57,880 --> 00:35:01,839 Speaker 1: afternoons from two to five PMS on Bloomberg dot com, 755 00:35:02,160 --> 00:35:05,919 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business App. 756 00:35:06,160 --> 00:35:09,000 Speaker 1: You can also watch us live every weekday on YouTube 757 00:35:09,280 --> 00:35:11,440 Speaker 1: and always on the Bloomberg terminal.