WEBVTT - Stocks Bounce on Trump’s Iran Peace Push 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.240 us live on YouTube. 0:00:27.720 --> 0:00:30.120 Okay, folks, what we're going to talk about you. We're 0:00:30.160 --> 0:00:33.559 not gonna talk dsge. We're not going to talk intercals 0:00:33.560 --> 0:00:37.199 within intericals or derivatives the mathiveness that Richard Clarett has 0:00:37.200 --> 0:00:40.159 acclaimed for the former vice chairman of the FED. I 0:00:40.240 --> 0:00:42.040 don't want to know when the Fed's going to cut 0:00:42.120 --> 0:00:44.680 rates or all that. We're going to talk about what 0:00:44.720 --> 0:00:48.160 you did at Columbia. Okay, Richard Claret of folks went 0:00:48.200 --> 0:00:53.559 into Columbia with some massive hires in retention of one 0:00:53.600 --> 0:00:56.440 of the best faculties in the planet. It goes back 0:00:56.440 --> 0:00:59.080 to Luvin in Belgium, it goes back to some of 0:00:59.080 --> 0:01:02.800 the way back work in Germany, and of course the 0:01:02.880 --> 0:01:09.000 combine out of England is well, you retained a laureate Stiglitz. Yeah, 0:01:09.480 --> 0:01:12.800 you dealt with Jeff Sachs with all of his ability. 0:01:13.000 --> 0:01:16.760 In that you have ned Phelps with this massive eclectic 0:01:17.480 --> 0:01:23.880 view over time. Colombia owns the social analysis. Good morning Chicago, 0:01:24.200 --> 0:01:27.880 and mister Becker, you own the social analysis of this 0:01:28.080 --> 0:01:32.000 K shaped economy. Jeff Sacks wrote a book twenty years ago. 0:01:32.040 --> 0:01:35.120 I'm going to say it was way out front on 0:01:35.280 --> 0:01:38.720 this how case shaped are we? When you talk to 0:01:38.800 --> 0:01:43.040 your friends and Romans and countrymen in Colombia, how K 0:01:43.200 --> 0:01:44.840 shaped are we now? Doctor Claardon. 0:01:44.959 --> 0:01:48.720 Well, and also you left out Bob Mandell, Chili a 0:01:48.760 --> 0:01:53.760 giant and international monetary economics. So it certainly been a 0:01:53.760 --> 0:01:56.840 treat to be at Columbia all these years. We're definitely 0:01:56.840 --> 0:02:00.280 in a K shape economy. I think we've been moving 0:02:00.320 --> 0:02:03.800 in that direction for thirty years. Not in a straight line, 0:02:03.840 --> 0:02:07.560 but the trend has definitely been in that direction. I 0:02:07.560 --> 0:02:12.280 think the events with the pandemic, the policy response, and 0:02:12.760 --> 0:02:17.480 the like amplified some of those trends. You know, in America, 0:02:18.000 --> 0:02:21.400 if you own your home, as sixty percent of people do, 0:02:21.760 --> 0:02:24.520 and if you own stock, you've had a very good run. 0:02:24.600 --> 0:02:26.240 But that means there's. 0:02:26.080 --> 0:02:30.079 A substantial fraction of the country that has not been participating. 0:02:30.120 --> 0:02:32.399 Maybe if I can just parachute a bit in on this. 0:02:33.560 --> 0:02:35.720 You know, at the FED. When the economy slows, you 0:02:35.800 --> 0:02:38.320 cut rates, and I certainly did that at my time 0:02:38.800 --> 0:02:39.480 at the FED. 0:02:39.880 --> 0:02:40.520 And the FED. 0:02:40.440 --> 0:02:43.240 Understands that when it lowers rates, it's going to support 0:02:43.280 --> 0:02:45.160 the labor market, which is good and for a lot 0:02:45.240 --> 0:02:48.400 of people that is their stake in the economy. 0:02:48.000 --> 0:02:48.600 Is their job. 0:02:49.360 --> 0:02:52.480 But low rates also lead to higher acid valuations and 0:02:52.840 --> 0:02:56.079 also leads to some of the trends that you've mentioned 0:02:56.120 --> 0:02:58.880 in the case shape economy. And so I think central 0:02:58.919 --> 0:03:02.359 bankers understand that, but their toolkit is really pretty limited. 0:03:02.400 --> 0:03:04.760 So I think that's how we end up with this dynamic. 0:03:05.560 --> 0:03:08.359 How does it fit a reserve? Any central bank deal 0:03:08.400 --> 0:03:10.920 with a black swan like, oh, I don't know, a 0:03:10.960 --> 0:03:13.440 war and rent that came out of nowhere. I mean, 0:03:13.720 --> 0:03:16.640 how does a FED typically look at those types of events. 0:03:18.080 --> 0:03:22.560 It's difficult to predict back swanp black swans almost by definition. 0:03:23.320 --> 0:03:24.960 So what you try to do is you try to 0:03:24.960 --> 0:03:27.799 do analysis. You try to look back at history. You know, 0:03:28.680 --> 0:03:32.400 history doesn't repeat, but it rhymes as the saying goes. 0:03:32.480 --> 0:03:34.400 And so I'm sure at the FED they're looking at 0:03:34.440 --> 0:03:38.560 past oil shocks, past Middle East conflicts, but they'll also 0:03:38.640 --> 0:03:41.280 have to fix factor in Paul that it's a different 0:03:41.360 --> 0:03:43.920 US economy than you know back in my college years 0:03:43.920 --> 0:03:46.960 in the nineteen seventies. In particular of the US is 0:03:47.000 --> 0:03:52.800 a net energy export. Important, however, is in the FEDS 0:03:52.920 --> 0:03:56.400 models it's still the case that when energy prices go up, 0:03:56.760 --> 0:03:59.400 the economy slows, and I think the main reason for 0:03:59.480 --> 0:04:02.200 that is that roads real incomes for a lot of workers. 0:04:03.440 --> 0:04:06.160 Also the fact that the US imports a lot of 0:04:06.200 --> 0:04:09.320 goods that have a high energy content, and so yes, 0:04:09.640 --> 0:04:11.840 you'd better be an exporter than an importer. But the 0:04:12.000 --> 0:04:13.960 US is not insulated from this shop. 0:04:14.360 --> 0:04:18.000 Karl Marx comes from the giant Thomas soul Out at Hoover. Yeah, 0:04:18.279 --> 0:04:21.400 and also from my great mentor in London, Megduan to Saia, 0:04:21.440 --> 0:04:24.560 who we lost last year, Carl Marx said in the 0:04:24.560 --> 0:04:28.280 British Museum reading room and wrote a treatise on the 0:04:28.400 --> 0:04:32.000 end of capitalism, and the bottom line is by definition 0:04:32.080 --> 0:04:36.120 we become ever more k shaped, evermore divided, and there's 0:04:36.200 --> 0:04:40.160 corrective solutions. Do you worry that within all of the 0:04:40.200 --> 0:04:44.000 institutions of you, as you've represented, that we're getting to 0:04:44.080 --> 0:04:46.359 stress points where it falls apart. 0:04:48.160 --> 0:04:50.440 Well, I'm not sure of that, but certainly. 0:04:50.080 --> 0:04:54.080 The trends, as I mentioned, since twenty twenty have definitely 0:04:54.279 --> 0:04:57.239 moved more in that direction. I would point out, though, 0:04:58.240 --> 0:05:00.600 that we have had periods not all that long ago, 0:05:00.760 --> 0:05:04.080 you know, certainly in the last part of Obama and 0:05:04.440 --> 0:05:08.920 during the first Trump term, before the before the pandemic, 0:05:09.400 --> 0:05:12.160 you actually had some of those K shaped trends reversing 0:05:12.520 --> 0:05:15.440 and lower desk. And I can certainly tell you that 0:05:15.560 --> 0:05:17.400 during my time at the FED, it was one of 0:05:17.400 --> 0:05:20.280 my focuses. That's one reason why the FED got a 0:05:20.320 --> 0:05:23.679 lot of criticism for cutting rates in twenty nineteen, because 0:05:23.920 --> 0:05:27.280 the unemployment rate was below four percent, and some models 0:05:27.279 --> 0:05:29.760 were saying, oh, you can't operate the economy below four 0:05:29.800 --> 0:05:32.960 percent unemployment. And our attitude, well, let's see how the 0:05:33.000 --> 0:05:36.680 economy operates. And I think that was a positive development. 0:05:36.800 --> 0:05:39.680 And so I think policymakers do need when they are 0:05:39.720 --> 0:05:44.479 in healthy economy to allow the economy to reach its potential. 0:05:44.839 --> 0:05:47.800 Well, one could argue, I mean the war. Notwithstanding the 0:05:47.839 --> 0:05:51.240 economy is generally performing well in terms of growth, the 0:05:51.320 --> 0:05:54.880 unemployment still looks like at our near full employment. Sure, 0:05:55.560 --> 0:05:57.240 I guess that's a recipe for the FED to say, 0:05:57.240 --> 0:05:59.160 all right, we're doing our job and maybe we can 0:05:59.240 --> 0:06:01.880 just sit down, stand down a little bit. Is that 0:06:01.920 --> 0:06:03.080 what you expect the FED to do over the next 0:06:03.120 --> 0:06:03.920 several meetings? 0:06:04.279 --> 0:06:04.680 I do. 0:06:04.839 --> 0:06:08.480 I think that they've pretty much signaled that the existing 0:06:08.520 --> 0:06:12.560 FED before Kevin Warsh arrives, it is happy right now 0:06:13.000 --> 0:06:16.520 to step back see how the economy evolves with its 0:06:16.640 --> 0:06:21.600 energy shock. It is interesting, though, that they did indicate 0:06:21.680 --> 0:06:23.960 that most of the members of the committee still see 0:06:24.000 --> 0:06:27.800 at least one cut this year and next year as appropriate, 0:06:27.920 --> 0:06:31.440 and so I would think that over time Kevin Warsh 0:06:31.480 --> 0:06:33.720 will be able to get the Committee to cut rates 0:06:33.760 --> 0:06:36.120 at least a couple more times, but it may not 0:06:36.240 --> 0:06:38.320 happen for for a while. 0:06:38.560 --> 0:06:40.960 Richard Clarina with this folks of Columbia, of course of 0:06:41.080 --> 0:06:45.000 PIMCO as well, global economic advisor in the former chair 0:06:45.040 --> 0:06:47.840 of the Federal former vice chair, It's going to give 0:06:47.839 --> 0:06:52.200 you a promotion Therey formervice chair the Federal system as well. Okay, 0:06:52.200 --> 0:06:54.320 I've got to get you in trouble. Myrone was and 0:06:54.360 --> 0:06:56.640 Governor Myron was in with John Farrell. John I thought 0:06:56.680 --> 0:07:03.000 was great. Good, there's a FED reacting after the fact, folks, 0:07:03.120 --> 0:07:05.800 John Tucker told me the Latin is ex post, and 0:07:05.839 --> 0:07:08.360 then there's this whole dream of getting out front and 0:07:08.360 --> 0:07:11.600 fixing it before it screws up, called ex ANTI. I 0:07:11.640 --> 0:07:16.240 would suggest Governor Myron is not nearly ex post. Is 0:07:16.280 --> 0:07:19.680 his brethren at the FED. He genuinely wants to get 0:07:19.920 --> 0:07:23.360 x anti. Is there any evidence of a successful central 0:07:23.400 --> 0:07:26.200 bank trying to get out front of the model? 0:07:28.240 --> 0:07:32.240 Well, you have to look pretty long and hard to 0:07:32.280 --> 0:07:32.680 find that. 0:07:35.000 --> 0:07:35.720 New testament. 0:07:35.880 --> 0:07:39.480 Yeah, you know, models are tools, but they're backward looking, 0:07:39.600 --> 0:07:44.440 and in particular, I think oftentimes the argument that Governor 0:07:44.480 --> 0:07:46.360 Myron has made is he. 0:07:46.160 --> 0:07:48.960 He has a personal individual belief that the. 0:07:48.960 --> 0:07:51.800 Neutral interest rate in the US is well below the 0:07:51.800 --> 0:07:55.080 current level and well below where the committee believes. You know, 0:07:55.400 --> 0:07:57.800 he could be right, but I don't think that is 0:07:57.840 --> 0:08:00.680 the view on the committee, So I think he'll continue 0:08:01.320 --> 0:08:04.120 to be a minority view on that. 0:08:04.800 --> 0:08:09.480 You mentioned mister Walsh taking the FED chair seat later 0:08:09.600 --> 0:08:10.280 this year. 0:08:10.120 --> 0:08:10.960 In several months time. 0:08:11.440 --> 0:08:13.360 I'm not sure we've got a path for that to happen. 0:08:13.440 --> 0:08:16.920 How concerned are you about some of the noise surrounding 0:08:16.960 --> 0:08:17.360 that whole. 0:08:17.520 --> 0:08:20.840 Well, I think it's pretty clear now that in order 0:08:20.880 --> 0:08:22.720 to become a FED chair you've got to be confirmed 0:08:22.720 --> 0:08:24.880 by the Senate, and to be confirmed by the Senate, 0:08:24.880 --> 0:08:26.440 you have to have an affirmative. 0:08:26.040 --> 0:08:27.320 Vote in the Banking Committee. 0:08:27.360 --> 0:08:31.960 And right now, Senator till Us has indicated he will 0:08:31.960 --> 0:08:35.120 not support any FED nominee, including Warsh, who he thinks 0:08:35.160 --> 0:08:40.320 would be a good choice, until the current situation with 0:08:40.440 --> 0:08:44.160 the Justice Department subpoenas and the FED is resolved. And 0:08:44.240 --> 0:08:46.320 Power more or less said that himself that he's not 0:08:46.400 --> 0:08:49.840 going anywhere until it's resolved. We do think it will 0:08:49.880 --> 0:08:53.840 be resolved. We do think eventually Warsh becomes chair. The 0:08:53.920 --> 0:08:56.320 timing of that is uncertain. Whether or not it happens 0:08:56.360 --> 0:08:58.960 in time for the June meeting is too soon to tell. 0:08:59.000 --> 0:09:02.600 But we do a thing eventually that it will get resolved. 0:09:02.600 --> 0:09:05.680 The first thing I did with AI, yeah, Tom Sekunda 0:09:05.760 --> 0:09:08.760 was our founders grabbed me by the cheese its rack 0:09:08.840 --> 0:09:10.840 in the food court, so that we need a briefing. 0:09:10.880 --> 0:09:14.680 And is mister Secunda's leadership. Folks on AI is noted 0:09:14.720 --> 0:09:19.439 across a ten state area. Richard Clarita, he said, here's AI. 0:09:20.160 --> 0:09:22.600 Get up to speed on it. Richard Clarita is up 0:09:22.600 --> 0:09:26.000 to speed on AI right now? Is it a job 0:09:26.120 --> 0:09:28.959 creator or is it a job loser? 0:09:29.600 --> 0:09:34.240 Well, right now doesn't appear to be either in the data. 0:09:34.800 --> 0:09:38.040 And I think there is as many opinions on this 0:09:38.120 --> 0:09:42.480 as there are people that you talk to. Myself, I am. 0:09:42.840 --> 0:09:45.640 I'm skeptical that in the next year or so we're 0:09:45.679 --> 0:09:48.280 going to see a dramatic change in the labor market 0:09:48.320 --> 0:09:53.040 because of AI. The models are impressive, but the analogy 0:09:53.120 --> 0:09:56.440 I like to use is even their developers admit right 0:09:56.559 --> 0:09:57.360 they hallucinate. 0:09:57.720 --> 0:09:59.600 Hallucination is a feature, not a bug. 0:09:59.640 --> 0:10:01.200 And I don't know about you, a Bloomber, but I 0:10:01.240 --> 0:10:04.240 can tell you at PIMCO, we don't hire a lot 0:10:04.320 --> 0:10:07.360 of employees who say part of my job description is 0:10:07.400 --> 0:10:09.640 I'm going to hallucinate, And so I think until they 0:10:09.679 --> 0:10:12.280 figure that out, it may not have as much an 0:10:12.280 --> 0:10:14.200 effect on the labor market as people think. 0:10:14.280 --> 0:10:17.120 You and I used a Kueful and Asker slide rule. Okay, 0:10:17.200 --> 0:10:19.480 the only way you can learn logs is a slide rule. 0:10:19.679 --> 0:10:22.840 Remember when the Hewlett Packard cat or the rich kids 0:10:23.200 --> 0:10:24.520 had the Helett Packard. 0:10:25.320 --> 0:10:28.480 What was it called reverse polish reverse polish notation. 0:10:28.679 --> 0:10:31.560 I got one on my phone here, But to me, 0:10:31.640 --> 0:10:34.120 it's the same shift where the professors are going mental 0:10:34.160 --> 0:10:37.360 and clash and use your calculator and all that, and 0:10:37.480 --> 0:10:39.280 we're just gonna get We're gonna deal with it. 0:10:39.559 --> 0:10:40.600 I think we're gonna deal. 0:10:40.520 --> 0:10:43.200 With it, and remember that near term, in order to 0:10:43.200 --> 0:10:45.960 get the nirvana of AI benefits, there has to be 0:10:45.960 --> 0:10:49.720 a lot of capital spending, data centers, power generation, and 0:10:49.760 --> 0:10:53.120 so that the interesting thing about AI right now is 0:10:53.160 --> 0:10:55.360 that it's really a driver of a lot of the 0:10:55.400 --> 0:10:57.640 old traditional bricks and mortar economy. 0:10:57.960 --> 0:11:01.480 One final question, Yes, sir own Powell. Yeah, you've been 0:11:01.520 --> 0:11:04.720 a staunch defender of him. He's had a pretty good 0:11:04.800 --> 0:11:10.400 ten days week here. Yeah. And so the governor as well, 0:11:10.480 --> 0:11:15.160 under duress, what's his value add to the American people 0:11:15.760 --> 0:11:17.960 to serve out all of his different tenures. 0:11:19.440 --> 0:11:20.600 Well, I think it's important. 0:11:20.679 --> 0:11:21.480 I think I think J. 0:11:21.679 --> 0:11:26.600 Powell recognizes that, you know, the first sentence and eventually, 0:11:26.679 --> 0:11:30.000 whenever his New York Times obituary is written, is he 0:11:30.080 --> 0:11:32.040 wants to make sure that it says something along the 0:11:32.040 --> 0:11:36.280 lines as chair Powell Report, restore price stability and maintained 0:11:36.360 --> 0:11:38.240 the Fed's independence. 0:11:38.720 --> 0:11:41.360 And I think that he is going to achieve that. 0:11:42.000 --> 0:11:44.480 Thank you so much, Richard Claire to coming. Was this 0:11:44.559 --> 0:11:46.839 okay that we didn't do monetary parlor game? 0:11:47.120 --> 0:11:49.440 Can I also say it must be opening day because 0:11:49.480 --> 0:11:54.200 mister Kean's wearing a tomorrow probably mister Sweeney, of course, 0:11:54.240 --> 0:11:55.200 My god, where's the duke? 0:11:55.880 --> 0:11:58.560 I know, are you going to the game? Not going 0:11:58.559 --> 0:12:00.000 to the game, But it'll be a great game. 0:12:00.600 --> 0:12:02.760 I'm afraid to ask. How's your bracket? 0:12:03.000 --> 0:12:06.280 Yes, well, I'm a loyal alam of the University of 0:12:06.280 --> 0:12:07.800 Illinois and I picked them. 0:12:08.160 --> 0:12:09.560 At least on that part of the bracket. 0:12:09.640 --> 0:12:11.760 I'm doing pretty well, although I got to tell you, 0:12:11.840 --> 0:12:15.200 what's this playing a tournament game on a home court 0:12:15.480 --> 0:12:16.280 for the number two? 0:12:17.080 --> 0:12:21.000 Do they have a bracket pool at the FED? Oh yeah, 0:12:21.160 --> 0:12:26.640 PhDs all the stuff? I think so ringer there, you know, 0:12:26.720 --> 0:12:29.360 like Vince Ryanair years ago was reading three years in 0:12:29.400 --> 0:12:29.800 a row. 0:12:30.960 --> 0:12:32.640 Anyway, go line on. 0:12:33.000 --> 0:12:36.280 Okay, Richard Claire, thank you so much, greatly, greatly appreciated. 0:12:37.960 --> 0:12:42.160 Stay with us. More from Bloomberg Surveillance coming up after this. 0:12:49.400 --> 0:12:53.000 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:12:53.040 --> 0:12:56.200 weekday afternoons from seven to ten am Eastern Listen on 0:12:56.280 --> 0:13:00.000 Applecarplay and Android Otto with the Bloomberg business app or 0:13:00.160 --> 0:13:01.719 watch us live on YouTube. 0:13:02.160 --> 0:13:05.040 Tina Fordham is a force on LinkedIn and research effort 0:13:05.040 --> 0:13:08.280 at Fordham Global Foresight is world class. Where thrilled we 0:13:08.320 --> 0:13:10.960 could get a briefing this morning, Tina. And all the 0:13:11.040 --> 0:13:14.760 years I've done this, I have never ever seen a 0:13:14.800 --> 0:13:19.760 morning like this, a cacophony of news sources, headlines, different 0:13:19.840 --> 0:13:23.320 cross currents this way that I'm completely relying on the 0:13:23.440 --> 0:13:28.080 acclaimed t live of Bloomberg with its translation abilities. Give 0:13:28.160 --> 0:13:31.600 us your update on the veracity of a fifteen point 0:13:31.960 --> 0:13:32.520 piece plan. 0:13:35.120 --> 0:13:36.760 No one knows Tom. 0:13:36.800 --> 0:13:39.920 The idea of coordinating with Pakistan on this is interesting. 0:13:39.960 --> 0:13:42.720 It is something that we heard through our sources over 0:13:42.760 --> 0:13:45.800 the last couple of days. What I think is really, 0:13:46.480 --> 0:13:51.760 you know, fascinating and so important for kind of gaming 0:13:51.760 --> 0:13:56.400 out the power balance here is that Iran, having been 0:13:57.200 --> 0:14:02.840 presumed to be a weak military force, actually finds itself 0:14:02.880 --> 0:14:06.600 with more leverage than anybody thought right now and is 0:14:06.600 --> 0:14:11.319 issuing some pretty robust statements about its commitment to defending 0:14:11.360 --> 0:14:15.400 its land even as the eighty second Airborne is on 0:14:15.520 --> 0:14:15.840 the way. 0:14:16.240 --> 0:14:21.320 Does President Trump and whomver of America have an identified 0:14:21.440 --> 0:14:23.920 Iranian leadership they can speak to. 0:14:25.760 --> 0:14:29.000 Well there's some suggestion about who they might be speaking to. 0:14:29.600 --> 0:14:33.040 But one of our problems, you know, and I put 0:14:33.120 --> 0:14:36.280 both of us in the same boat here is the 0:14:37.480 --> 0:14:42.400 presence of so many unreliable narrators, including the President of 0:14:42.440 --> 0:14:45.800 the United States. Now he is clearly looking for an interlocutor, 0:14:47.040 --> 0:14:48.400 as he said himself. 0:14:49.000 --> 0:14:51.640 So many of them have been killed. 0:14:51.640 --> 0:14:55.920 They've been assassinated by Israel, who have eliminated that whole 0:14:56.000 --> 0:14:57.200 kind of middle. 0:14:57.120 --> 0:14:59.680 Cadre of possible successors. 0:15:00.000 --> 0:15:03.720 I know that the Iranian succession is for leaders deep, 0:15:04.120 --> 0:15:06.680 but you've got to have somebody to talk to to 0:15:06.800 --> 0:15:10.280 make a deal, and you have to have a counterparty 0:15:10.760 --> 0:15:12.280 that wants to accept that. 0:15:12.480 --> 0:15:14.640 Right now, Iran is signaling strength. 0:15:15.640 --> 0:15:19.200 So Tina, I have to ask, where's the US State 0:15:19.240 --> 0:15:21.160 Department in all of this? Don't we have like a 0:15:21.160 --> 0:15:23.920 whole section of government that does this kind of stuff, 0:15:24.000 --> 0:15:27.960 negotiates with the countries, really thinks about how to craft 0:15:28.720 --> 0:15:30.680 these agreements. Is that is there any a sense that 0:15:30.720 --> 0:15:31.960 there's involvement here? 0:15:33.360 --> 0:15:35.920 Well, we haven't seen much from the Secretary of State. 0:15:36.000 --> 0:15:38.560 And not only that at the kind of you know, 0:15:38.680 --> 0:15:42.720 the line levels, so many of the embassy's US embassies 0:15:42.760 --> 0:15:46.160 in the Middle East are without a US ambassador, so 0:15:46.680 --> 0:15:52.960 everything's concentrated in the president who values surprise, it confuses 0:15:53.040 --> 0:15:57.200 that Jesus out of market participants among others. I've been 0:15:57.240 --> 0:16:01.440 talking to corporates, including in the Middle least, who are 0:16:01.760 --> 0:16:06.880 you know, bewildered about all of this. The geopolitical butterfly effect, 0:16:06.920 --> 0:16:09.200 as I call it, the kind of knock on effects 0:16:09.880 --> 0:16:12.920 are manifold, but one of the ones that's caught my 0:16:13.120 --> 0:16:16.800 attention is a reminder that after the nineteen seventy three 0:16:16.840 --> 0:16:22.040 oil price shock, no incumbents in major countries were re elected. 0:16:22.160 --> 0:16:26.240 So this is going to be sending a cool, you know, 0:16:26.480 --> 0:16:27.000 chill win. 0:16:27.280 --> 0:16:30.200 Not just the inflation shock, but the political outlook from 0:16:30.240 --> 0:16:35.080 all of this is not going to endear the United 0:16:35.120 --> 0:16:37.320 States to anybody. 0:16:36.960 --> 0:16:39.720 Across the United States around the world. This morning, Tina 0:16:39.840 --> 0:16:42.840 Fordham where it's a Ford and Global Foresight, Paul Sweeney 0:16:42.880 --> 0:16:46.040 and Tom Keene with a news flow this morning extraordinary, 0:16:46.280 --> 0:16:48.800 there's an upfield to it. With a fifteen point piece 0:16:48.880 --> 0:16:52.960 plan futures up sixty down, futures up four forty six, 0:16:53.040 --> 0:16:56.360 The vixen well over a stick, but oil now under 0:16:56.440 --> 0:16:59.440 ninety eight ninety seven point seventy one on Brent Crude. 0:17:00.080 --> 0:17:04.720 Your acclaim is a cultural synthesis of your study a 0:17:04.800 --> 0:17:08.960 foreign policy of international relations. Now we have a presence 0:17:09.040 --> 0:17:13.159 talking to Tim O'Brien of Bloomberg Opinion. Yesterday you go 0:17:13.240 --> 0:17:15.359 up to the food court. I'm having a bag of 0:17:15.400 --> 0:17:19.240 apricots and Tim O'Brien's having a full English. Sure up there, 0:17:19.280 --> 0:17:21.639 you know the whole thing, And Tina, I'm talking to 0:17:21.680 --> 0:17:25.480 Tim O'Brien, who owns the understanding of Trump. We've got 0:17:25.520 --> 0:17:30.640 a guy who's deal transaction based in that Culturally, how 0:17:30.760 --> 0:17:36.160 is that Trumpian deal transaction process greeted by the Arab 0:17:36.680 --> 0:17:39.200 and separately by the Persian world. 0:17:41.119 --> 0:17:42.800 How is it created by Well? 0:17:43.280 --> 0:17:46.720 I mean he is somebody who values making a deal 0:17:46.880 --> 0:17:50.639 above all, but also winning above all. And what I 0:17:50.680 --> 0:17:54.240 think is very concerning is that it's hard to imagine 0:17:55.320 --> 0:17:58.320 an easy win here. As we get further in, you 0:17:58.359 --> 0:18:01.760 start to you know, hear references to that Q word 0:18:02.160 --> 0:18:04.480 from the Vietnam era quagmire. 0:18:05.000 --> 0:18:08.720 Now, the President probably won't want to allow that to happen. 0:18:08.520 --> 0:18:11.720 But you know, thinking about your previous guest and what 0:18:11.800 --> 0:18:14.000 others like Mohammed a Larian are saying. 0:18:14.680 --> 0:18:17.240 The impact of this oil price shock. 0:18:17.359 --> 0:18:22.760 Even if it's stopped tomorrow, it will you know, continue 0:18:22.760 --> 0:18:24.440 for some months. 0:18:24.480 --> 0:18:26.600 We're already in this shock. 0:18:26.760 --> 0:18:30.679 So calling that a win, I mean most market participants 0:18:30.760 --> 0:18:32.880 I speak to say, well, the president can kind of. 0:18:33.160 --> 0:18:35.480 You know, he can quit any time. He can quit 0:18:35.520 --> 0:18:37.200 this war and call it a victory anytime. 0:18:38.080 --> 0:18:42.400 Maybe, But we still come back to first principles, which 0:18:42.480 --> 0:18:45.000 is who's going to lead the country. And this notion 0:18:45.080 --> 0:18:50.480 of the world's most unusual joint venture proposition with the Ayatola, 0:18:50.560 --> 0:18:53.880 as President Trump put it, and himself, you know, kind 0:18:53.920 --> 0:18:58.399 of co owning the Strait of Hormuz. It's hard to 0:18:58.440 --> 0:19:01.520 think about how you execute that kind of arrangement, isn't. 0:19:01.359 --> 0:19:02.520 It It is? 0:19:02.560 --> 0:19:04.199 It's odd, And I think what it comes down to 0:19:04.320 --> 0:19:05.919 for a lot of us that are just ramping up 0:19:05.920 --> 0:19:08.639 our knowledge of this part of the world once again, 0:19:08.720 --> 0:19:10.600 is it all comes down to the Strait of horror 0:19:10.600 --> 0:19:15.320 moves and I just declaring victory and walking away. That 0:19:15.359 --> 0:19:17.399 does nothing to really secure that part of the world. 0:19:17.760 --> 0:19:19.040 Is reasonable, take it. 0:19:19.000 --> 0:19:23.240 Away from Iran, It doesn't take Iran controls a major 0:19:23.280 --> 0:19:27.720 economic choke hold. If you know, among the many pretexts 0:19:27.760 --> 0:19:31.719 given for this war. One one that has appeared is 0:19:32.040 --> 0:19:36.080 kind of eliminating Iran's leverage there. You know, there's some 0:19:36.160 --> 0:19:40.160 reason to imagine that President Trump thinks about the Strait 0:19:40.200 --> 0:19:42.640 of Hormuz, which he's been talking about for forty years, 0:19:42.680 --> 0:19:45.760 by the way, and carg Island in the same way 0:19:45.800 --> 0:19:48.520 that he thinks about the Panama Canal something that it 0:19:48.600 --> 0:19:51.399 is like a toll road for global trade that it 0:19:51.480 --> 0:19:56.760 is unacceptable for anyone to have control of without United 0:19:56.800 --> 0:20:00.240 States as a as a kind of majority shareholder in 0:20:00.240 --> 0:20:01.000 that arrangement. 0:20:01.520 --> 0:20:03.639 Tina, thank you so much. I can't say enough, folks 0:20:03.680 --> 0:20:07.679 about the LinkedIn effort of Fordham Global Foresight. As we 0:20:07.720 --> 0:20:10.600 had way Lee of Blackrock on yesterday. It's just a 0:20:10.640 --> 0:20:14.120 font of brilliance from Tina Fordham and her team out 0:20:14.160 --> 0:20:19.440 at LinkedIn. Tina Fordham, thank you. Stay with us. More 0:20:19.560 --> 0:20:22.440 from Bloomberg Surveillance coming up after this. 0:20:29.680 --> 0:20:33.280 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:20:33.359 --> 0:20:36.480 weekday afternoons from seven to ten am Eastern Listen on 0:20:36.600 --> 0:20:40.240 Applecarplay and Android Auto with the Bloomberg Business app, or 0:20:40.400 --> 0:20:42.000 watch us live on YouTube. 0:20:42.359 --> 0:20:46.760 Brian Belski with us with Humillus investment strategies, and the 0:20:46.800 --> 0:20:50.720 wonderment of his eight page note densely written, like damn, 0:20:50.760 --> 0:20:53.639 I've got to read every word. Is he this is 0:20:53.680 --> 0:20:57.640 the courage, this is the thinking to stay in the market. 0:20:58.080 --> 0:21:00.480 Is the mood out there? A panic our people quote 0:21:00.600 --> 0:21:03.800 unquote going to cash. 0:21:03.960 --> 0:21:06.560 I think a lot of institutional accounts are kind of 0:21:06.560 --> 0:21:09.200 waiting to see to happen. You know, the majority of 0:21:09.480 --> 0:21:12.400 who we've talked to recently, obviously are a great wealth 0:21:12.400 --> 0:21:16.399 management clients and they've been waiting for an opportunity. In Canada, 0:21:16.440 --> 0:21:18.480 they're still a little bit worried with respect to what's 0:21:18.520 --> 0:21:20.200 happening in the US, and they kind of see this. 0:21:20.160 --> 0:21:21.960 As a replay of last year, so they're. 0:21:21.800 --> 0:21:22.919 A little more emotional. 0:21:23.600 --> 0:21:26.240 But in the US, we're ready to put money to work. 0:21:26.280 --> 0:21:27.560 I think a lot of people. 0:21:29.280 --> 0:21:31.960 Kind of redid their portfolios and re kind of configured 0:21:31.960 --> 0:21:33.879 at the end of the year time, and there's been 0:21:33.920 --> 0:21:37.560 a lot of talk with respect to some tax gains 0:21:37.600 --> 0:21:39.399 taken at the end of the year, So I think 0:21:39.480 --> 0:21:41.639 there's some cash on the sidelines that are ready to go. 0:21:41.800 --> 0:21:44.520 Is Microsoft at a pea twenty two forward like a 0:21:44.560 --> 0:21:45.400 new Microsoft? 0:21:46.160 --> 0:21:49.440 You know what's interesting about Microsoft is that last year 0:21:49.480 --> 0:21:51.159 it was kind of the darling in terms of the 0:21:51.200 --> 0:21:54.720 war chest of cash and in terms of how we 0:21:54.800 --> 0:21:58.879 look at Microsoft and kind of core and large cap portfolios. 0:21:59.280 --> 0:22:02.040