WEBVTT - Shutdown's Impact and Geopolitical Outlook 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 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.880 Business App. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:26.960 or watch us live on YouTube. 0:00:27.200 --> 0:00:27.800 Joining us now. 0:00:27.920 --> 0:00:33.040 Michael Darta, Always on the Vineyard, forever looking north to Fenway. 0:00:33.200 --> 0:00:37.960 Michael Darta, Chief Economists, Rough Capital Partners. Michael from a 0:00:39.159 --> 0:00:41.520 GDP standpoint, does a shutdown? 0:00:41.600 --> 0:00:42.480 Is it Germaine? 0:00:42.920 --> 0:00:46.559 It really depends how long this goes on, Tom. You know, 0:00:46.720 --> 0:00:51.360 hopefully calmer and cooler heads can prevail in Washington, so 0:00:51.440 --> 0:00:54.680 we don't end up, you know, weeks and potentially months 0:00:54.680 --> 0:00:57.120 on end, because the longer this goes on, the more 0:00:57.160 --> 0:01:02.080 disruptive it will be to the economy into the macro data, 0:01:02.120 --> 0:01:04.200 which we now don't have. Right, we're kind of flying 0:01:04.280 --> 0:01:06.480 blind into the end of the week here, and we're 0:01:06.520 --> 0:01:09.240 missing some pretty important necro reports. 0:01:09.680 --> 0:01:10.959 So what do you do? 0:01:12.080 --> 0:01:13.800 You know, then, start is so good at this folks 0:01:13.800 --> 0:01:17.959 linking economics into investment. If you're blind, Michael, what do 0:01:18.000 --> 0:01:19.600 you do with a trading strategy? 0:01:21.000 --> 0:01:25.960 Well, luckily we still do have some private sector reports 0:01:26.040 --> 0:01:28.720 that are coming out. So we got some data from 0:01:28.840 --> 0:01:32.440 ADP yesterday which was not very good. I've got some 0:01:32.680 --> 0:01:37.320 data from the Institute of Supply Management, and so abstracting 0:01:37.400 --> 0:01:42.760 from that, you know, we can still construct running forecast 0:01:42.959 --> 0:01:46.000 estimates for how the economy's doing. And interestingly enough, I mean, 0:01:46.040 --> 0:01:49.960 the Atlantic beed tracking data for the third quarter is 0:01:50.000 --> 0:01:53.280 really still holding in there at pretty robust levels. For 0:01:53.560 --> 0:01:56.800 real final sales to the private sector sector still running 0:01:56.840 --> 0:02:00.400 pretty close to three percent for Q three. It would 0:02:00.400 --> 0:02:04.360 be completely shocking if we were actually in an environment 0:02:04.560 --> 0:02:07.919 of negative job growth with the real economy humming along 0:02:08.520 --> 0:02:12.440 at three percent. So I would take all of this 0:02:12.560 --> 0:02:14.720 and take a bit of a step back, and you know, 0:02:14.919 --> 0:02:18.880 I think these jobs numbers are probably weak more in 0:02:18.919 --> 0:02:21.840 a temporary way, unless the economy just goes off a 0:02:21.840 --> 0:02:23.080 cliff in the fourth quarter. 0:02:24.040 --> 0:02:27.440 You know, Michael, you mentioned you referenced the ADP data yesterday. 0:02:27.560 --> 0:02:29.320 I know people take that with a grain of salt, 0:02:29.320 --> 0:02:32.320 but boy, that was kind of startling there. A negative 0:02:32.600 --> 0:02:36.600 number there for the month and a negative revision for 0:02:36.680 --> 0:02:39.000 the prior month. What'd you take away from that? 0:02:40.320 --> 0:02:43.600 Yeah, definitely was not good data. You know, at a 0:02:43.639 --> 0:02:47.800 time when private payroll growth has slowed very sharply, with 0:02:48.200 --> 0:02:51.320 quite significant downward revisions over the course of the last 0:02:51.400 --> 0:02:54.560 year through March. I think there's a you know, there's 0:02:54.600 --> 0:02:57.200 a bigger focus on these weak data points. And within 0:02:57.400 --> 0:03:01.320 ADP we saw three down months, three negative job growth 0:03:01.400 --> 0:03:04.880 months out of the last four, so that's not a positive. 0:03:04.919 --> 0:03:07.959 And there was also some weakness that showed up in 0:03:08.000 --> 0:03:11.880 the conference board data. You ask people about jobs being 0:03:11.880 --> 0:03:14.840 hard to get or plentiful, that tends to correlate with 0:03:14.880 --> 0:03:18.640 the unemployment rate pretty well. So that deteriorated again in 0:03:18.680 --> 0:03:21.560 the most recent reading. So it does look like there 0:03:21.800 --> 0:03:25.079 is some lingering softness in the labor market. The question 0:03:25.280 --> 0:03:27.600 is is that going to intensify or is it more 0:03:27.639 --> 0:03:30.519 temporary and likely to rebound. And Tom, I think that's 0:03:30.520 --> 0:03:34.640 where you bring in the financial markets, which are quite optimistic. 0:03:35.000 --> 0:03:37.080 And you know, you hear that old refrain all the 0:03:37.120 --> 0:03:40.720 time that you know, the economy is not the stock market. Well, 0:03:40.840 --> 0:03:43.800 actually the economy is the stock market. If you take 0:03:43.840 --> 0:03:48.240 a look at the data. Equity markets are not perfect predictors, 0:03:48.320 --> 0:03:52.640 but they do need growth rate of real and nominal 0:03:52.680 --> 0:03:56.800 GDP by about one quarter, and so you know easy 0:03:56.840 --> 0:04:01.240 financial conditions, the Fed continuing to eat He's monetary policy. 0:04:01.320 --> 0:04:02.960 I think you want to be a little bit more 0:04:02.960 --> 0:04:06.920 optimistic than pessimistic in terms of where the labor market 0:04:06.960 --> 0:04:08.600 is as we move into next year. 0:04:08.720 --> 0:04:11.840 Acrastination. This morning, Michael Darty with this rough capital thrilled 0:04:11.840 --> 0:04:12.320 he could. 0:04:12.160 --> 0:04:13.920 Be with us on YouTube. 0:04:13.960 --> 0:04:18.440 Subscribe to Bloomberg Podcasts, our new digital distribution. It is 0:04:18.680 --> 0:04:21.200 Paul's in my future. Thank you so much for your 0:04:21.200 --> 0:04:25.560 attention in your living room and in your office on YouTube, 0:04:25.960 --> 0:04:28.280 just growing every day. Thank you so much for a 0:04:28.360 --> 0:04:30.480 record September for us. 0:04:30.760 --> 0:04:31.080 Michael. 0:04:31.120 --> 0:04:33.320 I look at that then, and I look at the 0:04:33.320 --> 0:04:36.080 fold over the green spanning. An idea that the equity 0:04:36.120 --> 0:04:41.080 market really matters is the equity market is an expectation vehicle. 0:04:41.640 --> 0:04:44.360 How far out is expecting right now? 0:04:45.839 --> 0:04:46.039 Yeah? 0:04:46.040 --> 0:04:49.599 I mean the equity market. Look, Tom, you know it's volatile. 0:04:49.960 --> 0:04:53.960 Equity investors are not always correct, and with any market 0:04:54.080 --> 0:05:00.000 you can have a sudden, abrupt and unexpected turn of course. Right, 0:05:01.080 --> 0:05:04.880 all of that said, investors are looking ahead. And if 0:05:04.920 --> 0:05:07.719 you look at how the correlations tend to run from 0:05:07.760 --> 0:05:12.120 markets into data, markets lead data lags and on average, 0:05:12.200 --> 0:05:15.880 you know, the equity market leads by about three months. 0:05:16.000 --> 0:05:18.840 If you bring the credit markets into the mix and 0:05:18.880 --> 0:05:22.160 you look at overall financial conditions, you know, the lead 0:05:22.320 --> 0:05:25.400 is maybe six or seven months at best. So you know, 0:05:25.400 --> 0:05:30.440 we're not able to forecast really long horizon situations here 0:05:30.880 --> 0:05:34.279 you're using these market based indicators, but at least over 0:05:34.320 --> 0:05:37.040 the next one or two quarters, you know, I think, 0:05:37.400 --> 0:05:42.880 especially now with the shutdown, these financial variables are pretty. 0:05:42.560 --> 0:05:44.360 Important, Michael. 0:05:44.360 --> 0:05:47.760 Looking at the consumer, the retail sales, other metrics like that, 0:05:47.800 --> 0:05:51.039 the consumer seems to be more than hanging in there, 0:05:51.080 --> 0:05:52.799 actually doing quite well. 0:05:52.880 --> 0:05:54.640 Does that surprise you at all? 0:05:56.360 --> 0:05:56.640 Yes? 0:05:56.680 --> 0:05:57.040 And no. 0:05:57.200 --> 0:05:59.800 I mean, you know, we're talking about the equity market, 0:05:59.839 --> 0:06:03.600 and you know the fact that household net worth has 0:06:03.760 --> 0:06:07.839 risen pretty dramatically. Now the worry is that, oh, that's 0:06:07.880 --> 0:06:10.560 concentrated on the higher end, but the higher end is 0:06:10.640 --> 0:06:14.600 driving a very large and growing share of total consumption. 0:06:15.600 --> 0:06:18.760 And even with these weak jobs numbers, the unemployment rate 0:06:18.839 --> 0:06:20.760 is only pushed up a little bit, you know, it 0:06:20.800 --> 0:06:23.839 hasn't pushed up in a dramatic fashion, and so you 0:06:23.960 --> 0:06:29.680 have still essentially a fully employed economy, very high asset prices, 0:06:29.720 --> 0:06:33.240 so household balance sheets are in quite good shape, and 0:06:33.279 --> 0:06:36.000 that's underpinning the you know, the consumer and you know, 0:06:36.040 --> 0:06:39.640 the tracking estimates for Q three around three percent, So 0:06:39.720 --> 0:06:41.279 that does not look like a recession. 0:06:42.400 --> 0:06:44.440 I look, Michael, at where we are, and it comes 0:06:44.480 --> 0:06:47.560 back to something quaint. It's really falling. It's fallen off 0:06:47.600 --> 0:06:51.640 the radar use of cash. Okay, I got nominal GDP. 0:06:51.800 --> 0:06:55.560 They're going to deliver better than good revenue growth once again. Oh, 0:06:55.680 --> 0:06:59.760 earnings are going to be terrible. Yeah, okay, Michael, earnings 0:06:59.760 --> 0:07:03.000 will be okay. Let's say and margins. Do you see 0:07:03.000 --> 0:07:06.280 a use of cash that just continues to drive this 0:07:06.360 --> 0:07:07.400 bullmarket forward. 0:07:08.600 --> 0:07:11.920 Well, that's really the key, Tom. If top line growth 0:07:12.320 --> 0:07:14.679 is you know, looks Q three looks like it's about 0:07:14.720 --> 0:07:17.640 six percent. But even if we take that down by 0:07:17.640 --> 0:07:21.240 a percentage point and top line is compounding at five 0:07:22.000 --> 0:07:25.480 and companies are profitable, you know, and corporate profits have 0:07:25.520 --> 0:07:28.480 been strong, that is not going to sustain itself for 0:07:28.560 --> 0:07:31.800 any period unless you're getting positive hiring at the same time. 0:07:31.960 --> 0:07:34.600 So companies will do different things. They can buy backstock, 0:07:34.680 --> 0:07:37.120 they can invest. You know, we might see some lift 0:07:37.160 --> 0:07:41.240 in capex, but they'll be hiring as well. So you know, 0:07:41.680 --> 0:07:44.680 if you have top line growth, and you have corporate profits, 0:07:44.680 --> 0:07:46.520 you're going to have employment as well. 0:07:46.920 --> 0:07:49.880 So this is something I think people have trouble with, Michael. 0:07:49.920 --> 0:07:52.880 And let's not get into like nominal GDP, animal spirits. 0:07:53.320 --> 0:07:57.480 Let's just say, is inflation good for Procter in gamble? 0:07:58.120 --> 0:08:02.560 Is inflation good for you know, name another you know, 0:08:03.800 --> 0:08:06.360 Church and Dwight, I mean, you know arm and Hammer 0:08:06.400 --> 0:08:09.480 and all that. Is inflation good for basic companies? 0:08:11.120 --> 0:08:13.040 Well? Tom, you know it's a good question. I mean, 0:08:13.080 --> 0:08:15.840 you do want some corporate pricing power, but the flip 0:08:15.880 --> 0:08:18.480 side of that is costs. Right, So if you do 0:08:18.640 --> 0:08:22.680 end up in an environment where inflation is high and volatile, 0:08:23.440 --> 0:08:25.560 and then you have the central bank that has to 0:08:25.640 --> 0:08:28.920 iron that out and restrain the economy, that's not good 0:08:28.960 --> 0:08:29.360 for anyone. 0:08:29.400 --> 0:08:30.920 Okay, then carry it forward, Mike. 0:08:30.960 --> 0:08:32.480 I don't mean to interrupt, but this is this is 0:08:32.600 --> 0:08:35.880 darta is central Carry it forward. If I go from 0:08:35.880 --> 0:08:39.640 a FED moodeling two percent out to two point x percent, 0:08:40.080 --> 0:08:42.200 what does it do to those companies? Do they see 0:08:42.240 --> 0:08:42.880 wage lift? 0:08:44.520 --> 0:08:44.720 Yeah? 0:08:44.760 --> 0:08:46.960 And I think you are, you know you are seeing that. 0:08:47.080 --> 0:08:50.319 You know, nominal wages and real wages are growing. So 0:08:50.440 --> 0:08:54.800 that's consistent with the real economy expanding. Inflation is still 0:08:54.800 --> 0:08:57.280 above the fedce target. But I think, you know, an 0:08:57.600 --> 0:09:00.880 in an environment where inflation is trending at around three 0:09:01.880 --> 0:09:04.120 you know, that can still be a very strong environment 0:09:04.240 --> 0:09:07.160 for corporate profits if the economy is you know, staying 0:09:07.200 --> 0:09:09.679 out of recession, and that's you know, I think that 0:09:09.800 --> 0:09:12.960 is likely with the FED easing monetary policy. They've already 0:09:13.000 --> 0:09:15.880 taken rates down one hundred and twenty five basis points 0:09:16.840 --> 0:09:21.040 and with inflation expectations moving up forty to sixty basis 0:09:21.080 --> 0:09:24.679 points over that period, real rates have fallen about two 0:09:24.760 --> 0:09:29.960 hundred basis points. So the FED is definitely removed quite 0:09:30.000 --> 0:09:33.079 a bit of restraint from its policy, so the top 0:09:33.120 --> 0:09:35.640 line should hang there. I do think, you know, I 0:09:35.720 --> 0:09:38.200 do worry about the FED getting back to two percent 0:09:38.240 --> 0:09:41.320 inflation on a reasonable timeline. If we're still stuck at 0:09:41.320 --> 0:09:45.000 three percent inflation over the course of the next two years, 0:09:45.080 --> 0:09:48.280 and that's part of the Fed's forecasts, boy, that's a 0:09:48.320 --> 0:09:51.760 long overshoot seven years, So I worry a little bit 0:09:51.800 --> 0:09:55.600 that that bleeds into credibility. You know, the administration really 0:09:55.640 --> 0:09:59.080 wants FED to ease because they want lower market interest rates, 0:09:59.120 --> 0:10:01.520 but you know, you're not going to get lower market 0:10:01.559 --> 0:10:05.080 interest rates of inflation expectations continue moving off, so the 0:10:05.120 --> 0:10:08.360 FED needs to stay credible here. I think, you know, 0:10:08.400 --> 0:10:11.600 four to five percent nominal, that's the sweet spot You'll 0:10:11.640 --> 0:10:14.760 have corporate pricing power, Inflation won't be too high long 0:10:14.880 --> 0:10:17.040 rates will be at reasonable levels. 0:10:17.120 --> 0:10:17.439 There you go. 0:10:17.559 --> 0:10:18.360 Bottle that, folks. 0:10:18.440 --> 0:10:20.360 Michael Darter, thanks so much, rough Capital. 0:10:20.600 --> 0:10:21.320 Stay with us. 0:10:21.559 --> 0:10:24.800 More from Bloomberg Surveillance coming up after this. 0:10:32.040 --> 0:10:35.640 You're listening to the Bloomberg Surveillance podcast. Catch US Live 0:10:35.679 --> 0:10:38.880 weekday afternoons from seven to ten am Eastern Listen on 0:10:38.920 --> 0:10:42.600 Applecarplay and Android Auto with the Bloomberg Business app, or 0:10:42.760 --> 0:10:44.160 watch US live on YouTube. 0:10:44.320 --> 0:10:46.880 Our next guest on short Notes, we are honored to 0:10:46.920 --> 0:10:50.080 have with us Ian Bremmer. Of course, he has changed 0:10:50.120 --> 0:10:53.520 the discussion of international relations at worldwide. We're going to 0:10:53.520 --> 0:10:56.760 have an extended conversation here for all of you across 0:10:56.800 --> 0:11:00.800 the nation. Good morning internationally on the Pacific rim on YouTube, 0:11:00.840 --> 0:11:04.840 and your evening is well. Ian, Let's talk about the 0:11:04.840 --> 0:11:09.360 international relations of a fractured America. What is the state 0:11:09.480 --> 0:11:11.480 of our State Department right now? 0:11:12.960 --> 0:11:15.800 Well, the State Department, I mean, you know, at least 0:11:15.840 --> 0:11:18.720 you have someone who's quite capable that's actually running it. 0:11:19.440 --> 0:11:24.120 Having said that, USAID has been eviscerated, as you know, 0:11:25.400 --> 0:11:29.520 and the biggest concern among the professional diplomats I know, 0:11:29.640 --> 0:11:33.320 both in office now and also those that have left, 0:11:34.240 --> 0:11:39.280 is that countries around the world no longer believe the 0:11:39.400 --> 0:11:44.160 United States is reliable as an ally, that America's ward 0:11:45.360 --> 0:11:48.040 is no longer something that you want to count on. 0:11:48.320 --> 0:11:51.600 The US is incredibly powerful. It's not in decline, but 0:11:51.640 --> 0:11:53.840 that what the US will do for you is not 0:11:53.880 --> 0:11:56.040 necessarily what it will say. And that's true on trade, 0:11:56.480 --> 0:11:58.880 it's true on collective security. It's true on the treatment 0:11:58.920 --> 0:12:02.120 of your citizens living in the United States or traveling 0:12:02.120 --> 0:12:02.960 to the United States. 0:12:02.960 --> 0:12:03.640 These things can. 0:12:03.600 --> 0:12:07.800 Change on a dime on the whims of the President 0:12:08.120 --> 0:12:11.800 and his top advisors, and that worries these country is 0:12:11.840 --> 0:12:12.360 a great deal. 0:12:13.000 --> 0:12:15.720 That level of disengagement Ian, do you think that is 0:12:15.760 --> 0:12:18.319 reflective of this Republican Party? 0:12:18.679 --> 0:12:20.679 When you say disengagement, I'm sorry, what do you mean 0:12:20.720 --> 0:12:21.000 by that? 0:12:21.240 --> 0:12:25.000 No, just in the America first, a type of feeling 0:12:25.080 --> 0:12:26.160 within the Trump administration. 0:12:29.080 --> 0:12:34.000 I think the Republican Party is completely loyal to Trump, 0:12:34.000 --> 0:12:37.320 and it doesn't really matter if a lot of them 0:12:37.360 --> 0:12:43.280 feel differently about his doing a deal with China on 0:12:43.400 --> 0:12:47.080 the Age twenty chips or coming to terms on TikTok. 0:12:47.960 --> 0:12:51.400 It doesn't really matter if he says Ukraine's not that 0:12:51.480 --> 0:12:53.640 important because it's an ocean away. Of course, a lot 0:12:53.679 --> 0:12:58.199 of Republicans historically disagree with that, They disagree with Trump 0:12:58.200 --> 0:13:03.400 opposing free trade, but the population has changed. So first 0:13:03.400 --> 0:13:05.200 of all, there are a lot of people that really 0:13:05.200 --> 0:13:10.360 oppose a lot of neocons in the Republican Party that 0:13:10.800 --> 0:13:15.160 led to very expensive, very deadly failed wars, and there 0:13:15.160 --> 0:13:19.800 are a lot of traditional free trade Republicans that no 0:13:19.840 --> 0:13:23.480 longer have the support of the population in pushing for 0:13:23.600 --> 0:13:26.400 globalization and for taking tariffs down. 0:13:26.480 --> 0:13:28.200 We're in a radically. 0:13:27.840 --> 0:13:30.839 Different environment, right We have tariffs at one hundred level, 0:13:31.080 --> 0:13:35.200 historic highs, one hundred year highs, and we also have 0:13:35.640 --> 0:13:40.760 a president that's doing his damndest to reduce American security 0:13:41.400 --> 0:13:45.000 guarantees and commitments to other countries around the world, even 0:13:46.040 --> 0:13:48.480 making big questions about whether the US would stand up 0:13:48.520 --> 0:13:51.280 for Taiwan, for example, long term. So I mean, clearly 0:13:51.320 --> 0:13:53.760 a lot of Republicans quietly uncomfortable with that. 0:13:53.920 --> 0:13:55.600 There's so many ways to go here, Ian Bremer, with 0:13:55.640 --> 0:13:57.520 this for an extended conversation. 0:13:57.000 --> 0:13:59.240 With Eurasia Group. I know what people want to know. 0:13:59.280 --> 0:13:59.960 When's the next book? 0:14:00.640 --> 0:14:02.640 Give me a date sometime next year. 0:14:02.720 --> 0:14:05.280 Sometime next year, Like, that's good enough. Ian, I want 0:14:05.280 --> 0:14:07.480 to talk about Gaza. I want you to triangulate it 0:14:07.520 --> 0:14:11.120 with Qatar, the president's relationship there, maybe with this desire 0:14:11.160 --> 0:14:13.760 to win a peace prize and all that. How should 0:14:13.760 --> 0:14:19.600 our listeners and viewers synthesize the cacophony of Gaza. I'm 0:14:19.640 --> 0:14:22.080 looking at a video in the Washington Post this morning, 0:14:22.320 --> 0:14:26.160 Greta Thunberg and others being the Israelis have taken over 0:14:26.320 --> 0:14:31.680 flotilla whatever, how does the and Bremer translate the horror 0:14:31.760 --> 0:14:35.880 of Gaza us through the American prism? 0:14:36.320 --> 0:14:44.360 The two combatants have very little consequence for. 0:14:44.480 --> 0:14:46.760 Continuing to engage in the fight. 0:14:47.400 --> 0:14:52.360 It's been extremely hard to convince Israel that they should 0:14:52.440 --> 0:14:56.120 limit the warfare on the ground in Gaza or against 0:14:56.120 --> 0:14:59.040 the Axis of Resistance more broadly, because there have been 0:14:59.040 --> 0:15:02.560 no consequences for them doing so, and of course, because 0:15:02.600 --> 0:15:07.120 they're militarily and technologically dominant in the entire region. It's 0:15:07.120 --> 0:15:09.880 been extremely difficult to convince Hamas that they have to 0:15:09.920 --> 0:15:14.600 actually let the hostages go, which was Trump's only applause 0:15:14.640 --> 0:15:17.080 line in his fifty five minute speech at the UN 0:15:17.280 --> 0:15:22.000 Nations General Assembly last week. Because they're terrorists, because there 0:15:22.000 --> 0:15:24.320 are a bunch of dead enders, and because they recognize 0:15:24.360 --> 0:15:30.560 that they face assassination kind of either way. And look, 0:15:30.600 --> 0:15:33.240 it's hard to put yourself in the position of what 0:15:33.280 --> 0:15:36.480 would create rationality among leadership of Hamas. But they're putting 0:15:36.480 --> 0:15:39.240 their own people at risk every day, and they have 0:15:39.360 --> 0:15:43.400 for years now. So in that regard, it's hard to 0:15:43.520 --> 0:15:47.840 maneuver much, though I think that there has been success 0:15:48.400 --> 0:15:52.920 in putting a few small constraints on Israeli behavior. Trump 0:15:53.560 --> 0:15:57.760 had been indifferent to Israeli annexation of the West Bank, 0:15:57.800 --> 0:15:59.520 and he came out last week and said that they 0:15:59.560 --> 0:16:02.440 will not do that on the back of the UAE, 0:16:02.960 --> 0:16:06.160 saying that they would leave the Abraham Accords if the 0:16:06.240 --> 0:16:13.560 Israelis proceeded. Trump had been actively promoting the idea of removing. 0:16:13.080 --> 0:16:14.800 Palestinians from Gaza. 0:16:14.920 --> 0:16:17.480 In fact, he said as much when he was on 0:16:17.560 --> 0:16:20.680 stage with the King of Jordan a few months ago, 0:16:20.760 --> 0:16:24.360 and he's now shifted away from that to a plan 0:16:24.960 --> 0:16:28.680 that has been approved by the golf Arabs and by 0:16:28.720 --> 0:16:32.480 the Israeli Prime Minister that says that the Palestinians aren't 0:16:32.480 --> 0:16:35.640 going to be forced to leave that rather, they're going 0:16:35.720 --> 0:16:38.600 to be able to stay in Gaza. And so, I mean, look, 0:16:38.880 --> 0:16:42.680 it's not stopping the war, and as long as Hamas 0:16:42.680 --> 0:16:46.120 refuses to release the hostages, I don't expect the war 0:16:46.200 --> 0:16:48.440 to end, even though I think it would be much 0:16:48.440 --> 0:16:52.160 better for Israel and everyone else involved. 0:16:51.560 --> 0:16:52.680 If they would stop. 0:16:53.880 --> 0:16:58.040 But I do think that we have a few guardrails, 0:16:58.600 --> 0:17:01.640 however limited today. 0:17:01.600 --> 0:17:03.119 That we didn't have a week ago. 0:17:04.000 --> 0:17:06.880 Ian Let's switch gears to another hot spot, which would 0:17:06.920 --> 0:17:11.200 be Ukraine. Is there any reason to believe that there 0:17:11.280 --> 0:17:16.080 is some type of peace process possible in the near 0:17:16.359 --> 0:17:17.360 intermediate term here? 0:17:19.680 --> 0:17:23.720 I would say it's more likely that the. 0:17:25.240 --> 0:17:32.320 Completely stalled offensive that Russia has had, it's been this grinding, 0:17:33.040 --> 0:17:37.960 virtually no territory being taken, massive casualties, particularly in terms 0:17:37.960 --> 0:17:41.000 of the Russian soldiers, over a million casualties in this 0:17:41.080 --> 0:17:43.240 war for Russia so far in three and a half years. 0:17:43.480 --> 0:17:46.199 It's a staggering number. It's hard to even imagine what 0:17:46.240 --> 0:17:49.600 that means for society, but Putin doesn't care. It's hard 0:17:49.640 --> 0:17:51.800 to imagine that that's going to continue the way it 0:17:51.880 --> 0:17:56.080 has for the next six to twelve months, in part 0:17:56.160 --> 0:17:58.439 because it's going to be very difficult for Ukraine to 0:17:58.480 --> 0:18:02.760 continue to defend their territory and field the soldiers to 0:18:02.840 --> 0:18:06.359 do so over the coming year, but also in part 0:18:06.440 --> 0:18:07.840 because Trump. 0:18:07.600 --> 0:18:08.680 Is angry about this. 0:18:09.440 --> 0:18:12.600 He thought that he was going to leverage his relationship 0:18:12.640 --> 0:18:17.240 with you. However it existed into a ceasefire. He made 0:18:17.240 --> 0:18:20.280 Putin a lot of offers, ending sanctions and the like, 0:18:20.960 --> 0:18:24.120 and Putin said no, thank you, and has embarrassed Trump, 0:18:24.200 --> 0:18:26.760 has angered Trump, and Trump Trump is bringing it up. 0:18:26.800 --> 0:18:29.320 He never brings up his failures. He forgets about them. 0:18:29.320 --> 0:18:32.959 It's one of his political skills, not on Russia. And 0:18:33.080 --> 0:18:37.680 instead he's talking about providing extended range missiles to Ukraine 0:18:37.720 --> 0:18:41.720 that could take out Russian energy capability. And he's privately 0:18:41.760 --> 0:18:46.199 pushing the Hungarians, the Turks, the Indians saying, you know, 0:18:46.440 --> 0:18:50.320 I want you to end your purchasing of Russian oil. 0:18:50.400 --> 0:18:52.479 He wasn't willing to do that a month ago. So 0:18:52.520 --> 0:18:56.800 that there is real movement here from President Trump himself 0:18:57.440 --> 0:19:01.320 to try to not just offer putin a care ineffectually. 0:19:01.840 --> 0:19:04.080 It would also include some stick. 0:19:04.040 --> 0:19:05.600 Doctor Reimer, let's finish up with this. 0:19:05.800 --> 0:19:09.320 We had a riveting conversation with Edwinal Mullen at the 0:19:09.359 --> 0:19:11.120 Bloomberg Global Forum the other day. 0:19:11.160 --> 0:19:12.960 He was just on the South China Sea. 0:19:13.520 --> 0:19:19.040 Extraordinary the submarine secrets there, the Heinan, the island off China. 0:19:19.560 --> 0:19:24.120 I think Americans Ian are ignorant that Taiwan isn't one 0:19:24.160 --> 0:19:30.640 monolithic island. Explain to us the strategic realities for Americans 0:19:31.160 --> 0:19:35.840 of Kinmen and Matsu islands just off the coast of China. 0:19:35.920 --> 0:19:40.720 What are the immediate risks to those frontline islands in Taiwan. 0:19:41.280 --> 0:19:44.480 Well, of course, China's ability if they wanted to engage 0:19:44.640 --> 0:19:50.000 in warfare with less consequence, taking those over or blockading 0:19:50.080 --> 0:19:54.159 those much easier, right and with very little ability for 0:19:54.200 --> 0:19:58.440 the Americans to respond or its Asian allies to respond militarily. 0:19:58.480 --> 0:20:01.400 But nobody really believes near turn that's going. 0:20:01.320 --> 0:20:07.680 To happen, in part because the United States is oriented 0:20:07.720 --> 0:20:11.320 to work with China on Taiwan. Look, Trump and Chizhinping 0:20:11.440 --> 0:20:15.280 had a phone call much anticipated last Friday, and the 0:20:15.359 --> 0:20:18.959 single thing that Trump most wanted, which he got was 0:20:19.160 --> 0:20:22.280 a nod from Xijin Ping on the US taking over 0:20:22.359 --> 0:20:27.560 TikTok with political loyalists installed in charge of it. And 0:20:27.560 --> 0:20:30.240 that's the thing that matters most to Trump. It allows 0:20:30.320 --> 0:20:33.720 him to undermine the free media, control the information space, 0:20:34.280 --> 0:20:37.240 and better ensure that he and his. 0:20:38.720 --> 0:20:42.320 Advisors can control twenty twenty six and twenty twenty eight. 0:20:42.880 --> 0:20:47.320 What the Chinese want is for Trump to back away 0:20:48.000 --> 0:20:53.480 and say that they oppose independence for Taiwan as Bush 0:20:53.520 --> 0:20:57.159 had President Bush had once before, and I think that 0:20:57.240 --> 0:21:02.520 Trump is oriented to provide that. Frankly, so, we're not 0:21:02.720 --> 0:21:06.760 heading towards escalation right now with the Chinese. We're actually 0:21:06.800 --> 0:21:10.639 heading towards both sides getting something that really matters to 0:21:10.720 --> 0:21:11.880 the individual leaders. 0:21:12.200 --> 0:21:14.399 You mentioned. There was one final question. I got a 0:21:14.520 --> 0:21:16.800 ways to go here. Folks with Ian Bremer are always 0:21:16.840 --> 0:21:22.080 the case. You mentioned the collapse of US AID USAID. 0:21:22.560 --> 0:21:25.760 I've got family members abroad that say it's been devastating 0:21:25.800 --> 0:21:29.679 for Africa. Explain right now, at the beginning of this 0:21:29.800 --> 0:21:34.640 fourth quarter the impact of the lack of us AID. 0:21:36.760 --> 0:21:39.520 The United States is the most powerful country in the world. 0:21:39.600 --> 0:21:44.680 It's the strongest economy by far, and the US has 0:21:44.840 --> 0:21:48.560 historically been doing the most in terms of providing aid 0:21:49.280 --> 0:21:52.600 to other countries and to the people in those countries 0:21:52.640 --> 0:21:56.359 that need it, whether they're suffering from malaria, whether they're 0:21:56.440 --> 0:22:01.880 vulnerable to HIV AIDS, whether they're start whether they're facing 0:22:01.920 --> 0:22:02.800 forced migration. 0:22:03.000 --> 0:22:04.320 The US has done that directly. 0:22:04.359 --> 0:22:07.160 It's also led the charge in doing that indirectly through 0:22:07.200 --> 0:22:11.399 American support for the United Nations and the organizations that 0:22:11.440 --> 0:22:14.119 it stands up, like the World Food Program, for example. 0:22:14.880 --> 0:22:17.600 The United States has decided that those things should no 0:22:17.640 --> 0:22:22.240 longer be priorities. That America first means that these other 0:22:22.320 --> 0:22:24.879 countries should have to make their own way, They should 0:22:24.920 --> 0:22:25.840 have to pay for themselves. 0:22:25.920 --> 0:22:28.080 Now, the Chinese see this is a great opportunity. 0:22:28.760 --> 0:22:31.560 In the same way that when the Americans cut back 0:22:31.600 --> 0:22:33.800 on visas, the Chinese immediately say we're going to make 0:22:33.800 --> 0:22:37.159 it easier for talented people to come. They won't be 0:22:37.200 --> 0:22:40.240 as attractive in terms of their aid. But if they 0:22:40.280 --> 0:22:45.000 are the lead power. I mean, they made up their dues, 0:22:45.760 --> 0:22:47.960 many of which were in arrears at the UN the 0:22:47.960 --> 0:22:50.199 Americans aren't paying. The Chinese said, okay, we'll pay some 0:22:50.280 --> 0:22:53.119 of ours now, so that they can put forward that 0:22:53.160 --> 0:22:54.800 they're the ones that are more accountable. 0:22:55.280 --> 0:22:57.360 Look, if you think that only American hard. 0:22:57.200 --> 0:23:02.240 Power matters, and maybe in the short term that's true, 0:23:02.720 --> 0:23:05.560