Speaker 1: This is Bloomberg Business Wait inside from the reporters and
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Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.
Speaker 2: Well, our next guest is former Deputy Assistant Secretary of Defense,
Speaker 2: a retired CIA officer, and a retired US Marine reservist,
Speaker 2: having served for two decades. It's both a commissioned and
Speaker 2: enlisted Marine Carol. He's also the co founder of the
Speaker 2: Lobo Institute. It's an organization that, in its own words, quote,
Speaker 2: advises consults and teaches on current and future conflicts, how
Speaker 2: to end conflicts and prevent their recurrence. I not to
Speaker 2: help those who've been most effective.
Speaker 3: Very pleased to have with us. Mick mulroy on Zoom
Speaker 3: from Montana. Mick, nice to have you here with Tim
Speaker 3: and myself. So many questions I ran, what do they know?
Speaker 3: USA Toururhan, Russia maybe looking to distract, you know, the
Speaker 3: focus off Ukraine. There's so many things being floated China.
Speaker 3: President g not addressing what happened in terms of the conflict.
Speaker 3: If you were back at the Cia. What are the
Speaker 3: scenarios that you would be coming up with for President
Speaker 3: Biden and the US national security teams.
Speaker 4: So good to be with you all. There's many issues
Speaker 4: to be addressed. Of course, this was an intelligence failure,
Speaker 4: predominantly by the Israelis, but also quite frankly by the
Speaker 4: United States and other regional actors, and that does have
Speaker 4: to be addressed, but it's not the most pressing right now.
Speaker 4: We'd be talking about the hostages. We of course have
Speaker 4: responsibility for American hostages. They are it looks like up
Speaker 4: to one hundred many of them who are at Gaza
Speaker 4: right now. There are reports that they are in tunnels
Speaker 4: and the tunnels are wired, so a traditional hostage rescue
Speaker 4: would be exceptionally difficult. And I think we're going to
Speaker 4: have to look at our partners in the region Egypt,
Speaker 4: Katar that have some kind of leverage over Amas to
Speaker 4: try to recover all the hostages, of course, including the Americans.
Speaker 4: So that's one effort I think that we would need
Speaker 4: to look at. The other effort we need to look
Speaker 4: at is just how involved Iran was in this operation.
Speaker 4: There's many indicators it was a very complex operation. There
Speaker 4: was technical devices that brought down the communications in Israel. Obviously,
Speaker 4: the weaponry and the equipment does indicate that Iran was involved.
Speaker 4: There's also been reporting that they were involved. But I
Speaker 4: think the IC needs to make a determination of just
Speaker 4: what their level of involvement is because that would go
Speaker 4: toward potentially freezing the six billion dollars that we just negotiated,
Speaker 4: and then of course what to be done against Iran,
Speaker 4: if anything, if they were directly responsible for this.
Speaker 2: Well, let's start with the hostage as part of this,
Speaker 2: because hostages have long been a part of I don't
Speaker 2: want to say relations, but they've long been a part
Speaker 2: of the skirmishes between Palestinians and Israelis, namely on the
Speaker 2: Palestinian side. But prisoner swaps have often heard, sometimes after
Speaker 2: years of holding hostages. But one hundred and fifty hostages, Mick,
Speaker 2: this is a huge, huge number. What are the what
Speaker 2: is Hamas looking for with holding these people hostage?
Speaker 4: It is definitely a huge number, and the complexity of
Speaker 4: that from a military toile recovery would be enormous on
Speaker 4: top of all the other things I already mentioned. So
Speaker 4: I think what are they trying to get from that?
Speaker 4: They're probably going to use hostages as human shields. So
Speaker 4: every place that they think the Israelis are likely to
Speaker 4: strike and are striking right now, there may be a hostage. Unfortunately,
Speaker 4: in those locations they're going to use them for bargaining tools.
Speaker 4: They've already announced that they're going to start executing a
Speaker 4: hostage every hour on the hour. That would put a
Speaker 4: lot of pressure on Israel to mitigate what is coming,
Speaker 4: which is likely a ground invasion into Gaza. They're going
Speaker 4: to use them to try to recover their own that
Speaker 4: are held inside Israel Hamas prisoners, for example, to try
Speaker 4: to recover them. They're going to use them. Unfortunately, all
Speaker 4: against the law of armed conflict in every international protocol.
Speaker 4: Most of them are civilians, but obviously Hamas does not
Speaker 4: care about that.
Speaker 5: Nick.
Speaker 3: I do wonder what you see as the biggest concern
Speaker 3: and risk for the world right now as we watch this.
Speaker 3: It's very easy, I think sometimes unfortunately for folks who
Speaker 3: are not in it. We just talked with our Ethan Brawner,
Speaker 3: who is in Tel Aviv. He's our Israel Bureau chief
Speaker 3: and so is hearing it, seeing it firsthand. But the
Speaker 3: world has to be concerned about increasingly all of these
Speaker 3: geopolitical events, whether it's Ukraine or what's going on in
Speaker 3: Israel right now, what do you see is the biggest
Speaker 3: risk right now?
Speaker 4: So I think the biggest risk regarding this conflict is
Speaker 4: that Iran decides to engage all of its proxies to
Speaker 4: come at every different angle into Israel. So if they
Speaker 4: initiate Lebanese Heslo for example, or they just initiate themselves,
Speaker 4: they have about one hundred and fifty thousand rockets and
Speaker 4: missiles that they could launch into Israel, which would overwhelm
Speaker 4: any system, any air defense system, including the Iron Dobe.
Speaker 4: And they also have militias in Syria. So if this happened,
Speaker 4: I think that the United States would become more and
Speaker 4: more likely to get directly involved militarily as it could
Speaker 4: overwhelm the IDEA and the security services in Israel, and
Speaker 4: that could lead to a much broader regional war, potentially
Speaker 4: bring in or on directly, and that of course would
Speaker 4: be another war in the Middle East, and this one
Speaker 4: very substantial. We'll talk about that on top of what's
Speaker 4: happening right now.
Speaker 2: Yeah, talk about that a little bit. In the US's
Speaker 2: involvement and what you and your opinion think that the
Speaker 2: US should actually do not just to rescue the Americans
Speaker 2: who've been held hostage, but also to make sure that parties,
Speaker 2: whoever they are at this point, are held accountable for
Speaker 2: what happened on Saturday and what continues to happen in Israel.
Speaker 4: So militarily, the Pentagon announced the deployment of an aircraft
Speaker 4: carrier strike group, so the General Low Board Strike Group.
Speaker 4: That's one aircraft perria, two destroyers and two cruisers. It's substantial,
Speaker 4: and it's going to be parked off of Israel. Quite frankly,
Speaker 4: that is both a deterrence so that if any other
Speaker 4: country decide might be thinking about jumping into this, they
Speaker 4: have to consider that presence right there, which is an
Speaker 4: incredible amount of military capability. The second thing that I
Speaker 4: think the United States is already doing. We keep pre
Speaker 4: planned munitions pre staged in Israel for our own purposes. Israel,
Speaker 4: I believe, has already asked you to be able to
Speaker 4: get access to that, and I think we're going to
Speaker 4: do that. That's a lot of ammunition that they can
Speaker 4: use in their grind offensive at a time when ammunition
Speaker 4: and weapons are in a shortage all around the world life,
Speaker 4: mostly from the Ukraine conflict. And the third is I
Speaker 4: think helped them with intelligence. Obviously that's been an issue,
Speaker 4: but they need intelligence to be able to accurately plan
Speaker 4: their upcoming ground invasion, and I think the United States
Speaker 4: can do that all before becoming directly involved. That is
Speaker 4: likely where the United States is right now.
Speaker 3: Your Lobo Institute, it's all about conflicts, current future otherwise.
Speaker 3: And you advise clients about this and consult on this
Speaker 3: specifically at a time when we still have a war
Speaker 3: in Ukraine and now we have this, what's the message
Speaker 3: to global companies to governments about security issues international security
Speaker 3: issues at a time like today And just got about
Speaker 3: a minute unfortunately.
Speaker 4: Yeah, slowly understand. So thanks for bringing up Logo Institute.
Speaker 4: It is a group of people not only that we're
Speaker 4: in the agency and the military, but also in the
Speaker 4: UN for example USAID. So it really covers the gamut
Speaker 4: of both your military types and your essentially humanitarian types.
Speaker 4: And that is really what the message is of Lobo
Speaker 4: Institute is that it is not just one tool to
Speaker 4: help in conflicts, it's a multiple tools tools. For example,
Speaker 4: if the economic conditions in some countries don't improve then
Speaker 4: we're always going to have a terrorist issue from that country.
Speaker 4: It's just as a matter of fact. So that's what
Speaker 4: we focus on. We work for the UN we work
Speaker 4: for the US State Department. In areas where it's seemingly endless,
Speaker 4: wars continue to happen, and unfortunately wars continue to be started.
Speaker 3: All right, Going to leave it on that note, Thank
Speaker 3: you so much. We so appreciate your insight on this
Speaker 3: difficult day and just trying to make some sense out
Speaker 3: of it, certainly for all of the Bloomberg audiences that
Speaker 3: are out there. Mick Mulury, thank you so much. On
Speaker 3: zoom from Montana. He's co founder of the Lobo Institute.
Speaker 3: He's also former deput Assistant Secretary of Defense and a
Speaker 3: retired CIA officer, and so much more so, incredible insight
Speaker 3: and perspective on this.
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Speaker 3: US for Long with Tim Stenovic. Life here on Bloomberg
Speaker 3: Business Week, our coverage of the Hamas Israel conflict continues
Speaker 3: to be fair. Conflict feels like an easy word. Hamas
Speaker 3: really attacking Israel over the weekend Saturday surprise attack on
Speaker 3: Israel by the Palestinian Group may represent one of the
Speaker 3: biggest failures by Israeli intelligence since the Yam Kapor War
Speaker 3: of nineteen seventy three. We've been talking about this. The
Speaker 3: attack involved dozens of infiltrations by land and sea, together
Speaker 3: with rocket attacks. A sophisticated assault, but as we just
Speaker 3: talked about, you know that it was also in some ways,
Speaker 3: you know, very basic in terms of gliders, right, all
Speaker 3: those bulldozers, like. It wasn't necessarily technologically sophisticated, but nonetheless
Speaker 3: it was rather broad and it definitely took some kind
Speaker 3: of planning to get into it.
Speaker 2: And it's certainly one that intelligence agencies missed and they
Speaker 2: were supposed to pick up on. That's a bigger conversation
Speaker 2: for now, though. Let's get to doctor Ariel Cohen, a
Speaker 2: non resident Senior Fellow at the Atlantic Council's Eurasia Center,
Speaker 2: also a member of the Council of Foreign Relations. He's
Speaker 2: also a consultant where he works with companies, NGOs and
Speaker 2: governments on international security, oil and gas strategy. He's got
Speaker 2: a client list that includes Fortune five hundred companies, as
Speaker 2: well as USAID, the World Bank, the Pentagon, and the
Speaker 2: US Senate. He's also been in the Israeli Defense Forces.
Speaker 2: He served in the IDF, Israel's national military. Very pleased
Speaker 2: to have you join us, doctor Cohen, this afternoon. How
Speaker 2: are you.
Speaker 5: I'm very worried. Families cold up in reserves, friends of
Speaker 5: friends being killed, and the horrible pictures of close to
Speaker 5: a thousand Israeli's Jews, Arabs, Muslims, Christians killed. Also, people
Speaker 5: from Nepal, people from Thailand murdered in cold blood, children
Speaker 5: taking hostage to Gaza, eighty five year olds in Wiltshire killed,
Speaker 5: parents executed in front of their children. Horrible, horrible images.
Speaker 3: So how does this happen? And how does Israeli intelligence,
Speaker 3: which is considered top among the world, how does it fail?
Speaker 5: Israel right now is in a response mode into Gaza
Speaker 5: and very concerned about possible escalations in the West Bank, Judean,
Speaker 5: Samaria and Lebanon, where Chrisballa, the fully owned subsidiary of Iran,
Speaker 5: is aiming tens of thousands of more powerful rockets than
Speaker 5: those from Gaza on hyper Tel Aviv and other cities.
Speaker 5: And the accounting for this failure is going to come,
Speaker 5: but it's probably going to come later on after the
Speaker 5: shooting stops in the meantime. Yes, you're absolutely right. It's
Speaker 5: an intelligence failure of historic proportions like the Young Keeper War,
Speaker 5: or worse because during the war Young Keeper War, it
Speaker 5: was soldiers who were killed. It was armies who clashed,
Speaker 5: not peaceful villagers and attendeeeds of a raid in the
Speaker 5: desert who were surrounded and murdered. Two hundred and sixty
Speaker 5: people were killed in a raide young people. So in
Speaker 5: that respect it's worse. The accounting, probably the judiciary inquiry
Speaker 5: commission like the Grand Commission of nineteen seventy four, is
Speaker 5: probably going to happen. I cannot imagine Prime Minister Natanyao,
Speaker 5: Defense Minister Yov Gallant de Mosad director, the Shinbet Security
Speaker 5: Service director, the Chief of Intelligence for the Army and
Speaker 5: the Chief for the Army to keep their jobs.
Speaker 2: Wow, that's a long list of people, doctor Cohen, As
Speaker 2: we just heard a few minutes ago from our own
Speaker 2: Charlie Pellett Bloomberg headline crossing that said Delta Airlines will
Speaker 2: cancel its flights to and from Tel Aviv through October thirty. First, certainly,
Speaker 2: Delta Airlines thinks the conflict is going to last until
Speaker 2: at least the end of the month, when they're going
Speaker 2: to revisit whether they do flights there. How do you
Speaker 2: see this playing out?
Speaker 5: Well, First of all, this concerns me because my daughter
Speaker 5: and her husband are supposed to fly back to Israel
Speaker 5: this week on Delta. My daughter runs Cyberwell and online
Speaker 5: organization that fights anti Semitism in social media. Would she
Speaker 5: have returned, No, she's in the States right now.
Speaker 2: But would she have returned on her ticket if it
Speaker 2: was available?
Speaker 5: Oh? Yeah, absolutely. She has a crew of colleagues to run,
Speaker 5: she's the CEO of this nonprofit, and she would go back.
Speaker 5: Possibly should be called up because she served in the
Speaker 5: idea as well.
Speaker 2: We should note that we should note I just want
Speaker 2: to jump in. We should note that Lal, the flag
Speaker 2: carrier for Israel, the nation's carrier, has increased the number
Speaker 2: of flights to try to bring Israelis back to Israel
Speaker 2: who have been called.
Speaker 5: Up, and Israelis are volunteering to go back from all
Speaker 5: over the world. To save their country. I say saved
Speaker 5: deliberately because the threat, the threat to the cities and
Speaker 5: villages of Israel not just from Gaza, but also from
Speaker 5: Hama's presence in the West Bank, Islamic Jihad, which is
Speaker 5: fully supported and funded by Iran, and from Kibala. This
Speaker 5: is an existential threat. And if it escalates to the
Speaker 5: point where big cities like Hypen in Tel Aviv are
Speaker 5: bombed severely, if there is a threshold the victims of
Speaker 5: killed and wounded, I estimate it roughly around ten thousand.
Speaker 5: If that reaches these numbers, Israel may retaliate up to
Speaker 5: and including unconventional warfare.
Speaker 2: Against ira Do you mean nuclear weapons?
Speaker 5: Unconventional warfare? And by the way, the fact that we
Speaker 5: the United States are moving the carrier battle Group to
Speaker 5: eastern Mediterranean is as strong warning to the Islamic Republic
Speaker 5: and its leaders and to Syria not to escalate. And
Speaker 5: if they don't heed that warning, I do not exclude
Speaker 5: a situation in which the United States and Israel go
Speaker 5: for a joint operation for the first time in history.
Speaker 3: What's the risk for Israel. I'm doing too much, retaliating
Speaker 3: too much, and what's the risk of not doing enough.
Speaker 5: Israel did not retaliate too much for twenty years. Give
Speaker 5: a take since two thousand and seven, when Israel fully
Speaker 5: evacuated Gaza, when Gaza had an airport, a seaport, agriculture,
Speaker 5: and all Israeli settlements were relegated out of Gaza, and
Speaker 5: then kamaskar Is shooting rockets and the blockade on the
Speaker 5: Israeli side with the Egyptian borders still open came into play.
Speaker 5: And even with that, when you look at pictures that
Speaker 5: photographs of Gaza in between these escalations, there were restaurants,
Speaker 5: there were shops opened. They were not starving by any
Speaker 5: stretch of imagination. And deliberate escalation by Kama's leadership led
Speaker 5: to what just happened, including taking people hostage, including many
Speaker 5: many victims on Israeli side, but also there has to
Speaker 5: be unfortunately victims amongst civilian populations when Israel targets and
Speaker 5: hits Kamas command posts, Hamas rocket launchers, et cetera. Now,
Speaker 5: going forward, I think Israel got to a point where
Speaker 5: it will try to destroy the Kamas command structure and
Speaker 5: Palestinian Islamic JIOD command structure. If this will lead to
Speaker 5: the collapse of the Kammas theocratic dictatorship. Don't forget a
Speaker 5: lot of people in Gaza back in the day when
Speaker 5: the last elections happened in two thousand and five, voted
Speaker 5: for Kamas. And now the little public opinion reached search
Speaker 5: that happens indicate that half or more of residents of
Speaker 5: guds And may have had enough with these finacs.
Speaker 3: We were speaking with doctor Eryl Cohen, non Resident Senior
Speaker 3: Fellow at the Atlantic Councils Eurasia Center and a member
Speaker 3: of the Council of Foreign Relations, Good to get his
Speaker 3: thoughts up.
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Speaker 3: All right, we do want to go to our next guest,
Speaker 3: because continue to cover the attack in Israel and understand
Speaker 3: the situation at large, if you will, Tim, and we
Speaker 3: keep talking about size and scope, it's something we're all
Speaker 3: about at Bloomberg, but really understanding the significance of what
Speaker 3: happened in surprise attack and what ultimately means longer term.
Speaker 2: Yeah, very pleased to have with us. Danny Danone, a senior
Speaker 2: member of the Kiness set Or Parliament, also sits on
Speaker 2: Israel's Foreign Affairs and Defense Committee, former Deputy Defense Minister,
Speaker 2: former Israeli Ambassador to the UN. He's also a chairman
Speaker 2: of the World Licud party of Prime Minister Benjamin n Yahoo.
Speaker 2: Ambassador denn Is with us from Tel Aviv. Ambassador, good
Speaker 2: to have you with us this afternoon. I think a
Speaker 2: question that so many people are asking is how did
Speaker 2: Israeli security apparatus miss this?
Speaker 6: You know, today we had a very long discussion on
Speaker 6: the fall and a further defense committee exactly about this issue.
Speaker 6: And I think it would take us some time to
Speaker 6: do the popular inquiry. But we can admit and react
Speaker 6: to admit we were caught by surprise, exactly like what
Speaker 6: happened fifty years ago on Young kipul Wo. The always
Speaker 6: took advantage of a Jewish holiday and we were court
Speaker 6: by surprise. But you know, it's more than just a surprise.
Speaker 6: We were not ready for the brutality, for the barbaric
Speaker 6: approach of those militias. You know, when they entered these
Speaker 6: were they didn't attack a military basis. They went to
Speaker 6: peaceful communities on the border, dragged families out of the homes,
Speaker 6: executed them, and dragged a dozen of them into gather.
Speaker 6: And today when we start to count the numbers, it's
Speaker 6: very hard for us. More than one victims in one day.
Speaker 6: We never saw such a twasitive since the date of
Speaker 6: the Holocaust. So for us to see those videos and
Speaker 6: footage of Barbarica terrorists entering homes, taking elderly people and
Speaker 6: kids and committing a massacre, it is very hard for us.
Speaker 6: We feel the pain im it well, all of us,
Speaker 6: but we gather the strength to stand up and to
Speaker 6: fight back, and we would start to fight back in
Speaker 6: the next few days.
Speaker 3: You know, as you say, this is unusual, especially for
Speaker 3: the attack on civilians. Heard ever make sense in a
Speaker 3: situation like this. But how do you think about this
Speaker 3: approach that we saw by Hamas in terms of this attack.
Speaker 6: Well, you know, we shouldn't look for logic when you
Speaker 6: deal with terrorists, same for ninety eleven with al Qaida
Speaker 6: or Isis. You know, it's not the same logic. Way
Speaker 6: we think about goals and moving forward. You know, we
Speaker 6: left Gaza. We left Gaza eighteen years ago. We took
Speaker 6: out all the Jewish communities and we hope that it
Speaker 6: will be a peaceful entity next to us. Then look
Speaker 6: what happened. Hamas took over, kicked out the Palestinal authority
Speaker 6: and it became a hub for terrorism. And all the
Speaker 6: funds that the international community spends on Gaza goes for terrorism,
Speaker 6: for digging tunnels, developing the techniques, and we saw the capabilities.
Speaker 6: You know, they came from the sea, from the Earl,
Speaker 6: from the font tunnels, and the main goal was to
Speaker 6: sow destruction in our communities, chaos. And they think that
Speaker 6: maybe it will sell them, but they will learn very
Speaker 6: soon that it was a great mistake. They will pay
Speaker 6: a heavy price. We will hand them down and I
Speaker 6: think they will fill the might of the idea in
Speaker 6: the near future. And I call the government of it
Speaker 6: well to make a very clear statement that the goal
Speaker 6: of the operation should be to eradicate Hamas period, to
Speaker 6: finish it, not to have another round and then a
Speaker 6: seat fire, because then we will wake up in a
Speaker 6: few years with another attack.
Speaker 2: Mister ambassador, how do you how do you eradicate harmas
Speaker 2: from Gaza.
Speaker 6: Well, first of all, i'm i'm, I have to acknowledge
Speaker 6: it's not going to be an easy task. It would
Speaker 6: require a lot of efforts, but they basically you have
Speaker 6: to conquer the land and to make the distinction between
Speaker 6: the population and the militants. You know, as we speak,
Speaker 6: we're sending messages to certain neighborhood in Gaza calling for
Speaker 6: the residents to move out from those neighborhoods. You know,
Speaker 6: we do not have a desire to toward civilian population.
Speaker 6: Unlike Hamas, they commit a double walk crin the target
Speaker 6: civilians and then they hide behind civilians and they use
Speaker 6: them as human shields.
Speaker 7: We have the exact opposite.
Speaker 6: The goal is to minimize the casualties among civilians and
Speaker 6: we're trying to convince them to move away from the
Speaker 6: strategic Ramas headquarters.
Speaker 3: Ambassador, how do you do this? Though we talked about
Speaker 3: if Iran, although our officials have come out and said
Speaker 3: specifically I'm sorrying about our National Security Council spokesman John
Speaker 3: Kirby talking on MSNBC on CNN saying that they do
Speaker 3: not have any specific intelligence or evidence that points to
Speaker 3: direct participation by Iran in these attacks against Israel. But
Speaker 3: if indeed and Israel moves forward with some deep retaliation,
Speaker 3: and ultimately, if Iran is involved in some way and
Speaker 3: you engage Iran, and then you know, as we heard
Speaker 3: from an earlier guest, to Iran and all of its proxies,
Speaker 3: whether it's Syria, whether it's Lebanon, I mean, how do
Speaker 3: you how do you avoid this not getting out of
Speaker 3: control worse than it is already.
Speaker 6: So w Iran, it's very involved in everything in the region.
Speaker 6: They spend billions on promoting chaos, instability, funding Hamas and
Speaker 6: his Balam and training both proxies, and we know that
Speaker 6: they're very involved. There are some speculation about, you know,
Speaker 6: their desire to block a piece deal between Saudi Arabia
Speaker 6: and Israel, and maybe that's why, because there is no
Speaker 6: reason for the timing. You know, nothing happened. You know,
Speaker 6: it was an unprovoked attack. So maybe one of the
Speaker 6: speculations that they wanted to delay any progress in the
Speaker 6: negotiations with the saudiast But the Iranians should know that
Speaker 6: we are not playing games. If his Ballad will attack us,
Speaker 6: we will retaliate and it will be painful.
Speaker 7: For his Balad and also for the Lebanese people.
Speaker 3: We have seen the Prime Minister Benjamin and Yahou talking
Speaker 3: on via television earlier this evening talking about unifying the party.
Speaker 3: How important is that and how likely is that in
Speaker 3: this environment?
Speaker 7: So I think it's time for unity.
Speaker 6: You know, I think we understand now that we we
Speaker 6: don't have the luxury of arguing on internally domestic issues.
Speaker 6: You know, the enemy of the Haramas that do not
Speaker 6: make the distinction between a coalition and a position.
Speaker 7: And I hope that we will have a unity government soon.
Speaker 3: Is it likely? Is it likely from what you are hearing.
Speaker 6: Yes, I think it's it's moving to that direction. It's
Speaker 6: not going to last forever. But for the time we
Speaker 6: were involved in a war against Ramas, I think it
Speaker 6: can be helpful. You know, the people of Israel, you know,
Speaker 6: we are under a very main your emotional stress in
Speaker 6: the last few days, you know, seeing those footage, knowing
Speaker 6: that today as we speak, you have kids, toddlers, toddlers
Speaker 6: you know, at the age of three years old in
Speaker 6: the hand of Ramas, women that they were raped and
Speaker 6: dragged in together. This is the you know, you know,
Speaker 6: we built a Jewish state in order to protect the
Speaker 6: Jewish people. And we never thought that somebody would come
Speaker 6: into Israel and they commit such a noble a tuasity
Speaker 6: against ussadors.
Speaker 7: The government is the right thing.
Speaker 1: Just see the.
Speaker 2: Last minute that we have with you. How far geographically
Speaker 2: is Israel willing to go to defend itself? Is it
Speaker 2: willing to go to Iran? Is it willing to go
Speaker 2: to the north. Is it willing to go you know,
Speaker 2: we know it's willing to go into Gaza. How far
Speaker 2: is it willing to go?
Speaker 3: And we just have about twenty five thirty seconds.
Speaker 6: Please, we don't have a desire to expand the wall.
Speaker 6: We focus on the wall against Ramas period. But if
Speaker 6: we don't have a choice, we will go anywhere around
Speaker 6: the world to protect ourselves.
Speaker 3: All right, We're leave it at that note. Be well
Speaker 3: and be safe. Danny Dnone, senior member of the Kanesset Parliament,
Speaker 3: sitting on Israel's Foreign Affairs and Defense Committee, former Deputy
Speaker 3: Defense Minister, former Israeli Ambassador to the UN, Chairman of
Speaker 3: the World the coup party of course of the Prime Minister,
Speaker 3: and he of course was joining us from Tel Aviv.
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Speaker 3: We're going to continue on with that surprise Hamas attack
Speaker 3: on Israel. One of the big questions what Iran knew?
Speaker 3: What will be the geopolitical responses and alliances as a
Speaker 3: result of the attack. As for Iran, Aaron may have
Speaker 3: known about the deadly attacks by Hamas militants, although a
Speaker 3: US official coming out on various cable channels and saying
Speaker 3: at this point intelligence is saying no, they did not
Speaker 3: know anything about this attack. So let's get into it.
Speaker 3: Because Prime Minister Benjamin NETANYAHUO of Israel says We're going
Speaker 3: to change the Middle East in a big way, and
Speaker 3: you do wonder about how things are going forward.
Speaker 2: We've got a couple of great guests with us this afternoon,
Speaker 2: Major General retired Maston Robinson, a geopolitical and intelligence advisor
Speaker 2: at Academy Securities. Also with us. We have Academy Securities
Speaker 2: Director and head of macro Strategy, Peter Cheer joining us
Speaker 2: this afternoon. I want to start with you, Major General,
Speaker 2: really appreciate you taking the time. What do you think
Speaker 2: when you hear Benjamin Netanya who say that we are
Speaker 2: going to change the Middle East.
Speaker 8: Yeah, he wants to send a loud, resounding message to
Speaker 8: his people that this won't be tolerated and the time
Speaker 8: has come to take the gloves off, and Hamas will
Speaker 8: pay a heavy, heavy price. That's the easy part. The
Speaker 8: hard part is does a saucer draw in Lebanese tsbla's
Speaker 8: growing siri on the rons has drawing even Russian support.
Speaker 8: That'll be the capitalist It's really unknown right now. But
Speaker 8: I think the embarrassment that Israel is feeling right now,
Speaker 8: having been surprised and the population having put their complete
Speaker 8: trust in both the advanced warning and the security architecture
Speaker 8: they're used to, the Prime ministers has got to do
Speaker 8: something significant enough to regain that confidence and to establish
Speaker 8: to the rest of the Middle East Israel is not
Speaker 8: to be trumphed for it. It's the only way they'll survive.
Speaker 2: You make me think, Major General, of my conversation that
Speaker 2: Carol and I just had with Ambassador Danny Denone, I
Speaker 2: asked him, I posed that question to him, how far
Speaker 2: geographically is Israel willing to go to defend its borders.
Speaker 2: Is it going to go attack has Belaw? Is it
Speaker 2: going to go attack Iran? Is it going to go
Speaker 2: beyond Hamas and Gaza? And he told us Carol, he
Speaker 2: told us, right now, we are folks on Hamas and
Speaker 2: eradicating Hamas, but we will go as far as we
Speaker 2: need to go around the world in order to protect Israel.
Speaker 8: Yeah, and I certainly wouldn't want to start speculating that
Speaker 8: they're going to go further than Hamas. But if you
Speaker 8: Israel is always believed, right, wrong or indifferent that virtually
Speaker 8: every country within you know, five hundred miles is part
Speaker 8: of their enemy, I don't think that's realistically true today.
Speaker 8: I think that there's some strong, you know, possibility of
Speaker 8: relationships that they're going to want to not unravel if
Speaker 8: they can keep from doing so. And keep in mind
Speaker 8: that that there are a number of Middle East countries
Speaker 8: are still under the accords, that the Abraham Cords that
Speaker 8: they're still held to. So you would think that they
Speaker 8: in this particular case, that Saudi and Jordan and u
Speaker 8: A and that they would sit this out. But there's
Speaker 8: no guarantee that it's hard to believe that Hamas planned
Speaker 8: this and execute to something discomplicated all by itself. No
Speaker 8: proof yet that Iran was involved, but they they certainly
Speaker 8: would would not surprise anybody if Iran or Heswela were
Speaker 8: involved at least in the plan. And of course if
Speaker 8: Hesbelog gets involved, they got at least the two if
Speaker 8: another three front rule, or that Israel was doing.
Speaker 3: It, and that's what we're all worried about. And that
Speaker 3: certainly was one of the concerns, I would say earlier
Speaker 3: in the day in the financial markets here in the
Speaker 3: United States, Peter Kamanian on this. You're head of macro
Speaker 3: strategy over at Academy Securities. You know, geopolitics, I don't
Speaker 3: have to tell you has lots of market implications short
Speaker 3: and then sometimes longer term. We saw play out and
Speaker 3: oil prices a little bit of a flight to safety.
Speaker 3: Defense docks here in the US. Airlines are under pressure.
Speaker 3: We definitely saw it play out today. Energy names on
Speaker 3: the equity side of things, certainly rallying. What are you
Speaker 3: keeping an eye on? What are you telling clients? What
Speaker 3: are you being asked?
Speaker 9: You know, I think about all of the above. I
Speaker 9: guess I would say we kind of start what seems
Speaker 9: most obvious, like oil should continue to go higher. With
Speaker 9: this right, there is a threat to oil supply chains,
Speaker 9: so I see oil going higher as one thing. I
Speaker 9: also think rates are going to go lower though, So
Speaker 9: despite higher oil, yes, that would seem inflationary, the Fed's
Speaker 9: not going to worry about that, the markets aren't going
Speaker 9: to worry about that. You have a flight to safety.
Speaker 9: So you're seeing rates go lower. The Feds folk today
Speaker 9: and actually kind of already fell into the camp that
Speaker 9: I think we've been saying before this occurred, no more
Speaker 9: hikes this year. So that helped equities, and I think
Speaker 9: equities are kind of the wildcard. Do they follow the
Speaker 9: bad news as good because yields are lower, or do
Speaker 9: they start getting worried about what this means for the
Speaker 9: global economy. All of a sudden, you have the US
Speaker 9: potentially helping allies on two fronts. What does it mean
Speaker 9: for the rest of the world. So I think equities
Speaker 9: are really the wildcard. They responded nicely to day to
Speaker 9: lower yields. I think that might continue, but I'd want
Speaker 9: to pair back risk if this is going to escalate.
Speaker 3: Hey, Peter, if I may follow with you, you know, how
Speaker 3: does this complicate maybe the Fed's world two more meetings
Speaker 3: November one, December thirteenth. We get FOMC minutes this week
Speaker 3: from the most recent meeting, we get reads on inflation.
Speaker 3: But how does potentially and again where three? It looks
Speaker 3: like starting on a four days in terms of the
Speaker 3: attack on Israel, and we don't know what's going to
Speaker 3: happen the rest of the week or how long this
Speaker 3: goes on. But how does this potentially complicate the FED
Speaker 3: thinking about monetary policy and maybe looking to ease conditions
Speaker 3: a little bit? Although the market has done a lot
Speaker 3: of the Fed's work as of late.
Speaker 9: Yeah, I think the FED has been and they do
Speaker 9: not want to do anything. So I think they've been
Speaker 9: looking for the data to give them excuses to do nothing,
Speaker 9: and unfortunately this probably gives them the excuse to do nothing.
Speaker 9: They are certainly not going to hike in the face
Speaker 9: of this frustration. People might talk about oil prices going higher,
Speaker 9: they will ignore that right, they will view it as transitory.
Speaker 9: It's something beyond their control, so they won't ease anytime soon.
Speaker 9: But I think this takes any hike conversations off the
Speaker 9: table for now.
Speaker 2: General I want to bring you back into the conversation
Speaker 2: and I'll ask you about the US's role here and
Speaker 2: to what extent you think that the US should get
Speaker 2: involved beyond sending a carrier and a group of ships
Speaker 2: on its way from the Mediterranean. Right now, Look, Americans
Speaker 2: have been killed. We have reason to believe per Hamas
Speaker 2: that Americans have been captured. That's what we heard from
Speaker 2: our Washington d C reporter just a few minutes ago.
Speaker 2: What should the US involvement be?
Speaker 8: Yeah, I don't things see doubt the US will be
Speaker 8: involved when because of munitions and comes to naval activity, collection, architecture, jets.
Speaker 9: But.
Speaker 8: Keep Mount Israel is extraordinarily well equipped. The question is
Speaker 8: how long the war goes, how deep their munitions supply,
Speaker 8: said is and we would certainly help them with that.
Speaker 8: And the other piece that I think we could is
Speaker 8: we could certainly work behind the scenes with the other
Speaker 8: Gulf states, like I said, Audi Arabia to try to
Speaker 8: facilitate a more neutral status with them, or even a
Speaker 8: diplomatic status with them, to try to bring this to
Speaker 8: a closure on a corporate pace. But we'd have to
Speaker 8: give something up to do that.
Speaker 2: Well, that's why I think this was so surprising to
Speaker 2: so many people, Major General, is that anyone who's been
Speaker 2: to Israel understands the might of the Israeli military. You
Speaker 2: can't go anywhere in the country without seeing members of
Speaker 2: the IDF CAROL carrying automatic weapons at bus stations. It's
Speaker 2: a normal, everyday thing. That's why it's so surprising that
Speaker 2: Hamas militants were able to get so far, so quickly,
Speaker 2: and into so many different military bases in such a
Speaker 2: short period of time.
Speaker 3: Which General makes us think about this intelligence failure, how
Speaker 3: are you thinking about that and concerns about what might
Speaker 3: be being missed currently as we speak.
Speaker 8: Yeah, so absolutely, the intelligence failure and the security architecture's
Speaker 8: response was a failure. But just like in America, when
Speaker 8: something catastrophic happens, no matter how bad the failure was,
Speaker 8: it has a bonding effect. It brings the country together.
Speaker 8: So I don't think you're going to see Israelis that
Speaker 8: are throwing potshots at the government. They're saying I would survive.
Speaker 8: What do I need to do? And that's the beauty
Speaker 8: of Israel Is every single person in that country considers
Speaker 8: them part of the security architecture, and they are all
Speaker 8: going to be whether it's intelligence, whether it's gathering, or
Speaker 8: whether it's manning a weapon or a security station. They're
Speaker 8: going to be all in for survival. In their mind,
Speaker 8: they are surrounded by enemy and they have nothing but
Speaker 8: complete also survival as an end state. If they don't,
Speaker 8: if they can't be successful.
Speaker 3: We've heard the Prime Minister already calling for unification within
Speaker 3: his government. Peter Chier, really quickly, ten seconds, what's top
Speaker 3: of mind for you as we head into a busy
Speaker 3: week for the markets.
Speaker 9: No thing we all have to watch is where this
Speaker 9: head's on social media?
Speaker 1: Right?
Speaker 9: Who wins the kind of social media a war? So
Speaker 9: I think there's going to be an intelligence operation on
Speaker 9: our side. They're going to compat this, and that becomes
Speaker 9: the risk that this escalates into a US versus them
Speaker 9: and it goes beyond just a regional battle, in which
Speaker 9: case then I think yields go much lower, but stocks
Speaker 9: have to fall in that case.
Speaker 3: Peter Cheer and Major General Maston Robson of Academy Securities,
Speaker 3: thank you both so much.
Speaker 9: Bromack a journal how about you let me drive?
Speaker 1: Oh no, no, no, no, alay please, I'll do these.
Speaker 7: Wait, I want to drive.
Speaker 4: It's a good question.
Speaker 1: Good This is good drive to the clothes for me.
Speaker 1: Think well it down on Bluebird Radio.
Speaker 3: All right, everybody, eighteen minutes left to go in the
Speaker 3: first trading session of the week. Of course, it is Monday,
Speaker 3: October ninth, Carol Master Tim Stanovick live here at Bloomberg
Speaker 3: Headquarters in our Bloomberg Interactive Broker Studio on YouTube and
Speaker 3: Bloomberg Originals, and we've got a little bit of a
Speaker 3: rally underway here. Who to thunk considering the news flow
Speaker 3: over the weekend, the attack on Israel Baijamas, and we're
Speaker 3: trying to gauge it. Of course, the bond market is
Speaker 3: closed here in the United States. We have maybe that's
Speaker 3: why have in bid. No, that's a really good point
Speaker 3: because I think before on Friday we teased forward and
Speaker 3: saying it's going to be bank earnings, it's going to
Speaker 3: be inflation reads here in the United States Thursday Fed minutes,
Speaker 3: and yet we're definitely top of mind.
Speaker 2: Something very different at this Maybe the FED speakers we
Speaker 2: heard from today are driving this market. That's certainly what
Speaker 2: it feels like. Let's see what David Deets has to say.
Speaker 2: Our Drive to the closed guest this afternoon, senior portfolio
Speaker 2: strategist at Pepack Private Wealth Management, joining us from a
Speaker 2: summit New Jersey this afternoon.
Speaker 10: David, how are you doing great? Tim, and Carroll's happy
Speaker 10: to be with you.
Speaker 2: Well, thanks for joining us on what we've certainly considered
Speaker 2: a somber day, given everything that we've been talking about
Speaker 2: it for the last hour. We are bloomberg, though, we
Speaker 2: are show focused on markets, and we are just seventeen
Speaker 2: minutes away from the clothes on this kind of holiday
Speaker 2: trading day, I think you could call it. How do
Speaker 2: you explain the turnaround inequities that we saw today?
Speaker 10: Well, certainly there was a knee jerk reaction for safe
Speaker 10: haven buying and all sorts of things like bonds and
Speaker 10: the dollar, and to buy up of course energy out
Speaker 10: of fear of energy supplies. But I think during the
Speaker 10: course of the day you put your finger out at Tim.
Speaker 10: There was some duvish talk from a Federal Reserve officials
Speaker 10: talking about how the bond market has done a lot
Speaker 10: of our workforce and therefore maybe we're best off just
Speaker 10: taking a wait and see attitude. And during the we
Speaker 10: have seen the odds of a rate hike by the
Speaker 10: FED in November, go down just since Friday, So that's
Speaker 10: a big positive. But I think also cooler heads have said,
Speaker 10: you know, what are the possibilities of a huge spike
Speaker 10: in oil because of this? And quite frankly, the world
Speaker 10: today is so much different than it was fifty years
Speaker 10: ago in the yam Kapur war. We are energy sufficient here.
Speaker 10: Palestine and Israel are not big energy produced. This is
Speaker 10: a couple offshore.
Speaker 2: Yeah, but the concern. The concern isn't that, you know,
Speaker 2: we're going to see disruptions from Israel and Palestine. The
Speaker 2: concern is that it'll set off some sort of broader
Speaker 2: conflict and we'll see broader supply destructions within the region
Speaker 2: because the region is a huge oil supplier.
Speaker 10: You are absolutely right, And the real problem is if
Speaker 10: it turns out that Iran was a big supporter or
Speaker 10: somehow helped instigate this attack by Hamas, you know, that
Speaker 10: could reinstitute or cause the United States the reinstitute embargoes
Speaker 10: on their production. It could also halt a thaw in
Speaker 10: relationships that we're seeing between the United States and Saudi Arabia.
Speaker 10: Here is the wildcar, which wildcar could throw everything into
Speaker 10: a tailspin is that Straits of Hormuz. Twenty million barrels
Speaker 10: of oil passed through there regularly. That is the economic
Speaker 10: choke point for the world. If for some and Iran
Speaker 10: where to put a blockade there, all bets are off.
Speaker 10: But that's certainly not the way you want to bet
Speaker 10: right now.
Speaker 3: And energy certainly has been a bet that you have made. David,
Speaker 3: talk to us about how you're looking at it on
Speaker 3: this Monday.
Speaker 5: Yeah.
Speaker 10: Absolutely, So longer term, you know, all the think tanks
Speaker 10: say we are going to be using more oil by
Speaker 10: the end of this decade than we do now. We're
Speaker 10: going to be using more oil by the year twenty fifty.
Speaker 10: So demand is going to continue. There's many areas of
Speaker 10: the world, particularly in Asia, which are not prepared financially
Speaker 10: or otherwise to make a big fast switch to green.
Speaker 10: At the same time, of course, producers are saying, gee,
Speaker 10: you know, we are getting negative vibes from governments and
Speaker 10: policy makers. They don't want us to produce. They're putting
Speaker 10: more and more barriers in the way. We may not
Speaker 10: be able to make a return on investment, and so
Speaker 10: therefore supply is starting to drop. Demand continues. That's a
Speaker 10: recipe for higher prices.
Speaker 3: So wait, so where do you commit money still in
Speaker 3: the energy space.
Speaker 10: Well, stay diversified. But I mean, you know, we can't
Speaker 10: overlook the fact that the largest player publicly trade player
Speaker 10: out or Exon, is making a potentially sixty billion dollar
Speaker 10: bet on another company which has all these resources in
Speaker 10: the permiam. If a company like Exon felt that oil
Speaker 10: didn't have a strong future, why would they do that?
Speaker 10: I think there's another thing at play there.
Speaker 3: And of course you're talking about pioneer natural Resources buy in.
Speaker 10: Their natural resources, and that deal has not been confirmed,
Speaker 10: but it looks like it's well on its way. So
Speaker 10: here's the thing. So what I think is going on
Speaker 10: is coming like Exon saying because of the low equity
Speaker 10: valuations out there, is cheaper to drill, as it were
Speaker 10: on Wall Street than to actually spend money to hire
Speaker 10: people and commit resources in IRL in the real world.
Speaker 10: And therefore I'm taking my queue there and saying, well,
Speaker 10: if a company like Exon thinks is cheaper to buy
Speaker 10: oil companies rather than drill, I think as part of
Speaker 10: a diversified portfolio makes a lot of sense. Plus, if
Speaker 10: you like dividends and you're worried a potential inflation and
Speaker 10: for example, geopolitical risks we saw today, good addition to
Speaker 10: your portfolio.
Speaker 3: What about Chevron, which Israel ordered to shut down of
Speaker 3: a major gas field run by Chevron in the eastern Mediterranean,
Speaker 3: so they were there were some safety concerns as the
Speaker 3: fighting continues on thoughts specifically on Chevron, Yeah.
Speaker 10: We like Chevron. You know, low debt member the dow uh,
Speaker 10: you know, wonderful management under I believe it's mister worth there.
Speaker 10: They are, you know, diversified, globally integrated, so they're in
Speaker 10: all facets. Now, mind you the fact that Israel has
Speaker 10: them to stop work on one of their platforms, that's
Speaker 10: kind of a detail right now, because there's a very
Speaker 10: small part of their overall production in Israel doesn't have
Speaker 10: the capability to cut off a lot of oil. But
Speaker 10: you know that is good. But we also we also
Speaker 10: like Xon. I think for a lot of reasons, people
Speaker 10: have even more skeptical of Exxon. I think the evaluation
Speaker 10: is lower. They're more geographically diversified, and over the long run,
Speaker 10: I would want to bet against Xon either.
Speaker 2: Okay, well, before we let you go, just in the
Speaker 2: last two minutes, that we have with you. I want
Speaker 2: to talk about what's what we have upcoming. We hear
Speaker 2: from some of the big banks already starting this week.
Speaker 2: We got some inflation numbers coming on Thursday, we got
Speaker 2: consumer sentiment on Friday. What's the most important in the
Speaker 2: near term catalyst.
Speaker 10: I think those inflation numbers. The inflation numbers have been
Speaker 10: driving the higher interest rates, in driving the hawker system.
Speaker 5: The FED.
Speaker 10: If we see something that looks like it's getting way
Speaker 10: too hot, I think that puts the marketing to lockdown
Speaker 10: as they worry about what the Fed's reaction is going
Speaker 10: to be. And of course it can work the other around.
Speaker 10: On the earnings, obviously you buy stocks or earnings. The
Speaker 10: problem is Q three earnings are going to be the
Speaker 10: fourth quarter in a row of negative year over year results.
Speaker 10: So you're not going to have a whole lot to
Speaker 10: point to to say, hey, let's go commit a lot
Speaker 10: more money in the market. On the nails, I think
Speaker 10: they're going to be cautious on the outlook. How can
Speaker 10: they not be with all of the bacco issues. On
Speaker 10: the other hand, I think if the bond you'll start
Speaker 10: dropping off. I think that's gonna be your callloser better
Speaker 10: market ahead.
Speaker 3: Do you like Wells Fargo twenty five seconds though? Is
Speaker 3: that correct?
Speaker 10: Yeah? Exactly. Well, they're going to be one of the
Speaker 10: three of the big six that's going to report strong
Speaker 10: year over year results. They're going to be up about
Speaker 10: forty percent versus last year. Also, you know, they're trading
Speaker 10: at about tangible book value, about eight times earnings, and
Speaker 10: they have potential because they're cutting costs. They have to
Speaker 10: because of scandals in the past, and I think ultimately
Speaker 10: the Center Reserve will allow them to take the asset
Speaker 10: cap off, which will allow them to grow. They're sticking
Speaker 10: with the domestic focus. They're number one or number two
Speaker 10: in all their markets. Then you know, when times they're tough,
Speaker 10: you want to go with the big guys.
Speaker 3: City Group, JP Morgan, and Wells Farg are all reporting
Speaker 3: on Friday the thirteenth, saying.
Speaker 2: Anything, we're going to be in LA.
Speaker 3: We are going to be in LA still Friday the thirteen.
Speaker 2: Yeah, we'll still be doing the show.
Speaker 3: Thanks to David des Ever at PEPAG Private Wealth Management.
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