1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 2 00:00:09,200 --> 00:00:13,200 Speaker 1: with Jonathan Ferrell and Lisa Bramowitz Jailey, we bring you 3 00:00:13,280 --> 00:00:18,600 Speaker 1: insight from the best and economics, finance, investment, and international relations. 4 00:00:18,960 --> 00:00:23,799 Speaker 1: Find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg dot com, 5 00:00:23,920 --> 00:00:29,840 Speaker 1: and of course, on the Bloomberg Terminal. He is the 6 00:00:29,880 --> 00:00:33,560 Speaker 1: former mayor of Boston. He is now Secretary of Labor. 7 00:00:34,200 --> 00:00:37,440 Speaker 1: Here were there, John Faroh, Let's listen to Barty Walsh, 8 00:00:37,840 --> 00:00:40,479 Speaker 1: the US Labor Secretary, Marty Wolf. Secondy Wolves quite a 9 00:00:40,479 --> 00:00:43,000 Speaker 1: cash out with you said, your reflection, your reaction to 10 00:00:43,000 --> 00:00:47,080 Speaker 1: this job support this morning. Certainly it's a good jobs report. 11 00:00:47,120 --> 00:00:49,800 Speaker 1: Anytime you go over projections, that's a good job report. 12 00:00:49,840 --> 00:00:53,240 Speaker 1: We saw some areas in this and manufacturing and transportation 13 00:00:53,280 --> 00:00:55,760 Speaker 1: which the numbers are really good in and seeing continue 14 00:00:55,800 --> 00:00:58,440 Speaker 1: strength there. Retail number is very good as well. And 15 00:00:58,480 --> 00:01:00,920 Speaker 1: I think what's exciting about that is the fact that 16 00:01:01,000 --> 00:01:02,560 Speaker 1: you know, when we think about retail, we often think 17 00:01:02,560 --> 00:01:05,199 Speaker 1: about online shopping, and we're actually starting to see, uh, 18 00:01:05,360 --> 00:01:08,280 Speaker 1: the the in store shopping stronger than it has been 19 00:01:08,360 --> 00:01:10,800 Speaker 1: in quite some time. We're excited about that. I think 20 00:01:10,840 --> 00:01:12,600 Speaker 1: these numbers that we come on here and talk about 21 00:01:12,600 --> 00:01:16,880 Speaker 1: four five hundred thousand jobs. Eventually, eventually we will kind 22 00:01:16,880 --> 00:01:20,080 Speaker 1: of revert back to a normal process here. I have 23 00:01:20,160 --> 00:01:22,720 Speaker 1: not seen that since I'm in Labor secretary because we're 24 00:01:22,760 --> 00:01:26,959 Speaker 1: recovering from a pandemic. But overall of the jobs that 25 00:01:26,959 --> 00:01:29,880 Speaker 1: were pre pandemic have recovered. Uh, and we're seeing we 26 00:01:30,120 --> 00:01:32,880 Speaker 1: wage growth. And the one area where wage world was 27 00:01:32,920 --> 00:01:36,160 Speaker 1: really good is in the hospitality industry that is outpacing inflation. 28 00:01:36,240 --> 00:01:38,759 Speaker 1: But we we all know you you open the store 29 00:01:38,880 --> 00:01:41,200 Speaker 1: the show here right now with the stock market, the 30 00:01:41,280 --> 00:01:43,640 Speaker 1: volatility and the stock market obviously we have we have 31 00:01:43,680 --> 00:01:46,800 Speaker 1: pressures on inflation. So there's still there's still much work 32 00:01:46,840 --> 00:01:50,000 Speaker 1: to be done here. But overall this report was good. Secondly, Welsh, 33 00:01:50,040 --> 00:01:52,120 Speaker 1: what does the two evitable jobs for every unemployed work 34 00:01:52,120 --> 00:01:54,360 Speaker 1: in America tell you right now by the strength of 35 00:01:54,360 --> 00:01:57,520 Speaker 1: this labor market, Well, I think that you know, we 36 00:01:57,640 --> 00:01:59,760 Speaker 1: clearly know that there's work to be done. We're looking 37 00:01:59,760 --> 00:02:01,760 Speaker 1: at the number this morning as well about the people 38 00:02:01,800 --> 00:02:04,120 Speaker 1: that that are not participating in the workforce, and we're 39 00:02:04,120 --> 00:02:05,720 Speaker 1: looking at the number of the people that for the 40 00:02:05,800 --> 00:02:08,079 Speaker 1: last month haven't look for a job. But didn't get 41 00:02:08,120 --> 00:02:10,600 Speaker 1: a job. And clearly the question is if we have 42 00:02:10,639 --> 00:02:13,520 Speaker 1: twelve million jobs opening, six million people roughly looking for work, 43 00:02:13,560 --> 00:02:15,640 Speaker 1: why shouldn't they able to find a job. And I 44 00:02:15,680 --> 00:02:17,399 Speaker 1: think we have to do a little diver look into 45 00:02:17,440 --> 00:02:20,520 Speaker 1: that number regionally to see exactly what the reason is. 46 00:02:20,520 --> 00:02:23,080 Speaker 1: I mean, are people underskilled? Do we need to scale 47 00:02:23,120 --> 00:02:25,640 Speaker 1: them up? Are they really looking for work? How do 48 00:02:25,680 --> 00:02:27,440 Speaker 1: we do how do we encourage them to get to work? 49 00:02:27,560 --> 00:02:29,840 Speaker 1: So there's there's some working out to do. And I 50 00:02:29,840 --> 00:02:31,440 Speaker 1: think that you know, when when I look at the 51 00:02:31,440 --> 00:02:33,840 Speaker 1: economy and I look at workforce development, I don't look 52 00:02:33,880 --> 00:02:36,120 Speaker 1: at it globally. These numbers are all great, but you 53 00:02:36,200 --> 00:02:38,760 Speaker 1: dive into the numbers and it tells you a different 54 00:02:38,760 --> 00:02:40,640 Speaker 1: story sometimes. Secondly, well, so I want to do some 55 00:02:40,639 --> 00:02:42,240 Speaker 1: work with you as well on what's the man's happened 56 00:02:42,240 --> 00:02:44,040 Speaker 1: on the West coast. As you know, we've got these 57 00:02:44,120 --> 00:02:47,640 Speaker 1: labor negotiations going gone with the annipult workers with the unions. 58 00:02:47,680 --> 00:02:49,560 Speaker 1: Can you walk me through, just give me an idea 59 00:02:49,560 --> 00:02:51,320 Speaker 1: of the terms of negotiating. I know you might be 60 00:02:51,360 --> 00:02:54,120 Speaker 1: a part of that story. Yeah, this is a little different. 61 00:02:54,160 --> 00:02:56,760 Speaker 1: I mean the way this usually works is the report workers, 62 00:02:56,960 --> 00:02:59,200 Speaker 1: they don't start negotiate until I think next the next 63 00:02:59,240 --> 00:03:01,760 Speaker 1: week or so. The contract ends the end of June, 64 00:03:01,800 --> 00:03:05,079 Speaker 1: so there's this about a six week window where people negotiate, 65 00:03:05,560 --> 00:03:07,400 Speaker 1: and generally what happens is if you don't get to 66 00:03:07,480 --> 00:03:09,280 Speaker 1: a negotiation, if you don't get to an agreement by 67 00:03:09,360 --> 00:03:12,000 Speaker 1: the end of June, they'll they'll extend the contract and 68 00:03:12,120 --> 00:03:14,640 Speaker 1: continue to negotiate. The last time there was a strike 69 00:03:14,720 --> 00:03:16,480 Speaker 1: in the ports, so I believe nineteen in the nineteen 70 00:03:16,440 --> 00:03:19,400 Speaker 1: sep ninety seventy, nineteen seventies three area. So I'm not 71 00:03:19,440 --> 00:03:21,840 Speaker 1: concerned about strikes. What what I what I'm hopeful for 72 00:03:22,200 --> 00:03:24,160 Speaker 1: is to encourage both sides to stay at the table 73 00:03:24,360 --> 00:03:26,440 Speaker 1: and get this steal done as soon as possible, because 74 00:03:26,480 --> 00:03:29,000 Speaker 1: we can't afford any type of work slow down, we 75 00:03:29,000 --> 00:03:31,679 Speaker 1: can't afford any type we can't go anything, no, any 76 00:03:31,680 --> 00:03:34,080 Speaker 1: type of up in negotiation. I was in l A 77 00:03:34,080 --> 00:03:36,320 Speaker 1: a week ago, and I think at the time I 78 00:03:36,360 --> 00:03:38,200 Speaker 1: was there, we had twenty seven ships in the in 79 00:03:38,280 --> 00:03:40,760 Speaker 1: the harbor. When I was there three months before that, 80 00:03:40,800 --> 00:03:43,280 Speaker 1: there was sixty seven ships. So we're seeing a lot 81 00:03:43,320 --> 00:03:46,160 Speaker 1: of ease of of of cargo coming into the ports. 82 00:03:46,360 --> 00:03:48,400 Speaker 1: But we also on the other side of the other 83 00:03:48,400 --> 00:03:50,480 Speaker 1: side of the ocean, we're seeing ships lined up in 84 00:03:50,920 --> 00:03:52,680 Speaker 1: China that eventually will be loaded and brought to the 85 00:03:52,720 --> 00:03:54,720 Speaker 1: United States. So we just need to continue to keep 86 00:03:54,720 --> 00:03:56,960 Speaker 1: our supply chain moving forward. It's likely Welsh we've touched 87 00:03:57,000 --> 00:03:58,240 Speaker 1: on this together in the past. I want to do 88 00:03:58,280 --> 00:04:00,360 Speaker 1: it again. What do you think the difference is between 89 00:04:00,640 --> 00:04:03,360 Speaker 1: leveraging your position as a port worker with the union 90 00:04:03,360 --> 00:04:07,640 Speaker 1: representing you and holding the economy hostage. What's the difference. Well, 91 00:04:07,680 --> 00:04:10,200 Speaker 1: I think it's important. My role is Secretary of Labor 92 00:04:10,240 --> 00:04:13,000 Speaker 1: is important because I've been I've been I've literally negotiated 93 00:04:13,040 --> 00:04:15,200 Speaker 1: on both sides of the table. I've negotiated on the 94 00:04:15,280 --> 00:04:17,560 Speaker 1: labor side and I've negotiating the management side when I 95 00:04:17,560 --> 00:04:19,919 Speaker 1: was near the city of Boston. And I think that, um, 96 00:04:20,240 --> 00:04:22,360 Speaker 1: it's not you know, I don't need to get involved, 97 00:04:22,400 --> 00:04:24,520 Speaker 1: and we don't need to get involved into negotiation unless 98 00:04:24,560 --> 00:04:27,200 Speaker 1: we have to. And I think that anytime there's a 99 00:04:27,240 --> 00:04:30,080 Speaker 1: negotiation going on this country, it's always better to try 100 00:04:30,120 --> 00:04:32,880 Speaker 1: and do without a mediator or with out somebody intervening, 101 00:04:33,000 --> 00:04:35,200 Speaker 1: because it shows that both sides are committed to getting 102 00:04:35,200 --> 00:04:37,680 Speaker 1: a time. I feel in this particular case on the 103 00:04:37,720 --> 00:04:40,440 Speaker 1: ports of of the West coast. Both sides are very 104 00:04:40,440 --> 00:04:42,560 Speaker 1: committed to getting a contract time. Secondly, well, so I 105 00:04:42,600 --> 00:04:44,839 Speaker 1: just wanted a final question about the release of the 106 00:04:44,920 --> 00:04:48,440 Speaker 1: data and the process. It's not responsible for the prices 107 00:04:48,480 --> 00:04:50,240 Speaker 1: on the screen. The equity market has put a mess 108 00:04:50,279 --> 00:04:51,880 Speaker 1: the last few days, but it was responsible for some 109 00:04:51,960 --> 00:04:54,839 Speaker 1: volatility around eight thirty Eastern time. As you know, the 110 00:04:54,839 --> 00:04:57,400 Speaker 1: process for releasing the job's numbers has changed somewhat. They 111 00:04:57,480 --> 00:04:59,080 Speaker 1: used to be these lock ups where you'd get the 112 00:04:59,160 --> 00:05:02,760 Speaker 1: information before and the major organizations would sit on it responsibly, 113 00:05:02,960 --> 00:05:05,600 Speaker 1: then release at eight thirty Eastern time. That's changed and 114 00:05:05,680 --> 00:05:09,359 Speaker 1: everyone's scraping the information off the website the Internet of course, 115 00:05:09,800 --> 00:05:11,960 Speaker 1: h f t S web scrapers. People with that edge 116 00:05:11,960 --> 00:05:14,520 Speaker 1: get the numbers them before, say the retail trader, Can 117 00:05:14,520 --> 00:05:17,200 Speaker 1: we reassess this? Would you go back over the process 118 00:05:17,440 --> 00:05:19,440 Speaker 1: and have a look at it again. Well, I know 119 00:05:19,480 --> 00:05:21,840 Speaker 1: it was clearly pre pandemic, but in this particular case, 120 00:05:21,920 --> 00:05:24,800 Speaker 1: so we released the information. Everybody gets at the same time. 121 00:05:24,839 --> 00:05:27,160 Speaker 1: It's a fair way to do it. Every news outlet 122 00:05:27,200 --> 00:05:29,360 Speaker 1: from from big news outlets, the medium news outlets, the 123 00:05:29,400 --> 00:05:32,040 Speaker 1: small news outlets get the same exact information at the 124 00:05:32,080 --> 00:05:34,039 Speaker 1: same exact time, and I think that, you know, I 125 00:05:34,080 --> 00:05:36,279 Speaker 1: think there was an evaluation here and one of the 126 00:05:36,320 --> 00:05:39,640 Speaker 1: results whereas that we better off being fair that they're 127 00:05:39,680 --> 00:05:41,640 Speaker 1: not fair to company that people. They had the ability 128 00:05:41,640 --> 00:05:43,800 Speaker 1: to send people to this building and get the information, 129 00:05:43,880 --> 00:05:46,960 Speaker 1: yet a smaller news outlet in the Midwest couldn't get here, 130 00:05:47,320 --> 00:05:49,640 Speaker 1: but they will release it at the same time eight 131 00:05:49,680 --> 00:05:52,400 Speaker 1: thirty Eastern time. That's the whole point. The problem is 132 00:05:52,560 --> 00:05:54,080 Speaker 1: that when you release it on the website and not 133 00:05:54,160 --> 00:05:56,640 Speaker 1: everyone gets it from the website because they don't get 134 00:05:56,640 --> 00:05:58,600 Speaker 1: it as quickly as other people do. You understand that 135 00:05:58,800 --> 00:06:01,839 Speaker 1: the other organizations and have a wider spread of organizations 136 00:06:01,880 --> 00:06:04,960 Speaker 1: that can push out of information simultaneously without racing to 137 00:06:05,040 --> 00:06:07,600 Speaker 1: the website. Well, I mean, I don't know if racing 138 00:06:07,680 --> 00:06:10,600 Speaker 1: to the website is a problem. I think that when 139 00:06:10,640 --> 00:06:13,680 Speaker 1: you hit the website, everyone can everyone has the ability 140 00:06:13,760 --> 00:06:15,600 Speaker 1: to get the information at the same time. If it's 141 00:06:15,600 --> 00:06:18,120 Speaker 1: in this building, everyone does not have the ability to 142 00:06:18,160 --> 00:06:21,320 Speaker 1: come to this building. Okay, that's your perspective. Psychly wol, 143 00:06:21,520 --> 00:06:24,040 Speaker 1: We appreciate your time, so I know you're super super busy. Again, 144 00:06:24,160 --> 00:06:32,159 Speaker 1: Thanks for being with us this morning. Never problematic because 145 00:06:32,200 --> 00:06:34,920 Speaker 1: to speak with Jeffrey Rosenberg with Black Rocker Tour to 146 00:06:35,000 --> 00:06:37,440 Speaker 1: Force on our FED show a few days ago when 147 00:06:37,440 --> 00:06:41,640 Speaker 1: he joins us again, Jeff to me, it's a massive continuum. 148 00:06:41,640 --> 00:06:45,600 Speaker 1: It's just a movement forward of the American labor economy. 149 00:06:45,640 --> 00:06:49,520 Speaker 1: Does that surprise you, No, this is a very strong 150 00:06:49,640 --> 00:06:52,760 Speaker 1: labor market. You know, the markets are parsing the very 151 00:06:52,800 --> 00:06:57,440 Speaker 1: small uh you know, deviations versus expectations, and I think Jonathan, 152 00:06:57,640 --> 00:07:00,360 Speaker 1: you know, highlighted it. You know, the participation and rate, 153 00:07:00,440 --> 00:07:03,200 Speaker 1: you know, is a little bit disappointing. Is Randy kind 154 00:07:03,200 --> 00:07:05,000 Speaker 1: of laid out, you know, I think that could be 155 00:07:05,080 --> 00:07:07,760 Speaker 1: chalked up to the surge that we're seeing in the 156 00:07:07,800 --> 00:07:10,760 Speaker 1: Amicron b A two variants and and some of the 157 00:07:10,800 --> 00:07:14,120 Speaker 1: impacts there. That's a bit disappointing. On the other side 158 00:07:14,200 --> 00:07:16,440 Speaker 1: is the disappointment on the ah G figures, which on 159 00:07:16,480 --> 00:07:19,280 Speaker 1: an unrounded basis from point three one month over month 160 00:07:19,360 --> 00:07:21,920 Speaker 1: year over year a little bit lower than that five 161 00:07:22,160 --> 00:07:25,920 Speaker 1: and a half percent five point four. Uh So that 162 00:07:26,080 --> 00:07:28,400 Speaker 1: helps to offset this is a little bit you know, 163 00:07:28,520 --> 00:07:32,080 Speaker 1: kind of splitting hairs. But you know, where we're focused 164 00:07:32,120 --> 00:07:36,760 Speaker 1: on is the expectation is the healing on the supply 165 00:07:36,920 --> 00:07:39,960 Speaker 1: side of labor market will help to bring the pressure 166 00:07:40,040 --> 00:07:45,000 Speaker 1: down on wage inflation, and this report doesn't really clarify 167 00:07:45,200 --> 00:07:47,880 Speaker 1: which way that goes. I think it's at last I 168 00:07:47,920 --> 00:07:50,560 Speaker 1: looked a minute ago, you know, kind of a mild 169 00:07:50,600 --> 00:07:54,920 Speaker 1: market reactions. So the story remains the same, very strong 170 00:07:55,040 --> 00:07:58,360 Speaker 1: labor market uncertainty as to whether or not we're going 171 00:07:58,400 --> 00:08:01,280 Speaker 1: to see the pressure come off on wages by more 172 00:08:01,360 --> 00:08:03,600 Speaker 1: supply on the part right John, as you as you 173 00:08:03,640 --> 00:08:07,040 Speaker 1: mentioned you know, you can't say that this is a strong, 174 00:08:07,160 --> 00:08:10,200 Speaker 1: ringing endorsement of the view that the supply side is 175 00:08:10,200 --> 00:08:12,200 Speaker 1: going to come and ride to the rescue of the 176 00:08:12,240 --> 00:08:15,000 Speaker 1: wage inflation pressures. Honestly, I find this report on the 177 00:08:15,040 --> 00:08:17,560 Speaker 1: margins really confusing because you have a beat in the 178 00:08:17,640 --> 00:08:20,560 Speaker 1: overall numbers, which would suggest more people are coming in, 179 00:08:20,600 --> 00:08:22,880 Speaker 1: that the supply is greater, and yet you have a 180 00:08:23,240 --> 00:08:27,280 Speaker 1: decline and participation. It's a bit confusing. At what point, Jeff, 181 00:08:27,480 --> 00:08:29,480 Speaker 1: can we say that the data starts to matter in 182 00:08:29,600 --> 00:08:33,040 Speaker 1: terms of giving the FED some sort of conviction in 183 00:08:33,080 --> 00:08:38,000 Speaker 1: moving either faster or faster, longer, or pulling back. Well, 184 00:08:38,040 --> 00:08:40,400 Speaker 1: it's that it's that wage piece. You know, so we're 185 00:08:40,440 --> 00:08:45,280 Speaker 1: we're not really getting a material uh slowdown yet in 186 00:08:45,600 --> 00:08:49,480 Speaker 1: the wages. And most importantly, as as Powell said yester 187 00:08:49,720 --> 00:08:52,199 Speaker 1: two days ago, you know, one month isn't going to 188 00:08:52,320 --> 00:08:55,480 Speaker 1: be that definitive change. It's going to be the trend 189 00:08:56,000 --> 00:08:59,000 Speaker 1: in that wage inflation. And and right now we're coming 190 00:08:59,040 --> 00:09:02,079 Speaker 1: off of a very wrong e c I print, the 191 00:09:02,200 --> 00:09:07,760 Speaker 1: quarterly prints. This a g rate isn't really materially decelerating. 192 00:09:07,800 --> 00:09:10,120 Speaker 1: You could argue there's a little bit of deceleration in 193 00:09:10,120 --> 00:09:12,880 Speaker 1: in one month, but it will be that sequence of 194 00:09:13,000 --> 00:09:16,440 Speaker 1: reports and and and lots of different reports that we 195 00:09:16,559 --> 00:09:20,880 Speaker 1: tracked the labor market, from survey data to Atlanta FED 196 00:09:20,920 --> 00:09:23,360 Speaker 1: Wage tracker, to the e c I to the monthly 197 00:09:23,440 --> 00:09:25,640 Speaker 1: labor reports, they all have to point to the same 198 00:09:25,679 --> 00:09:30,040 Speaker 1: direction that we're seeing the froth the heat come off 199 00:09:30,280 --> 00:09:32,320 Speaker 1: on the labor markets. That will give the Fed the 200 00:09:32,360 --> 00:09:35,960 Speaker 1: confidence that what Powell said two days ago is correct, 201 00:09:35,960 --> 00:09:39,320 Speaker 1: which many people you know, I think correctly may have 202 00:09:39,360 --> 00:09:42,320 Speaker 1: disagreed with. You know, where are we with respect to 203 00:09:42,360 --> 00:09:45,960 Speaker 1: the wage price spiral. His view was no need to 204 00:09:46,040 --> 00:09:49,880 Speaker 1: worry a lot of other pieces of information saying we 205 00:09:49,960 --> 00:09:52,360 Speaker 1: may be right in the middle of that, and so 206 00:09:52,440 --> 00:09:55,160 Speaker 1: the wage figures are really going to be center on that. 207 00:09:55,520 --> 00:09:58,360 Speaker 1: Not much new that we can take away, maybe a 208 00:09:58,400 --> 00:10:01,360 Speaker 1: little bit on the margin, and but it's a pretty 209 00:10:01,360 --> 00:10:03,800 Speaker 1: mixed report. Another big range in this equity market. The 210 00:10:03,880 --> 00:10:05,640 Speaker 1: S and P positive a tenth of one percent, and 211 00:10:05,720 --> 00:10:07,600 Speaker 1: that's that one hundred up two tenths of one percent 212 00:10:07,679 --> 00:10:10,200 Speaker 1: already this morning. A pretty big range on NASTAG one 213 00:10:10,240 --> 00:10:13,000 Speaker 1: hundred futures at the lows with a negative one percentage point. 214 00:10:13,000 --> 00:10:15,080 Speaker 1: The low was a little more than an hour ago. 215 00:10:15,360 --> 00:10:17,840 Speaker 1: Big turnaround positive a quarter of one percent. I'll be 216 00:10:17,840 --> 00:10:20,200 Speaker 1: catching up with Rick readA, Jeff's colleague, in about thirty 217 00:10:20,240 --> 00:10:22,199 Speaker 1: forty minutes from now, to go through the bond market 218 00:10:22,200 --> 00:10:24,559 Speaker 1: and what this all means. I'll catch up with Anastasia 219 00:10:24,600 --> 00:10:27,120 Speaker 1: Amrosa a little bit later after that, with Mike Collins 220 00:10:27,240 --> 00:10:29,880 Speaker 1: and Muhammad al airin around the opening about after that 221 00:10:29,920 --> 00:10:31,720 Speaker 1: tea care if you haven't had enough, we'll get the 222 00:10:31,760 --> 00:10:34,319 Speaker 1: view from the White House. Secondly, Walsh coming up very 223 00:10:34,360 --> 00:10:38,160 Speaker 1: shortly in the next hour. John in a three months 224 00:10:38,240 --> 00:10:40,800 Speaker 1: moving average on non farm payerials with that big seven 225 00:10:40,840 --> 00:10:45,880 Speaker 1: hundred thousand statistic, a five hundred thirty five thousand. Jeff Rosenberg, 226 00:10:45,920 --> 00:10:50,040 Speaker 1: let me ask you really really dumb question. The public's 227 00:10:50,040 --> 00:10:53,000 Speaker 1: going on to go, what's wrong. We're generating five hundred 228 00:10:53,080 --> 00:10:58,080 Speaker 1: thirty five thousand jobs per month over ninety days. Why 229 00:10:58,120 --> 00:11:04,680 Speaker 1: are people leathered up it the sterling job formation. It's 230 00:11:04,679 --> 00:11:07,360 Speaker 1: a it's a great question. And you know, go back 231 00:11:07,360 --> 00:11:10,000 Speaker 1: to what Powell said wednesday, what we discussed, and I 232 00:11:10,040 --> 00:11:13,400 Speaker 1: think it was the most important takeaway, because you know, 233 00:11:13,600 --> 00:11:17,360 Speaker 1: what they're really trying to say is there on the 234 00:11:17,400 --> 00:11:22,760 Speaker 1: case of inflation, that inflation is the most important objective 235 00:11:22,800 --> 00:11:25,920 Speaker 1: within the duel, or or if you add financial stability 236 00:11:26,000 --> 00:11:29,200 Speaker 1: the three objectives, And what he said clearly was that 237 00:11:29,280 --> 00:11:33,000 Speaker 1: you can't have the benefits of broad based and inclusive 238 00:11:33,520 --> 00:11:39,160 Speaker 1: labor markets without price stability. Price stability is necessary for 239 00:11:39,200 --> 00:11:42,720 Speaker 1: the benefits of that labor market growth. So if we're 240 00:11:42,760 --> 00:11:48,479 Speaker 1: generating too much job growth, we're generating too much inflation. 241 00:11:49,080 --> 00:11:52,400 Speaker 1: Real wages are falling, and that's really the issue we 242 00:11:52,480 --> 00:11:54,480 Speaker 1: have right now is that yes, there's a lot of 243 00:11:54,520 --> 00:11:56,760 Speaker 1: strength in the labor market, but it's not keeping pace 244 00:11:56,840 --> 00:11:59,720 Speaker 1: with inflation, which means real incomes and falling. And that's 245 00:11:59,720 --> 00:12:02,520 Speaker 1: why when you look at consumer confidence when you look 246 00:12:02,520 --> 00:12:06,880 Speaker 1: at small business confidence, the confidence figures are falling and 247 00:12:07,040 --> 00:12:10,240 Speaker 1: in small business are exceptionally low because of the impact 248 00:12:10,280 --> 00:12:13,920 Speaker 1: of this inflation, and so they're gonna preference fighting inflation 249 00:12:14,280 --> 00:12:16,480 Speaker 1: over the job market. Now, what he said is, hey, 250 00:12:16,480 --> 00:12:18,800 Speaker 1: they can do both. They can find the path. There's 251 00:12:18,800 --> 00:12:21,320 Speaker 1: not going to be a recession. There's plenty of froth 252 00:12:21,440 --> 00:12:25,800 Speaker 1: that they can take out without raising unemployment. We'll see 253 00:12:25,840 --> 00:12:27,480 Speaker 1: whether or not that's going to be the case. You 254 00:12:27,480 --> 00:12:30,240 Speaker 1: can see lots of former FED officials coming out and 255 00:12:30,280 --> 00:12:32,200 Speaker 1: saying that's not going to be the case, and they're 256 00:12:32,200 --> 00:12:35,200 Speaker 1: going to actually have to tighten into restrictive territory. But 257 00:12:35,200 --> 00:12:39,160 Speaker 1: it's because inflation is the most important priority right now, Jeff. 258 00:12:39,200 --> 00:12:42,360 Speaker 1: After yesterday there was this whip sawing in markets, and 259 00:12:42,440 --> 00:12:44,920 Speaker 1: today we're looking at the carnage of yesterday and some 260 00:12:44,960 --> 00:12:47,640 Speaker 1: people are saying, is it time to buy the dip? 261 00:12:47,720 --> 00:12:49,880 Speaker 1: And I know that you've been cautious and wondering if 262 00:12:49,880 --> 00:12:53,280 Speaker 1: you're more or less cautious after the price action, and frankly, 263 00:12:53,600 --> 00:12:56,679 Speaker 1: the willingness that people have to just absolutely go and 264 00:12:56,720 --> 00:12:59,840 Speaker 1: just take the message on inflation away from the FED 265 00:13:00,160 --> 00:13:03,560 Speaker 1: and put it towards something that is a more concerning nature. 266 00:13:05,559 --> 00:13:08,439 Speaker 1: We I would say, when you look back at Wednesday 267 00:13:08,440 --> 00:13:11,520 Speaker 1: and Thursday, you know what happened, right, and and lots 268 00:13:11,559 --> 00:13:14,840 Speaker 1: of people coming up with explanations, but just what happened 269 00:13:14,920 --> 00:13:19,840 Speaker 1: was massive uncertainty reflected in huge swings in financial markets. 270 00:13:19,880 --> 00:13:23,240 Speaker 1: And so the takeaway is this is a reflection of 271 00:13:23,280 --> 00:13:28,120 Speaker 1: the significant point we are with respect to uncertainty around 272 00:13:28,160 --> 00:13:32,520 Speaker 1: policy and the economic and financial implications of that policy tightening. 273 00:13:32,840 --> 00:13:36,200 Speaker 1: And so it makes me you know, I guess, you know, 274 00:13:36,320 --> 00:13:41,080 Speaker 1: reaffirming our more cautious view that that swing and financial 275 00:13:41,120 --> 00:13:44,000 Speaker 1: markets is validating that this is going to be a 276 00:13:44,160 --> 00:13:48,840 Speaker 1: very tough environment until we get through the clarity around 277 00:13:49,080 --> 00:13:51,640 Speaker 1: what is that path of inflation and how tight does 278 00:13:51,679 --> 00:13:55,080 Speaker 1: the Fed have to get When we're in that uncertainty period, 279 00:13:55,080 --> 00:13:57,600 Speaker 1: you gotta have to expect that's reflected in these higher 280 00:13:57,679 --> 00:14:01,120 Speaker 1: levels of volatility, and therefore a little bit more conservatism 281 00:14:01,240 --> 00:14:05,520 Speaker 1: in your portfolio. Bloomberg Television, Bloomberg Radio, Jeffrey Rosenberger, Black Rocket. 282 00:14:11,280 --> 00:14:15,600 Speaker 1: It is a perfect time off of a good jobs report, 283 00:14:15,640 --> 00:14:18,520 Speaker 1: if not a very good jobs report with a ninety 284 00:14:18,600 --> 00:14:21,800 Speaker 1: day moving average of non farm payrolls. Paul with revision 285 00:14:22,720 --> 00:14:27,360 Speaker 1: five thirty five thousand, five years ago, ten years ago, 286 00:14:27,840 --> 00:14:31,560 Speaker 1: we would have killed for thattist. The optimist joins Neil 287 00:14:31,640 --> 00:14:34,640 Speaker 1: Datta with renaissance back row this morning. You know, how 288 00:14:34,640 --> 00:14:39,600 Speaker 1: does this job's report reaffirm your congenital optimism on the 289 00:14:39,640 --> 00:14:46,040 Speaker 1: American experiment. Well, it just shows a continued strong um 290 00:14:46,240 --> 00:14:49,000 Speaker 1: labor market dynamic. UM. I think at the margin it 291 00:14:49,120 --> 00:14:53,360 Speaker 1: was kind of Goldilocks like, um, you know, solid jobs growth, 292 00:14:53,360 --> 00:14:57,200 Speaker 1: the unemployment rate was flat, wage growth moderated a bit. UM. 293 00:14:57,240 --> 00:15:00,840 Speaker 1: I think this will take off. You know, if pal 294 00:15:00,960 --> 00:15:03,240 Speaker 1: didn't do it already, it'll clip a lot of the 295 00:15:03,280 --> 00:15:06,040 Speaker 1: potential hawkers tail risk out comes around the FED. Um. 296 00:15:06,080 --> 00:15:09,280 Speaker 1: No one's really gonna be talking about points anymore after 297 00:15:09,280 --> 00:15:12,080 Speaker 1: this report. So I think it's welcome and I think 298 00:15:12,120 --> 00:15:15,600 Speaker 1: some of the details under the surface were encouraging, right, 299 00:15:15,640 --> 00:15:21,640 Speaker 1: like manufacturing employment is booming. UM. So the good side 300 00:15:21,680 --> 00:15:23,560 Speaker 1: of the economy looks pretty healthy, and that tends to 301 00:15:23,560 --> 00:15:26,840 Speaker 1: be more cyclically sensitive. You know, what do you think 302 00:15:26,840 --> 00:15:29,240 Speaker 1: about wages going forward? Here? It seems like when we 303 00:15:29,280 --> 00:15:33,520 Speaker 1: get down to these unemployment rate numbers really suggest that 304 00:15:33,560 --> 00:15:36,960 Speaker 1: the pressure is mounting to really push wages up. How 305 00:15:36,960 --> 00:15:38,480 Speaker 1: do you think about that in the context of the 306 00:15:38,560 --> 00:15:42,720 Speaker 1: overall inflation we're seeing in our economy. Well, wages have 307 00:15:42,800 --> 00:15:45,760 Speaker 1: been so strong in certain industries as it is, and 308 00:15:45,800 --> 00:15:48,200 Speaker 1: you're you're actually beginning to see some of those industries 309 00:15:48,240 --> 00:15:51,120 Speaker 1: start to moderate somewhat. So, like leisure and hospitality, it's 310 00:15:51,120 --> 00:15:53,080 Speaker 1: still quite strong, but it's not nearly as strong as 311 00:15:53,080 --> 00:15:55,480 Speaker 1: it was several months ago. The same as can be 312 00:15:55,480 --> 00:15:58,280 Speaker 1: said for retail trade. Um. But I do think as 313 00:15:58,360 --> 00:16:00,520 Speaker 1: participation rates. I know, we didn't have good month for 314 00:16:00,600 --> 00:16:02,680 Speaker 1: the participation rate this month. A lot of that was 315 00:16:02,720 --> 00:16:06,800 Speaker 1: just a function of the younger workforce, I believe. But um, 316 00:16:06,840 --> 00:16:09,560 Speaker 1: you know, if participation picks up and more people are 317 00:16:09,600 --> 00:16:12,400 Speaker 1: looking for work, that will make the those that are 318 00:16:12,440 --> 00:16:16,480 Speaker 1: already working less tempted to quit their jobs. Um, you know, 319 00:16:16,640 --> 00:16:20,960 Speaker 1: kind of switch from one employer to another. UM, And 320 00:16:21,240 --> 00:16:24,480 Speaker 1: that should, um, you know, take some of the the 321 00:16:24,600 --> 00:16:26,880 Speaker 1: air out of out of wage growth. So I would 322 00:16:26,880 --> 00:16:30,840 Speaker 1: expect wage growth to moderate somewhat from where it is 323 00:16:30,960 --> 00:16:33,200 Speaker 1: right now over the remainder of the year. All Right, Well, 324 00:16:33,240 --> 00:16:35,480 Speaker 1: I just found up my youngest is starting his summer 325 00:16:35,560 --> 00:16:39,240 Speaker 1: job Sunday. So another person getting back back into the workforce. 326 00:16:39,720 --> 00:16:41,520 Speaker 1: So that's good news, and I think we're seeing that 327 00:16:41,600 --> 00:16:44,440 Speaker 1: across the board. But Neil, you know, if I'm the 328 00:16:44,440 --> 00:16:47,680 Speaker 1: Federal Reserve here, this is pretty solid. You miss the 329 00:16:47,720 --> 00:16:50,440 Speaker 1: punchline here. This is one of these Kusher banking jobs 330 00:16:50,440 --> 00:16:57,080 Speaker 1: where his entries one fifty animal hospital, Animal Hospital, Monterey County, California. 331 00:16:57,720 --> 00:16:59,440 Speaker 1: So he went out and got his job. He's probably 332 00:16:59,440 --> 00:17:03,040 Speaker 1: the most restive of my four kids, and he's youngest. Yeah, like, 333 00:17:03,480 --> 00:17:06,240 Speaker 1: I got a couple of people that can take exactly 334 00:17:06,280 --> 00:17:08,720 Speaker 1: continue with Mr. I'm gonna get him off the doll soon. 335 00:17:09,080 --> 00:17:12,760 Speaker 1: So Neil, again, my fel to Reserve. They're aggressive. Um, 336 00:17:12,880 --> 00:17:15,520 Speaker 1: the question is how aggressive should they be? So when 337 00:17:15,520 --> 00:17:18,320 Speaker 1: they see a numbers report like this, if I guess 338 00:17:18,359 --> 00:17:22,960 Speaker 1: their measured approach seems to be the way to go. Well, 339 00:17:23,000 --> 00:17:26,639 Speaker 1: I think the question you have to ask yourself really is, um, 340 00:17:26,920 --> 00:17:30,640 Speaker 1: is the FED going to risk um a hard landing 341 00:17:31,000 --> 00:17:33,840 Speaker 1: of the economy? Right? Um? You know when they talk 342 00:17:33,920 --> 00:17:37,600 Speaker 1: about soft landing, what they're really talking about is they're 343 00:17:37,640 --> 00:17:40,879 Speaker 1: willing to tolerate a little bit more relative to their 344 00:17:40,920 --> 00:17:43,960 Speaker 1: inflation target so that they don't have to push the 345 00:17:44,000 --> 00:17:48,680 Speaker 1: unemployment rate up too much. UM. So yeah, I mean, 346 00:17:48,720 --> 00:17:52,760 Speaker 1: I think they're going aggressively relative to what we've normally 347 00:17:52,760 --> 00:17:55,760 Speaker 1: been accustomed to. I mean, Pole basically green lit three 348 00:17:56,400 --> 00:17:59,920 Speaker 1: consecutive fifty basis point moves and said the next move 349 00:18:00,000 --> 00:18:01,960 Speaker 1: wouldn't be to stop, but would just simply be to 350 00:18:02,119 --> 00:18:04,920 Speaker 1: go twenty five at the remaining three meetings of the year. 351 00:18:05,080 --> 00:18:09,080 Speaker 1: So that's a pretty aggressive interest rate move relative to 352 00:18:09,160 --> 00:18:12,399 Speaker 1: what we've seen in recent memories. So, um, you know, 353 00:18:12,440 --> 00:18:14,880 Speaker 1: I don't know what neutral is, and neither do they. 354 00:18:15,640 --> 00:18:19,119 Speaker 1: My assumption is that it's probably higher than where they 355 00:18:19,119 --> 00:18:21,840 Speaker 1: would in the year. But you know, the fact that 356 00:18:21,880 --> 00:18:23,359 Speaker 1: the FED is willing to do so much, I think 357 00:18:23,440 --> 00:18:26,159 Speaker 1: is is important in and of itself. I mean, if 358 00:18:26,160 --> 00:18:28,439 Speaker 1: you told someone late last year that the FED was 359 00:18:28,440 --> 00:18:30,560 Speaker 1: going to go fifty basis points at the main meeting, 360 00:18:30,560 --> 00:18:32,040 Speaker 1: I mean you would have been laughed out of the room. 361 00:18:32,119 --> 00:18:34,440 Speaker 1: So I think that, you know, I mean, they pivoted 362 00:18:34,480 --> 00:18:38,040 Speaker 1: quite aggressively, Neil, very important to follow line from two 363 00:18:38,080 --> 00:18:42,919 Speaker 1: brilliant conversations in the lasts Michael Darda m CAM Partners 364 00:18:43,040 --> 00:18:47,840 Speaker 1: and Dominique Constanmate Miszooo. Both look at the nominal component 365 00:18:47,920 --> 00:18:51,320 Speaker 1: of real g D people's inflation. They see a FED 366 00:18:51,440 --> 00:18:54,320 Speaker 1: and and this is constants language, it is necessary and 367 00:18:54,440 --> 00:18:59,160 Speaker 1: sufficient to knock inflation down. Service sector coming on after 368 00:18:59,240 --> 00:19:03,399 Speaker 1: a diminution of of of goods. Inflation great, and that 369 00:19:03,600 --> 00:19:08,840 Speaker 1: because nominal GDP will come in because of the ginormous inflation. 370 00:19:08,880 --> 00:19:11,800 Speaker 1: Now it will come in not with a vengeance, but 371 00:19:11,920 --> 00:19:15,480 Speaker 1: it will come in as well. Providing an optimism the 372 00:19:15,520 --> 00:19:20,880 Speaker 1: FEDS can succeed discuss that outcome that inflation comes in 373 00:19:21,560 --> 00:19:23,960 Speaker 1: just because it's so large, now it's got to come 374 00:19:24,000 --> 00:19:28,400 Speaker 1: in well. As I mentioned Tom, I mean, manufacturing employment 375 00:19:28,520 --> 00:19:30,600 Speaker 1: was quite strong. What does that mean. It means that 376 00:19:30,640 --> 00:19:33,600 Speaker 1: industrial production is accelerating, and what does that mean. It 377 00:19:33,640 --> 00:19:37,040 Speaker 1: means that inventories are likely accelerating. And what does that mean. 378 00:19:37,160 --> 00:19:39,919 Speaker 1: It means that the prices for durable goods will moderate. 379 00:19:40,800 --> 00:19:42,439 Speaker 1: And so I think the FED is going to kind 380 00:19:42,480 --> 00:19:44,879 Speaker 1: of have the wind behind their back with respect to 381 00:19:44,920 --> 00:19:48,720 Speaker 1: the inflation data um over the next several months. I mean, 382 00:19:48,720 --> 00:19:52,120 Speaker 1: we know that car prices, wholesale sort of auction prices 383 00:19:52,160 --> 00:19:54,119 Speaker 1: for use cars have been coming down. That's going to 384 00:19:54,240 --> 00:19:59,560 Speaker 1: bleed into UH consumer prices. Obviously, motor vehicle assemblies are accelerating. 385 00:19:59,600 --> 00:20:04,399 Speaker 1: That's going bleed into new car prices. UM. And that 386 00:20:04,560 --> 00:20:08,440 Speaker 1: decline is a big reason why. I mean, why inflation 387 00:20:08,640 --> 00:20:12,080 Speaker 1: at least, you know, headline and core inflation will moderate. Um. 388 00:20:12,119 --> 00:20:14,480 Speaker 1: You know, we've seen some flattening out of energy. Obviously, 389 00:20:14,600 --> 00:20:17,560 Speaker 1: energy prices are still quite high. UM. Oil prices, not 390 00:20:17,640 --> 00:20:20,600 Speaker 1: gas prices are going up. So that's something to think about. 391 00:20:20,680 --> 00:20:22,680 Speaker 1: But I think you know, when I look at sort 392 00:20:22,720 --> 00:20:26,680 Speaker 1: of core inflation, UM, you know that will be moderating 393 00:20:26,760 --> 00:20:30,040 Speaker 1: somewhat because the durable goods um, you know, core consumer 394 00:20:30,119 --> 00:20:32,920 Speaker 1: durables will have will have moderated. And you know, let's 395 00:20:32,920 --> 00:20:34,920 Speaker 1: not forget the dollar here either. I mean, the dollar 396 00:20:35,000 --> 00:20:37,199 Speaker 1: has been strengthening. What is that gonna do? That's going 397 00:20:37,240 --> 00:20:40,680 Speaker 1: to push down the prices for imported consumer goods? All right, 398 00:20:40,760 --> 00:20:46,240 Speaker 1: So Neil, let's talk about economic growth here, Uh, recession stagflation, 399 00:20:46,280 --> 00:20:48,600 Speaker 1: which I had to go back to my economics textbook 400 00:20:48,640 --> 00:20:52,439 Speaker 1: and get the definition there of are either of those 401 00:20:52,760 --> 00:20:59,679 Speaker 1: issues in your forecast? I don't have recession in my forecast, no, um, 402 00:20:59,720 --> 00:21:02,040 Speaker 1: and I don't think anyone else does either. I mean, 403 00:21:02,040 --> 00:21:04,840 Speaker 1: what is it seventy chance of no recession over the 404 00:21:04,880 --> 00:21:11,840 Speaker 1: next two years? Yeah right, Yeah, But but to be fair, 405 00:21:11,880 --> 00:21:16,280 Speaker 1: focused Landau and Lozetti over Deutsche Bank have a printed 406 00:21:16,320 --> 00:21:19,440 Speaker 1: recession call. But as you correctly say, you know that's 407 00:21:19,440 --> 00:21:22,320 Speaker 1: not two years. I don't know how you do well. 408 00:21:22,359 --> 00:21:24,520 Speaker 1: I mean, you know, look in this business is difficult 409 00:21:24,560 --> 00:21:29,359 Speaker 1: to see um forward two months, let alone. But I 410 00:21:29,920 --> 00:21:35,159 Speaker 1: would I would just tell you, um, next year. Is 411 00:21:35,240 --> 00:21:37,840 Speaker 1: China looking better than it does now or worse? I 412 00:21:37,880 --> 00:21:41,320 Speaker 1: would argue, is Europe? Is Europe looking better than it 413 00:21:41,320 --> 00:21:44,119 Speaker 1: does now or worse? I would argue better. So the 414 00:21:44,200 --> 00:21:46,240 Speaker 1: argument is that the US economy is going to slip 415 00:21:46,240 --> 00:21:49,520 Speaker 1: into a recession at a time when Europe and China 416 00:21:49,560 --> 00:21:52,720 Speaker 1: are probably accelerating. I mean, we know that China's easing 417 00:21:52,760 --> 00:21:56,480 Speaker 1: conditions in their economy looked down notwithstanding, so when they 418 00:21:56,520 --> 00:21:59,640 Speaker 1: reopened that they should have the momentum behind them. Stay 419 00:21:59,680 --> 00:22:03,480 Speaker 1: with you'll stay with us. We've got Secretary Walsh coming up, 420 00:22:03,520 --> 00:22:06,480 Speaker 1: a Secretary of Labor with John Farrow. Michael Barr will 421 00:22:06,560 --> 00:22:10,000 Speaker 1: be on now, but we continue with Neil Dutti here. Neil, 422 00:22:10,080 --> 00:22:13,720 Speaker 1: I've been talking about this for three days. Based on 423 00:22:13,760 --> 00:22:16,440 Speaker 1: everything we know about the pandemic, there will be an 424 00:22:16,640 --> 00:22:22,000 Speaker 1: end to the lockdown in China when that occurs. What 425 00:22:22,080 --> 00:22:27,119 Speaker 1: does it mean for our listeners from c to Shining Sea. Well, 426 00:22:27,160 --> 00:22:30,399 Speaker 1: I think it introduces a incremental source of demand to 427 00:22:30,400 --> 00:22:33,760 Speaker 1: the global economy and will relief pressure on global supply chain. 428 00:22:33,840 --> 00:22:37,520 Speaker 1: So it would it would imply shifting composition in the 429 00:22:38,880 --> 00:22:41,000 Speaker 1: nominal growth, you would have a little bit more que 430 00:22:41,520 --> 00:22:44,439 Speaker 1: quantity and a little bit less price. There we go, 431 00:22:44,520 --> 00:22:52,880 Speaker 1: Neil Dotta, thank you so much, Renaissance Marco. I need 432 00:22:52,920 --> 00:22:55,920 Speaker 1: to review this, folks, so you understand the framework. First 433 00:22:55,920 --> 00:22:58,919 Speaker 1: of all, the singular interview we have had on the 434 00:22:58,960 --> 00:23:02,879 Speaker 1: war in Ukraine was of General kimmittt many many weeks ago, 435 00:23:03,119 --> 00:23:07,200 Speaker 1: where he described exactly what would occur in the urban 436 00:23:07,320 --> 00:23:11,000 Speaker 1: areas of Ukraine. Of course, it's a much larger story 437 00:23:11,119 --> 00:23:14,760 Speaker 1: and centers this morning on the new strategy and new 438 00:23:14,880 --> 00:23:20,840 Speaker 1: visibility of U S Intelligence assisting Ukraine and specifically off 439 00:23:20,880 --> 00:23:23,400 Speaker 1: of NBC News and then rewritten by the New York 440 00:23:23,400 --> 00:23:27,320 Speaker 1: Times in the Washington Post in immense detail this morning, 441 00:23:28,040 --> 00:23:31,879 Speaker 1: the shades the colors of assistance on intelligence that we 442 00:23:31,960 --> 00:23:34,560 Speaker 1: provided and alluding to, of course, the sinking of the 443 00:23:34,640 --> 00:23:39,119 Speaker 1: Russian substantial Russian ship and the Black Sea. Mark Kimmitt 444 00:23:39,200 --> 00:23:42,640 Speaker 1: with a sterling career with the United States Armory and Army, 445 00:23:42,720 --> 00:23:47,159 Speaker 1: including artillery, and also his service to the Supreme Command 446 00:23:47,240 --> 00:23:51,520 Speaker 1: in NATO. Mark Kimmitt were used surprised by the depth 447 00:23:51,640 --> 00:24:00,040 Speaker 1: of this reporting from sources from people familiar from US officials. No, 448 00:24:00,160 --> 00:24:03,000 Speaker 1: I really wasn't. Uh. If you take a look at 449 00:24:03,160 --> 00:24:11,679 Speaker 1: significant material support that we have been giving to the fight, artillery, javelin, missiles, switchblades. 450 00:24:12,480 --> 00:24:15,880 Speaker 1: If we are giving that level of material support, why 451 00:24:15,960 --> 00:24:19,320 Speaker 1: wouldn't we be giving that level of intelligerent support as well? 452 00:24:19,400 --> 00:24:22,480 Speaker 1: I'd be surprised if we hadn't been providing that level 453 00:24:22,480 --> 00:24:27,320 Speaker 1: of support. Should those along the eastern front of Europe 454 00:24:27,640 --> 00:24:30,040 Speaker 1: up to Finland and all the challenges they have with 455 00:24:30,200 --> 00:24:35,000 Speaker 1: NATO admission, should they be worried of the reaction off 456 00:24:35,040 --> 00:24:38,919 Speaker 1: of the last forty eight hours reports from Mr Putin? 457 00:24:40,640 --> 00:24:44,719 Speaker 1: I don't necessarily see why would they would be concerned 458 00:24:44,760 --> 00:24:48,119 Speaker 1: if you're talking about these these phony nuclear threats that 459 00:24:48,240 --> 00:24:51,520 Speaker 1: he's been putting out, I wouldn't. I wouldn't lose any 460 00:24:51,520 --> 00:24:55,040 Speaker 1: sleep over that at all. In general, I'm sure I'm 461 00:24:55,080 --> 00:24:57,480 Speaker 1: like a lot of observers of this conflict and just 462 00:24:57,600 --> 00:25:03,160 Speaker 1: shocked at the poor performance of Russian military. Um, what 463 00:25:03,240 --> 00:25:06,679 Speaker 1: does Mr Putin do now from a military perspective here, 464 00:25:06,720 --> 00:25:09,160 Speaker 1: because it seems like every day that goes past Ukraine 465 00:25:09,160 --> 00:25:14,840 Speaker 1: gets more and more momentum. Well, he's already downscaled his aspirations. Remember, 466 00:25:14,920 --> 00:25:18,359 Speaker 1: he started off his attack towards Kiev with the intent 467 00:25:18,480 --> 00:25:24,560 Speaker 1: of a lightning like blitzkrieg of armored forces and airborne 468 00:25:24,600 --> 00:25:28,000 Speaker 1: forces to take ev turn over. The government put in 469 00:25:28,040 --> 00:25:32,760 Speaker 1: a puppet regime that was pretty bold, and now because 470 00:25:32,800 --> 00:25:35,600 Speaker 1: of the consistent failures that they've had, they've had to 471 00:25:35,640 --> 00:25:40,040 Speaker 1: downscope their aspiration, so they're now pretty much focused on 472 00:25:40,080 --> 00:25:45,200 Speaker 1: the area that the separatists already had. What's he going 473 00:25:45,240 --> 00:25:48,920 Speaker 1: to do going forward? More than likely he will continue 474 00:25:48,960 --> 00:25:51,960 Speaker 1: to double down. The last thing he ever he wants 475 00:25:51,960 --> 00:25:53,920 Speaker 1: to do on May nine is stand up in front 476 00:25:53,960 --> 00:25:56,840 Speaker 1: of his people and say I'm giving up. So, in 477 00:25:56,920 --> 00:26:00,640 Speaker 1: typical Russian fashion, he'll just keep pushing more war troops 478 00:26:00,760 --> 00:26:05,480 Speaker 1: into this cauldron and try to fight for a little 479 00:26:05,480 --> 00:26:07,800 Speaker 1: bit of more territory which he may or may not 480 00:26:07,920 --> 00:26:11,520 Speaker 1: get um and hope that europe will finally get tired 481 00:26:11,520 --> 00:26:14,960 Speaker 1: of this and need gas more than they need Ukrainian independence. 482 00:26:15,920 --> 00:26:19,840 Speaker 1: So in general, again, from from the Ukrainian perspective, assuming 483 00:26:19,840 --> 00:26:23,639 Speaker 1: that they continue to get increased military support from Western 484 00:26:23,720 --> 00:26:26,800 Speaker 1: nations other European nations, what do you think their aspirations 485 00:26:26,880 --> 00:26:29,240 Speaker 1: should be. Should they be We're going to get Russia 486 00:26:29,240 --> 00:26:31,959 Speaker 1: out of the whole of Ukraine or do you think 487 00:26:32,000 --> 00:26:36,240 Speaker 1: they will negotiate for maybe something a little bit more modest. Well, 488 00:26:36,440 --> 00:26:39,400 Speaker 1: certainly that's their aspiration, not only to get Russia out, 489 00:26:39,440 --> 00:26:43,160 Speaker 1: but actually to to extend sovereignty back into the Don 490 00:26:43,200 --> 00:26:46,600 Speaker 1: Boss region, which is pretty much a wild west controlled 491 00:26:46,600 --> 00:26:50,920 Speaker 1: by the separatists. Logically, though, I think they will probably 492 00:26:52,040 --> 00:26:56,439 Speaker 1: at best get back to where it was about a 493 00:26:56,520 --> 00:26:59,080 Speaker 1: year ago, where the Don Boss continues to be an 494 00:26:59,119 --> 00:27:04,000 Speaker 1: unsettled region and and they have territorial control over the 495 00:27:04,000 --> 00:27:07,320 Speaker 1: rest of Ukraine, and it turns into what some would 496 00:27:07,320 --> 00:27:10,640 Speaker 1: call a frozen conflict, the kind of conflict we had 497 00:27:10,920 --> 00:27:14,199 Speaker 1: in the Garner car box between Azerbaijan and Armenia for 498 00:27:14,280 --> 00:27:19,040 Speaker 1: many years, between India and Pakistan and the Kashmir just 499 00:27:19,119 --> 00:27:21,520 Speaker 1: be a frozen conflict that goes on to quite some time. 500 00:27:21,840 --> 00:27:23,600 Speaker 1: If you're just joining a smart Kimmitt with us for 501 00:27:23,640 --> 00:27:27,920 Speaker 1: an extended conversation this morning off of U s intelligence 502 00:27:27,960 --> 00:27:30,440 Speaker 1: discussions of the last twenty four hours, but of course 503 00:27:30,440 --> 00:27:33,920 Speaker 1: of the war in Ukraine in general, Uh, General Kimon. 504 00:27:34,440 --> 00:27:36,879 Speaker 1: There's been so much talk in the interviews Paul Sweeney 505 00:27:36,920 --> 00:27:39,720 Speaker 1: and I have done about World War three, and what 506 00:27:39,800 --> 00:27:44,840 Speaker 1: I find is international relations pros and military retired are 507 00:27:45,080 --> 00:27:50,640 Speaker 1: heated that it is overwrought. Should we analyze an expansion 508 00:27:50,840 --> 00:27:55,400 Speaker 1: of the war. Should that be part of the discussion. Well, 509 00:27:55,480 --> 00:27:58,520 Speaker 1: first of all, I agree with those retired generals that 510 00:27:58,560 --> 00:28:01,639 Speaker 1: are talking about this being overwrought. I mean, this is 511 00:28:01,800 --> 00:28:05,760 Speaker 1: the life we lived during the Cold War years. Bob 512 00:28:05,800 --> 00:28:08,040 Speaker 1: Gates had a recent dinner that I was at. The 513 00:28:08,080 --> 00:28:11,480 Speaker 1: former Secretary Defense said, we just got to realize that 514 00:28:11,600 --> 00:28:14,560 Speaker 1: this holiday from history that we've had over the last 515 00:28:14,640 --> 00:28:17,680 Speaker 1: twenty five years has come to an end, and we're 516 00:28:17,680 --> 00:28:21,399 Speaker 1: getting back to that great power competition between Russia and 517 00:28:21,440 --> 00:28:25,400 Speaker 1: the United States these days. So this should be seen 518 00:28:25,440 --> 00:28:29,000 Speaker 1: as the norm and not necessarily as as something new. 519 00:28:29,400 --> 00:28:32,600 Speaker 1: Robert Gates is extraordinary, folks. I'm gonna steal that first 520 00:28:32,960 --> 00:28:38,160 Speaker 1: this weekend from from Secretary Gates. Holiday from History many 521 00:28:38,200 --> 00:28:41,320 Speaker 1: have written about. I believe it was two thousand eight 522 00:28:41,320 --> 00:28:46,240 Speaker 1: in Belgrade and a meeting of EU, NATO America. I 523 00:28:46,240 --> 00:28:47,920 Speaker 1: don't know the details in front of me, sir. I'm 524 00:28:47,960 --> 00:28:52,080 Speaker 1: sorry with Secretary Rice among others, where maybe we made 525 00:28:52,080 --> 00:28:57,480 Speaker 1: the decision to extend towards Russia. That's not Mark Kimmitt territory. 526 00:28:57,560 --> 00:29:02,000 Speaker 1: You're not one to evil gaze back and say should 527 00:29:02,000 --> 00:29:05,880 Speaker 1: have could? What if? When you hear people analyze the 528 00:29:06,000 --> 00:29:10,840 Speaker 1: what ifs of the US in the postcode war, the 529 00:29:10,920 --> 00:29:15,840 Speaker 1: holiday from history, how do you respond to that? Well, 530 00:29:16,080 --> 00:29:18,920 Speaker 1: so there's two arguments there, and this whole subject of 531 00:29:19,000 --> 00:29:26,320 Speaker 1: NATO expansion, which came really started right around and was 532 00:29:26,400 --> 00:29:32,680 Speaker 1: in full swing by the time that meeting happened in Dulgrade. Uh. 533 00:29:32,720 --> 00:29:35,200 Speaker 1: There are two sides of the argument. The first side 534 00:29:35,240 --> 00:29:39,200 Speaker 1: of the argument says Russia has always demanded a buffer 535 00:29:39,440 --> 00:29:45,480 Speaker 1: with the West. The word Ukraine in Polish means frontier. 536 00:29:46,080 --> 00:29:49,240 Speaker 1: The Criina, as people would remember from the balkanst days, 537 00:29:49,320 --> 00:29:53,479 Speaker 1: mean frontier. Russia always wanted a buffer from the West, 538 00:29:54,480 --> 00:29:57,240 Speaker 1: and we saw it in this century as the war 539 00:29:57,280 --> 00:30:03,280 Speaker 1: saw a pack those countries between the NATO, Western European 540 00:30:03,320 --> 00:30:08,040 Speaker 1: companies countries in Russia. The problem that Russia has, and 541 00:30:08,040 --> 00:30:11,400 Speaker 1: the problem that argument has, is if you agree that 542 00:30:11,480 --> 00:30:16,080 Speaker 1: Russia should have a buffer zone. Well, that means you 543 00:30:16,240 --> 00:30:22,320 Speaker 1: do not allow for sovereign decisions and national decisions being 544 00:30:22,360 --> 00:30:25,600 Speaker 1: made by those countries in the way. So it's very 545 00:30:25,680 --> 00:30:28,080 Speaker 1: easy for us to say this wouldn't have happened if 546 00:30:28,200 --> 00:30:32,760 Speaker 1: NATO had not crept up on UH Russia and it's 547 00:30:32,800 --> 00:30:35,680 Speaker 1: now on the borders of Russia. But you you would 548 00:30:35,720 --> 00:30:37,680 Speaker 1: have to then say, what does that mean that we 549 00:30:37,760 --> 00:30:41,280 Speaker 1: need to deny the Romanians and the Hungarians and the 550 00:30:41,360 --> 00:30:45,200 Speaker 1: Ukrainians UH their decision to be part of the West 551 00:30:45,440 --> 00:30:48,400 Speaker 1: rather than part of the East. And I fall on 552 00:30:48,400 --> 00:30:52,560 Speaker 1: the side of those those that say, look, these people 553 00:30:52,640 --> 00:30:56,040 Speaker 1: have as much right to decide their future whether they 554 00:30:56,040 --> 00:30:59,040 Speaker 1: want to lean towards the west or lean towards the east, 555 00:30:59,240 --> 00:31:03,080 Speaker 1: and we should not deny that to them, sim because 556 00:31:03,160 --> 00:31:06,520 Speaker 1: Russia maybe a little bit concerned. General Kimmitt, thank you 557 00:31:06,560 --> 00:31:10,400 Speaker 1: for joining us this morning. Mark Kimmitt, of course a 558 00:31:10,480 --> 00:31:14,920 Speaker 1: former Assistant Secretary of State for Political Military Affairs. This 559 00:31:14,960 --> 00:31:18,800 Speaker 1: is the Bloomberg Surveillance Podcast. Thanks for listening. Join us 560 00:31:18,840 --> 00:31:22,600 Speaker 1: live weekdays from seven to ten am Eastern on Bloomberg 561 00:31:22,680 --> 00:31:26,480 Speaker 1: Radio and on Bloomberg Television each day from six to 562 00:31:26,640 --> 00:31:31,280 Speaker 1: nine am for insight from the best in economics, finance, investment, 563 00:31:31,440 --> 00:31:36,440 Speaker 1: and international relations. And subscribe to the Surveillance podcast on 564 00:31:36,520 --> 00:31:40,360 Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course, on 565 00:31:40,480 --> 00:31:44,600 Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg.