WEBVTT - Israel, Geopolitical Risks, and Market Response 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.720 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.640 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:20.920 --> 0:00:23.000 Right now, we want to get to the ground in 0:00:23.360 --> 0:00:29.200 Tel Aviv. We're joined by Galit Alstein. She is the 0:00:29.240 --> 0:00:34.400 economic and government reporter with Bloomberg News based in Tel Aviv. Galit, 0:00:34.440 --> 0:00:35.800 thanks so much for joining us. I know this is 0:00:35.760 --> 0:00:39.879 an incredibly difficult time for everyone in that part of 0:00:39.960 --> 0:00:42.040 the world. What can you tell us about the latest 0:00:42.040 --> 0:00:43.479 reporting on the ground. 0:00:45.440 --> 0:00:50.440 So basically we're looking at a couple of things here 0:00:50.880 --> 0:00:53.519 on the southern front of Israel, which is in the 0:00:53.520 --> 0:00:58.160 Gaza vicinity. Until this morning at least, there were still 0:00:58.200 --> 0:01:03.800 infiltrations of AMAS militant attackers who went to managed to 0:01:03.840 --> 0:01:06.240 come through the fence. This was on a much lower 0:01:06.240 --> 0:01:09.880 scale than it obviously was on Saturday when they came by, 0:01:10.520 --> 0:01:13.399 as it turns out, by the hundreds. By the way, 0:01:13.440 --> 0:01:19.280 the ideas is talking about one thousand hamas attackers who 0:01:19.319 --> 0:01:22.360 came who broke the fence and just went into Israel 0:01:22.400 --> 0:01:25.440 on Saturday morning. So what I started saying is that 0:01:25.600 --> 0:01:30.000 until this morning, we were still seeing infiltrations on a 0:01:30.080 --> 0:01:33.800 much smaller scale, and there were still combat arenas in 0:01:33.840 --> 0:01:37.240 the south of Israel, with defense forces trying to get 0:01:37.280 --> 0:01:41.839 hold of Israelis, Israeli communities and settlements in the south 0:01:41.880 --> 0:01:45.559 of Israel and trying to sort of, you know, clean 0:01:45.640 --> 0:01:50.360 them of potential you know, attackers there and at the 0:01:50.400 --> 0:01:53.720 same time trying to evacuate a lot of the not 0:01:53.840 --> 0:01:57.400 a lot of actually most of the settlements, Israeli settlements 0:01:57.400 --> 0:02:01.360 and communities were just by the Gaza fence, about twenty 0:02:01.400 --> 0:02:03.160 four of them, I think, and I think that so 0:02:03.280 --> 0:02:06.920 far fifteen have been evacuated and they're still working on 0:02:06.960 --> 0:02:10.560 the rest. So that is what is going on on 0:02:10.600 --> 0:02:15.000 the south of Israel later on today, and that is 0:02:15.080 --> 0:02:21.200 basically under control at this time. In the North of Israel, 0:02:21.400 --> 0:02:25.880 it has been relatively quiet until this afternoon. It is 0:02:25.919 --> 0:02:30.960 still not not a very bad situation there, but we 0:02:31.040 --> 0:02:35.079 have seen a bit of mortar fire fired from Lebanon, 0:02:35.240 --> 0:02:38.040 and there were also there was also a very minor 0:02:38.200 --> 0:02:42.639 infiltration and the idea DS. I'm just I'm looking at 0:02:42.639 --> 0:02:45.680 my phone to be exact, and what they said. They 0:02:45.720 --> 0:02:48.880 did put out a message about a couple of hours 0:02:48.919 --> 0:02:51.639 ago that they had killed a number of armed suspects 0:02:51.680 --> 0:02:56.760 that infiltrated into Israel from Lebanese territory. Isbela has denied 0:02:57.320 --> 0:03:00.920 connection with this, which is important because you know, everyone 0:03:01.000 --> 0:03:04.120 is also now looking at Frizabella to see if they 0:03:04.120 --> 0:03:07.920 will join the attacks on Israel to form like a 0:03:08.000 --> 0:03:10.320 sort of multifront arena. 0:03:11.080 --> 0:03:13.400 Can I ask Matt Miller here in New York and 0:03:13.480 --> 0:03:16.840 really appreciate you joining us, and I understand how difficult 0:03:16.880 --> 0:03:18.560 it must be to report on this right now, But 0:03:19.480 --> 0:03:24.120 what do we know about Israel's plans to go into Gaza? 0:03:24.360 --> 0:03:29.960 And how are you know, uh, you know, civilians in 0:03:30.080 --> 0:03:32.440 Gaza going to get out because of course they've got 0:03:32.440 --> 0:03:37.800 borders on all sides and the ocean and the med 0:03:38.920 --> 0:03:41.880 so it seems like they're stuck. How can they get 0:03:41.920 --> 0:03:44.480 out if Israel's going to sweep in militarily. 0:03:45.520 --> 0:03:48.320 Yeah, so this is a very good question because you know, Matt, 0:03:48.400 --> 0:03:52.720 we've been hearing idea for officials who have been briefing 0:03:53.280 --> 0:03:58.720 journalists about twice or more than that every day, and 0:03:58.880 --> 0:04:01.720 just this morning of the idea of spokes on people 0:04:02.200 --> 0:04:06.440 told us some journalists that they will be evacuating Gaza 0:04:06.840 --> 0:04:11.720 when asked if Israel will actually be evacuating Gaza, because 0:04:11.800 --> 0:04:14.840 Israel does not you know, does not control Gaza at 0:04:14.840 --> 0:04:18.360 this time, so he said no, but we will recommend 0:04:18.440 --> 0:04:21.520 they evacuate, you know, on their own. And this is 0:04:21.560 --> 0:04:24.839 a very good question that has not been answered answered 0:04:24.880 --> 0:04:28.520 yet and this is definitely something to keep pushing the 0:04:28.640 --> 0:04:32.240 ideas to give answers on because the answer to that 0:04:32.440 --> 0:04:35.160 is not clear. Although the idea is saying we will 0:04:35.520 --> 0:04:38.840 want people to evacuate, we do not know how. We 0:04:39.240 --> 0:04:42.520 do know that at this time the Gaza Strip has 0:04:42.560 --> 0:04:47.760 been cut off from electricity of supply, water supply, fuel supply, 0:04:48.400 --> 0:04:52.960 and other supplies as well because all passages have been 0:04:53.240 --> 0:04:56.120 shut down. One of the main passages, by the way, 0:04:56.240 --> 0:05:00.160 the Arrest passage, was one of the breach points through 0:05:00.160 --> 0:05:03.560 which the attackers came through on Saturday, and Idea of 0:05:03.640 --> 0:05:06.880 officials have been telling us on record, we're not in 0:05:06.920 --> 0:05:09.919 a hurry, you know, to rebuild this passage because this 0:05:10.000 --> 0:05:11.039 is what it was used for. 0:05:11.880 --> 0:05:15.200 So what do we know about the hostages and maybe 0:05:15.240 --> 0:05:17.360 any plans to get them back? 0:05:18.880 --> 0:05:22.799 Yeah, So so you know, obviously, you know, all sides 0:05:22.800 --> 0:05:25.760 are keeping their cards very very very close to their 0:05:25.839 --> 0:05:30.560 chests at this point. There have been various reports today 0:05:31.680 --> 0:05:37.000 about about some sort of negotiations going on, mainly negotiations 0:05:37.040 --> 0:05:41.360 to free women and children who were taken hostage into 0:05:41.400 --> 0:05:46.200 Gaza in turn for for women prisoners of Hamas that 0:05:46.240 --> 0:05:50.960 are being held in Israel. An official Israeli source, high 0:05:51.040 --> 0:05:54.000 ranking official Israeli source who asked not to be named, 0:05:54.320 --> 0:05:59.159 but he had he has denied that explicitly, and I 0:05:59.200 --> 0:06:02.200 think that Hama, although to be frank, I'm not sure 0:06:02.240 --> 0:06:05.039 who in Hamas have also just over the past hour 0:06:05.120 --> 0:06:07.880 deny that there's any negotiations going on. So it's nothing 0:06:08.000 --> 0:06:11.680 very firm, you know, that is going on at this stage. 0:06:12.360 --> 0:06:14.520 All right, Glit, thank you so much for joining us. 0:06:14.560 --> 0:06:16.760 We know it's very very difficult time and we appreciate 0:06:16.800 --> 0:06:19.520 getting some of your time in your reporting. Galitz Altstein 0:06:19.800 --> 0:06:23.800 israel economy and government reporter with Bloomberg News based in 0:06:24.240 --> 0:06:26.360 Tel Aviv. So we will continue to bring you the 0:06:26.400 --> 0:06:28.640 latest reporting on this situation. 0:06:29.920 --> 0:06:33.320 You're listening to the team can's our live program Bloomberg 0:06:33.360 --> 0:06:35.719 Markets weekdays at ten am Eastern. 0:06:35.400 --> 0:06:38.479 On Bloomberg dot Com, the iHeartRadio. 0:06:37.760 --> 0:06:40.520 App and the Bloomberg Business App, or listen on demand 0:06:40.560 --> 0:06:42.120 wherever you get your podcasts. 0:06:44.120 --> 0:06:47.480 You want to continue to follow the story in Israel, 0:06:47.560 --> 0:06:51.960 the war there with Hamas militants. Roz Mathieson joins us. 0:06:52.000 --> 0:06:55.640 She's the news director for e m e A Europe, 0:06:55.680 --> 0:06:59.080 Middle East and Africa for Bloomberg News based in I 0:06:59.120 --> 0:07:01.800 think London. Roz, thanks so much for joining us. I 0:07:01.800 --> 0:07:04.200 know it's a busy, busy time here. I guess one 0:07:04.240 --> 0:07:06.520 of the questions over here that a lot of folks 0:07:06.520 --> 0:07:08.080 are asking, I'm sure it's the same there is just 0:07:08.760 --> 0:07:12.280 how did this happen? What happened to the vaunted intelligence 0:07:12.360 --> 0:07:14.880 of not only Israel but everybody else in that part 0:07:14.880 --> 0:07:16.720 of the world, including the US and the West. 0:07:17.880 --> 0:07:20.440 Well, that is the ultimate question, and it may take 0:07:20.520 --> 0:07:23.800 weeks or even months until we understand some of that, because, 0:07:23.800 --> 0:07:25.680 as you can say, this seems to have been an 0:07:25.760 --> 0:07:30.440 absolute surprise very early on Saturday morning that this kind 0:07:30.480 --> 0:07:35.800 of infiltration could happen into Israel itself and Israeli intelligence 0:07:35.880 --> 0:07:39.520 is famed for its ability, They're known for it. They 0:07:39.520 --> 0:07:43.160 share their intel with their key allies, including the US, 0:07:43.200 --> 0:07:46.240 and so what went wrong here? Because this operation by 0:07:46.280 --> 0:07:49.200 Hamas must have been months in the planning. It was 0:07:49.320 --> 0:07:52.560 very intricate, it was very detailed, it was very carefully 0:07:53.040 --> 0:07:55.280 carried out. How is it that no one in the 0:07:55.320 --> 0:07:59.440 Israeli intelligence community got wind of this? And so obviously, 0:08:00.040 --> 0:08:02.360 you know, lots of questions now that are going on 0:08:02.480 --> 0:08:04.640 to the Defense Force in all of that, and they're 0:08:04.680 --> 0:08:06.800 saying it's going to take the weeks, if not months 0:08:07.000 --> 0:08:09.640 to try and understand where the failures were in this, 0:08:09.880 --> 0:08:13.440 but obviously very much caught by surprise, and you can see, 0:08:13.480 --> 0:08:16.600 you know that the perhaps of recriminations that may come 0:08:17.000 --> 0:08:19.800 from that down the track, including for the Prime Minister 0:08:19.920 --> 0:08:24.040 Benjamin Netanyahu right now the country very much rallying behind 0:08:24.120 --> 0:08:27.240 him in this moment, but there are also questions already 0:08:27.240 --> 0:08:30.160 coming about the failure here of the government to have 0:08:30.200 --> 0:08:30.840 known about this. 0:08:31.680 --> 0:08:34.640 So Ras, as far as we know now, you had 0:08:34.679 --> 0:08:41.160 this multi point breach of the Israeli border, right the 0:08:41.240 --> 0:08:47.760 attacks and also hostage taking. Did the did the I 0:08:47.800 --> 0:08:54.920 guess attackers then pull back into Gaza and other sort 0:08:54.960 --> 0:08:58.360 of cross border areas, and does it look like they're 0:08:58.400 --> 0:09:02.520 trying to draw Israeli forces into those areas well. 0:09:02.559 --> 0:09:04.400 In fact, if anything, they seem to have been trying 0:09:04.400 --> 0:09:07.360 to push further into some Jewish communities that are in 0:09:07.400 --> 0:09:10.360 that area that's very close to the Gaza Strip and 0:09:10.400 --> 0:09:12.960 in the south of Israel, and trying to push on 0:09:13.040 --> 0:09:16.240 into communities and towns. And some of that is about 0:09:16.280 --> 0:09:19.760 attacking Israeli military posts in the area. Some of it 0:09:19.840 --> 0:09:23.440 has been unfortunate, attacking civilians in the area, and in 0:09:23.480 --> 0:09:27.160 some cases, you say, taking those civilians back into the 0:09:27.200 --> 0:09:29.920 Gaza Strip for whatever reason. Is that to use them 0:09:29.960 --> 0:09:33.840 as hostages for whatever purposes, but certainly drawing some of 0:09:33.880 --> 0:09:37.160 them back into the Gaza area. So it's about sort 0:09:37.160 --> 0:09:39.200 of just sending the message to Israel, you know what, 0:09:39.200 --> 0:09:41.440 you're not safe inside your own border. 0:09:41.520 --> 0:09:43.240 We can come for you, and we will. 0:09:43.520 --> 0:09:47.320 But it's also about sort of using hostages for sort 0:09:47.320 --> 0:09:49.840 of further purposes as this conflict goes on. I mean, 0:09:49.880 --> 0:09:52.480 there are real pressions about whether this now leads to 0:09:52.520 --> 0:09:57.360 a full scale ground invasion by Israel of Palestine territories, 0:09:57.400 --> 0:10:01.240 including the Gaza Strip. So the purpose of those hostages. Well, 0:10:01.320 --> 0:10:02.320 one can only guess at that. 0:10:02.720 --> 0:10:07.480 Do we know anything about personnel numbers, how many the 0:10:07.520 --> 0:10:12.239 attackers had, and do we know anything about you know, equipment. 0:10:12.760 --> 0:10:16.880 I imagine they weren't coming in tanks, just shoulder launch 0:10:17.000 --> 0:10:20.640 rockets and you know, in machine guns or what do 0:10:20.679 --> 0:10:21.880 we know about that sort of thing? 0:10:23.040 --> 0:10:23.240 Well? 0:10:23.280 --> 0:10:26.920 Interesting, it was a fairly sophisticated operation. In Hamas has 0:10:26.960 --> 0:10:32.480 been fighting in some measure for decades against Israel, and 0:10:32.520 --> 0:10:36.199 they're supported. They've been supported over the years financially and 0:10:36.240 --> 0:10:38.000 in other ways by Iran. 0:10:38.040 --> 0:10:40.240 Of course, there are questions about how much around may or. 0:10:40.240 --> 0:10:43.280 May not have been involved in this particular episode that 0:10:43.320 --> 0:10:46.199 we're seeing now, but these are sort of been carrying 0:10:46.240 --> 0:10:49.120 out guerrilla warfare of some of some extent, you know, 0:10:49.400 --> 0:10:52.560 for years, so they're very highly trained. There are apparently 0:10:52.600 --> 0:10:56.239 systems of tunnels they may have used. They use mechanized 0:10:56.280 --> 0:11:01.600 parachutes to literally parachute themselves into into Israeli territory. And 0:11:01.679 --> 0:11:05.480 quite an organized, coordinated operation. So this is not just 0:11:05.520 --> 0:11:08.320 sort of random groups roaming around it. It is quite 0:11:08.400 --> 0:11:09.760 organized and sophisticated. 0:11:10.679 --> 0:11:13.959 So as we've seen video coverage of you know, it 0:11:14.000 --> 0:11:20.320 seems like tanks massing on personnel carriers massing on Israeli side. 0:11:20.960 --> 0:11:22.560 The reports this morning of a call up of three 0:11:22.640 --> 0:11:28.240 hundred thousand reserves. Is it the expectation that Israel at 0:11:28.240 --> 0:11:30.240 some point in the near future will make a full 0:11:30.280 --> 0:11:33.480 scale invasion of that part of Gaza. 0:11:34.640 --> 0:11:37.240 It's certainly seen as probable. I mean, this is a 0:11:37.320 --> 0:11:41.400 severe attack on Israel. The high number of civilian casualties 0:11:41.840 --> 0:11:46.720 that we've seen it will compel the government to act. 0:11:46.760 --> 0:11:49.040 In the past, they've retaliated in different ways. 0:11:49.080 --> 0:11:52.959 Maybe they've struck through sort of rocket fire back into 0:11:52.960 --> 0:11:56.280 the Gaza strip. We're seeing that already. If they blame Iran, 0:11:56.400 --> 0:11:59.760 they tend to hit Araand's proxies elsewhere in the area. 0:11:59.840 --> 0:12:02.360 This goes beyond what we've seen in a very long 0:12:02.440 --> 0:12:06.000 time in terms of the level of the attack on Israel, 0:12:06.040 --> 0:12:10.319 which will probably lead to a much bigger scale retaliation. 0:12:10.440 --> 0:12:12.880 And that's why the idea of a full scale ground 0:12:12.920 --> 0:12:15.520 war now really is on the table. I mean, the 0:12:15.559 --> 0:12:18.360 Israeli government's talking me about months of campaign here in 0:12:18.400 --> 0:12:21.200 military campaign. This is not going to be over in 0:12:21.280 --> 0:12:23.720 the next couple of days. They really are going to 0:12:23.760 --> 0:12:26.280 turn the screws on Gaza. They're turning the water off, 0:12:26.320 --> 0:12:28.800 they're turning the power off. They're going to make life 0:12:28.800 --> 0:12:32.200 for people living in Gaza extremely miserable. So we really 0:12:32.240 --> 0:12:34.880 are looking at the prospect of a full scale ground 0:12:34.960 --> 0:12:36.120 war now in the Middle East. 0:12:36.400 --> 0:12:40.200 I mean, given the size of the attack and the 0:12:40.320 --> 0:12:45.240 support that Iran has historically provided to Hamas and has Belah, 0:12:45.679 --> 0:12:51.440 it seems difficult to imagine the Iranians didn't know, even 0:12:51.480 --> 0:12:55.280 if you maybe say they weren't involved in the actual planning, 0:12:55.280 --> 0:12:57.200 which the Wall Street Journal has reported that they were 0:12:58.440 --> 0:13:02.720 courting unidentified members of Comas and Hezbollah. What does this 0:13:02.840 --> 0:13:06.400 mean for Israel I mean in terms of markets rise? 0:13:06.440 --> 0:13:08.080 And they hate to bring it back to that, but 0:13:08.760 --> 0:13:12.440 you know, we've looked at oil coming up roughly four 0:13:12.800 --> 0:13:17.040 to five percent. If we get solid evidence that Iran 0:13:17.160 --> 0:13:21.680 is behind this, does that push the price higher? Are 0:13:21.679 --> 0:13:23.840 there are those flows completely cut off? 0:13:25.120 --> 0:13:27.560 Well, that becomes a real question right now. What you're seeing, 0:13:27.600 --> 0:13:30.480 obviously is a reaction in financial markets around. 0:13:30.160 --> 0:13:32.720 The world, be it riskier assets and also oil. 0:13:33.360 --> 0:13:35.719 And that's sort of a knee joke response to the 0:13:36.160 --> 0:13:38.160 extent of the conflict so far. 0:13:38.559 --> 0:13:40.480 But if you get contagion. 0:13:39.920 --> 0:13:42.960 Which means you're pulling in other plays in the Middle East, 0:13:43.000 --> 0:13:44.199 particularly around and. 0:13:44.320 --> 0:13:47.320 If all supply is affected, because right. 0:13:47.200 --> 0:13:50.360 Now where we are, there's no disruption to all supply, 0:13:50.480 --> 0:13:53.240 and so the price move is simply a reaction a 0:13:53.320 --> 0:13:55.800 question so risk being priced into the market. But if 0:13:55.840 --> 0:13:58.640 you get to the point that supply is really disrupted 0:13:58.679 --> 0:14:01.560 through the straits there, I mean Iran has been pumping 0:14:01.600 --> 0:14:03.839 oil again with the US that of turning a slight 0:14:04.400 --> 0:14:06.400 blind eye to that, then you're going to get real 0:14:06.440 --> 0:14:09.640 ishoes about around supply, and that feeds not just into 0:14:10.000 --> 0:14:13.520 the all MICA but also into broader questions around global inflation, 0:14:14.320 --> 0:14:17.560 the problems for interest rates around the world, higher for 0:14:17.640 --> 0:14:21.040 longer for interest rates, so there are real possible contagion 0:14:21.080 --> 0:14:23.640 effects for markets here in the longer term. And that's 0:14:23.640 --> 0:14:26.479 what people are really watching is does this stay contained 0:14:26.520 --> 0:14:28.920 where it is or does it draw in a run 0:14:29.000 --> 0:14:31.680 and suddenly you've got a much broader regional coldlip that's 0:14:31.720 --> 0:14:33.760 really affecting things like all supply. 0:14:34.200 --> 0:14:36.560 Ris to the effect that Israel does in fact amount 0:14:36.680 --> 0:14:40.240 some type of invasion. Is there any census the timing 0:14:40.280 --> 0:14:42.000 Is this in a matter of days or is the 0:14:42.080 --> 0:14:44.040 weeks I just don't how long it takes for them 0:14:44.080 --> 0:14:46.240 to get mobilized. It seems like Israel would probably be 0:14:46.280 --> 0:14:48.640 on a high level alert at all times anyway, But 0:14:48.720 --> 0:14:49.720 do we any sense of timing. 0:14:51.160 --> 0:14:53.840 It's very unclear and much might depend on how things 0:14:53.880 --> 0:14:56.720 go in terms of any push by Israel into the 0:14:56.800 --> 0:15:00.720 Gaza strip, whether Israel takes the initiative and stuff striking 0:15:00.800 --> 0:15:04.160 targets inside Iran. I mean, they also may opt if 0:15:04.160 --> 0:15:06.920 they do want to do something against Iran, to hit 0:15:06.920 --> 0:15:10.120 one of Iran's proxies in the region, which they've done before. 0:15:10.160 --> 0:15:11.920 There'll be a high level of caution about. 0:15:11.720 --> 0:15:14.640 Taking that step with Iran, as I said, because that 0:15:14.720 --> 0:15:19.359 just like escalates significantly the tension in the whole region. 0:15:19.120 --> 0:15:20.640 And the US and other players. 0:15:20.800 --> 0:15:24.360 You know, allies of Israel are being very very cautious 0:15:24.360 --> 0:15:27.880 about that and urging Israel to be careful and walk 0:15:27.920 --> 0:15:29.040 the steps on this. 0:15:29.320 --> 0:15:31.920 No one really seems to be agitating. 0:15:31.280 --> 0:15:35.040 For an immediate strike on Iran, and certainly Iran doesn't 0:15:35.040 --> 0:15:39.840 seem to be showing an inclination to directly attack Israel. 0:15:39.440 --> 0:15:41.520 And so that's possibly some way off. 0:15:41.560 --> 0:15:43.840 We first probably need to see how things play out 0:15:44.120 --> 0:15:46.320 in the Gaza strip, but certainly it does remain to 0:15:46.400 --> 0:15:49.120 keep question in the minds of many people is where 0:15:49.160 --> 0:15:51.160 does this begin and where is it? Where on Earth 0:15:51.200 --> 0:15:52.000 is it going to end? 0:15:52.320 --> 0:15:56.840 Just to wrap our heads around this geographically raz does 0:15:56.880 --> 0:15:59.320 it look like most of the attackers came out of 0:15:59.360 --> 0:16:04.800 Gaza and missiles coming out of Lebanon at the West 0:16:04.800 --> 0:16:08.080 Bank and Jerusalem seem problem free at the at the moment. 0:16:09.280 --> 0:16:12.160 Well, certainly the attacks of mostly come out of Gaza, 0:16:12.160 --> 0:16:15.960 but we are seeing some skirmishes involving Hesblah, which is 0:16:16.000 --> 0:16:19.680 obviously from the Lebanon side of things, and we've seen 0:16:19.720 --> 0:16:22.240 some rockets fired by Hesbealah into Israel. 0:16:22.280 --> 0:16:24.320 We've seen Israel files and rockets back. 0:16:24.600 --> 0:16:27.360 We're now seeing reports that a handful of people May 0:16:27.840 --> 0:16:31.040 Palestines may have attempted. It's across from the Lebanon side 0:16:31.680 --> 0:16:35.200 into Israel and we're seeing retaliation going on there. So 0:16:35.400 --> 0:16:38.080 it is happening on both ends, but it's mostly concentrated 0:16:38.120 --> 0:16:38.720 in the South. 0:16:39.680 --> 0:16:41.760 Hi Ros, thanks so much for joining us. Roz Mathison, 0:16:42.160 --> 0:16:44.520 news director for Bloomberg News over in London. 0:16:44.880 --> 0:16:48.000 You're listening to the Teeth Cats Are Live program Bloomberg 0:16:48.040 --> 0:16:51.640 Markets Weekdays at ten am Eastern on Bloomberg Radio, the 0:16:51.720 --> 0:16:53.680 tune in app, Bloomberg dot Com, and. 0:16:53.640 --> 0:16:54.920 The Bloomberg Business App. 0:16:54.960 --> 0:16:57.800 You can also listen live on Amazon Alexa from our 0:16:57.800 --> 0:17:02.440 flagship New York station, Jose. Let's playing Bloomberg eleven thirty. 0:17:04.280 --> 0:17:05.720 Right now, when we're going to get back to the 0:17:05.840 --> 0:17:09.199 story at hand, the conflict in Israel, and we're going 0:17:09.240 --> 0:17:11.800 to do that today with doctor Ariel Cohen, Senior fellow 0:17:12.080 --> 0:17:15.679 at the Atlantic Council Eurasia Center, also a member of 0:17:15.800 --> 0:17:20.200 the Council Foreign Relations, someone who's steeped in all things 0:17:20.200 --> 0:17:24.280 geopolitical issues on that type that part of the world. 0:17:24.400 --> 0:17:26.720 Doctor Cohen, Thanks for joining us here. We'd love to 0:17:26.800 --> 0:17:29.080 just we've had a full I guess, twenty four hours 0:17:29.119 --> 0:17:30.800 to kind of figure out what's going at forty eight 0:17:30.800 --> 0:17:32.960 hours to figure out what's going on there. What's your 0:17:33.280 --> 0:17:36.800 I guess initial take, maybe informed take is what we've 0:17:36.840 --> 0:17:38.600 witnessed since Saturday morning. 0:17:40.160 --> 0:17:44.240 First of all, we witnessed an attack on Israeli civilians 0:17:44.440 --> 0:17:48.760 that we did not see that level of death since 0:17:48.760 --> 0:17:52.520 the Holocaust. Probably in the end of the day it's 0:17:52.560 --> 0:17:55.160 going to be eight hundred and nine hundred people killed 0:17:55.160 --> 0:18:02.440 in one day, rape, taking people hostage and prisoner, including 0:18:02.720 --> 0:18:05.480 little children, murdering. 0:18:06.600 --> 0:18:08.400 Parents in front of the. 0:18:08.400 --> 0:18:15.920 Children, put posting rape on social media, desecration of corpses, etc. 0:18:16.680 --> 0:18:22.600 These are horrifying pictures on the Israeli front. 0:18:23.520 --> 0:18:29.040 This is the largest Israeli failure since the Yom Kipur War, 0:18:29.359 --> 0:18:36.640 the October War of nineteen seventy three. The Israeli intelligence, 0:18:37.720 --> 0:18:43.399 the shin Bed, the Security Service, the Mossad, the external intelligence, 0:18:43.440 --> 0:18:47.040 and the military intelligence failed to understand what was right 0:18:47.080 --> 0:18:50.680 in front of them. I was reading newspapers with reports 0:18:50.760 --> 0:18:54.240 of the meetings of all these organizations with the Iranians 0:18:55.400 --> 0:18:59.080 Islamic Revolutionary Guard Corps in Beirut and asking a question 0:18:59.400 --> 0:19:01.720 that the Israeli leaders should have asked, what's. 0:19:01.520 --> 0:19:04.080 Going on here? Why the meeting? 0:19:04.600 --> 0:19:08.200 They were meeting weekly or bi weekly in Beirut. They 0:19:08.240 --> 0:19:13.440 also are connecting through Turkey, which gave shelter to senior 0:19:13.560 --> 0:19:19.000 Kamas operators. And then the question that I am focused 0:19:19.040 --> 0:19:23.000 on now is whether he's Balah they fully owned subsidiary 0:19:23.320 --> 0:19:28.600 of Iranian Revolutionary Guard Corps. The leader of his Bala 0:19:29.000 --> 0:19:33.520 Sheek Nasa has a title of representative of the Supreme 0:19:33.600 --> 0:19:36.960 Leader of Iran in Lebanon, Are they entering the frame? 0:19:37.520 --> 0:19:42.359 If they do, this is a very very serious threat 0:19:42.400 --> 0:19:48.400 to Israeli existence because his Bala reportedly has between one 0:19:48.520 --> 0:19:53.320 hundred and two hundred thousand rockets, whereas Kamas was shooting 0:19:53.400 --> 0:19:57.280 into Israel at a rate of two thousand rockets in 0:19:57.359 --> 0:20:02.719 twenty minutes. A thousand rockets, what is it a two 0:20:02.840 --> 0:20:08.160 hundred rockets a minute that the Israeli iron dome system, 0:20:08.680 --> 0:20:11.440 one of the most advanced of the world, was overwhelmed. 0:20:12.320 --> 0:20:17.240 Now we may have higher rates of bigger rockets hitting 0:20:17.600 --> 0:20:19.280 strategic places. 0:20:18.880 --> 0:20:23.760 Like the refinery in Haifa and turning Israeli cities. 0:20:24.920 --> 0:20:27.960 Where my relatives live all over the country where I 0:20:28.080 --> 0:20:32.040 used to live myself, turning that into a fiery inferno. 0:20:32.400 --> 0:20:36.160 In that case, Israeli leaders, including. 0:20:35.760 --> 0:20:39.200 The head of the Mossada, David Barnea, about two weeks ago, 0:20:39.640 --> 0:20:44.480 said that they will have the top leadership of around 0:20:44.480 --> 0:20:49.840 responsible in Tehran and news flash, Israeli airplanes do not 0:20:50.040 --> 0:20:55.240 have the range to hit Iran without help from the 0:20:55.359 --> 0:21:00.880 Arab allies or Arab friends, and if such health will 0:21:00.920 --> 0:21:06.200 not be forthcoming, Israel may use its rockets, whether land 0:21:06.240 --> 0:21:13.280 based rockets or rockets, missiles on its submarines, two Hiterranean targets, 0:21:13.320 --> 0:21:17.160 including Tehran and including the oil terminal in. 0:21:17.480 --> 0:21:21.560 Barbas, Doctor con what do you expect Israel to do 0:21:21.720 --> 0:21:24.000 in response? And when do you expect them to do that? 0:21:25.040 --> 0:21:26.080 They're doing it now. 0:21:27.800 --> 0:21:34.440 Israel mobilized three hundred thousand of the reserves, that's two 0:21:34.480 --> 0:21:37.040 thirds of the reserves are mobilized already. 0:21:37.920 --> 0:21:41.120 The moralist high. I am monitoring. 0:21:42.280 --> 0:21:47.760 What's up feeds of apartment buildings and relatives and sources, 0:21:48.359 --> 0:21:52.320 and the morales high. The leadership is trying to figure 0:21:52.359 --> 0:21:55.159 out what to do, maybe not as fast as we 0:21:55.200 --> 0:21:59.679 would like. For example, when Tamas was running over the 0:21:59.760 --> 0:22:03.840 villa and towns in southern Israel and people were stuck 0:22:04.240 --> 0:22:07.960 under fire, it took sometimes eight to ten hours for 0:22:08.080 --> 0:22:09.639 security forces to arrive. 0:22:10.200 --> 0:22:12.200 Now, of course, the response is going to be. 0:22:12.600 --> 0:22:16.760 Faster, and I'm sure that the Israeli air force and 0:22:16.840 --> 0:22:21.760 missile forces are getting ready if Habala is involved. 0:22:21.840 --> 0:22:24.960 And right now these very minutes. 0:22:25.000 --> 0:22:29.800 We see reports about exchanges of fire along the Lebanese border, 0:22:30.320 --> 0:22:35.200 and yesterday Tamas was shooting missiles into the Cheba farm 0:22:35.720 --> 0:22:39.720 area that they claim not the Lebanese government but Chrisbala 0:22:39.840 --> 0:22:44.560 is claiming a little piece of territory between Israel, Syria 0:22:44.600 --> 0:22:52.960 and Lebanon. If that escalates, all bets are off. The 0:22:52.960 --> 0:22:56.560 Bandara bas oil terminal of Iran is in the range 0:22:56.560 --> 0:23:00.840 of Israeli missiles, the oil prices may jump and the 0:23:01.000 --> 0:23:06.800 US support. Now we see the carrier battle group moving 0:23:06.800 --> 0:23:10.879 to eastern Mediterranean in a clear signal to Iran that 0:23:10.960 --> 0:23:14.480 if they Activatebella, we may see for the first time 0:23:14.840 --> 0:23:19.240 a joint Israeli American operation against Iranian targets in the 0:23:19.280 --> 0:23:19.760 Middle East. 0:23:20.119 --> 0:23:21.040 So I guess. 0:23:22.960 --> 0:23:28.600 Israeli defense forces would sweep through Gaza and secure the 0:23:28.640 --> 0:23:31.040 border with the West Bank while they then move north, 0:23:31.560 --> 0:23:34.800 pushing into Lebanon. Is that the idea Militarily. 0:23:35.760 --> 0:23:43.480 If Hiszbala opens, Israelis will need to destroy whatever known 0:23:43.560 --> 0:23:45.840 targets are. The problem in Lebanon is that there are 0:23:45.840 --> 0:23:48.760 a lot of tunnels. They need to secure the West Bank, 0:23:48.880 --> 0:23:53.760 not just the line between Israel and the West Bank. 0:23:53.840 --> 0:23:56.360 This is not recognized international border. 0:23:56.640 --> 0:24:00.880 Israel occupies parts of the west Bank, but any kind 0:24:00.920 --> 0:24:04.040 of terrorist activity out of the West Bank should in 0:24:04.080 --> 0:24:08.320 missiles killing civilians will require a response, and this is 0:24:08.359 --> 0:24:11.479 a big challenge for small country like Israel, a country 0:24:11.480 --> 0:24:14.760 is size of New Jersey with population about nine point 0:24:14.840 --> 0:24:17.800 two million people. That you have an active front in 0:24:17.880 --> 0:24:21.720 the south in Gaza where a thousand people got killed, 0:24:22.480 --> 0:24:27.320 You have a very unstable West Bank where Kamas is 0:24:27.359 --> 0:24:33.000 competing with Palestinian authority for power, and you have Hisbala 0:24:33.119 --> 0:24:37.240 with fifty thousand fighters and hundreds of thousands of rockets. 0:24:37.400 --> 0:24:38.560 This is a huge challenge for. 0:24:38.600 --> 0:24:43.880 Israel, all right, So, doctor Cohen, here is there any 0:24:44.040 --> 0:24:48.320 appetite for some type of I don't know less lethal 0:24:48.400 --> 0:24:50.840 type of solution here? Is there any room for that? 0:24:50.960 --> 0:24:53.320 Is there any psyche for that in Israel at the moment? 0:24:55.000 --> 0:24:58.480 No. In terms of Gaza, absolutely not. 0:24:59.480 --> 0:25:04.080 When you see, say, sweep through the Gaza strip, which 0:25:04.119 --> 0:25:07.600 is not big, it's I think nine by fourteen miles, 0:25:08.640 --> 0:25:09.960 a lot of it heavily built. 0:25:10.880 --> 0:25:13.240 The problem is the Israelis are not. 0:25:14.760 --> 0:25:19.320 Happy to kill civilians, but Hamas deliberately puts its military 0:25:20.640 --> 0:25:25.320 targets inside mosques, inside schools and hospitals, and there's no 0:25:25.480 --> 0:25:29.880 choice under international law. If the military targets are within 0:25:29.920 --> 0:25:35.159 civilian population, you are allowed under the international law to 0:25:35.280 --> 0:25:38.440 hit the military targets Israelis, for example. 0:25:38.080 --> 0:25:39.840 Do what they call knock on the roof. 0:25:39.920 --> 0:25:44.800 They warn the citizens to leave buildings, and sometimes they 0:25:44.840 --> 0:25:47.359 manage and sometimes Kamas prevents them from leaving. 0:25:47.800 --> 0:25:51.240 So Gaza is going to be softened as. 0:25:51.160 --> 0:25:55.440 A target by the air force and artillery before they 0:25:55.440 --> 0:26:01.080 move in, so sweep, yes, maybe within a week, not immediately, 0:26:01.160 --> 0:26:05.200 because they do not want to lose their boys and girls. Understandably, 0:26:05.440 --> 0:26:08.639 we did the same in Iraq. Okay, you don't go 0:26:08.800 --> 0:26:13.840 in before the targets is suffered. And Withibala, if they 0:26:13.880 --> 0:26:19.320 really enter the war, they will be bombed and shelled 0:26:19.520 --> 0:26:22.320 before the land operation begins. 0:26:22.800 --> 0:26:25.360 Is there, doctor Cohne, Is there any way to evacuate 0:26:25.760 --> 0:26:30.399 civilians from Gaza at all? Because they have border on 0:26:30.520 --> 0:26:32.600 all three sides and the Mediterranean on the other. 0:26:33.840 --> 0:26:38.600 Absolutely, and here the United States, Saudi Arabia and others 0:26:38.720 --> 0:26:44.040 can do a lot of favor to the civilian population 0:26:44.160 --> 0:26:44.600 and Goza. 0:26:44.760 --> 0:26:45.040 Well. 0:26:45.080 --> 0:26:48.879 First of all, when you say civilians, I would probably 0:26:49.359 --> 0:26:53.399 focus on women and children first and foremost, because a 0:26:53.400 --> 0:26:58.359 lot of able bodied men are pressed into membership in 0:26:58.400 --> 0:27:04.879 Hamas and Islamic JIP and civilians can go into two directions. 0:27:04.960 --> 0:27:12.720 One open spaces fields, fields and desert land in Gaza 0:27:13.000 --> 0:27:16.040 and stay there with tents, or. 0:27:16.920 --> 0:27:20.359 Go to the Egyptian border and convince it. 0:27:20.760 --> 0:27:24.439 The international community should convince the Egyptians to let the 0:27:24.560 --> 0:27:30.119 civilians enter and accommodate the civilians. 0:27:29.800 --> 0:27:31.600 Because we do not want. 0:27:32.920 --> 0:27:38.159 Any civilian casualtism on eva side Israel or Gaza to 0:27:38.240 --> 0:27:42.960 be hurt. And then those who remain and fight, their 0:27:43.000 --> 0:27:46.400 blood is on them. In terms of Lebanon, same thing. 0:27:46.760 --> 0:27:51.199 Lebanon is much bigger than Gaza. The civilians should exit 0:27:51.520 --> 0:27:54.200 the sous in case the balloon goes up. 0:27:54.119 --> 0:27:54.679 On the south. 0:27:54.880 --> 0:27:57.320 Okay, doctor Cohen, thank you so much for joining us. 0:27:57.680 --> 0:28:00.680 I appreciate your thoughts in your analysis, Doctor Eryl. He's 0:28:00.720 --> 0:28:04.680 the senior fellow at the Atlanta Council Eurasia Center, also 0:28:04.960 --> 0:28:08.040 a former member of the Council Foreign Relations, one of 0:28:08.040 --> 0:28:11.240 the leading voices. Their intentions obviously running extraordinarily high. The 0:28:11.280 --> 0:28:15.000 next several days, I guess we'll show a lot show 0:28:15.040 --> 0:28:18.760 the world where this thing may develop over the coming days, weeks, 0:28:18.960 --> 0:28:20.800 and months, and we'll certainly have the full reporting. 0:28:21.800 --> 0:28:25.640 You're listening to the Team ken'shur Live program Bloomberg Markets 0:28:25.680 --> 0:28:28.760 weekdays at ten am Eastern on Bloomberg dot Com, the 0:28:28.840 --> 0:28:32.000 iHeartRadio app and the Bloomberg Business App, or listen on 0:28:32.040 --> 0:28:34.200 demand wherever you get your podcasts. 0:28:35.880 --> 0:28:38.560 Matt Miller, Paul Sweeney live here in our Bloomberg Interactive 0:28:38.560 --> 0:28:41.400 Brokers studio, streaming as well on YouTube. So check us 0:28:41.400 --> 0:28:43.880 out over there. Let's bring in our good friend Mike mcglohan. 0:28:43.920 --> 0:28:46.960 He's the senior macro strategist for Bloomberg Intelligence. He's based 0:28:47.000 --> 0:28:50.760 down in our Miami office. And Mike, we see oil 0:28:50.800 --> 0:28:53.960 surging here, no surprise, WTI up over four percent. We're 0:28:53.960 --> 0:28:57.400 now about eighty six dollars a barrel here. Historically, you've 0:28:57.440 --> 0:28:59.640 got a ton of experience in this mic. When you see, 0:29:00.120 --> 0:29:03.760 you know, geopolitical conflicts breakout, particularly in the Middle East. 0:29:04.040 --> 0:29:06.840 How do traders in the oil pits, how do they 0:29:06.880 --> 0:29:08.760 kind of parse this stuff out? 0:29:09.600 --> 0:29:13.000 The quote my son's or adults like yours, they would teach 0:29:13.040 --> 0:29:16.080 me the worm meh, the word meth. From what you'd 0:29:16.080 --> 0:29:18.320 see in crude oil today of four percent, it's kind 0:29:18.360 --> 0:29:20.200 of a normal day for crude oil. I'm not saying 0:29:20.240 --> 0:29:24.360 what happened with the how messiresrail conflict isn't normal, but 0:29:24.400 --> 0:29:27.160 it's it's indicative of what's happening in crude oil. Cruel 0:29:27.200 --> 0:29:29.600 peak at the end of September around ninety five oh 0:29:29.640 --> 0:29:32.040 three so far, that's the high for the year. I 0:29:32.080 --> 0:29:35.520 think it's the market's retesting that, but it's also showing 0:29:35.520 --> 0:29:39.040 the resilience of manage money net positions are just starting 0:29:39.080 --> 0:29:40.400 to roll over their way too long. 0:29:40.400 --> 0:29:41.680 It looks like it's probably peaked. 0:29:41.960 --> 0:29:46.240 It's showing the more significant tilt globally towards this event 0:29:46.400 --> 0:29:49.960 might accelerate that tilt towards recession. And one thing also 0:29:50.000 --> 0:29:51.720 you're seeing what it's doing is you look at the 0:29:51.760 --> 0:29:55.240 front the back month futures. In terms of Fed Fund futures, 0:29:55.520 --> 0:29:57.680 I mean Fed Fund future is just for October of 0:29:57.920 --> 0:30:01.120 next year, down fifteen basis points. That implies that to you, 0:30:01.240 --> 0:30:02.880 not yield when we see it open up tonight will 0:30:02.920 --> 0:30:05.160 be down ten or so basis points. So to me, 0:30:05.240 --> 0:30:07.400 this might mark the peak that I've been looking for 0:30:07.440 --> 0:30:11.240 in crude oil and for bond yields, and to sustain 0:30:11.400 --> 0:30:14.960 higher prices, you need a major cutback and supply maybe 0:30:15.000 --> 0:30:16.920 from Iran, but there are only a million barrels a day. 0:30:16.960 --> 0:30:20.400 To put that in context, the excess of supply over 0:30:20.480 --> 0:30:23.479 demand in the US and Canada is six million barrel's 0:30:23.560 --> 0:30:24.040 day about. 0:30:24.520 --> 0:30:29.320 I just don't understand why we don't rally to far 0:30:29.400 --> 0:30:34.400 higher prices. I mean, my last week we saw barrels 0:30:34.520 --> 0:30:38.520 of WTI trade for ninety five dollars. That was well 0:30:38.800 --> 0:30:43.960 September twenty eighth, Right, If you liked it at ninety five, 0:30:44.600 --> 0:30:50.360 then it's now, you know, trading at eighty six while 0:30:51.040 --> 0:30:55.640 we're looking at the worst geopolitical eruption in Israel in 0:30:55.720 --> 0:30:59.720 fifty years. Why why wouldn't you back up the truck 0:30:59.720 --> 0:31:00.480 at this. 0:31:00.240 --> 0:31:02.960 Level it was already backed up. That's a key point. 0:31:02.960 --> 0:31:06.160 And member man positions of hedge funds, they were the 0:31:06.200 --> 0:31:10.600 most long at that period since November of last year, 0:31:10.600 --> 0:31:13.480 when CRUILL peaked around ninety three, now peaked around ninety five. 0:31:13.760 --> 0:31:17.320 But it's also that macro economic bent match, and it's 0:31:17.360 --> 0:31:20.680 that tilt towards recession. Remember it's this is a major 0:31:20.720 --> 0:31:22.760 difference when we were young in the seventies and we 0:31:22.760 --> 0:31:24.840 had these kind of issues. The US is a net 0:31:24.880 --> 0:31:28.120 exporter and a massive surplus kicking in. 0:31:28.320 --> 0:31:30.800 So also remember what happened two two thousand and eight. 0:31:30.840 --> 0:31:33.320 CRUIL peaked at one forty seven dollars a barrel, and 0:31:33.360 --> 0:31:35.480 it was a lot of that was positions. It wasn't 0:31:35.520 --> 0:31:38.920 really a strong fundamental reason. And when that tilts down, 0:31:39.000 --> 0:31:40.880 which it is or in the middle of that, then 0:31:40.920 --> 0:31:44.040 you have the major repercussions of going towards recession. And 0:31:44.080 --> 0:31:46.800 I think that's the case. Is so to me, that 0:31:46.880 --> 0:31:49.760 peak at ninety five was probably synonymous with bond yields 0:31:49.760 --> 0:31:50.840 peaking around five percent. 0:31:51.080 --> 0:31:54.600 Just a little history lesson right of what happened during 0:31:54.600 --> 0:31:57.160 the yam Kapur War, because well, I was born like 0:31:57.160 --> 0:31:59.800 a month later in nineteen seventy three, but I remember 0:32:00.640 --> 0:32:02.800 distinctly a few years later on my aunt, who had 0:32:02.800 --> 0:32:06.320 had a Mustang, got a little Honda Accord because you 0:32:06.360 --> 0:32:11.800 know exactly the oil, the oil what was it like 0:32:11.840 --> 0:32:14.520 in the oil embargo as it was referred to, sort 0:32:14.520 --> 0:32:17.320 of started with with that war, right. 0:32:18.000 --> 0:32:20.400 Yeah, so air oil bargues I love going back to 0:32:20.480 --> 0:32:23.160 nineteen seventy three seventy four, that's the first time crudell 0:32:23.680 --> 0:32:27.320 kind of really got to near twenty and that started 0:32:27.360 --> 0:32:30.240 a trend in crudell being the worst performing commodity a 0:32:30.360 --> 0:32:32.800 bar none even compare it to copper and soybeans and 0:32:32.800 --> 0:32:33.560 broad commodities. 0:32:33.840 --> 0:32:36.560 I love publishing on this. It just doesn't go up. 0:32:36.640 --> 0:32:37.280 It does and it. 0:32:37.440 --> 0:32:39.760 Spikes, it makes it go down. It's its own worst 0:32:39.840 --> 0:32:42.080 enemy versus things like copper. At least it made a 0:32:42.080 --> 0:32:44.120 new high last year. It's backed up. And if you 0:32:44.160 --> 0:32:46.600 compare it to soybeans, which I published this morning, soybeans 0:32:46.720 --> 0:32:49.440 way outperformed Crudel over time. So that to me is 0:32:49.480 --> 0:32:52.440 one that's changed the world and for people like me 0:32:52.520 --> 0:32:54.680 in the seventies. When I was pumping gas in nineteen 0:32:54.720 --> 0:32:57.040 seventy nine, we had a price in half gallons because 0:32:57.040 --> 0:32:59.360 it went over a dollar a gallon. The world's changed 0:32:59.360 --> 0:33:01.640 and that's what's really happened, and that's happening now and 0:33:01.640 --> 0:33:04.440 it's showing up every day in this commodity that is 0:33:04.560 --> 0:33:06.720 right now. The same price is first traded in two 0:33:06.720 --> 0:33:10.120 thousand and seven. And that's why I like to look 0:33:10.160 --> 0:33:12.560 at it as if we were a month ago when 0:33:12.560 --> 0:33:13.120 this happened. 0:33:13.120 --> 0:33:14.440 That was Kruel's an upswing. 0:33:14.480 --> 0:33:16.840 It might have pumped up ten dollars, but sorready started 0:33:16.880 --> 0:33:20.160 tilting back down for the global recession, which most people 0:33:20.200 --> 0:33:22.880 know that's coming, particularly if you look at leading indicators 0:33:22.880 --> 0:33:26.840 and economics, and after this conflict will trigger that Cruel 0:33:26.880 --> 0:33:29.520 will probably go to forty dollars bills. I've been saying 0:33:29.520 --> 0:33:32.440 that for a long time. I've been early, I've been wrong. 0:33:32.520 --> 0:33:34.880 But now that I see what's happening, it's its own 0:33:34.880 --> 0:33:37.800 worst enemies. It's spiking again. And you see what's happening. 0:33:38.200 --> 0:33:40.360 The stock market goes down. And if this tilts a 0:33:40.440 --> 0:33:42.920 normal correction in the stock market, that's the number one 0:33:42.920 --> 0:33:45.520 pressure for Crudel the last few years. Every time stock 0:33:45.520 --> 0:33:48.080 market drops twenty percent and it Fed saves it, Crueil 0:33:48.160 --> 0:33:49.080 drops forty percent. 0:33:49.240 --> 0:33:50.640 But this time will the FED save it? 0:33:51.120 --> 0:33:53.280 So, Mike, you know, I, as Matt mentioned, you know, 0:33:53.320 --> 0:33:55.520 oil peak just you know, back in the late September. 0:33:55.520 --> 0:33:57.560 But since then it's it's been coming back. When we 0:33:57.560 --> 0:33:59.920 were down, you know, obviously down in the low eighties 0:34:00.120 --> 0:34:03.120 for the weekend news here, and was that as you're 0:34:03.120 --> 0:34:05.760 suggesting kind of pricing in a recession. 0:34:06.640 --> 0:34:07.920 Oh, sure, it's starting a tilt there. 0:34:07.960 --> 0:34:11.840 So the low for the year w WTR Crudell sixty 0:34:11.920 --> 0:34:14.440 three dollars and sixty four cents. Now, if you had 0:34:14.440 --> 0:34:16.719 told anybody that a year ago, they would have said no, 0:34:16.760 --> 0:34:18.160 you couidding even be one in front of that, A 0:34:18.239 --> 0:34:20.399 one handle might know. So I have to point out 0:34:20.400 --> 0:34:22.120 there's a few things I did get right, and that 0:34:22.200 --> 0:34:23.640 is you never want to buy it when it spikes 0:34:23.640 --> 0:34:26.080 at that velocity. And every single time we spike it 0:34:26.120 --> 0:34:29.400 a symemal velocity of last year, you always have a recession. 0:34:29.440 --> 0:34:32.480 Now we're still a FED tightening. So yes, it's bounced 0:34:32.480 --> 0:34:35.920 from the low. Was low was eighty one dollars and 0:34:35.960 --> 0:34:37.959 fifty cents. But the average price for this year, about 0:34:38.040 --> 0:34:40.720 seventy seven dollars, is the same as about two thousand 0:34:40.760 --> 0:34:42.839 and six. At least gold has made a new high. 0:34:42.840 --> 0:34:45.080 So I look at this way. Crudeau might have peaked 0:34:45.120 --> 0:34:47.560 around ninety five. It looks like gold might be putting 0:34:47.600 --> 0:34:49.920 the bottom around eighteen hundred. Remember, we'll see what's happening 0:34:49.920 --> 0:34:52.799 with this conflict. It's making the world realize. Okay, Well, 0:34:52.840 --> 0:34:55.120 the dollar is the best place to be, particularly with 0:34:55.160 --> 0:34:58.000 the high yields. And if you get a recession, Crudel 0:34:58.120 --> 0:35:00.439 almost always gets cheap. It almost has to get cheap 0:35:00.480 --> 0:35:02.960 to reset itself. That's what's been missing so far this year. 0:35:03.680 --> 0:35:07.200 So in a geopolitical in a world where we've got Ukraine, 0:35:07.280 --> 0:35:09.400 the Middle East. Is there anything else on the commodity 0:35:09.480 --> 0:35:13.240 infrastructure that you're suggest people either get long or short. 0:35:14.280 --> 0:35:16.680 Well, the best foreign commodity this year is orange juice. 0:35:17.719 --> 0:35:23.120 It's one twentieth the amount of trading as wheat, and 0:35:23.120 --> 0:35:25.319 that's just more of an inventory thing. But the key 0:35:25.360 --> 0:35:27.799 thing I look at overall looking forward is let's look 0:35:27.800 --> 0:35:31.440 at historically, the best performing commodity almost all of history 0:35:31.520 --> 0:35:34.480 is gold. And except in demand pull periods when you 0:35:34.480 --> 0:35:37.560 pull up things like gold and copper, but particular in recessions, 0:35:37.800 --> 0:35:39.560 gold is the best performer. And I think it's just 0:35:39.600 --> 0:35:41.120 a matter of time it kicks in and does what 0:35:41.160 --> 0:35:43.960 it almost has does. Remember remember thinking about gold, you 0:35:44.000 --> 0:35:46.360 can store it on your body. It's cheap, it's not expensive. 0:35:46.640 --> 0:35:49.640 Crudles a toxic chemical, it's very expensive to store. That 0:35:49.680 --> 0:35:52.719 will show up over time. So if you invested interested 0:35:52.760 --> 0:35:55.840 in energy crudel, it's better to invest in the equities. 0:35:56.000 --> 0:35:58.280 Yet if you invest it, and you can still invest 0:35:58.280 --> 0:36:00.239 in physical gold and ETF and I think I think 0:36:00.280 --> 0:36:01.680 that's still gonna be one of the best form of 0:36:01.719 --> 0:36:04.000 commodities this year. Now this year it's app only about 0:36:04.000 --> 0:36:06.200 two percent. It was up almost ten and I think 0:36:06.200 --> 0:36:08.279 it's just came back to good support, and if we 0:36:08.320 --> 0:36:10.319 get toward the recession, I think it's gonna kind of 0:36:10.320 --> 0:36:12.480 meet at the same price as wherever they meet with 0:36:12.520 --> 0:36:13.560 the S and P five hundred. 0:36:13.600 --> 0:36:15.480 By the way, you rather have the ETF than just 0:36:15.800 --> 0:36:19.840 actually buying gold bars like a New Jersey senator and 0:36:19.880 --> 0:36:20.879 putting them under your bed. 0:36:21.440 --> 0:36:26.239 Yeah, I've enjoyed beating the gold space and if that 0:36:26.400 --> 0:36:28.400 was me, it'd probably be lost or stolen. I know 0:36:28.440 --> 0:36:31.520 my grandmother who was born in Germany during the war, 0:36:31.640 --> 0:36:35.840 they still store some gold in their in their underwear drawer, 0:36:36.560 --> 0:36:39.160 like okay, but I mean there's always it's diversity. The 0:36:39.160 --> 0:36:41.640 thing about ETFs is you can buy, hold and store 0:36:41.680 --> 0:36:44.200 that metal for virtually nothing. Compared to history, it was 0:36:44.320 --> 0:36:46.759 very difficult to do and you still have to pay 0:36:46.760 --> 0:36:48.439 for the storage and you have the risk. 0:36:48.719 --> 0:36:49.160 ETFs. 0:36:49.239 --> 0:36:50.920 I'm not saying they're risk free, but there's so much 0:36:50.920 --> 0:36:53.400 easier to get exposure. And the key thing that's really 0:36:53.440 --> 0:36:55.279 push for gold this year is that high interest rate 0:36:55.360 --> 0:36:57.759 you can be you know, the the output for the 0:36:57.800 --> 0:36:59.920 two you know that giant sucking sound of being up 0:37:00.120 --> 0:37:02.960 up of about five percent might have peaked with the 0:37:03.000 --> 0:37:06.240 FED potentially pivoting at some point, and that means gold 0:37:06.239 --> 0:37:08.520 will gains a little bit of accolades because it's that 0:37:09.440 --> 0:37:12.000 it doesn't earn interest, and it's that that the man 0:37:12.160 --> 0:37:14.319 pulling else to the stock market. If the stock marker's peak, 0:37:14.400 --> 0:37:16.120 gold should be one of the best performed. 0:37:15.800 --> 0:37:18.560 It sounds like bitcoin, only not nearly as good, right, 0:37:18.600 --> 0:37:21.200 because well, you can keep bitcoin on your person too, 0:37:21.200 --> 0:37:22.120 and a lot more of it. 0:37:22.920 --> 0:37:24.000 Big difference with bitcoin. 0:37:24.040 --> 0:37:27.560 It's the best performing asset in history, and it's volatility's 0:37:27.560 --> 0:37:29.160 about two to three times a gold and Matt, we 0:37:29.160 --> 0:37:31.279 all know what happens in recessions when people hit the 0:37:31.320 --> 0:37:34.439 bit and things. You sell your winners and you sell 0:37:34.440 --> 0:37:36.399 the high volatility assets first. And that's what I'm still 0:37:36.400 --> 0:37:38.600 worried about bitcoin. And if we have a normal recession, 0:37:38.800 --> 0:37:40.920 Bitcoin's going to go down with risk assets. At some 0:37:41.000 --> 0:37:42.920 point we might get to another bridge and lack more 0:37:42.960 --> 0:37:45.279 like gold and long bunds. But today you see what's 0:37:45.320 --> 0:37:49.040 happening on compared to compared to Monday of Friday, it's 0:37:49.040 --> 0:37:51.440 down about two percent. Ethereum is down about four percent, 0:37:52.000 --> 0:37:54.239 and I expect that to continue if we have a 0:37:54.239 --> 0:37:55.080 normal recession. 0:37:55.400 --> 0:37:57.360 All right, Mike, thanks so much for joining us. As always, 0:37:57.360 --> 0:38:00.920 Mike mcloanh directing to the point on his call. There, 0:38:01.040 --> 0:38:05.640 Mike McLoone, senior macro strategist, Bloomberg Intelligence from our Miami 0:38:05.800 --> 0:38:07.080 Beach office. 0:38:07.400 --> 0:38:11.040 You're listening to the tape cansur live program Bloomberg Markets 0:38:11.080 --> 0:38:14.479 weekdays at ten am Eastern on Bloomberg Radio, the tune 0:38:14.520 --> 0:38:16.399 in app, Bloomberg dot Com, and the. 0:38:16.280 --> 0:38:17.479 Bloomberg Business App. 0:38:17.520 --> 0:38:20.319 You can also listen live on Amazon Alexa from our 0:38:20.360 --> 0:38:25.440 flagship New York station. Just say Alexa playing Bloomberg eleven thirty. 0:38:26.080 --> 0:38:29.080 I'll tell you what. Whenever there is a major geopolitical 0:38:29.160 --> 0:38:32.160 issue anywhere in the globe, one of the first people 0:38:32.800 --> 0:38:35.040 we go to is Jack Divine. He's a president and 0:38:35.080 --> 0:38:35.920 founding partner of the. 0:38:36.000 --> 0:38:36.560 Arc And Group. 0:38:37.400 --> 0:38:40.320 He is a thirty two year veteran of the Central 0:38:40.320 --> 0:38:43.920 Intelligence Agency. He has been stationed all over the world. 0:38:44.000 --> 0:38:46.640 He's a publisher of the book Good Hunting and American 0:38:46.680 --> 0:38:51.560 Spymaster Story, which I highly recommend was excellent read. Jack. Here, 0:38:51.600 --> 0:38:54.240 we are back in the Middle East again with more 0:38:54.280 --> 0:38:59.279 conflict here. Let me just start with the intelligence area here. 0:38:59.480 --> 0:39:04.360 What happened been that the vaunted Israeli intelligence, the American 0:39:04.400 --> 0:39:06.680 intelligence did not pick this up. 0:39:07.480 --> 0:39:10.320 Well, I think everybody scratching their head. I think everyone 0:39:10.400 --> 0:39:14.920 recognizes it for a failure. When you look at israel 0:39:15.040 --> 0:39:17.400 I mean, I've worked closely with them over the years. 0:39:17.480 --> 0:39:21.120 They're very talented, they were at the cutting edge of technology. 0:39:22.000 --> 0:39:25.399 They know their target right, they know the threat, They've 0:39:25.440 --> 0:39:28.160 applied a lot of the fine technology. So we have 0:39:28.280 --> 0:39:33.880 to ask ourselves today how did Hamas get past that? 0:39:34.520 --> 0:39:39.160 And then the second area is the human sources. And 0:39:39.520 --> 0:39:44.440 again I think many of us probably were relying on 0:39:44.760 --> 0:39:48.040 the Israelis to have Hamas covered in a way that 0:39:48.600 --> 0:39:51.640 somehow it would have been an early warning. It's the 0:39:51.760 --> 0:39:58.279 early warning that you miss. Parts of intelligence are not unusual, 0:39:58.640 --> 0:40:01.279 but they miss that early warning something pretty good like this. 0:40:01.480 --> 0:40:04.879 There has to be an examination of conscience by all 0:40:04.920 --> 0:40:07.839 intelligence service that asks or do we have the right 0:40:07.880 --> 0:40:10.680 balance between technology and human and are we applying the 0:40:10.719 --> 0:40:13.640 right way? And what countermatters are we dealing with. So 0:40:14.400 --> 0:40:18.720 I think it's a tragic situation and an intelligence failure 0:40:18.920 --> 0:40:23.360 that lawrance after action, very careful analysis. 0:40:23.520 --> 0:40:27.120 What do you think Hamas? And maybe if it's working 0:40:27.160 --> 0:40:31.080 with HASBLA or others. What's ultimately their goal here, because 0:40:31.200 --> 0:40:35.800 now they've broken through borders at multiple points in Israel 0:40:36.120 --> 0:40:41.280 and carried out horrific terrorist attacks. 0:40:42.120 --> 0:40:42.600 Was that it? 0:40:43.120 --> 0:40:46.719 Or do you think there's there's there's more to come. 0:40:47.080 --> 0:40:50.520 Are they trying to bait you know, Israel into Gaza, 0:40:51.320 --> 0:40:54.960 Are they trying to blow up this conflict even further? 0:40:55.160 --> 0:40:57.120 Or do you think that was you know, this was 0:40:57.160 --> 0:40:58.440 the plan and it was accomplished. 0:40:59.239 --> 0:41:03.600 I think there's a lot of complex geopolitical issues behind it. 0:41:04.719 --> 0:41:08.279 Whether the organizers of it took all of them into 0:41:08.320 --> 0:41:12.799 consideration and played a great chess game remains to be seen. 0:41:12.880 --> 0:41:16.279 I'm allowing that it's possible. What I think what we're 0:41:16.280 --> 0:41:20.160 seeing is what there was. Other words, they decided that 0:41:20.280 --> 0:41:24.359 at a certain point they were going to attack. This 0:41:24.400 --> 0:41:27.920 has been long in coming. I think they needed it 0:41:27.960 --> 0:41:32.880 to sustain themselves and to push back. The thing that 0:41:33.000 --> 0:41:36.880 is stunning about it is that this is totally different 0:41:36.960 --> 0:41:40.880 in the level of sophistication and coordination, and I believe 0:41:40.880 --> 0:41:43.080 they had help. I mean, it's hard for me today. 0:41:43.440 --> 0:41:46.919 I may be proven wrong, but this looks like help 0:41:46.960 --> 0:41:51.520 from people that have done complicated operations, and specifically the Iranians. 0:41:52.160 --> 0:41:55.520 So the Iranians have one set of things at play, 0:41:56.280 --> 0:41:59.239 you know, Mas has some the Russians were right in 0:42:00.160 --> 0:42:04.360 approving it, and they have things to play. There's the 0:42:04.440 --> 0:42:09.879 Sauti Israeli prospects of the peace agreement, establishing relationships, if 0:42:09.880 --> 0:42:12.920 you will. So there's a lot of play. But I 0:42:12.920 --> 0:42:17.200 think Hamask just wanted to have a successful operation. This 0:42:17.400 --> 0:42:21.560 may exceed their expectations, but I think they weren't. They 0:42:21.560 --> 0:42:24.040 weren't doing it on the fly. They executed their plan 0:42:24.239 --> 0:42:27.680 and I think we saw it after that. I think 0:42:27.719 --> 0:42:30.759 it's the Israelis that have the game. They will they 0:42:30.800 --> 0:42:34.040 will decide how this plays out. I mean, him all 0:42:34.080 --> 0:42:36.719 women forced that they could flatten the country if they 0:42:36.760 --> 0:42:39.080 wanted to, So they have to calibrate it. But I 0:42:39.120 --> 0:42:42.799 think that Hamas can come back with new tricks. I 0:42:42.840 --> 0:42:46.120 think they pretty well run the course. Can his ballage 0:42:46.160 --> 0:42:48.560 jump in? Can there be problems in the West Bank? 0:42:49.200 --> 0:42:51.799 All that remains to be seen. But I don't think 0:42:51.800 --> 0:42:55.080 it's any in anyone's handbook. This part they're playing. I 0:42:55.120 --> 0:42:57.080 think they're planning day by day. 0:42:57.920 --> 0:43:00.440 Jack, you bring up some bigger issues as it relates 0:43:00.480 --> 0:43:05.719 to Iran, maybe even Russia. You know, I guess that 0:43:05.800 --> 0:43:09.160 the issue is that ties in with Ukraine. I mean, 0:43:10.200 --> 0:43:13.040 what role do you think the United States should play 0:43:13.080 --> 0:43:16.399 in the coming days and weeks now. 0:43:16.760 --> 0:43:19.279 I've been talking about it for some time. I think 0:43:19.320 --> 0:43:23.800 there's a grand struggle that is taking place in front 0:43:23.800 --> 0:43:27.160 of us in terms of the balance of power. On 0:43:27.200 --> 0:43:30.239 the one side, you have the democratic forces and its allies, 0:43:30.320 --> 0:43:33.040 and the other you have the non democratic forces on 0:43:33.120 --> 0:43:35.920 the other There is a big game that's being played 0:43:36.000 --> 0:43:40.319 well beyond Ukraine. Ukraine was clearly the first manifestation of it, 0:43:40.840 --> 0:43:45.600 but you have Russia, China, Iran, North Korea. But now 0:43:45.640 --> 0:43:48.920 they're extending it and trying to spread spread the faith 0:43:49.000 --> 0:43:51.759 of the Gospel if you like the other countries. If 0:43:51.760 --> 0:43:54.319 you look at Latin America, there's turmoil there in terms 0:43:54.360 --> 0:44:01.319 of elections, and in Africa, tremendous turmoil. It's very reminiscent. 0:44:01.360 --> 0:44:03.360 I hate to say it because, well, you're a Cold warrior, 0:44:03.840 --> 0:44:07.040 but it's so reminiscent of the international dimension of the 0:44:07.040 --> 0:44:11.400 Cold War, where the West and its allies were fighting 0:44:11.440 --> 0:44:14.040 them and counterpunching everywhere. Every once there to be a 0:44:14.080 --> 0:44:16.600 hot war so I think we're looking at it, and 0:44:16.640 --> 0:44:19.359 we have to look at a bigger scale. This is 0:44:19.400 --> 0:44:24.359 not just a fight between Hamas and Israel. There is 0:44:24.920 --> 0:44:29.759 this like Ukraine is going to alder the geopolitical dynamic 0:44:30.520 --> 0:44:33.600 of the balance of power, and now we're in the 0:44:33.640 --> 0:44:39.160 big time where things can get misunderstood, misconstrued and we 0:44:39.280 --> 0:44:42.640 end up expanding hot wars. 0:44:43.000 --> 0:44:47.360 Are you concerned about the impact the impact of this, 0:44:47.480 --> 0:44:49.920 I don't know if if you're saying this is kind 0:44:49.920 --> 0:44:54.200 of an axis of evil here the Russians, the Chinese, 0:44:54.320 --> 0:44:57.520 the Iranians, and North Korea, but certainly a lot of 0:44:57.560 --> 0:45:02.440 those countries have been aim for misinformation. And US elections 0:45:02.440 --> 0:45:08.120 were approaching one and you know, you've got a radical 0:45:08.160 --> 0:45:12.040 contingent in Congress that seems to, if not support Putin, 0:45:12.120 --> 0:45:14.640 at least be opposed to Ukrainian aid. Are are you 0:45:14.680 --> 0:45:18.920 worried that they've sort of infected the US Congress. 0:45:19.600 --> 0:45:26.600 We're in a new age where artificial intelligence disinformation is 0:45:26.680 --> 0:45:29.840 part of the realm, as part of the big game, 0:45:29.920 --> 0:45:32.759 if you will, and the Russians have been using them 0:45:32.800 --> 0:45:35.839 for some time. I think there was a general slowness 0:45:35.880 --> 0:45:41.520 in recognizing the breadth of it. Including involvement in our elections, 0:45:41.560 --> 0:45:45.520 which was I was more upset about the fact that 0:45:45.560 --> 0:45:49.440 they were involved in not that they were collecting information, 0:45:49.600 --> 0:45:52.480 but that they were playing in internal US affairs. Is 0:45:52.520 --> 0:45:55.719 really quite unprecedented. I mean, there's a little dabbling here 0:45:55.760 --> 0:45:57.680 and here in history, and the same is true on 0:45:57.719 --> 0:46:00.520 our site. We do not meddle inside their country. This dynamics, 0:46:00.600 --> 0:46:03.600 so this information and I would just bring it to 0:46:03.640 --> 0:46:08.080 the moment. This information is very much part of the 0:46:08.120 --> 0:46:11.759 Hamas if you like, and its allies propaganda. The propaganda 0:46:11.840 --> 0:46:16.360 is out there mobilizing their friends, and it's dynamic. I 0:46:16.440 --> 0:46:19.520 also should have put a footnote the cyber attacks at 0:46:19.560 --> 0:46:24.000 the very beginning of the Hamas attack are very impressive. 0:46:24.480 --> 0:46:27.080 So you're looking at that new dimension of war, just 0:46:27.120 --> 0:46:30.640 like you're looking at new dimensions of war in Ukraine. 0:46:31.520 --> 0:46:36.760 This experience will not only be lessons learned for intelligence officers, 0:46:36.760 --> 0:46:41.080 but it's also going to be lessons like lessons learned 0:46:41.120 --> 0:46:44.640 on war fighting and how we are going to deal 0:46:44.719 --> 0:46:48.920 with this, and it won't be just in the Middle East. 0:46:49.040 --> 0:46:54.040 So I think hold on to your seat. 0:46:53.239 --> 0:46:56.840 Jack, thirty seconds left. What do you think is Israel 0:46:56.920 --> 0:46:59.040 does next? How do you think they react. 0:47:02.000 --> 0:47:06.040 I think they have no choice but to use an 0:47:06.040 --> 0:47:10.800 iron hand, and with that will come, you know, repercussions. 0:47:11.440 --> 0:47:18.040 I don't see how it's possible feasible that had a 0:47:18.040 --> 0:47:22.480 soft landing negotiators. I think it's nonsense to suggests that 0:47:22.520 --> 0:47:25.520 at this point, when you look at the savagery of it, 0:47:26.320 --> 0:47:29.759 How of the Israelis that have suffered so much in history, 0:47:30.640 --> 0:47:34.320 how does the government stay in power and not set 0:47:34.360 --> 0:47:38.400 this right? So I think the repercussions are going to 0:47:38.480 --> 0:47:43.880 be very hard. I take that word everybody better. It'll 0:47:43.920 --> 0:47:49.040 be hard landing with long term implication. Getting back to 0:47:49.080 --> 0:47:49.600 the peace DAGs. 0:47:49.880 --> 0:47:51.960 Actually, Jack, I'm sorry, I just got to leave it 0:47:52.000 --> 0:47:55.240 there just because of time, But thanks as always, Jack Divine, President, 0:47:55.320 --> 0:47:56.919 founding partner of the ARC and Group. 0:47:57.280 --> 0:47:58.479 You're listening to the tape. 0:47:58.680 --> 0:48:02.480 Catch a live Programloomberg Markets weekdays at ten am Eastern 0:48:02.719 --> 0:48:06.200 on Bloomberg Radio, the tune in app, Bloomberg dot Com. 0:48:05.920 --> 0:48:07.359 And the Bloomberg Business app. 0:48:07.400 --> 0:48:10.200 You can also listen live on Amazon Alexa from our 0:48:10.200 --> 0:48:15.240 flagship New York station. Just say Alexa, play Bloomberg eleven thirty. 0:48:15.680 --> 0:48:17.200 Let's go to our next guest right here to get 0:48:17.200 --> 0:48:19.279 a sense of kind of a broader view of these 0:48:19.320 --> 0:48:22.080 markets here in the context of what is just another 0:48:22.160 --> 0:48:25.640 piece in the wall here in terms of geopolitical issues. 0:48:25.800 --> 0:48:28.840 Quincy Crosby joins us. She is the chief of Global 0:48:28.840 --> 0:48:33.759 Strategist for LPL Financial. Quincy, thanks so much for joining 0:48:33.840 --> 0:48:37.200 us here. Based upon your experience when you wake up 0:48:37.239 --> 0:48:39.880 to find an event like this, what's happening in Israel 0:48:40.000 --> 0:48:43.360 or what's happening in Ukraine and other parts of the world, 0:48:43.719 --> 0:48:47.120 in your experience, how do you kind of view markets 0:48:47.120 --> 0:48:49.840 in this how do you view positioning? Is it let's 0:48:49.960 --> 0:48:53.080 just kind of not you know, make quick changes, or 0:48:53.120 --> 0:48:54.480 how do you typically react? 0:48:55.840 --> 0:48:59.719 Well, you know, very often the first response in a 0:48:59.760 --> 0:49:04.320 mar is sell first, ask questions later. We didn't see 0:49:04.360 --> 0:49:07.360 that in this market. It's actually been maybe because it 0:49:07.400 --> 0:49:10.640 was the weekend, the market had time to assimilate what 0:49:10.840 --> 0:49:13.520 was going on. But you don't want to do anything 0:49:13.640 --> 0:49:18.480 drastic because there's still uncertainty hovering over the market. Now 0:49:18.520 --> 0:49:22.000 you would want to go into treasuries, obviously gold. You 0:49:22.040 --> 0:49:25.560 see that the treasure market will open, and you want 0:49:25.640 --> 0:49:29.359 to see the stocks that you want to buy may 0:49:29.760 --> 0:49:32.520 wind up being even more attractive than even in this 0:49:33.040 --> 0:49:36.200 death by a thousand cuts that we've had in the 0:49:36.239 --> 0:49:39.840 market over the last number of sessions. So again you 0:49:39.840 --> 0:49:42.239 don't want to be but I will say this, we're 0:49:42.280 --> 0:49:47.680 paying attention to energy, crude oil is hyper hyper alert 0:49:48.320 --> 0:49:51.799 to any rumor, any chatter of whether or not this 0:49:52.320 --> 0:49:56.320 conflict will expand into the deeper Middle East and or 0:49:56.400 --> 0:50:01.320 producing region. And also defense stocks. There is no doubt 0:50:01.360 --> 0:50:05.560 about it that we need more defense spending, and I 0:50:05.560 --> 0:50:08.000 think it's going to happen because of this in Ukraine. 0:50:08.120 --> 0:50:12.120 Obviously you have to imagine it will expand given what 0:50:12.160 --> 0:50:18.280 we've heard from Netan Yahoo and also given his position there. 0:50:19.040 --> 0:50:21.240 I wonder what you think about treasuries now. The market 0:50:21.280 --> 0:50:24.280 is closed today for the bond market is closed today 0:50:24.320 --> 0:50:28.120 for Columbus Day. But we have yields hovering at very 0:50:28.280 --> 0:50:31.719 high levels. So for example, the ten year right now 0:50:31.760 --> 0:50:36.360 at four eighty, the twenty year at five sixteen, five seventeen, 0:50:36.800 --> 0:50:40.840 and the thirty year at almost five percent. You know, 0:50:40.920 --> 0:50:43.640 typically this is a place at Quincy where you see 0:50:43.640 --> 0:50:48.440 investors go for safe haven and right now would be 0:50:48.520 --> 0:50:50.759 a time when they would use that, do they? 0:50:51.120 --> 0:50:51.279 You know? 0:50:51.320 --> 0:50:54.520 When the market opens, buy up these treasuries and force 0:50:54.560 --> 0:50:55.520 those yields back down. 0:50:56.800 --> 0:50:57.920 I think you'll probably see that. 0:50:58.000 --> 0:50:58.719 It won't just be. 0:51:00.280 --> 0:51:00.760 Investors. 0:51:00.800 --> 0:51:04.640 I think it's going to be global if the situation 0:51:04.840 --> 0:51:08.200 remains the same, or certainly if it looks as if 0:51:08.520 --> 0:51:13.399 there's going to be an escalation in terms of what 0:51:13.560 --> 0:51:15.680 Israel intends to do. 0:51:17.239 --> 0:51:19.680 So Quincy. I mean, I guess one of the questions 0:51:19.680 --> 0:51:22.560 here for in investors is is this kind of the 0:51:22.600 --> 0:51:24.480 new normal? I guess, I mean, do I need to 0:51:24.520 --> 0:51:29.520 have my portfolio structure in such a way that, you know, 0:51:29.840 --> 0:51:32.839 it just seems to be more and more uncertainly out there. 0:51:32.840 --> 0:51:36.040 From a geald political perspective, do you view it that way? 0:51:36.600 --> 0:51:39.160 Or is this kind of we shouldn't go that far? 0:51:39.200 --> 0:51:42.439 I guess I don't think we should go that far. 0:51:42.520 --> 0:51:46.240 I mean, let me say that if the European Union, 0:51:46.360 --> 0:51:52.160 the US, China for example, can contain this event to 0:51:52.600 --> 0:51:57.800 just the region, it will be it will be significant 0:51:58.120 --> 0:52:03.000 for the concept of g A political cooperation. Nobody wants 0:52:03.040 --> 0:52:08.560 to see this expand maybe has blocked does Humasque, but overall, uh, 0:52:08.640 --> 0:52:12.960 there's a broad consensus that this can't go beyond these borders. 0:52:13.120 --> 0:52:16.719 So that would be good that would be positive. But overall, 0:52:17.400 --> 0:52:20.120 you know, we have to look in Washington as to 0:52:20.200 --> 0:52:24.520 whether or not Washington can come together come up with 0:52:24.600 --> 0:52:29.719 a concrete package for defense, not just for the Israeli 0:52:29.840 --> 0:52:34.080 side and Ukraine, but for the United States. We're short 0:52:34.360 --> 0:52:39.600 in terms of defense spending. It's down, and we don't 0:52:39.640 --> 0:52:42.319 have the stock calls that we need. It must be done. 0:52:42.360 --> 0:52:45.720 Maybe this will be the impetus for it. There's nothing 0:52:45.800 --> 0:52:49.120 better than strength. There's nothing better than a government that 0:52:49.480 --> 0:52:53.720 is intact that actually helps prevent this kind of event. 0:52:55.280 --> 0:52:57.799 So it would help a Speaker of the House maybe 0:52:57.880 --> 0:52:58.359 the first step. 0:52:59.719 --> 0:53:01.480 Paul pointing out that we don't even have a Speaker 0:53:01.480 --> 0:53:03.400 of the House here. And part of the problem was 0:53:04.280 --> 0:53:09.320 obviously that the far right didn't want to fund any 0:53:09.400 --> 0:53:12.840 more support for Ukraine. And you have to wonder, I 0:53:12.840 --> 0:53:15.799 guess Israel is a different story, especially for the far right. 0:53:15.920 --> 0:53:19.480 But does the political situation in the US concern you 0:53:19.520 --> 0:53:20.960 at all? Quincy? 0:53:22.120 --> 0:53:22.279 Oh? 0:53:22.360 --> 0:53:23.040 Yes it does. 0:53:24.200 --> 0:53:28.240 Again, if I were, let's say, you know, I wanted 0:53:28.239 --> 0:53:33.000 to do something militarily overseas, this would be a good 0:53:33.040 --> 0:53:36.520 time because just the way Hamas looked at what was 0:53:36.560 --> 0:53:39.640 going on in Israel and the strikes and so on. 0:53:40.320 --> 0:53:44.719 It's always a good time when a government seems as 0:53:44.719 --> 0:53:50.640 though it is not integrated properly. And you're right about 0:53:50.680 --> 0:53:55.960 the conservative element in terms of spending more defense for Israel. 0:53:56.440 --> 0:54:00.800 Very strong evangelical Christian base that is very pro Israel 0:54:00.840 --> 0:54:04.279 and has been historically all right. 0:54:04.280 --> 0:54:09.640 So Quincy, let's step back. Earnings are starting off in ernest. 0:54:09.760 --> 0:54:12.680 Later this week, we'll get the banks here. What are 0:54:12.680 --> 0:54:14.920 you looking for in this earnings cycle? 0:54:16.320 --> 0:54:19.719 This is crucial and I'm glad that we start officially 0:54:19.800 --> 0:54:22.719 with the banks, especially JP Morgan. I want to hear 0:54:22.800 --> 0:54:28.440 what they have to say about the consumer credit card delinquencies, 0:54:28.560 --> 0:54:32.480 late payments, whether and who's being affected the most. I 0:54:32.480 --> 0:54:35.080 think we know that it is lower wage journals, but 0:54:35.120 --> 0:54:38.280 we want to hear from them rather than this conjecture, 0:54:38.440 --> 0:54:41.239 than the headlines that we see every day. They will 0:54:41.239 --> 0:54:43.239 have a good handle on it. Also, they're going to 0:54:43.280 --> 0:54:46.480 tell us about loan growth from their customers, from their 0:54:47.520 --> 0:54:51.520 client base overall, not just credit cards, and the guidance 0:54:51.600 --> 0:54:54.480 that the companies have. This is crucial because one of 0:54:54.520 --> 0:54:58.399 the things that is concerning and has been for some time, 0:54:58.440 --> 0:55:02.280 but it's been holding up, is margin compression, because if 0:55:02.400 --> 0:55:06.719 we see margin compression deepening, and we don't think it's 0:55:06.760 --> 0:55:08.640 going to be, but if we do, they're going to 0:55:08.719 --> 0:55:11.560 have to cut costs and that is going to affect 0:55:11.560 --> 0:55:14.399 the labor market, which is actually held up as we 0:55:14.440 --> 0:55:20.319 know and indicates resilience. But any sense that companies need 0:55:20.400 --> 0:55:23.080 to cut costs in order to get that bottom line, 0:55:23.160 --> 0:55:25.040 it is going to hit the labor market, which will 0:55:25.080 --> 0:55:28.360 hit the consumers. And then that leads you to the 0:55:28.480 --> 0:55:34.000 worry over a darker landing as opposed to a softer landing. 0:55:34.320 --> 0:55:36.960 We don't expect it, but we're watching for. 0:55:37.080 --> 0:55:39.640 It absolutely, all right, Quincy, thank you so much for 0:55:39.719 --> 0:55:42.960 joining us. I always appreciate getting your perspective. Quincy Crosby. 0:55:43.520 --> 0:55:48.279 She is the chief Global strategist at LPL Financial. Again, 0:55:48.400 --> 0:55:52.960 geopolitical risks front and center here. Central bank policy also 0:55:53.000 --> 0:55:56.239 a big issue for these markets. And then starting really 0:55:56.280 --> 0:55:58.520 later this week, particularly on Friday, with the big banks, 0:55:58.960 --> 0:56:01.120 we're going to start getting into the earning season. 0:56:02.960 --> 0:56:06.040 Thanks for listening to the Bloomberg Markets podcasts. You can 0:56:06.080 --> 0:56:09.880 subscribe and listen to interviews at Apple Podcasts or whatever 0:56:09.960 --> 0:56:13.680 podcast platform you prefer. I'm Matt Miller I'm on Twitter 0:56:13.880 --> 0:56:16.360 at Matt Miller nineteen seventy three. 0:56:16.239 --> 0:56:18.640 And I'm Faull Sweeney. I'm on Twitter at pt Sweeney. 0:56:18.760 --> 0:56:21.400 Before the podcast, you can always catch us worldwide at 0:56:21.440 --> 0:56:24.160 Bloomberg Radio