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Speaker 1: search Bloomberg Global News. Well, Ukrainian Russian officials meeting again
Speaker 1: for a third round of talks, but Russian leader Vladimir
Speaker 1: Putin saying Kiev must agree to his demand. Uh, and
Speaker 1: that's if fighting is to end. So there's that going on.
Speaker 1: You've got the House also exploring a bill that would
Speaker 1: ban the import of Russian oil and energy products. Um,
Speaker 1: there's just a lot of zigzag right now. That's certainly
Speaker 1: seeing it play out in the market. As Charlie just explained.
Speaker 1: Bill Fairies is National Security Team leader for Bloomberg News.
Speaker 1: Bill joins us on the phone from Washington. Uh, Bill,
Speaker 1: I just want to start with with where things are
Speaker 1: when it comes to Russia's invasion of Ukraine. As we
Speaker 1: you know, get past day twelve at this point, Um,
Speaker 1: bring us up to speed on on on the important
Speaker 1: things that we should be keeping an eye on. Well,
Speaker 1: the thanks for having me. The Russian offensive is, you know,
Speaker 1: just grinding on here, getting closer to uh, closer to Kieva,
Speaker 1: getting into some of the suburbs of the capital city,
Speaker 1: and also pushing in across on the east and south
Speaker 1: of the country. We've got about one point five million
Speaker 1: people who have been displaced either internally in Ukraine or
Speaker 1: who have fled, mostly mostly to Poland. And you have
Speaker 1: these talks that have been going on but really not
Speaker 1: achieving very much between Ukrainian and Russian officials. There's been
Speaker 1: no agreement on creating humanitarian passages out of some of
Speaker 1: the more besieged areas of the country. And you have
Speaker 1: almost on a day by day basis, either a ratchet
Speaker 1: enough of sanctions from US and mostly European nations, or
Speaker 1: you also have a lot of what we're calling self
Speaker 1: sanctioning companies that are just pulling out regardless of whether
Speaker 1: they are legally legally required to. You know, over the
Speaker 1: weekend we saw that coming from companies from KPMG to
Speaker 1: Netflix and TikTok Uh and American Express, among many others.
Speaker 1: So I don't know how even figure out what's next
Speaker 1: or how long this goes on. Bill, What are some
Speaker 1: of the smart conversations to have around that, and maybe
Speaker 1: they're realistic conversations. Well, the big debate right now is
Speaker 1: how far our nations willing to go on Russian energy supplies.
Speaker 1: And there's a big push and I think and this
Speaker 1: is a case where the administration is probably the Biden
Speaker 1: administration is probably a little bit behind Congress on this. Um.
Speaker 1: There's a lot of bipartisan support for the US to
Speaker 1: ban Russian energy imports, but it's pretty clear that a
Speaker 1: lot of European nations are not ready to take that step.
Speaker 1: And what you hear in the US is, you know,
Speaker 1: we're we're pushing back, We're pushing back on Putin and
Speaker 1: his war. But yet, you know, as long as the
Speaker 1: West is continuing to buy this energy, you're basically helping
Speaker 1: pay for his his his conflict in Ukraine. So um,
Speaker 1: But the US and Europe are just in different positions
Speaker 1: when it comes to that. In Germany in particular, you know,
Speaker 1: earlier in this I think it was last month you
Speaker 1: saw the sanctions come up on the nord Stream to
Speaker 1: gas pipeline that had never really sent energy into Germany.
Speaker 1: It was basically ready except for some environmental permits. But
Speaker 1: there is a nord Stream one pipeline, the original nord
Speaker 1: Stream pipeline, and that is providing a lot of energy
Speaker 1: that Germany's economy feels like it can't do without right now. So, uh,
Speaker 1: you're starting to see a divide on how how much
Speaker 1: further some of these countries can go. We're still waiting
Speaker 1: to see if some of these oligarchs have their yachts
Speaker 1: and jet uh seized by authorities in Europe or or
Speaker 1: authorities in the United States. It's but yeah, when you
Speaker 1: talk about the end game, I mean it's it's very
Speaker 1: hard to know what, you know, what would be the
Speaker 1: straw that finally convinces putin that economically this is not
Speaker 1: worth it. And I don't think anybody has that answer.
Speaker 1: And forgive me, I hate to the endgame because it's
Speaker 1: not a game. We know people are losing their lives here.
Speaker 1: I do also wonder the US doesn't feel the impact
Speaker 1: economically as severely as their European allies do. And I
Speaker 1: do wonder if the US just has to take its
Speaker 1: cues from Europe on this because of that. Well, you know,
Speaker 1: there are things that the U S could do. It
Speaker 1: could still go ahead and ban the importation of Russian
Speaker 1: petroleum products. Um, it's not a huge amount of our
Speaker 1: imports at this point, and um there's probably some substitutes
Speaker 1: that could be found. The end result is that, you know,
Speaker 1: I think that I think those goods will find their
Speaker 1: way to other markets, but some of the disruptions could
Speaker 1: have an impact here on things like gas prices at
Speaker 1: the pump, which we're already seen are you know, near
Speaker 1: a record at this point. So I think that's something
Speaker 1: the administration is concerned about that they say, well, we
Speaker 1: could do this, but it's not going to necessarily affect Russia,
Speaker 1: but it's really going to affect us. UM. So it's
Speaker 1: almost like a political moral decision at this point for
Speaker 1: the U S. If no one else goes along. And
Speaker 1: we're certainly seeing, at least from a from a moral perspective,
Speaker 1: Like you said, Bill, some companies that are self sanctioning
Speaker 1: um Bill. I want to ask you a question that
Speaker 1: I think we spoke about last week, which is what
Speaker 1: happens with multinational companies on the other side of this conflict.
Speaker 1: And I know we can't really speculate, but but I'm
Speaker 1: just wondering if, if if Russia ends up turning into
Speaker 1: some sort of international pariah akin to North Korea, for example,
Speaker 1: where the entire Russian population is essentially cut off from
Speaker 1: quote unquote Western goods and services. Well, you're you're definitely
Speaker 1: seeing that to some degree, you know, even if you've
Speaker 1: just looked at things like social media. And I don't
Speaker 1: want to overstate that, but you know, people are being
Speaker 1: cut off from some of the non Russian information sources
Speaker 1: that they had even a couple of weeks ago. The
Speaker 1: Russian media was always going to present the government's point
Speaker 1: of view on things, but at least if you had
Speaker 1: access to TikTok or Facebook or something like that, you
Speaker 1: might have a chance of seeing what what many and
Speaker 1: the rest of the world see in terms of what's
Speaker 1: happening in Ukraine. But I think you're right there, there's
Speaker 1: gonna be a lot more isolation. You're seeing Russian companies
Speaker 1: pulling out of Western Europe finding they can't do business there. Um.
Speaker 1: But it's a huge country. It's surrounded by you know everything.
Speaker 1: You know, it's got Europe on one side and China
Speaker 1: on the other, Japan just off the coast. It's hard,
Speaker 1: it's hard for it to be completely uh in the
Speaker 1: same categories North Korea. All Right, Bill Fairies, National Security
Speaker 1: team leader at Bloomberg. You're listening to Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio. So, as we've said, the Russian invasion and
Speaker 1: subsequent war in Ukraine has many consequences in front. We've
Speaker 1: talked about the military and cyber wars. It is also
Speaker 1: though a humanitarian crisis, and that was something we wanted
Speaker 1: to get into. More than one point five million refugees
Speaker 1: have fled the war in Ukraine thus far. Dr Ian
Speaker 1: lush Bader is clinical professor of medicine at and y
Speaker 1: U Langnes Medical Center. He joined us on the phone
Speaker 1: from New York City. Uh. Dr LUs Bader, I wanted
Speaker 1: to talk about you know, we've been covering the war
Speaker 1: in Ukraine, Russia's invasion of Ukraine from a lot of
Speaker 1: different perspectives. From the medical perspective as a doctor, when
Speaker 1: you see the images, when you see the reporting, when
Speaker 1: you read the reporting, what's your instinct that kicks in?
Speaker 1: What do you think about? Hi, Carol and Tim. It's
Speaker 1: really terrible. It is a medical and humanitarian crisis. You know,
Speaker 1: when you target UH and bomb civilians in hospitals, UM,
Speaker 1: you're really and nuclear plants. You're putting so many innocent
Speaker 1: people at risk. And many of these acts really meet
Speaker 1: criteria for war crimes according to the Haguen Geneva Conventions.
Speaker 1: UM attacking civilians hospitals in Kharkivan, Kursan, or running out
Speaker 1: of supplies, they're more in the eastern part, running low
Speaker 1: on oxygen. And part of the problem is how do
Speaker 1: you actually deliver any of these supplies. You know, we're
Speaker 1: seeing a number of countries, eighty six countries, thirteen international organizations,
Speaker 1: foreign healthcare workers are all making efforts, but basically all
Speaker 1: these supplies have to go to Poland and then go
Speaker 1: over land. And part of the problem it's a very
Speaker 1: big country, is there are no safe carridors to get
Speaker 1: to hospitals that are far from the Polish border. Um
Speaker 1: and I think that from a global perspective, you know,
Speaker 1: we've barely cope with a two to three year pandemic,
Speaker 1: millions of lives lost, patients, and people are concerned about
Speaker 1: nuclear escalation with threats, So there's you know, we're all
Speaker 1: seeing this and I think people are in an emotional state,
Speaker 1: barely recovering. So you know, the real questions what do
Speaker 1: we do We Obviously there are the w H show.
Speaker 1: It's very active. They're sending thirty six tons of supplies
Speaker 1: and medical supplies, individual companies like Henry Shine and others.
Speaker 1: There's a lot of volunteer. The real question is how
Speaker 1: do you get them to these isolated, surrounded UH spots
Speaker 1: in the war zone. And to me, it comes to
Speaker 1: mind in after World War Two the Berlin Airlift, Right,
Speaker 1: the Soviets cut off Berlin, surrounded it and you needed
Speaker 1: an airlift to actually drop supplies. They successfully supplied Berlin
Speaker 1: for over a year. You know, how to do that
Speaker 1: in a combat zone would be a challenge, and we
Speaker 1: need to think about maybe a United Nations not NATO
Speaker 1: no fly zone, but a U n UH no fly
Speaker 1: zone that would really be seen as more neutral and humanitarian,
Speaker 1: but There are a lot of details with that that
Speaker 1: would have to be worked out, but it's very stressful
Speaker 1: for for people. Their babies are being delivered in subways,
Speaker 1: maternity hospitals. Literally you're under threat, they're being bombed and mothers.
Speaker 1: I mean it's forty million people babies get delivered every
Speaker 1: day and some are being delivered in the dark in subways.
Speaker 1: It's it's unimaginable. Well, I'm merely the solution is to
Speaker 1: end the war, right, That's how you relate, because there's
Speaker 1: just so much you can do in a war in
Speaker 1: a war zone. Yeah, I mean, the challenges is how
Speaker 1: to do that and of course, um, there is some
Speaker 1: tent tentative feeling about escalation when potentially uh nuclear weapons
Speaker 1: are involved, but there will be no stop. You know,
Speaker 1: there's what the Baltic States and further expansion. If you're
Speaker 1: always going to threaten nukes sooner or later, there has
Speaker 1: to be a direct confrontation otherwise you a bully will
Speaker 1: always win. You. You have to stand up and say
Speaker 1: you know this far and no further. Um, But it
Speaker 1: has to be done carefully. A UN no fly zone
Speaker 1: would be helpful where you can justify protecting humanitarian aid.
Speaker 1: There are some legal issues, right, Russia's on the Security
Speaker 1: Council and so forth, But there are exclusions to combatants.
Speaker 1: So if Russia and China are considered combatants, they have
Speaker 1: to be excluded from a Security Council resolution. I don't
Speaker 1: know fly zone. So there are legal ways to do
Speaker 1: this if you want to do it. I we only
Speaker 1: have about thirty seconds left. Um. You mentioned the idea
Speaker 1: of a Berlin airlift type of scenario, but how our countries?
Speaker 1: How can countries continue to provide aid to these areas well?
Speaker 1: I think for the time being, UM, we have to
Speaker 1: work through organizations like the wh Show and individual companies
Speaker 1: of Henry seein medical supply companies, and there are a
Speaker 1: number of volunteer organizations. Even Bethanie Frankel has raised ten
Speaker 1: to twenty million dollars. People need to go on the
Speaker 1: internet and see how they can help UH and even
Speaker 1: if they get into Poland, at least there can be
Speaker 1: some overland routes. All right, good to check in with you, Ian.
Speaker 1: Thank you so much. Dr Alas paid or his clinical
Speaker 1: professor of medicine at n y U Landgoing Medical Center
Speaker 1: joining us on the phone in New York City. This
Speaker 1: is Bloomberg Business Week with Carol Masser and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio and the current issue
Speaker 1: of Bloomberg Business Week magazine. It's about the hundred billion
Speaker 1: dollar bet on five G wireless technology. Remember five G
Speaker 1: was going to just solve all that ails us to him, Oh,
Speaker 1: it totally has. I mean, doctors around the world are
Speaker 1: doing robotic surgery. They don't even have to be there
Speaker 1: in person. At least that's what the executives from these
Speaker 1: telecom companies told me a few years ago. Truly they
Speaker 1: did did. I would interview them all the time, and
Speaker 1: they were talking about the life changing things of five G.
Speaker 1: Joel Webber is editor at Bloomberg Business Week. He's with
Speaker 1: us in the Bloomberg Interactive Broker Studio. Jim Alice's assistant
Speaker 1: managing editor at Bloomberg Business Week. He also joins us
Speaker 1: in the Bloomberg Interactive Broker Studio. Joel, So, why uh
Speaker 1: five G was was launched? I I have five G. Uh,
Speaker 1: I don't feel like my life is any different. Remember
Speaker 1: the Great Simpsons Monoreel episode Monreil Monorail. It feels to
Speaker 1: me a little bit as I was reading uh this
Speaker 1: five G story UM by Scott Morris, and in the
Speaker 1: latest issue it felt a little bit like that minus
Speaker 1: the catchy song where you're right like, we heard about
Speaker 1: five G and we haven't heard about it forever, and
Speaker 1: it's like how it's going to be this game changer
Speaker 1: and up end everything we know about the world, and
Speaker 1: and here we are living in a five G world
Speaker 1: and it feels exactly like it daid before. Um, So, Jim,
Speaker 1: hundred billion dollars have gone into this investment. It is
Speaker 1: sort of amazing for that much money to be spent
Speaker 1: and not really have something. I have a lot. Five
Speaker 1: wasn't quite working right there. Well, what happened was that, um,
Speaker 1: you know, everybody sort of believed I don't wanna say
Speaker 1: the hype, but maybe they got the timing wrong. Definitely, UM.
Speaker 1: And so the notion that they would spend essentially double
Speaker 1: what was spent on four G. I mean four G
Speaker 1: we spent about uh sixty billion bucks and on on licenses,
Speaker 1: and so the notion that you would jump in throw
Speaker 1: a hundred and I guess it was about a hundred
Speaker 1: eighteen billion dollars in licenses out there and say okay,
Speaker 1: now we're gonna go out and sell five G. The
Speaker 1: problem was there's no five G applications for most things,
Speaker 1: and so all the hype doctors before the telecom horse
Speaker 1: or what is this, well, yeah, it actually is that.
Speaker 1: I mean the notion that long term you probably will
Speaker 1: have doctors who can do aboutic surgery using sort of
Speaker 1: you know, five G connections that are super fast. But
Speaker 1: I probably won't be alive when that happens, you know.
Speaker 1: So the thing is that we're going to be alive
Speaker 1: forever time, I hope, so, you know, but thanks, that's
Speaker 1: not going to And so what happened then is that, um,
Speaker 1: you know, they've introduced a lot of five G handsets
Speaker 1: without a lot of applications for it, and so people
Speaker 1: are not willing to pay extra for it. So a
Speaker 1: lot of the cell phone operators are having to basically
Speaker 1: give away FIGG handsets and hopes of jump starting the
Speaker 1: five G demands. I actually my carrier. I'm not gonna
Speaker 1: say who it is, but I keep getting these texts
Speaker 1: like you didn't get a new phone with five gene.
Speaker 1: I'm like, I've got the new phone and I've already
Speaker 1: got the five G. But but they're being really aggressive
Speaker 1: of wanting you to kind of ramp up. There could
Speaker 1: be three sorry, there are only three carriers exactly. Well,
Speaker 1: they've got to try to get out there and build
Speaker 1: up that market and essentially, um you know, the big
Speaker 1: advantage of FIG right now is that it has something
Speaker 1: called low latency, in other words, very fast pick up,
Speaker 1: so you don't have to await time despite large distances.
Speaker 1: The problem is that we don't really have a lot
Speaker 1: of applications for that. So what we're really seeing now
Speaker 1: is they're doing it on um you know, being able
Speaker 1: to put to find something that places WiFi. Okay, that's
Speaker 1: a big deal though, because that's a that's a significant
Speaker 1: cost for for people who you know, just have a
Speaker 1: high speed broadband connection at home and they don't have
Speaker 1: a lot of choice because we're talking you know, these
Speaker 1: telecom companies coming in and they don't have a lot
Speaker 1: of choice. But don't get too excited, because a lot
Speaker 1: of these developmentists actually help most in areas that don't
Speaker 1: have a lot of access to broadband, and so it
Speaker 1: might not be as super fast as the broadband that
Speaker 1: you would get from from a local cable company. Now
Speaker 1: a lot of people will argue that point, but just
Speaker 1: remember that uh um, a lot of things that are promised,
Speaker 1: maybe like that robotic surgery. The other dimension of this
Speaker 1: story that I think is really interesting is like you've
Speaker 1: got the carriers and they're the ones that have really
Speaker 1: been paying up. But in in in the back, here
Speaker 1: are the Facebook's apples, Microsoft's that play right, So how
Speaker 1: do those two factions end up potentially warring yet again
Speaker 1: in this in the in well two things. First of all,
Speaker 1: there it's been the sort of weird marriage of these competitors.
Speaker 1: I mean basically the guys who run the pipe, the
Speaker 1: network operators, you know, the wireless carriers, and the guys
Speaker 1: who are basically the ones who profit from all this connectivity,
Speaker 1: the Googles and the facebooks, and they're right now working
Speaker 1: together because they've got to figure out ways to push
Speaker 1: these new services to businesses since consumer services aren't out
Speaker 1: there paying the bills right now. So you're pushing the
Speaker 1: businesses to put a pin in sort of private networks
Speaker 1: in house to do other things that require ultra high speeds.
Speaker 1: But we've seen this happen before with four G that
Speaker 1: when you say, um, oh, we're gonna make all this
Speaker 1: money for everybody. It turns out that this increased connectivity
Speaker 1: really gets most money for those so called web scalers,
Speaker 1: the big web companies that use data, and not for
Speaker 1: the guys who run the pipe. And so that's the
Speaker 1: danger that they spend all the money, but they're probably
Speaker 1: not going to be the ones who actually make the
Speaker 1: most out of this. Alright, So think about our audience, right,
Speaker 1: For years we've heard from the telecoms CEO, but this
Speaker 1: was going to be so incredible, right, and you think
Speaker 1: about their bottom line. So I don't know. Is it
Speaker 1: just a case of timing, as you said? And so
Speaker 1: we do start to see the payoffs, well, you will
Speaker 1: see a payoff in five g. The question is whether
Speaker 1: that payoff is going to go to network operators. And
Speaker 1: that's the big undecided question. We've already paid a lot
Speaker 1: of move already paid a lot of money for it.
Speaker 1: I'm telling you right now. For a lot of investors,
Speaker 1: they'll say, Facebook, Microsoft, Google, do I want to put
Speaker 1: my money there? Are with the guys who were on
Speaker 1: the pipe. Okay, last question, Jim, driverless cars, that was
Speaker 1: another problem, going to make them sing the mono? No,
Speaker 1: this was like the promise from executives years ago. You
Speaker 1: know this is perfect for IoT, smart cities, driverless cars.
Speaker 1: Uh anything there? Well, I did you take a car?
Speaker 1: I would not hold my breath waiting on the application
Speaker 1: that comes to four. Okay, there we go. Well it's
Speaker 1: really you know, I just googled it. I'm like, wait, wait,
Speaker 1: we're gonna play this. Um, good story. Thank you so much.
Speaker 1: Joe Weber, editor of Bloomberg Business Week, here in our
Speaker 1: Interactive Broker studio along with Jim Ellis, Assistant Managing editor
Speaker 1: at Bloomberg Business Week. Also in studio, you're listening to
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes.
Speaker 1: Tim Stinovic on Bloomberg Radio. The escalation of warrant sanctions
Speaker 1: that are increasingly pushing Russian President Vladimir Puttin into a
Speaker 1: corner with possible dire consequences. You know that we talked
Speaker 1: about it. Uh, certainly concerned about a nuclear war. Um,
Speaker 1: but it does have some asking is there some kind
Speaker 1: of off ramp for Russia? Tim Andy Brown is editorial
Speaker 1: director at Bloomberg New Economy. He joins us on the
Speaker 1: phone from New York City. Uh, Andy. You you're in
Speaker 1: this week's New Economy Saturday. You write not just about
Speaker 1: Russia but about China as well. Um. We talked last
Speaker 1: week about the relationship between the president she and Vladimir
Speaker 1: Putin and what they what they were both told ahead
Speaker 1: of this, or what she was told ahead of this? Um,
Speaker 1: where do we see ourselves now? And how? How and
Speaker 1: how you're thinking of of China's faithful choice in tying
Speaker 1: up with Russia. Well, this, this really is a critical
Speaker 1: question of what did she, jimping know what did Putin
Speaker 1: tell him when the two of them met just ahead
Speaker 1: of the Olympic names in Beijing. And the position of
Speaker 1: the US government is that um Putin did share his
Speaker 1: war plans with with She. Um. And even if you
Speaker 1: believe that, though, I mean, the question is, you know
Speaker 1: how much detailed did Putin share with him? Did he
Speaker 1: convince Uh She as he appears to have convinced himself
Speaker 1: that this was a war that was going to be
Speaker 1: all over in a couple of days. The Russians would
Speaker 1: move in, and the Ukrainian defenders would lay down their arms,
Speaker 1: and the people of Ukraine would welcome the Russian arrivals
Speaker 1: as liberators. From the Nazi cabal that was supposedly running
Speaker 1: Ukraine that obviously hasn't happened. Then Russia is now bulked
Speaker 1: down in a two week war which increasingly looks like
Speaker 1: it's going to become an extended war of attrition UH
Speaker 1: in Ukraine and Russia is in China is now in
Speaker 1: a really untenable position. Well, and that's you know, in
Speaker 1: the lead and I talked about, you know, we're wondering
Speaker 1: is there an off ramp for Russia where President Putin
Speaker 1: feels really back into a corner? But you right in
Speaker 1: your weekend column that a similar question might be asked
Speaker 1: about China because of its affiliation relationship with Russia. Is
Speaker 1: there an off ramp for China? You know, it's really
Speaker 1: looking increasingly as though China is doubling down on Putin
Speaker 1: in spite of all the atrocities in the prospect of
Speaker 1: an intensification UH and an increase in the in the
Speaker 1: violence of of Putin's invasion of Ukraine. I think that
Speaker 1: they share a very similar outlook they world view. They're
Speaker 1: both determined. The United States has held bent on holding
Speaker 1: them down, on containing them, on using military alliance is
Speaker 1: to prevent their rise to where they considerably their proper
Speaker 1: place in the world, which Russia means reassembling somehow the
Speaker 1: Russian Old Russian Empire, which for China means becoming a
Speaker 1: dominant actor in ages. So you know, I think they've
Speaker 1: I think they've they're they're they're tight. And just we
Speaker 1: saw in the National People's Congress over the weekend China's
Speaker 1: Foreign Minister Wangi saying that China's relations with Russia are
Speaker 1: quote unquote rock solid. It's it's pretty remarkable, Andy. But
Speaker 1: I do also wonder, you know, if we think about
Speaker 1: it from the perspective of China being the second largest
Speaker 1: economy in the world, and one that, compared to Russia,
Speaker 1: is much more intertwined with the the world. I can't
Speaker 1: imagine American and multinational companies jumping out of China the
Speaker 1: way they've jumped out of Russia over the last twelve days. Yeah, well,
Speaker 1: it's certainly true that China has an awful lot more
Speaker 1: to lose than Russia from decoupling. I mean, just to
Speaker 1: put the relationship, you cannot relationship between Russia and China
Speaker 1: into perspective. Trade between the two countries is smaller than
Speaker 1: China's trade with Vietnam. China is, in fact the global
Speaker 1: technology is superpower, and it's very reliant on global networks
Speaker 1: of innovation and access to US technology, So it doesn't
Speaker 1: it doesn't want to decouple at all. However, I think
Speaker 1: the lesson that they're likely to learn to take away
Speaker 1: from this is that China needs to harden its economy
Speaker 1: against potential sanctions, increase the use of the Ruman b
Speaker 1: in in international transactions, and make itself less vulnerable to
Speaker 1: to US sanction and right them out if it has to. Andy,
Speaker 1: you understand China, you live there. How much of a
Speaker 1: risk do you think President g very smart and long
Speaker 1: term planning, How much of a risk do you think
Speaker 1: this strategy is in terms of aligning itself with Russia.
Speaker 1: How much risk does that present do you think for
Speaker 1: China going forward? Or or is it doesn't make sense
Speaker 1: to you? You know, China has gone way way out
Speaker 1: on a limb now for for Russia to the extent
Speaker 1: that it's been prepared to blow up decades of foreign
Speaker 1: policy doctrine which holds his sacra san national sovereignty UM
Speaker 1: borders um. They talk about win win cooperation. Much of
Speaker 1: that now seems to be out of the window as
Speaker 1: he doubles down on his relationship with Putin. Look, I
Speaker 1: think it's I think China is making its face. It
Speaker 1: has a has a very very geopolitical decision to make.
Speaker 1: The world is now split. We're in the middle. We're
Speaker 1: at the start of a new Cold War. On the
Speaker 1: one hand, you've got Europe and the United States, and
Speaker 1: on the other side you've got Russia. China has to
Speaker 1: decide which side is going to be on. But the
Speaker 1: world is so much different, and and when we have
Speaker 1: about forty seconds left, how does this new Cold War
Speaker 1: play out? Well? As they say, the the it's it's
Speaker 1: it's playing out now in Violin ways in Ukraine, and
Speaker 1: that is likely to continue regardless all the way that
Speaker 1: the war in Ukraine progressive. The question now is what
Speaker 1: will we what will be the impact on China in
Speaker 1: East Asia? And it's pretty clear that the United States
Speaker 1: and Europe are now increasingly seeing China and Russia in
Speaker 1: the same camp. And there is from China's perspective, a
Speaker 1: real risk now all economic detopolic. Right, we knew that
Speaker 1: there was you know that the world was being divided up,
Speaker 1: But I don't know that we all thought it was
Speaker 1: going to play out this way and with these certain alliances. Andy,
Speaker 1: thank you so much. Andy Brown, editorial director at Bloomberg
Speaker 1: New Economy. Check out his column and catch it every weekend.
Speaker 1: Yet drive Oh no, no, no, no, please, I'll do
Speaker 1: the driving. I want to drive. It's good question. Drive
Speaker 1: the drive to the globe on Bluebird Radio. All right, yep,
Speaker 1: we are just about eleven minutes away from the closing
Speaker 1: bell on this one day. I'm already yeah, it's that
Speaker 1: time already, and I'm not saying really any kind of
Speaker 1: buying into the clothes here. We are staying near are
Speaker 1: loads of the session. So as you heard from Charlie,
Speaker 1: down three point on the NASAC down down two and
Speaker 1: a quarter percent, s and P down about two point
Speaker 1: eight percent. Tech certainly taking it on the chin. Let's
Speaker 1: get into it with J Hatfield, chief executive officer at
Speaker 1: Infrastructure Capital Advisors, on the phone from New York City.
Speaker 1: J want to talk the markets. We want to talk
Speaker 1: to Spike and crude oil. But first, how you doing.
Speaker 1: I'm doing well. Thanks for having me on. Yeah, thanks
Speaker 1: for joining us. Um a good day to have you on.
Speaker 1: I do it certainly seems like the risk off mood
Speaker 1: today has a lot to do with the spike in
Speaker 1: in oil, not just in the United States, of course,
Speaker 1: but around the world as well. How high do you
Speaker 1: think oil is gonna get? We think it could get
Speaker 1: as high as iron and fifty a barrel for w
Speaker 1: TR if this global cancelation of Russia continues. Because really
Speaker 1: right now, so you were talking about the potential for
Speaker 1: the US and not by oil, but it's really not
Speaker 1: as critical as you would think because the financial sanctions
Speaker 1: have forced global trading and transportation companies to stop buying
Speaker 1: by all because they can't get financing. So we really
Speaker 1: had a current disruption in the flow, even though we
Speaker 1: don't have any constraint on companies and U countries buying it.
Speaker 1: Your infra crap infra cap excuse me, active MLPTF it
Speaker 1: invests in master limited partnerships. You guys are doing pretty
Speaker 1: well up nearly year to date, at in the past
Speaker 1: twelve months, according to our data here at Bloomberg UM.
Speaker 1: In terms of this current market environment, I mean you
Speaker 1: see MLPs certainly in the energy space, how has that
Speaker 1: benefited you? Well, I'm lts and which are really just
Speaker 1: pipeline companies structured a partnerships. The nice thing about them
Speaker 1: is they're relatively defensive, at least not relatives and market,
Speaker 1: but relative to straight out energy stocks. So they haven't
Speaker 1: fully participated like some of the energy stocks, but they
Speaker 1: have done well and they're really recovering from a five
Speaker 1: year shock that occurred when oil went from hundreds of twenty.
Speaker 1: So for investors who like to have the safety of
Speaker 1: substantial dividends and they are substantial at eight to nine
Speaker 1: and want to have some upside related to the rise
Speaker 1: of oil but not take the full risk their they're
Speaker 1: a decent way to play this the current situation. What
Speaker 1: are some other ways to to to play this situation? Again,
Speaker 1: I gotta just say, I mean it's it's it seems
Speaker 1: crass that we're talking about this in terms of of of,
Speaker 1: you know, how we can make money, but because we
Speaker 1: do have to remember this is a humanitarian crisis that's
Speaker 1: playing out not just in in Ukraine and but also
Speaker 1: throughout Europe as more than one point five million refu
Speaker 1: gees are fleeing the country. But it has global economic implications.
Speaker 1: J So help us understand what it would just highlight
Speaker 1: because it doesn't get discussed in most media outlets and
Speaker 1: you can access this data on the terminal acts of
Speaker 1: it up right now, g l c O is that
Speaker 1: the price of UM of European natural gas has hit.
Speaker 1: It was higher earlier this morning, but it's up to
Speaker 1: seventy in mcf, which is twelve times what it is
Speaker 1: in the US, and the equivalent of UM, you know,
Speaker 1: it's the multiple six, so it's fort the equivalent of
Speaker 1: four barrel. So I'm shocked that people haven't focused on
Speaker 1: this because it essentially makes and the last point is
Speaker 1: that natural gas drives the price of electricity, which most
Speaker 1: people don't know, even some energy professionals don't understand it.
Speaker 1: So it really means that very little European manufacturing is
Speaker 1: competitive right now with the United States, because it's not
Speaker 1: just like it's up twelve percent, it's twelve times as expensive.
Speaker 1: So you're gonna see a boom in US manufacturing fertilizer, materials, chemicals,
Speaker 1: natural gas obviously, but it could cause a recession in Europe.
Speaker 1: That's really the key dynamic. But because people can't see
Speaker 1: it on normal screens, see it on terminal but normal
Speaker 1: screens UM, then people don't focus on it. But that's
Speaker 1: the key kind of global problem in energy markets right now. Well,
Speaker 1: I mean you have to think about, right, all the
Speaker 1: input costs that go into something, right and certainly who's
Speaker 1: who's got the greater exposure and ultimately what happens. Um.
Speaker 1: Having said that, though, I mean, you have benefited right
Speaker 1: by this this rise, and I do wonder if we
Speaker 1: move into a recession global or otherwise. Um, the question
Speaker 1: or the discussion we're having at this point day is,
Speaker 1: you know, it's not a case of if it's just
Speaker 1: when and for how long and how it is how
Speaker 1: how do you think about that? Then? In terms of
Speaker 1: your investment portfolio, Well, we're actually relatively optimistic about the
Speaker 1: United States if you look at all the recession, no
Speaker 1: recession or if there is a recession, that's correct. We
Speaker 1: don't believe there would be a recession for really two reasons.
Speaker 1: The first is that all the other recessions associated with
Speaker 1: an energy price spike were validated by the FED. In
Speaker 1: other words, the FED rose increased interest rates, inverted theyl
Speaker 1: curve and cause of recession, so it wasn't just the
Speaker 1: oil that created it. And under appreciated fact is that
Speaker 1: if they get approved by the Senate, five out of
Speaker 1: the seven f o MC permanent voting members will be
Speaker 1: Democrat appointed and are more dubbish. So we think the
Speaker 1: Fed is going to take rates up to a neutral rate,
Speaker 1: but not cause a recession. They don't want to cause
Speaker 1: a recession. And keep in mind what I just said
Speaker 1: that the US is getting a tremendous competitive benefit, unfortunately
Speaker 1: as you pointed out to him, but unfortunately relative to Europe.
Speaker 1: So I think the US economy is going to continue
Speaker 1: to outshine the rest of the world and be a
Speaker 1: safe haven, not just because it's you know, we're we're
Speaker 1: further away from the from the war, but because of
Speaker 1: the free market economy and the abundance of particularly natural
Speaker 1: gas that's in the United States. What confidence do you
Speaker 1: have in the said getting that neutral rate right, Well,
Speaker 1: you know, usually they overestimate it, like they're talking about
Speaker 1: two and a half percent. We believe we have a
Speaker 1: differentiative view that the ten years capped at two ish.
Speaker 1: Of course right now we can't really tell because the
Speaker 1: treasuries have rallied with the with the war, but we
Speaker 1: do think there's fifty two trillion a global pension assets,
Speaker 1: a lot of deep bit out there for treasuries. So
Speaker 1: if it's two, then is the ten years. So obviously
Speaker 1: two and a half not the neutral rate. So to
Speaker 1: your point, it's going to be a lot of uncertainty
Speaker 1: until we create that, but until we figure out what
Speaker 1: that mut rate is. But we think next week will
Speaker 1: be a positive inflection, maybe off of lower levels, by
Speaker 1: the way, but a positive inflection because we'll get the
Speaker 1: dot plot, will get certain some certainty on the SAID,
Speaker 1: and that's kind of like overhang on the market right now.
Speaker 1: Is the said, the rest of courses, the war? What
Speaker 1: happens next week with the said, We think that that
Speaker 1: it will be um more devish than people expect. We
Speaker 1: do think that the Fed chair will pull the three
Speaker 1: members appointed by Biden that are not yet approved and
Speaker 1: get some of their views. Their their numbers won't be
Speaker 1: in the dot plot, though, So we think the dot
Speaker 1: plot will read out five or six increases this year,
Speaker 1: and that because it creates certainty, not because that's really
Speaker 1: out of consensus. We think that that the market will
Speaker 1: have a relief rally. I guess it could be off
Speaker 1: lower levels because right now oil prices are destabilizing the
Speaker 1: US stock market. Well, you do wonder if there's any
Speaker 1: kind of optimism out there. I mean, right now the
Speaker 1: market is so priced negatively in risk off trade to
Speaker 1: extreme ways. I mean we talked about these superlatives that
Speaker 1: you do feel like if there's any kind of optimism
Speaker 1: um that there, certainly you could see potentially investors coming back. Hey,
Speaker 1: j we gotta run. Jay hat Failed he's chief executive
Speaker 1: officer of Infrastructure Capital Advisor's i CAP. He is joining
Speaker 1: us on the phone from New York City. Thanks for
Speaker 1: listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
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