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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business app. We begin with our

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Speaker 2: top story, hot US data pushing out rate cuts the

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Speaker 2: Fed's preferred inflation gauge due on Friday, Michael O'Rourke of

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Speaker 2: Jones Trading saying this, financial markets are at an inflection point.

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Speaker 2: The Fed's overestimation and overconfidence as to how restrictive policy

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Speaker 2: is has fueled easy financial conditions and excessive risk taking

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Speaker 2: while fostering easing expectations. Michael joins us now for more

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Speaker 2: So Michael bears FETA site by still on that.

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Speaker 3: Yes, yes, definitely fair to say. I mean I think

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Speaker 3: you've touched it, even when you talk about that ten

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Speaker 3: year yield potentially going to five percent right now, For

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Speaker 3: the past three weeks, the ten year yield has been

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Speaker 3: higher than the S and P five hundred earning yield,

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Speaker 3: even though the S and P five hundred is corrected

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Speaker 3: six percent over that time, that relationship has stayed the

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Speaker 3: same because yields have continued to rise. And that just

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Speaker 3: shows you have a risk free instrument offering you a

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Speaker 3: very attractive return versus risky instruments and equities that are

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Speaker 3: pretty expensive.

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Speaker 2: JRO downside five five percent from the old time heighst

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Speaker 2: of match. How much down sound are you to can fall?

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Speaker 3: I think there's a lot of potential. I'm not gonna

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Speaker 3: sit there and say, you know, I can't put a

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Speaker 3: number on it because a lot of it's driven by

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Speaker 3: financial conditions. Right, We've had this easy financial condition environment

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Speaker 3: that has basically fostered equity prices fawted ascer prices across

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Speaker 3: the board. Even the FEDS Financial Stability Report released on

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Speaker 3: Friday talked about how equity valuations are high, historically high,

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Speaker 3: how credit spreads are tight. But if that relationship between

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Speaker 3: treasury yields and earnings yields, it's traditionally the equity you know,

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Speaker 3: the SP five hundred earns yield over the seven years

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Speaker 3: prior to the pandemic was about average three hundred and

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Speaker 3: forty basis points over treasury yields. Even to just get

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Speaker 3: a third of that back, the S and P five

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Speaker 3: hundred would drop twenty percent. And that's the type of

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Speaker 3: risk we're talking about here that I'm not saying we're

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Speaker 3: going right back to that relationship. It just gives you

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Speaker 3: an idea of how expensive stocks are relative to bonds.

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Speaker 4: I love this.

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Speaker 5: Everyone who comes on the show today seems to think

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Speaker 5: we're at an inflection point. Bob Michael also seeing a

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Speaker 5: potential inflection point, but in the opposite direction, a potential

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Speaker 5: opportunity to buy.

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Speaker 4: Why is this.

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Speaker 5: Inflection point in your view, going to inflect more negatively?

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Speaker 3: Well, because, okay, you look at the earning situation we

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Speaker 3: have earning season TOMP. We're talking about all the big

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Speaker 3: earnings this week, right, Earnings this quarter is supposed to

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Speaker 3: be basically sequentially flat versus Q four almost flat year

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Speaker 3: of year. The big bump in earnings is supposed to

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Speaker 3: come in Q two, three and four, where aggregate earnings

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Speaker 3: are supposed to rise sixteen percent. Now we're analyst forecasting

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Speaker 3: sixteen percent earnings jump for those three quarters in a

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Speaker 3: five point three seventy five percent fed funds environment. You know,

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Speaker 3: we're not getting the rate cuts we expected. We're not

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Speaker 3: getting what the catalyst that should drive things. And you know,

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Speaker 3: going forward in the economy, we've had an incredibly strong

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Speaker 3: economy and a lot of that is fiscal monetary stimulus

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Speaker 3: from the pandemic playing out of the past couple of years.

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Speaker 3: So again, to expect that type of jump in earnings,

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Speaker 3: it's pretty aggressive. And if you don't get that, then

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Speaker 3: you realize how expensive this tape is.

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Speaker 5: And do you see this idea of a sell off

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Speaker 5: in stocks that comes along with an ongoing sell off

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Speaker 5: in bonds sort of something that continues the divergence that

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Speaker 5: you were talking about with a ten year treasure yield

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Speaker 5: being above the S and P five hundred earning shield.

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Speaker 3: Yeah, well, if you go back, you go back to

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Speaker 3: the nineties and and you know, probably the earlier two thousands,

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Speaker 3: the old saying was, you know, stocks follow bonds, right,

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Speaker 3: If treasure yields were coming down on that big bond

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Speaker 3: bow market, stock's rallied, right because they're competing with each

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Speaker 3: other for assets for investment assets. So now we're seeing

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Speaker 3: treasure yields rise and basically, which is mean bonds are

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Speaker 3: going down and stocks should be following bonds lower here

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Speaker 3: from a price perspective to keep that earning deal for

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Speaker 3: the S and P five hundred somewhat competitive with with

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Speaker 3: the risk free instrument and treasuries, and we just haven't

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Speaker 3: really seen that yet except in the last three weeks.

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Speaker 3: We've seen this dip, but they've moved together.

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Speaker 5: Do any of these relationships still stand or have we

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Speaker 5: broken all of these?

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Speaker 1: No?

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Speaker 2: Well, so that's that's interesting.

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Speaker 3: If you go back to late nineties, the treasure you know,

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Speaker 3: the treasure yield was the earning five hundred, earning deal

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Speaker 3: was consistently lower than the treasure yield, but that was

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Speaker 3: a that was you know, during the Great Moderation, as

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Speaker 3: as inflation was you know, coming down you know, for

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Speaker 3: basically decades at that point, and bonds were just you know,

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Speaker 3: cautious and investments were late to follow. This is the

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Speaker 3: inverse situation where we're seeing inflation is more sticky. We're

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Speaker 3: seeing a structurally different economy than we've from two thousand

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Speaker 3: to twenty twenty.

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Speaker 6: You say that the Fed policy does not need to

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Speaker 6: change this point, but communication does. What are they getting

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Speaker 6: wrong when they're speaking to the market.

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Speaker 3: Well, I think they're just taking what they're seeing in

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Speaker 3: front of them, and they're they're being overconfident in what

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Speaker 3: they're seeing. So in twenty twenty one, the story was

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Speaker 3: it's transitory, and we heard that for a year. When

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Speaker 3: the Fed finally raised interest rates, core PC had actually

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Speaker 3: peaked in February of twenty twenty two. You know, the

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Speaker 3: Fed raised rates in March, and they finally ended QE

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Speaker 3: in March. They were late and they were too confident

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Speaker 3: too long. So for since last summer, we've heard policies restrictive.

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Speaker 3: Policy is restrictive, but it hasn't been. In Q three,

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Speaker 3: we put up a five percent GDP print. At that point,

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Speaker 3: the Fed has to go back to themselves and say

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Speaker 3: we're missing something in this economy. And they instead of

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Speaker 3: doing that, they continue to say policy is restrictive, and

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Speaker 3: they keep this estimate of the long term you know,

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Speaker 3: long term FED funds rate down at two and a

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Speaker 3: half percent, which is only a fifty basis point, you know,

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Speaker 3: real neutral rate. Whereas even the New York Fed's dsg

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Speaker 3: MO has it at two percent. So they're basically going

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Speaker 3: off of a you know, a forecast that interest rates

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Speaker 3: are going back to lower levels, or the markets taking

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Speaker 3: their forecus they don't actually even believe it anymore, and saying, oh,

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Speaker 3: this is where going in the future, so we can

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Speaker 3: keep equity evaluations inflated a little bit higher.

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Speaker 6: We start hearing some FED officials talk about whether or

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Speaker 6: not they are actually restrictive though, and Michelle Bowman last

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Speaker 6: week said we're restrictive, but we might not be sufficiently restrictive.

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Speaker 3: What's the difference, Oh, it's massive, because if you're underestimating

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Speaker 3: or if you're overestimating how restrictive you are, then you're

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Speaker 3: making a policy mistake because policy is far looser than

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Speaker 3: you believe it to be. So that is why, you know,

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Speaker 3: for the past three quarters, if you include what this

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Speaker 3: Q one is going to look like, we've put up,

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Speaker 3: I think we've averaged GDP about three point six percent,

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Speaker 3: which is double the fed's long term forecast of US

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Speaker 3: potential GDP. It's funny Chairman Powell talks about their risks

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Speaker 3: being balanced. Now if you go back to pre pandemic,

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Speaker 3: when we had one hundred. You know, one point eight

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Speaker 3: percent core PCE. The FED was willing to do anything

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Speaker 3: to push inflation up to two percent, and micro manager

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Speaker 3: there here we're at two point eight percent PCE. We're

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Speaker 3: talking about things being balanced. Meanwhile, the unemployment rates three

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Speaker 3: point eight percent, which is thirty basis points lower than

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Speaker 3: the Fed's long term target're at a four point one percent,

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Speaker 3: So we're still in an inflationary environment per the guidance

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Speaker 3: they give, per their models, per their forecast. But they

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Speaker 3: don't talk about like that. All they've talked about for

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Speaker 3: the past six months is cutting rates until the past

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Speaker 3: couple of weeks.

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Speaker 2: So why should I just buy stocks? There's nice sign

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Speaker 2: of them hiking anytime soon. Growth is good, inflation sticky

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Speaker 2: top li like grud it's going to be settled off

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Speaker 2: the back of that. Why wouldn't I be a bye head? Well,

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Speaker 2: it's funny.

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Speaker 3: I know when you guys had Torston slocking and Tom

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Speaker 3: King talks about he talks about it's a GDPGE driven event,

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Speaker 3: and he is he is right about that, and that

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Speaker 3: is that is something I agree with. I think the

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Speaker 3: risk here is we've had so many people chasing these

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Speaker 3: rate cuts chasing these these higher valuations that I think

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Speaker 3: we're due for that correction at this point as long

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Speaker 3: as these treasuryelds continue toize. If Treasury you'll stabilize, you

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Speaker 3: will start to reevaluate. But once that risk free instrument

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Speaker 3: starts to become more attractive, I think you do for

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Speaker 3: an equity correction.

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Speaker 2: Very close to five percent this morning on a two

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Speaker 2: year four ninety eight sixty four, Michael enjoyed. It's good

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Speaker 2: to see it. Thank you too long. It's like years

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Speaker 2: in person since we've done this. Michael Rock there, Thank you, sir,

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Speaker 2: Tasnim gil wadwella following the impact of those and more

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Speaker 2: as City Commercial Bank Cantantinim, I please to say join

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Speaker 2: us now for more Tasdin waterfol to catch up with you.

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Speaker 2: I can just say a little bit about our travels.

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Speaker 2: We've just got back to New York from Washington, d C.

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Speaker 2: We spent a week. We thought we were going to

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Speaker 2: spend a week at least talking about the economy, and

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Speaker 2: what we met was a load of economists who were

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Speaker 2: national security experts now Tans and I just wonder from

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Speaker 2: your perspective whether you can speak to some of the

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Speaker 2: trends that you've seen evolve that might speak to that

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Speaker 2: worries over what's happening between China and the US, the

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Speaker 2: US and maybe other countries too.

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Speaker 1: Yes, of course, thank you, Fusley, thank you very much

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Speaker 1: for having me. It's a real pleasure to be here. So,

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Speaker 1: I mean, definitely, we are seeing a lot of activity

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Speaker 1: with our clients as they try to navigate the environment,

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Speaker 1: which just seems to be getting more and more intense

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Speaker 1: on the macros, around inflation, around interest rates which are

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Speaker 1: proving to be definitely higher for longer, and clients eagerly

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Speaker 1: awaiting when the cuts are finally going to come. But

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Speaker 1: you know, as you just mentioned, on the political side

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Speaker 1: as well, lots of things for our clients to navigate.

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Speaker 5: Desnim how much has this actually altered the view for

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Speaker 5: mergers and acquisitions who are speaking with Bank from America's

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Speaker 5: CEO Brian moynihan, and he said, it's very difficult for

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Speaker 5: companies to get any conviction to buy another company or

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Speaker 5: merge at a time or a lot of things are

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Speaker 5: being rejected the name of national security concerns, the name

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Speaker 5: of antitrust, the name of whatever. You can't predict it

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Speaker 5: Are you seeing the same thing among your clients.

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Speaker 1: Yeah, it's it is a very very difficult time on

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Speaker 1: the deal deal front for companies to you know, go

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Speaker 1: about and although we are seeing some deals closed, you know,

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Speaker 1: we've had some cell side opportunities at City and some

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Speaker 1: of our clients you know, have have been able to

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Speaker 1: go through the cycle, but you know, lots of things

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Speaker 1: in the way exactly as you mentioned, and also with

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Speaker 1: the high interest rates, you know, capital to fund the acquisitions. Also,

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Speaker 1: you know, another factor that is proving to be a

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Speaker 1: sticking point for our clients that you know, it's not

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Speaker 1: cheap anymore to buy another company. You've got to, you know,

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Speaker 1: make sure that it's really worth it, that the valuation

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Speaker 1: you're not going to overpay, and the valuations are going

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Speaker 1: to be there to see you through kind of the

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Speaker 1: medium in the long.

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Speaker 5: Term, a lot of people are talking about this week

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Speaker 5: is a pivot point. We're going to get the earnings

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Speaker 5: of one hundred and seventy eight of the S and

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Speaker 5: P five hundred companies.

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Speaker 6: You focus on our whole host.

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Speaker 5: Of smaller banks and smaller excuse me, smaller companies that

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Speaker 5: have individual challenges and might have an even better view

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Speaker 5: in terms of the direction of travel of both economic

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Speaker 5: strength and inflation. Are the signs that you're seeing consistent

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Speaker 5: with this general feeling that we're going to get a

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Speaker 5: no landing with inflation that's going to run hot for

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Speaker 5: the foreseeable future.

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Speaker 1: So, I mean, I think one of the things that

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Speaker 1: I think is interesting that we're seeing with our clients

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Speaker 1: is that their ballot shoots are actually really, really quite strong.

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Speaker 1: For the vast majority of our clients, we've been supporting

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Speaker 1: them as they think about diversifying. You know, although the

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Speaker 1: environment is very tough, I think it's also posing quite

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Speaker 1: a lot of opportunities for clients as well. You know,

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Speaker 1: they're really thinking very very strongly about their supply chains

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Speaker 1: and how they make them more resilient, how they secure,

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Speaker 1: you know, make them very very secure as well. And

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Speaker 1: I think, you know, things like near shoring, things like

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Speaker 1: diversifying the funding environment for our supply chain. I think

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Speaker 1: these are the opportunities that our clients are kind of

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Speaker 1: playing into. So I think it's not all doom and gloom.

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Speaker 1: Quite frankly, where our clients are concerned.

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Speaker 6: Is that near shoring due to the market or because

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Speaker 6: of policies and you know, this urge by certain governments.

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Speaker 1: I think it's a bit of both. I think, you know,

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Speaker 1: on the supply chain side, I think clients are trying

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Speaker 1: to address things like logistic costs, like ensuring that you know,

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Speaker 1: their goods actually get there there's no delays, and manage

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Speaker 1: it from a kind of a cost and to get

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Speaker 1: a security right. And then of course there's the incentives

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Speaker 1: as well. You know, last week I was in Mexico

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Speaker 1: where I actually saw this, the whole phenomena of near shoring,

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Speaker 1: like with my own eyes. It was quite amazing. How

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Speaker 1: you know, when large companies, the big MNC's, announce either

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Speaker 1: a new investment or an expansion of a factory like

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Speaker 1: in Mexico, the entire supply chain kind of follows them

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Speaker 1: there and the whole kind of ecosystem gets built out

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Speaker 1: around those large supplies, like you know, Kia announcing the

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Speaker 1: big expansion of its plant in Mexico for ev cars.

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Speaker 1: There's a whole kind of tier one, tier two, tier

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Speaker 1: three impacts around the supply chain.

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Speaker 4: With that.

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Speaker 6: Do you see Chinese firms moving into Mexico, Because that's

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Speaker 6: been a big concern with lawmakers and officials in the

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Speaker 6: United states.

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Speaker 1: That there are a couple of Chinese firms, but I

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Speaker 1: think it's wider than that. You know, we've seen Korean

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Speaker 1: firms as well. We've seen other other Asian companies moving

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Speaker 1: there as well, So I think it's it's more mixed.

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Speaker 1: I think there's you know, what we're noticing and with

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Speaker 1: these these kind of corridors is there's a big North

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Speaker 1: Asia to Latin corridor that is very very vile, and

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Speaker 1: it's not only into Mexico as well, it's also into

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Speaker 1: Brazil and other lat Ham countries as well.

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Speaker 2: Tas'tan. What it sounds like is for multinationals, it's becoming

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Speaker 2: increasingly complex, and it might lead you to believe that

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Speaker 2: perhaps they just stay local and avoid expanding beyond their

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Speaker 2: own borders. You're not saying that, are you. That's not

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Speaker 2: what I.

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Speaker 1: Hear, Absolutely not. Of course, you know, companies want to

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Speaker 1: make sure that they're strong, you know, in their domestic

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Speaker 1: and markets, and they're operating very well. But I think,

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Speaker 1: you know, the vast majority of our clients and the

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Speaker 1: reason they come to city is because they have global ambitions,

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Speaker 1: and so you know, as they think about how they're

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Speaker 1: going to grow themselves and how they're going to succeed

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Speaker 1: in the market. That more and more our clients are

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Speaker 1: looking at cross border opportunities as the way in which

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Speaker 1: they are going to grow and access new markets, and

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Speaker 1: that's where you know, bank like House can really help them.

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Speaker 2: Can we just talk about just finally how that growth

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Speaker 2: is being funded with interest rates near multi decade highs

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Speaker 2: in some res agents, including here in the United States,

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Speaker 2: and the sources of funding shifting tasknum, Have you noticed that?

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Speaker 1: Definitely?

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Speaker 4: So.

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Speaker 1: I think one of the first things I'm going to

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Speaker 1: say with the with with such high interest rates for

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Speaker 1: quite some time now is that clients are are really

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Speaker 1: getting absolutely focused on their own liquidity and looking at

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Speaker 1: any kind of trap cash that they may have looking

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Speaker 1: at very sophisticated even mid market clients that you know

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Speaker 1: probably didn't pay that much attention as closely to their

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Speaker 1: liquidity as say some of the very large clients would

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Speaker 1: would would would traditionally be doing. They're they're paying a

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Speaker 1: lot of attention to ensuring that they're they're efficiently using

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Speaker 1: all the sources of capital, that payments are like swift there,

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Speaker 1: their collections are really quick as well, and that the

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Speaker 1: whole cash converstion cycle is is as tight and as

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Speaker 1: efficient as possible, and and of course you know, we've

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Speaker 1: got lots of solutions that can help with that. But

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Speaker 1: but I think you know, there's there's other pools of capital.

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Speaker 1: Of course, as you know, bank funding, and then we're

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Speaker 1: also seeing the rise of private credit as well as

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Speaker 1: coming up as being a kind of complementary to bank

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Speaker 1: funding for these clients. So lots and lots of kind

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Speaker 1: of innovation happening on the financing side.

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Speaker 5: Has that innovation led to basically an environment or where

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Speaker 5: higher rates have not crimped the expansion plans of a

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Speaker 5: lot of these companies, even though it might be more

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Speaker 5: challenging you have to be innovative, it's just as available

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Speaker 5: in terms of credit creation to go out and to expand.

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Speaker 1: Yeah, I think so, Liza, I mean, I think you know,

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Speaker 1: what we're seeing is that with companies that are strong,

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Speaker 1: they are just getting stronger, and high rates and even

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Speaker 1: you know, just general geopolitics don't tend to kind of

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Speaker 1: take the wind out the sales of these types of companies,

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Speaker 1: and they do use almost kind of volatile environments to

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Speaker 1: get even stronger and look for opportunities to expand you know,

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Speaker 1: pick up sort of do small. We're seeing a lot

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Speaker 1: of mid market companies like doing not like big transformative

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Speaker 1: kind of deals, but small bolt on em and a

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Speaker 1: like you know, picking up a kind of a ten

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Speaker 1: million dollar company, twenty million dollar company, you know, adding

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Speaker 1: a particular expertise. You know, those are some of the

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Speaker 1: things that we're hearing a lot from our clients.

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Speaker 2: Interesting, Tassanium, Let's do this again next time you're in

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Speaker 2: New York City. We'd love to have you with us

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Speaker 2: around the table tasnim gil wand whilea there of city.

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Speaker 2: European Investment Bank President Nadia Calvino is here in New York,

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Speaker 2: but it's for more President Calvino, good to see you,

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Speaker 2: very good to see it's greater cash up once again.

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Speaker 2: You're back from Washington, d C. We are as well,

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Speaker 2: so maybe we can compare notes. We've talked a long

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Speaker 2: time about a lack of cooperation maybe worldwide, a breakdown

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Speaker 2: between the United States and what the Europeans need and

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Speaker 2: what Ukraine ultimately wance. Did you sense the same thing

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Speaker 2: at all in Washington and were coming together or moving apart?

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Speaker 4: Well, we're definitely coming to Indeed, I think it was

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Speaker 4: a very productive Spring Meetings week. We had many exchanges

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Speaker 4: and I really see a momentum in coming together and

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Speaker 4: supporting Ukraine very strongly, but also deepening our cooperation within

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Speaker 4: the Multilateral Development Bank family to contribute to climate change, financing,

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Speaker 4: peaceful and more. How would I say, sustainable world going forward.

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Speaker 2: We'll get some more details on your lending plans in

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Speaker 2: just a moment. There has been a sense of fatigue

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Speaker 2: in Congress around what is happening with Ukraine in its

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Speaker 2: war against Russia. There are some people asking whether there

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Speaker 2: is a different way, whether there should be something we

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Speaker 2: continue with, stick with, continue funding what looks like maybe

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Speaker 2: another runding war. What would your view on that argument be.

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Speaker 4: Well, absolutely, we need to support Ukraine. It is a

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Speaker 4: very serious situation that we're living. It's a threat to

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Speaker 4: democracy at the end of the day, and the way

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Speaker 4: we see things, I think in the US and Europe too,

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Speaker 4: and so from the European point of view, there's no

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Speaker 4: doubt our support to Ukraine is I think the decision

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Speaker 4: that has been taken by the US to provide support

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Speaker 4: for more than sixty billion dollars is very valuable and

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Speaker 4: these joints. Also the previous decision of the European institutions

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Speaker 4: to provide fifty billion euros in the Ukraine facility, which

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Speaker 4: we will manage at the European Investment Bank, and I

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Speaker 4: think it will provide much, much valuable support for the

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Speaker 4: reconstruction as well as the military effort.

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Speaker 6: Of course, But President, did you see the vote counts

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Speaker 6: on as AID bills, So when you look at something

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Speaker 6: like the Indo Pacific, it was three eighty five to

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Speaker 6: thirty four in the House. When it comes to Israel,

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Speaker 6: it was three eleven to one twelve. It barely got

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Speaker 6: through and it came sorry, excuse me, to Ukraine. How

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Speaker 6: concerned are you about how deeply divided US politicians are

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Speaker 6: about AID in Ukraine oversay other issues like Israel and Taiwan.

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Speaker 4: I really think that we should continue to support Ukraine,

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Speaker 4: as President Zelenski was just saying on the screen, they

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Speaker 4: have a chance if we continue to support them from

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Speaker 4: the European point of view. You know, Ukraine is our neighbor,

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Speaker 4: It is a prospective member of the family, if I

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Speaker 4: can say this way, and thus we need to ensure

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Speaker 4: that we keep a secure environment in the region. The

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Speaker 4: other conflicts are just as important. I mean, the Middle

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Speaker 4: East situation is very warring. It's a source of concern

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Speaker 4: for all of us, and we should try to stop

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Speaker 4: that war and that conflict, you know, as soon as possible.

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Speaker 4: But Ukraine should not be forgotten.

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Speaker 6: But in the numbers, it shows that Ukraine was the

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Speaker 6: hardest one for lawmakers to get through. What does this

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Speaker 6: mean potentially if you were, say to deal with a

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Speaker 6: different administration, a Trump administration.

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Speaker 4: Well, I wouldn't like to speculate on US politics and

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Speaker 4: I wouldn't dare to comment on the internal wheelings and dealings.

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Speaker 4: But I think the most important news we have today

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Speaker 4: is this got through more than sixty billion euros dollars

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Speaker 4: support and these will provide a very valuable support to

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Speaker 4: Ukraine at a crucial point in the conflict in the war.

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Speaker 5: President, you know, how much is this actually the uncertainty

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Speaker 5: helping you to raise money for military efforts within Europe

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Speaker 5: to bolster military spending within the continent.

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Speaker 4: But it's obvious that you know, some people woke up

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Speaker 4: to the fact that we were more fragile, and maybe

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Speaker 4: we thought because of the war in Ukraine and the

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Speaker 4: unwarranted aggression by Russia, many members states the frontline members stays.

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Speaker 4: I think we're already wide awake and very aware of

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Speaker 4: the challenge of having this kind of neighbor. But you know,

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Speaker 4: it is absolutely clear we need to step up and

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Speaker 4: support Europe's security and defense industry, and the European Investment

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Speaker 4: Bank can play a role in that.

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Speaker 5: When you talk about financing it, how much are you

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Speaker 5: on board with the idea of monetizing Russian assets that

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Speaker 5: are harbord in Europe, maybe in tandem with the United

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Speaker 5: States in terms of coming up with some sort of plan.

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Speaker 4: It's very important. I think that we act united and

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Speaker 4: so the G seven discussions are extremely valuable so that

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Speaker 4: we move ahead as one. Of course, the situation is

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Speaker 4: not comparable between the US and Europe in terms of

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Speaker 4: the volume of assets we are discussing, and on the

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Speaker 4: European side we are making progress. The European Commission has

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Speaker 4: put forward a step by step plan and so you know,

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Speaker 4: we're making some progress in making sure that these assets

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Speaker 4: are put to good use in supporting Ukraine.

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Speaker 5: In supporting Ukraine, is that also include in investing in

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Speaker 5: some of the military development in Europe.

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Speaker 4: I think this is a bit you know too soon

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Speaker 4: to say how is the best use of these assets.

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00:22:25,680 --> 00:22:28,399
Speaker 4: Just see that we are really unwavering in our support

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Speaker 4: to the country, and we're making progress in mobilizing all

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Speaker 4: sources of financing to provide that important support.

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Speaker 6: When it comes to the Russian assets, particularly the ones

443
00:22:37,200 --> 00:22:39,760
Speaker 6: in Europe, there's lots of different things being thrown around

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Speaker 6: on how to actually monetize it. Do you expect a

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Speaker 6: decision when the leaders meet in June in Pulia.

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Speaker 4: I certainly think this is going to be on the

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00:22:49,119 --> 00:22:52,400
Speaker 4: table and there it is a different issue to talk

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Speaker 4: about the assets than talking about the proceeds coming from

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Speaker 4: those assets. I think there is more unanimity on the

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Speaker 4: second than the former. Many considerations are on the table,

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Speaker 4: and we need to calibrate well our decisions so as

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Speaker 4: to make sure that there are no unwarranted side effects.

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Speaker 2: I just wanted to wrap things up, President Calvina, with

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Speaker 2: the changes you've proposed to the EIB, which is a

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Speaker 2: plan to ultimately make it easier to fund defense projects,

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Speaker 2: could you talk to us a little bit about that.

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Speaker 2: What can we expect at these changes going to go through?

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Speaker 4: I certainly think so.

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Speaker 2: Yes.

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Speaker 4: For the past eight years, we've been already financing europe

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00:23:26,160 --> 00:23:29,879
Speaker 4: security and defense industry. What we're doing now is adapting

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00:23:29,960 --> 00:23:34,400
Speaker 4: our lending policy whilst preserving a very strong financing capability capacity.

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Speaker 4: I mean, THEVIB has a triple A plus consideration in

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00:23:38,320 --> 00:23:40,840
Speaker 4: the market. We are a very strong player in financial market.

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00:23:41,400 --> 00:23:43,800
Speaker 4: Last week we had an auction. I was following your

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00:23:43,840 --> 00:23:48,120
Speaker 4: program this morning and it is impressive because last week

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00:23:48,119 --> 00:23:51,280
Speaker 4: we did a five year bond of five billion issuance

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00:23:51,440 --> 00:23:55,040
Speaker 4: which was heavily oversubscribed on twenty one billion euros in demand,

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00:23:55,320 --> 00:23:57,320
Speaker 4: and we closed with an interest rate that was just

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00:23:57,400 --> 00:24:01,719
Speaker 4: ten basis points over the US Treasury. That shows the

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00:24:01,760 --> 00:24:05,439
Speaker 4: important financing capacity of the bank and this is what

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00:24:05,480 --> 00:24:08,160
Speaker 4: allows us to be very competitive in financing our clients,

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00:24:08,240 --> 00:24:11,560
Speaker 4: public and private clients and contributing to growth and prosperity

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00:24:11,600 --> 00:24:15,440
Speaker 4: in Europe and beyond. So we really need to calibrate

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00:24:15,480 --> 00:24:18,560
Speaker 4: our respons as well. So far, the market is responding

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Speaker 4: as we had anticipated, and I think we certainly will

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Speaker 4: step up our support to europe security and defense.

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Speaker 2: Just the final comment if we can. You, of course,

479
00:24:25,600 --> 00:24:27,280
Speaker 2: were part of the Spanish government for a little while.

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Speaker 2: I'm used to calling you minister. I want to get

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Speaker 2: your thoughts on whether the defense spending will overwhelm the

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Speaker 2: capital that could be used for developing the European economy

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Speaker 2: more broadly, you concerned about that in any way, shape

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Speaker 2: or form.

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Speaker 4: Certainly, That's why I said a moment ago, we need

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Speaker 4: to mobilize all our funding sources so as to make

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00:24:44,960 --> 00:24:49,000
Speaker 4: sure that funding our security and defense effort contributing to

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Speaker 4: peace at the end of the day, is not weakening

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Speaker 4: our support to social infrastructures, innovation, the digitalization, and of

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Speaker 4: course climate action, which is a top priority and the

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Speaker 4: key challenge of our time.

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Speaker 2: Nadia, was good to see you, thanks for dropping by,

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Speaker 2: very good. Thank you very much in Joy, New York.

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Speaker 2: Nadia Calvin of the European Investment Bank. This is the

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00:25:09,800 --> 00:25:14,040
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