1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 2 00:00:09,240 --> 00:00:13,200 Speaker 1: with Jonathan Ferroll and Lisa Bronwitz Jaily. We bring you 3 00:00:13,320 --> 00:00:18,600 Speaker 1: insight from the best and economics, finance, investment, and international relations. 4 00:00:18,960 --> 00:00:23,840 Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 5 00:00:23,920 --> 00:00:29,680 Speaker 1: and of course on the Bloomberg terminal. Right now we 6 00:00:29,880 --> 00:00:33,200 Speaker 1: change gears. We've been speaking with Ambassador Bolton and Congressman 7 00:00:33,280 --> 00:00:37,159 Speaker 1: Davidson from Ohio and now and Lisa Bramwits has been 8 00:00:37,240 --> 00:00:41,040 Speaker 1: so good about this. We speak of an allied response. 9 00:00:41,240 --> 00:00:44,920 Speaker 1: We've heard many defenses of the permanence in need for NATO. 10 00:00:45,280 --> 00:00:48,200 Speaker 1: We are now joined by the Secretary General, of course, 11 00:00:48,240 --> 00:00:52,680 Speaker 1: his affiliation with his Norway against Stoltenberg, joins us this morning. 12 00:00:52,960 --> 00:00:58,640 Speaker 1: Yen's what should be NATO policy after America exits from Afghanistan. 13 00:01:01,720 --> 00:01:06,360 Speaker 1: First of all, to stay committed to uh to ensure 14 00:01:06,480 --> 00:01:10,120 Speaker 1: that Afghanistan doesn't once again the concepts safe avan for 15 00:01:10,400 --> 00:01:13,039 Speaker 1: national terrorists, because we have to remember that the reason 16 00:01:13,080 --> 00:01:18,039 Speaker 1: why NATO allaizes joined the United States going into Afghanistan 17 00:01:18,480 --> 00:01:22,120 Speaker 1: in two thousand and one was a direct response to 18 00:01:22,319 --> 00:01:26,000 Speaker 1: terrorist attack attack on the United States and the hundreds 19 00:01:26,040 --> 00:01:29,760 Speaker 1: of thousands of Canadian European NATUS soldiers and partners have 20 00:01:29,880 --> 00:01:33,400 Speaker 1: served alongside US soldiers there for twenty years, and and 21 00:01:33,480 --> 00:01:36,959 Speaker 1: for those twenties we have prevented Afghanistan from being a 22 00:01:36,959 --> 00:01:40,480 Speaker 1: safe havan for international terrorists. We need to ensure that 23 00:01:40,480 --> 00:01:44,560 Speaker 1: that also the case in the future, so so we 24 00:01:44,600 --> 00:01:48,360 Speaker 1: will we will follow monitor the new rulers and Cobbled 25 00:01:48,440 --> 00:01:50,440 Speaker 1: very closely, and we will also make it clear that 26 00:01:51,360 --> 00:01:54,320 Speaker 1: NATO allies have the capabilities to strike from long distance 27 00:01:54,840 --> 00:01:58,760 Speaker 1: terrorist groups if they try to re establish themselves in Afghanistan. 28 00:01:58,840 --> 00:02:01,520 Speaker 1: Because at the time constrained this morning, Secretary General, I 29 00:02:01,520 --> 00:02:05,800 Speaker 1: really want to focus on the important Resolute support mission, 30 00:02:05,880 --> 00:02:09,040 Speaker 1: the idea of the Italians in the west of Afghanistan, 31 00:02:09,480 --> 00:02:13,000 Speaker 1: the Germans up north where the Northern alliances, and then 32 00:02:13,040 --> 00:02:16,840 Speaker 1: there's a Turkish flag in the middle providing support NATO's 33 00:02:16,880 --> 00:02:21,600 Speaker 1: support to Afghanistan. Now Turkey is in a unique position. 34 00:02:22,120 --> 00:02:26,880 Speaker 1: Explain NATO's relationship with Mr Rajuan and the New Afghanistan. 35 00:02:28,919 --> 00:02:32,760 Speaker 1: The NATO has ended its military presence in Afghanistan, as 36 00:02:32,960 --> 00:02:35,440 Speaker 1: NATI states as huh and I would like to thank 37 00:02:35,480 --> 00:02:38,680 Speaker 1: and praise and and and command all those men and 38 00:02:38,720 --> 00:02:41,640 Speaker 1: women who have served there for so many years, and 39 00:02:41,680 --> 00:02:45,239 Speaker 1: their efforts and their service was not in vain. Turkey 40 00:02:45,680 --> 00:02:48,920 Speaker 1: Is has spread the key role in in operating the 41 00:02:48,919 --> 00:02:53,280 Speaker 1: airport and and Turke has offered to continue to support 42 00:02:53,760 --> 00:02:57,800 Speaker 1: the airport. And the airport is in cobble Is vitallys 43 00:02:57,800 --> 00:03:01,440 Speaker 1: a vital link to the world to get a humanitarian 44 00:03:01,560 --> 00:03:06,480 Speaker 1: aid in but also to enable safe passage for those 45 00:03:06,520 --> 00:03:11,000 Speaker 1: who want to leave. And NATO allies have strongly stated 46 00:03:11,040 --> 00:03:13,600 Speaker 1: that we will not forget all those who are still 47 00:03:13,600 --> 00:03:16,840 Speaker 1: in Afghanistan who supported those who are at risk, and 48 00:03:16,880 --> 00:03:19,600 Speaker 1: we will continue to work to ensure that they can 49 00:03:19,760 --> 00:03:24,520 Speaker 1: leave Afghanistan. Will that be in NATO support directly and 50 00:03:24,600 --> 00:03:29,200 Speaker 1: the many adjacent borders of Afghanistan to continue to get 51 00:03:29,360 --> 00:03:34,160 Speaker 1: people out. So NATAL allies are first of all working 52 00:03:34,200 --> 00:03:39,440 Speaker 1: on how to make sure that airport can continue to operate. 53 00:03:40,200 --> 00:03:42,920 Speaker 1: A second, we expect the Taliban to live up to 54 00:03:42,960 --> 00:03:47,200 Speaker 1: their commitments both on safe passage but also on open 55 00:03:47,440 --> 00:03:50,880 Speaker 1: land borders UH and of course also what they are 56 00:03:50,920 --> 00:03:55,480 Speaker 1: promised when it comes to preventing Harris organizations being able 57 00:03:55,520 --> 00:03:58,920 Speaker 1: to reconstitute themselves in Afghanistan. If you're just joining us 58 00:03:58,920 --> 00:04:01,560 Speaker 1: on radio and television in Stoltenberg, where there's a former 59 00:04:01,560 --> 00:04:05,160 Speaker 1: Prime Minister of Norway, Secretary General of NATO or honored 60 00:04:05,160 --> 00:04:08,000 Speaker 1: that he could join us on this historic morning, Mr. 61 00:04:08,080 --> 00:04:11,720 Speaker 1: Secretary General NATO. It's not so much in search of 62 00:04:11,720 --> 00:04:14,000 Speaker 1: a mission, but it is a morph It is a 63 00:04:14,080 --> 00:04:20,360 Speaker 1: changeable Europe, a changeable NATO North Atlantic Treaty organization. As 64 00:04:20,440 --> 00:04:24,120 Speaker 1: we move into two thousand twenty two, all of that 65 00:04:24,600 --> 00:04:28,800 Speaker 1: butcher stuff against a question of migration, a question of 66 00:04:28,920 --> 00:04:33,400 Speaker 1: refugees across Europe, I would suggest this is the third rail. 67 00:04:33,760 --> 00:04:38,440 Speaker 1: How can NATO support its nations and continental Europe confronting 68 00:04:38,600 --> 00:04:45,280 Speaker 1: a new round of mass refugees and migration. Our main 69 00:04:45,360 --> 00:04:50,080 Speaker 1: talk is to help to stabilize our neighborhood and that's 70 00:04:50,080 --> 00:04:53,120 Speaker 1: the reason why we are working with partners in North 71 00:04:53,160 --> 00:04:58,920 Speaker 1: Africa Enemy least to help to stabilize countries in our neighborhoo. 72 00:04:58,960 --> 00:05:02,520 Speaker 1: Because we're our neighbors on most table, we are more secure. 73 00:05:03,040 --> 00:05:05,719 Speaker 1: We also have some presents, for instance in the Agen 74 00:05:05,920 --> 00:05:08,880 Speaker 1: where we help to implement agreement within Turkey and the 75 00:05:08,920 --> 00:05:13,520 Speaker 1: European Union on illegal migration over the Agine see from 76 00:05:13,520 --> 00:05:18,560 Speaker 1: from Turkey into the rest of Europe. But the NATO's 77 00:05:18,640 --> 00:05:21,159 Speaker 1: main purpose is to make sure that we stand together 78 00:05:21,640 --> 00:05:25,600 Speaker 1: thirty allies, one for all, and all for one. This 79 00:05:25,720 --> 00:05:28,000 Speaker 1: is important for Europe, but it's also important for the 80 00:05:28,080 --> 00:05:33,200 Speaker 1: United States. In a world with a shifting global balance 81 00:05:33,200 --> 00:05:35,560 Speaker 1: of power with the rights of China, it is a 82 00:05:35,640 --> 00:05:39,480 Speaker 1: huge advantage for the United States to have twenty nine 83 00:05:39,680 --> 00:05:43,520 Speaker 1: friends and allies in NATO. No other major power has 84 00:05:43,600 --> 00:05:46,920 Speaker 1: anything like that, and therefore a strong NATO, Europe and 85 00:05:46,920 --> 00:05:50,640 Speaker 1: North American standing together is important both for North America 86 00:05:50,760 --> 00:05:54,720 Speaker 1: and for Europe. How can NATO assist your members in 87 00:05:54,839 --> 00:05:58,159 Speaker 1: what we're hearing interview the interview general commit of the 88 00:05:58,240 --> 00:06:03,120 Speaker 1: United States Ambassadorable Alton, Congressman Davidson, and others. They all 89 00:06:03,160 --> 00:06:07,440 Speaker 1: circle back to a relationship of a new Afghanistan with 90 00:06:07,560 --> 00:06:11,520 Speaker 1: China and with Russia. How can NATO respond to that 91 00:06:11,720 --> 00:06:18,960 Speaker 1: perceived new alliance? So for US, it's obvious that all 92 00:06:19,000 --> 00:06:22,200 Speaker 1: the countries in the region, and that of course also 93 00:06:22,240 --> 00:06:25,400 Speaker 1: includes China and neighbor Afghanistan and the Russia not so 94 00:06:25,440 --> 00:06:28,680 Speaker 1: far away, it is in their interests to have a 95 00:06:28,760 --> 00:06:34,520 Speaker 1: stable Afghanistan and Afghanistan where terrorist groups like isis K 96 00:06:35,520 --> 00:06:41,520 Speaker 1: cannot work. Established themselves operate plan Taririst attacks against any 97 00:06:41,520 --> 00:06:46,520 Speaker 1: other country. So there are many differences between Russia, China, 98 00:06:46,720 --> 00:06:49,839 Speaker 1: NATO allies and all the countries in the region, but 99 00:06:49,960 --> 00:06:54,760 Speaker 1: we all have a common interest in preventing Afghanistan from 100 00:06:54,800 --> 00:06:57,760 Speaker 1: once again as it was before we went in in 101 00:06:57,800 --> 00:07:01,680 Speaker 1: two thousand and one, becoming a place where TIS organizations 102 00:07:01,680 --> 00:07:06,719 Speaker 1: can plan, organize, conductors attacks against other countries. Mr. Secretary 103 00:07:06,800 --> 00:07:11,200 Speaker 1: General Angelo Merkell of Germany speaks of an existential need 104 00:07:11,440 --> 00:07:14,480 Speaker 1: to have a Kabbal airport open. You mentioned it earlier, 105 00:07:14,680 --> 00:07:17,280 Speaker 1: like in our final moments here to speak about the 106 00:07:17,400 --> 00:07:20,640 Speaker 1: new Kabal airport. How do you perceive and you mentioned 107 00:07:20,680 --> 00:07:24,600 Speaker 1: Turkey and their affiliation of protecting and sustaining it over 108 00:07:24,640 --> 00:07:27,440 Speaker 1: the years of this war, how do you perceive a 109 00:07:27,520 --> 00:07:36,000 Speaker 1: new Kabbal airport with NATO support. NATO Allies are strongly 110 00:07:36,040 --> 00:07:38,960 Speaker 1: supporting the efforts to make sure that we have a 111 00:07:39,040 --> 00:07:44,840 Speaker 1: functional operational airport in a cobbal U. Turkey is playing 112 00:07:44,880 --> 00:07:48,840 Speaker 1: a key role. I discussed this uh just yesterday with 113 00:07:49,000 --> 00:07:51,840 Speaker 1: the with the Turkish Foreign Minister, and I would like 114 00:07:51,920 --> 00:07:55,600 Speaker 1: to praise Turkey for the key role both in supporting, 115 00:07:55,680 --> 00:08:01,640 Speaker 1: helping facilitating the evacuation, getting people out from Cobble, out 116 00:08:01,640 --> 00:08:04,320 Speaker 1: from Afghanistan into the airport over the last days, but 117 00:08:04,400 --> 00:08:07,440 Speaker 1: also now the offer they have made to help to 118 00:08:07,440 --> 00:08:11,080 Speaker 1: operate the airport, because the airport is are so essential 119 00:08:11,840 --> 00:08:14,720 Speaker 1: both for aid coming in but also for people to 120 00:08:14,800 --> 00:08:17,960 Speaker 1: be able to leave. But how will we affect that, 121 00:08:18,160 --> 00:08:22,160 Speaker 1: I mean America's it's done over what occurred yesterday. We 122 00:08:22,200 --> 00:08:24,920 Speaker 1: all knew it was coming, and yet particularly those of 123 00:08:25,000 --> 00:08:29,400 Speaker 1: us with an understanding of nineteen five, are stunned. How 124 00:08:29,440 --> 00:08:35,680 Speaker 1: do we actually affect a reopening with the Tailiban? As 125 00:08:35,720 --> 00:08:40,080 Speaker 1: we work, NATO is not planning to deploy any forces 126 00:08:40,160 --> 00:08:43,200 Speaker 1: or personnel at the Cobble Airport. We have ended our 127 00:08:43,240 --> 00:08:47,280 Speaker 1: military presence there as as as as an alliance and 128 00:08:47,320 --> 00:08:50,880 Speaker 1: as for instance allies like the ninety States have done. 129 00:08:51,320 --> 00:08:55,199 Speaker 1: But we are working with other countries, including a need 130 00:08:55,240 --> 00:08:58,680 Speaker 1: to ally cad UH and they have what I will 131 00:08:58,720 --> 00:09:03,040 Speaker 1: call operational contact with Taliban to see if we can 132 00:09:03,080 --> 00:09:08,400 Speaker 1: help ensuring that the continue, that the airport continues to function. 133 00:09:08,600 --> 00:09:11,520 Speaker 1: Mr Secretary General, thank you so much for joining Bloomberg 134 00:09:11,559 --> 00:09:16,480 Speaker 1: this morning. Yen Stoltenberg, NATO Secretary General, and this historic morning, 135 00:09:20,960 --> 00:09:25,320 Speaker 1: we now finished whatever year Politics is with John Bolton. 136 00:09:25,400 --> 00:09:28,600 Speaker 1: He is a former national security advisor. The book A 137 00:09:28,640 --> 00:09:31,920 Speaker 1: Sensation a year ago, the room where it happened, and 138 00:09:31,960 --> 00:09:36,040 Speaker 1: we're thrilled that Ambassador Bolton could join us this morning. 139 00:09:36,280 --> 00:09:39,040 Speaker 1: I'm not going to mince words, Ambassador Bolton. You are 140 00:09:39,160 --> 00:09:45,320 Speaker 1: scathing about the urgency and the magnitude of the Pakistan problem. 141 00:09:45,360 --> 00:09:48,720 Speaker 1: How should the Secretary of State advise a president on 142 00:09:48,760 --> 00:09:54,200 Speaker 1: our new relationship with Pakistan? Well, I think for many 143 00:09:54,280 --> 00:09:59,119 Speaker 1: years we've been constrained by our concern for Pakistani logistical 144 00:09:59,200 --> 00:10:03,840 Speaker 1: support to our forces in Afghanistan, and our concern about 145 00:10:04,320 --> 00:10:07,800 Speaker 1: Pakistan's nuclear weapons, which if they fell into the hands 146 00:10:07,800 --> 00:10:11,360 Speaker 1: of terrorists one by one, or worst case, the terrorist 147 00:10:11,440 --> 00:10:15,040 Speaker 1: regime took over Pakistan, would be a global threat immediately. 148 00:10:16,040 --> 00:10:18,400 Speaker 1: But the fact is we've been played by the government 149 00:10:18,400 --> 00:10:22,880 Speaker 1: of Pakistan for a long time. Terrorist elements within that 150 00:10:22,920 --> 00:10:28,240 Speaker 1: government already, particularly Inner Services intelligence, have played a double game, 151 00:10:28,360 --> 00:10:30,720 Speaker 1: and we've put up with it. I just think with 152 00:10:30,840 --> 00:10:35,880 Speaker 1: the end of American involvement in Afghanistan, with a terrorist 153 00:10:35,920 --> 00:10:40,320 Speaker 1: government in place there now, which gives potential support for 154 00:10:40,520 --> 00:10:43,719 Speaker 1: terrorist activity and take over Pakistan, we've just got to 155 00:10:43,760 --> 00:10:47,160 Speaker 1: get tough on the government either to crack down on 156 00:10:47,360 --> 00:10:50,199 Speaker 1: terrorism or to face the consequences. To me, the critical 157 00:10:50,280 --> 00:10:53,680 Speaker 1: sentence and you're wonderful essay and the Washington Post, John Bolton, 158 00:10:54,160 --> 00:10:57,640 Speaker 1: was you say, now we tilt to India. Let's take 159 00:10:57,679 --> 00:11:01,319 Speaker 1: it back to John Galbraith's ambassador to India, long ago 160 00:11:01,440 --> 00:11:05,040 Speaker 1: and far away. We've always been struggling with this tilt 161 00:11:05,080 --> 00:11:08,680 Speaker 1: to India. How do we tilt to India now to 162 00:11:08,840 --> 00:11:13,240 Speaker 1: assist the memory of our soldiers in Afghanistan. Well, the 163 00:11:13,600 --> 00:11:16,679 Speaker 1: principal threat that we face globally in the twenty one 164 00:11:16,800 --> 00:11:20,720 Speaker 1: century is China, and India has moved away a long 165 00:11:20,800 --> 00:11:23,400 Speaker 1: way from the so called neutrality of the Cold War, 166 00:11:23,480 --> 00:11:27,280 Speaker 1: where it actually tilted towards the Soviet Union, which was 167 00:11:27,320 --> 00:11:30,079 Speaker 1: one reason we tilted towards Pakistan. I mean, it kind 168 00:11:30,120 --> 00:11:32,640 Speaker 1: of goes back and forth, but but India now sees 169 00:11:32,760 --> 00:11:35,360 Speaker 1: China as the threat, and it sees the same thing 170 00:11:35,400 --> 00:11:39,880 Speaker 1: we see in Pakistan, a large and growing Chinese presence 171 00:11:39,920 --> 00:11:42,959 Speaker 1: of Chinese assistance to Pakistan over the years for its 172 00:11:43,040 --> 00:11:46,679 Speaker 1: nuclear and ballistic missile programs. Uh and I think the 173 00:11:46,720 --> 00:11:49,480 Speaker 1: time is is here for the US to tighten up 174 00:11:49,520 --> 00:11:52,840 Speaker 1: with with India. With Australia, with Japan, which we already 175 00:11:52,840 --> 00:11:55,840 Speaker 1: formed what we call the Quad with UH and and 176 00:11:56,160 --> 00:11:58,679 Speaker 1: really to put to Pakistan as clearly as we can 177 00:11:58,840 --> 00:12:03,560 Speaker 1: give up this flotation with terrorism and UH. If you do, 178 00:12:03,679 --> 00:12:06,439 Speaker 1: there's a there's a real prospect for cooperation. But we're 179 00:12:06,480 --> 00:12:09,000 Speaker 1: not going to go on any longer pretending you're not 180 00:12:09,080 --> 00:12:12,240 Speaker 1: doing it. There's always been a struggle. You're institutionally within 181 00:12:12,280 --> 00:12:16,760 Speaker 1: our international relations with India. What form of relationship would 182 00:12:16,800 --> 00:12:20,840 Speaker 1: you advocate after your travels to Central Asia? Does Biden 183 00:12:20,880 --> 00:12:24,520 Speaker 1: need to go to Delhi now? Well, I think he 184 00:12:24,559 --> 00:12:27,360 Speaker 1: needs to go soon. And I think we've got some 185 00:12:27,400 --> 00:12:29,760 Speaker 1: real issues with India too. This is not this is 186 00:12:29,760 --> 00:12:31,840 Speaker 1: not going to be easy. They've got to break their 187 00:12:31,880 --> 00:12:35,760 Speaker 1: dependence on Russian weapons systems, which they've relied on and 188 00:12:35,800 --> 00:12:40,040 Speaker 1: purchased for decades, going back to the Cold War. Uh And. 189 00:12:40,080 --> 00:12:43,840 Speaker 1: I think a lot of the the political class in 190 00:12:43,840 --> 00:12:45,600 Speaker 1: India is going to have to wake up to the 191 00:12:45,640 --> 00:12:48,920 Speaker 1: fact that the neutrality, which was never really neutral during 192 00:12:48,920 --> 00:12:51,240 Speaker 1: the Cold War, is no longer an option. I think 193 00:12:51,240 --> 00:12:54,079 Speaker 1: they're beginning to move in that direction. I think, uh 194 00:12:54,120 --> 00:12:56,920 Speaker 1: there's a lot of opportunity there, but I don't underestimate 195 00:12:56,960 --> 00:12:59,240 Speaker 1: the amount of work that's going to be involved, impassatable 196 00:12:59,360 --> 00:13:01,280 Speaker 1: and how can so? And are you about some sort 197 00:13:01,280 --> 00:13:05,360 Speaker 1: of alliance between the Taliban and Islamic State or other 198 00:13:05,400 --> 00:13:08,560 Speaker 1: groups that could become something reminiscent of the al Kada 199 00:13:08,679 --> 00:13:12,800 Speaker 1: of your Well, I think I think it's an important question. 200 00:13:12,840 --> 00:13:15,120 Speaker 1: I think we should first remember the al Qaida of 201 00:13:15,200 --> 00:13:17,560 Speaker 1: your is the al Qaida of today as well, and 202 00:13:17,600 --> 00:13:20,920 Speaker 1: they have remained in close touch with Taliban during twenty 203 00:13:21,000 --> 00:13:24,400 Speaker 1: years of exile in Pakistan. They're back in force now. 204 00:13:24,480 --> 00:13:26,960 Speaker 1: We see that even in U N reports before the 205 00:13:27,000 --> 00:13:30,880 Speaker 1: fall of the Afghan government, isis K has been at 206 00:13:30,880 --> 00:13:35,000 Speaker 1: odds with Taliban because they don't think they're tough enough, 207 00:13:35,120 --> 00:13:40,920 Speaker 1: they think they're insufficiently strict in the implementation of Islamic law. 208 00:13:41,440 --> 00:13:44,920 Speaker 1: So so there's there's tension there now. But but let's 209 00:13:44,960 --> 00:13:47,439 Speaker 1: be clear, this could turn into cooperation in the blink 210 00:13:47,480 --> 00:13:51,880 Speaker 1: of an eye. And isis K does have worldwide thread capabilities, 211 00:13:51,920 --> 00:13:55,120 Speaker 1: as does al Qaeda, and I'm worried we have slipped 212 00:13:55,120 --> 00:13:59,240 Speaker 1: back into a pre nine eleven situation. Meanwhile, we do 213 00:13:59,320 --> 00:14:01,560 Speaker 1: have a poor that there are a number of American 214 00:14:01,600 --> 00:14:05,960 Speaker 1: citizens still in Afghanistan UH, and the US has completely 215 00:14:06,040 --> 00:14:09,000 Speaker 1: pulled out. What do you see as the best pathway 216 00:14:09,360 --> 00:14:12,440 Speaker 1: to get some of these people who are remaining out 217 00:14:12,440 --> 00:14:16,040 Speaker 1: of the nation safely? I mean, especially whose alliance are 218 00:14:16,040 --> 00:14:19,680 Speaker 1: we going to rely upon. Well, I'm I'm very worried 219 00:14:19,680 --> 00:14:22,160 Speaker 1: that that they're not coming out. Let's let's remember a 220 00:14:22,200 --> 00:14:25,440 Speaker 1: lot of these US citizens may well be dual citizen 221 00:14:25,600 --> 00:14:29,000 Speaker 1: US and Afghan or they may have been Afghan and 222 00:14:29,000 --> 00:14:34,080 Speaker 1: and become US citizens. So from Taliban's perspective, there's still 223 00:14:34,120 --> 00:14:40,960 Speaker 1: Afghans and UH. I would not UH rest any comfort 224 00:14:41,040 --> 00:14:43,800 Speaker 1: in cooperating with Taliban that we may get a few 225 00:14:43,800 --> 00:14:47,080 Speaker 1: more people out who are American citizens. I think the 226 00:14:47,160 --> 00:14:50,520 Speaker 1: number of Afghans who worked with US and other coalition 227 00:14:50,600 --> 00:14:53,280 Speaker 1: forces for the last twenty years are going to be 228 00:14:53,400 --> 00:14:56,200 Speaker 1: few and far between getting out. I think I think 229 00:14:56,240 --> 00:15:00,600 Speaker 1: we're real risk here of a long brutal hostage situation. 230 00:15:01,520 --> 00:15:03,680 Speaker 1: Did we do the right thing? We left, and we 231 00:15:03,800 --> 00:15:07,640 Speaker 1: left those people behind, and we knowingly did it. We 232 00:15:07,960 --> 00:15:10,480 Speaker 1: never should have left. I think that's the fundamental mistake. 233 00:15:10,520 --> 00:15:14,840 Speaker 1: I think the exit itself was badly bungled, no question 234 00:15:14,880 --> 00:15:17,720 Speaker 1: about that. But the mistake here goes back to the 235 00:15:17,760 --> 00:15:23,000 Speaker 1: Trump administration negotiating with the Taliban, not negotiating with a 236 00:15:23,080 --> 00:15:27,880 Speaker 1: terrorist group, not negotiating with the government of Afghanistan that 237 00:15:27,960 --> 00:15:31,680 Speaker 1: we helped create twenty years ago, and that whatever its deficiencies, 238 00:15:31,720 --> 00:15:35,680 Speaker 1: and it had plenty, it had at least some democratic legitimacy, 239 00:15:35,800 --> 00:15:41,240 Speaker 1: of which the Taliban has zero. Yeah, certainly complicated. Can 240 00:15:41,280 --> 00:15:43,360 Speaker 1: you come back and just do big picture with us? 241 00:15:43,400 --> 00:15:45,440 Speaker 1: A lot of the concerns about the way in which 242 00:15:45,480 --> 00:15:49,560 Speaker 1: we withdrew has been China now stepping in the Belden 243 00:15:49,680 --> 00:15:53,040 Speaker 1: Road initiative, as you know, through Pakistan. You wonder if 244 00:15:53,080 --> 00:15:58,240 Speaker 1: it continues through Afghanistan. Is that a real threat? Yes? 245 00:15:58,440 --> 00:16:00,320 Speaker 1: I think it is. In fact, I have up in 246 00:16:00,440 --> 00:16:03,520 Speaker 1: the Well Street Journal today on the reaction both by 247 00:16:03,640 --> 00:16:06,480 Speaker 1: China and Russia to what we've done in Afghanistan. And 248 00:16:06,520 --> 00:16:10,920 Speaker 1: I think while we're all understandably concentrating on what's gone 249 00:16:10,920 --> 00:16:14,560 Speaker 1: wrong in Afghanistan, what's the global terrorst threat? As a consequence, 250 00:16:14,680 --> 00:16:17,320 Speaker 1: if you look at the big picture, our main adversaries 251 00:16:17,320 --> 00:16:20,760 Speaker 1: read this as a sign of American retwreet, retreat and weakness. 252 00:16:21,320 --> 00:16:24,040 Speaker 1: John Bolton, you came out of Baltimore. Your father was 253 00:16:24,080 --> 00:16:27,760 Speaker 1: a fireman, you did the military academy thing and wandered 254 00:16:27,840 --> 00:16:30,720 Speaker 1: up to the liberal swamp known as New Have in Connecticut, 255 00:16:31,240 --> 00:16:33,040 Speaker 1: and and it must have been a real shock your 256 00:16:33,040 --> 00:16:36,760 Speaker 1: first day at Yale University. You did pretty good up 257 00:16:36,800 --> 00:16:41,720 Speaker 1: there as well. You've got a great perspective on the 258 00:16:41,760 --> 00:16:46,960 Speaker 1: international relations establishment of Washington. Are we in search of 259 00:16:47,000 --> 00:16:51,840 Speaker 1: an operative theory? We went from the civilizations, the Washington consensus, 260 00:16:52,040 --> 00:16:56,320 Speaker 1: maybe Zakaria's post American world. What does John Bolton's new 261 00:16:56,560 --> 00:17:00,880 Speaker 1: foreign policy theory look like? Well, you know, I'm a 262 00:17:00,920 --> 00:17:07,040 Speaker 1: Burkean conservative, so I'm not so interested in the broad 263 00:17:07,080 --> 00:17:10,240 Speaker 1: scale theorizing. But I think American foreign policy has to 264 00:17:10,240 --> 00:17:14,040 Speaker 1: be based on American national interest, which is why we 265 00:17:14,040 --> 00:17:16,479 Speaker 1: were in Afghanistan, not not We weren't there to do 266 00:17:16,600 --> 00:17:19,320 Speaker 1: charity work for the Afghans. We were there as a 267 00:17:19,400 --> 00:17:23,040 Speaker 1: strategic defense against the recurrence of terrorism like we saw 268 00:17:23,080 --> 00:17:25,520 Speaker 1: on nine eleven. And I think when we give up 269 00:17:25,600 --> 00:17:29,480 Speaker 1: that very hard headed approach, we leave American danger, which 270 00:17:29,560 --> 00:17:32,200 Speaker 1: is exactly where I think we are today. Meanwhile, we 271 00:17:32,240 --> 00:17:35,240 Speaker 1: are hearing the administration is turning its focus much more 272 00:17:35,400 --> 00:17:38,800 Speaker 1: to the Far East, into cyber security, to cyber warfare, 273 00:17:38,840 --> 00:17:42,439 Speaker 1: to the protection uh, that could come from space and 274 00:17:42,520 --> 00:17:44,879 Speaker 1: other types of fronts for the new war. What do 275 00:17:44,920 --> 00:17:48,080 Speaker 1: you foresee in terms of the U s IS priorities 276 00:17:48,119 --> 00:17:52,320 Speaker 1: and how it should chart a path in that direction. Well, 277 00:17:52,359 --> 00:17:55,760 Speaker 1: I think cyberspace has been a kind of a garden 278 00:17:55,800 --> 00:17:58,040 Speaker 1: of Eden for many people for twenty years or so. 279 00:17:58,200 --> 00:18:02,040 Speaker 1: We now realize it's filled with dangers. As I said before, 280 00:18:02,080 --> 00:18:04,720 Speaker 1: I do think China is the main threats, the existential 281 00:18:04,760 --> 00:18:07,400 Speaker 1: threat of the twenty one century. But but I think 282 00:18:07,480 --> 00:18:10,360 Speaker 1: what's most important to understand is with the with the 283 00:18:10,520 --> 00:18:13,280 Speaker 1: end of the Cold War, the collapse of the Soviet Union. 284 00:18:13,680 --> 00:18:17,120 Speaker 1: Although people had this dream of the peace dividend and whatnot, 285 00:18:17,200 --> 00:18:19,840 Speaker 1: actually in the past thirty years the world is more 286 00:18:19,960 --> 00:18:23,040 Speaker 1: dangerous from more diverse threats that we've got to be 287 00:18:23,080 --> 00:18:27,400 Speaker 1: ready for. It's not with Afghanistan gone we're more secure. 288 00:18:27,200 --> 00:18:29,800 Speaker 1: The clear point today is we are less secure and 289 00:18:29,840 --> 00:18:33,120 Speaker 1: we need to be ready across a multiplicity of threats. 290 00:18:33,200 --> 00:18:35,240 Speaker 1: Inbassador Bolton, thank you so much writing in the Wall 291 00:18:35,280 --> 00:18:38,000 Speaker 1: Street Journalist morning, and we thank him for his conversation. 292 00:18:43,000 --> 00:18:46,120 Speaker 1: He watches the euro on an hour by hour Basis. 293 00:18:46,160 --> 00:18:49,960 Speaker 1: Ibrahim Urbari City Group Global had a foreign exchange analysis, 294 00:18:50,000 --> 00:18:53,040 Speaker 1: but much more than foreign exchange folding in the sum 295 00:18:53,280 --> 00:18:58,600 Speaker 1: of all its part. How correlated are the markets right now, Abraham, Well, 296 00:18:58,640 --> 00:19:01,440 Speaker 1: they remained pretty correlated, and in fact, when we look 297 00:19:01,440 --> 00:19:03,840 Speaker 1: at the FX market, one of the major ques we 298 00:19:04,160 --> 00:19:06,640 Speaker 1: of course always take is what happens in in in 299 00:19:06,640 --> 00:19:09,120 Speaker 1: interest rates and what happens in terms of global risk 300 00:19:09,160 --> 00:19:13,080 Speaker 1: appetite and ex has been moving more or less in tandem. 301 00:19:13,440 --> 00:19:16,240 Speaker 1: That being said, for the dollars specifically, it means that 302 00:19:16,320 --> 00:19:19,280 Speaker 1: it's been called in the cross currents to a degree. 303 00:19:19,400 --> 00:19:22,600 Speaker 1: As you said, it's been a little range fund over 304 00:19:22,640 --> 00:19:24,680 Speaker 1: the last few weeks because interest rates in the US 305 00:19:24,720 --> 00:19:26,919 Speaker 1: have been low even as equity markets have been pushing 306 00:19:27,000 --> 00:19:30,399 Speaker 1: up so raises. You were him the economic question, what 307 00:19:30,480 --> 00:19:33,679 Speaker 1: could potentially push the Fed to act more quickly and 308 00:19:33,720 --> 00:19:36,240 Speaker 1: thus to create some strength in the dollar that could 309 00:19:36,240 --> 00:19:38,760 Speaker 1: disrupt the rest of the ffex world. What are you 310 00:19:38,800 --> 00:19:43,159 Speaker 1: looking for in this Friday's jobs report on that front? Well, 311 00:19:43,200 --> 00:19:45,680 Speaker 1: I think when it comes to the FED, they're actually 312 00:19:46,480 --> 00:19:49,040 Speaker 1: drivers that matter a lot and drivers that matter much less. 313 00:19:49,119 --> 00:19:51,560 Speaker 1: And I think the tapering question is much more in 314 00:19:51,600 --> 00:19:53,920 Speaker 1: the latter category. And that was the main takeaway coming 315 00:19:53,920 --> 00:19:56,560 Speaker 1: out of Jackson Hole. And therefore we don't think there's 316 00:19:56,640 --> 00:19:59,679 Speaker 1: all that much that this paywall report can do for 317 00:19:59,720 --> 00:20:03,280 Speaker 1: the actionality of the dollar beyond the day itself. What 318 00:20:03,400 --> 00:20:05,360 Speaker 1: is much more important is what is the outbook for 319 00:20:05,680 --> 00:20:09,400 Speaker 1: the fence price hiking intentions? And there I don't think 320 00:20:09,400 --> 00:20:13,040 Speaker 1: this payroll report will do a great deal. So I 321 00:20:13,040 --> 00:20:15,640 Speaker 1: think it will be a time until the FIT becomes 322 00:20:15,680 --> 00:20:19,640 Speaker 1: the major market driver again in FX. If that's fascinating, Abrahim, 323 00:20:19,720 --> 00:20:21,640 Speaker 1: especially when we take a look at what's happening over 324 00:20:21,680 --> 00:20:23,960 Speaker 1: in Europe with the inflation print that we saw this morning, 325 00:20:24,000 --> 00:20:26,040 Speaker 1: coming in at the hottest in two thousand and eleven, 326 00:20:26,280 --> 00:20:29,800 Speaker 1: hotter than people previously expected. How much does this actually 327 00:20:30,119 --> 00:20:33,280 Speaker 1: bleed into the potential for dollar strength? You're a weakness 328 00:20:33,520 --> 00:20:35,920 Speaker 1: as you start to look at inflation really pick up, 329 00:20:35,960 --> 00:20:40,400 Speaker 1: and perhaps people recognize that in the FX world. Yes, 330 00:20:40,520 --> 00:20:43,640 Speaker 1: there I guess too too interesting observations here. One is, 331 00:20:43,680 --> 00:20:46,600 Speaker 1: as you said, inflation in Europe has has crept high, 332 00:20:46,880 --> 00:20:49,880 Speaker 1: much higher in a way that few of us have expected. 333 00:20:49,920 --> 00:20:52,159 Speaker 1: And I think that puts the spotlight on to what 334 00:20:52,280 --> 00:20:54,879 Speaker 1: the e CV may do at their next meeting just 335 00:20:55,000 --> 00:20:57,639 Speaker 1: over a week from now, because they themselves have to 336 00:20:57,680 --> 00:21:01,560 Speaker 1: consider whether to taper asset purchases, and our our expectation 337 00:21:01,600 --> 00:21:04,080 Speaker 1: has been that they will be very slow in indicating that. 338 00:21:04,160 --> 00:21:07,760 Speaker 1: But I think this inflation print could in fact increase 339 00:21:07,800 --> 00:21:10,440 Speaker 1: the urgency for them to prepare to wind down there 340 00:21:10,480 --> 00:21:12,919 Speaker 1: as a purchase program, and that in turn, it's not 341 00:21:13,000 --> 00:21:16,000 Speaker 1: so much your negative factor, but it could actually suggest 342 00:21:16,080 --> 00:21:18,520 Speaker 1: that there's a bit more upside linked to central like 343 00:21:18,640 --> 00:21:22,520 Speaker 1: expectations from the s S outthom in the coming weeks, 344 00:21:22,840 --> 00:21:25,680 Speaker 1: we also start China pm is weakening just a little 345 00:21:25,680 --> 00:21:29,280 Speaker 1: bit overnight, and I'm curious how that impacts our inflation. 346 00:21:29,359 --> 00:21:32,160 Speaker 1: If they are exporting it and we are importing it, 347 00:21:32,240 --> 00:21:37,760 Speaker 1: is it indeed transitory? So I think China is in fact, 348 00:21:37,840 --> 00:21:40,400 Speaker 1: or global growth more generally is in fact right now. 349 00:21:40,480 --> 00:21:43,879 Speaker 1: The key question for for effects, it's to some degree 350 00:21:43,920 --> 00:21:47,919 Speaker 1: the debate between reflation versus stackflation, and what we got 351 00:21:47,960 --> 00:21:51,360 Speaker 1: out of the China PMS was that maybe the manufacturing 352 00:21:51,400 --> 00:21:54,040 Speaker 1: part held up, and that tends to be the more 353 00:21:54,080 --> 00:21:56,760 Speaker 1: important between the two, But what was striking was that 354 00:21:56,840 --> 00:22:00,760 Speaker 1: non manufacturing was extremely weak relative to expectations and relative 355 00:22:00,800 --> 00:22:04,600 Speaker 1: to the previous trend. So it does raise some warning signs, 356 00:22:04,640 --> 00:22:08,159 Speaker 1: but they're actually not necessarily inflationary. To the degree that 357 00:22:08,240 --> 00:22:11,080 Speaker 1: demand in China is folding back in line with some 358 00:22:11,160 --> 00:22:13,680 Speaker 1: of the supply restrictions, we don't think that it fuels 359 00:22:13,720 --> 00:22:17,639 Speaker 1: necessarily makingary impulses that we're seeing elsewhere. But it does 360 00:22:17,720 --> 00:22:20,919 Speaker 1: leave that major question open, which is where does global 361 00:22:20,960 --> 00:22:23,240 Speaker 1: growth go from here? And the one thing we know 362 00:22:23,400 --> 00:22:26,920 Speaker 1: is that the dollar tends to strengthen when global growth weakens, 363 00:22:26,920 --> 00:22:29,920 Speaker 1: So that I think is the key scenario under which 364 00:22:29,960 --> 00:22:32,479 Speaker 1: the dollar strengthens in the coming ups. Everyhom and our 365 00:22:32,600 --> 00:22:37,679 Speaker 1: collective memories, there are emerging market crises Ecuador, Mexico, on 366 00:22:37,800 --> 00:22:42,040 Speaker 1: and on. Do you feel like we're near great instability 367 00:22:42,119 --> 00:22:45,520 Speaker 1: within selected emerging markets or is its studies she goes 368 00:22:45,600 --> 00:22:49,680 Speaker 1: given the information flow. So so for now we think 369 00:22:49,720 --> 00:22:53,800 Speaker 1: that the risks and emerging markets are more ideosynchronic than systemic. 370 00:22:54,040 --> 00:22:56,560 Speaker 1: And that's in the context of expecting that the global 371 00:22:56,600 --> 00:22:59,840 Speaker 1: recovery will persist, that Chinese growth will bottom out and 372 00:23:00,119 --> 00:23:04,120 Speaker 1: do okay. But this is one area where eventually fed 373 00:23:04,160 --> 00:23:07,160 Speaker 1: policy and interest rates could matter a great deal. Via 374 00:23:07,280 --> 00:23:09,800 Speaker 1: n S Chief Economists just highlighted that the other day 375 00:23:09,800 --> 00:23:12,359 Speaker 1: that emerging markets are not in a position where they 376 00:23:12,400 --> 00:23:15,320 Speaker 1: can weather a major increase in US interest rates. Well, 377 00:23:15,960 --> 00:23:18,760 Speaker 1: for now, it's reassuring to see that US interest rates 378 00:23:18,760 --> 00:23:22,760 Speaker 1: are really subdued, and under that scenario, we think that 379 00:23:22,960 --> 00:23:26,320 Speaker 1: emerging markets will in fact be an interesting investing opportunity, 380 00:23:26,359 --> 00:23:30,000 Speaker 1: including in effects. But again it is with with a 381 00:23:30,040 --> 00:23:32,960 Speaker 1: bit of stomach ache, because we're all a little confounded 382 00:23:33,000 --> 00:23:34,840 Speaker 1: by how low interest rates in the US are and 383 00:23:34,880 --> 00:23:37,160 Speaker 1: if that changes, I think it could make the likelihood 384 00:23:37,160 --> 00:23:41,399 Speaker 1: of more commonly emerging market crisis a lot more a 385 00:23:41,440 --> 00:23:45,160 Speaker 1: lot more likely. REMBERI thank you so much for joining 386 00:23:45,240 --> 00:23:52,159 Speaker 1: us today with City Group. Cathy Jones joins us right 387 00:23:52,200 --> 00:23:56,000 Speaker 1: now Trumps Center for Financial Research here and the oardities 388 00:23:56,200 --> 00:23:59,000 Speaker 1: of the bond market, Cathy, the wall of money out 389 00:23:59,000 --> 00:24:02,920 Speaker 1: there is tang Will. What do you advise to savers 390 00:24:03,200 --> 00:24:10,280 Speaker 1: exhausted from low nominal yields in non existent real yields? Yeah, Tom, 391 00:24:10,720 --> 00:24:12,959 Speaker 1: you know, I think the key is that you need 392 00:24:13,000 --> 00:24:16,600 Speaker 1: a pretty diversified portfolio. So you know clearly you're not 393 00:24:16,640 --> 00:24:20,520 Speaker 1: going to get much return in traditional treasuries, and so 394 00:24:20,680 --> 00:24:23,840 Speaker 1: you need a fairly diversified portfolio. But yields are low, 395 00:24:23,960 --> 00:24:28,000 Speaker 1: and that that reflects as you mentioned with tremendous liquidity 396 00:24:28,000 --> 00:24:31,760 Speaker 1: in the markets, sort of secular forces that continue to 397 00:24:31,760 --> 00:24:36,000 Speaker 1: pour money into high quality bonds and um, that's probably 398 00:24:36,000 --> 00:24:37,760 Speaker 1: not going to change, so you need to really have 399 00:24:37,840 --> 00:24:40,639 Speaker 1: a lot of diversification to deal with it. Kathy, can 400 00:24:40,680 --> 00:24:44,000 Speaker 1: you put into perspective the discussions of tapering bond stimulus 401 00:24:44,000 --> 00:24:45,840 Speaker 1: that we're hearing both from the Federal Reserve and now 402 00:24:45,920 --> 00:24:48,240 Speaker 1: also from the e c B. I mean, will there 403 00:24:48,240 --> 00:24:50,960 Speaker 1: be a material effect that just hasn't come through yet 404 00:24:50,960 --> 00:24:57,119 Speaker 1: on bond yields moving higher as the taper plans get effectuated. Well, 405 00:24:57,400 --> 00:25:00,240 Speaker 1: you know, my feeling on tapering is the slower I go, 406 00:25:00,720 --> 00:25:03,960 Speaker 1: the higher the yield. So the reason is, of course, 407 00:25:04,080 --> 00:25:07,000 Speaker 1: because tapering is kind of the first step towards tightening 408 00:25:07,040 --> 00:25:11,160 Speaker 1: policy and reducing liquidity and slow in growth and aggregate 409 00:25:11,240 --> 00:25:14,600 Speaker 1: demand and inflation. So if the Fed takes a very 410 00:25:14,640 --> 00:25:19,520 Speaker 1: slow approach, that allows longer term expectations about inflation and 411 00:25:19,600 --> 00:25:23,840 Speaker 1: growth to stay higher. So if we move slowly, I 412 00:25:23,840 --> 00:25:26,360 Speaker 1: think yields move up. If the Fed moves very quickly, 413 00:25:26,560 --> 00:25:30,679 Speaker 1: and certainly if Germany starts are the ECB UM starts 414 00:25:30,720 --> 00:25:34,840 Speaker 1: to taper quickly and clamp down on this Uh, on 415 00:25:34,920 --> 00:25:37,920 Speaker 1: the stimulus, then we're probably going to see yield stay 416 00:25:37,960 --> 00:25:41,320 Speaker 1: lower longer term. This is really confusing, and frankly, the 417 00:25:41,359 --> 00:25:44,400 Speaker 1: whole backdrop of the what could be and what maybe's 418 00:25:44,600 --> 00:25:47,480 Speaker 1: have been basically a soup out there, which is possibly 419 00:25:47,520 --> 00:25:49,960 Speaker 1: why the market hasn't done all that much. And I'm 420 00:25:49,960 --> 00:25:51,960 Speaker 1: wondering why. If what you're saying is the case that 421 00:25:52,040 --> 00:25:54,000 Speaker 1: there is this faith that the Federal Reserve is going 422 00:25:54,040 --> 00:25:56,400 Speaker 1: to remain on hold for longer, why aren't we seeing 423 00:25:56,400 --> 00:25:58,480 Speaker 1: a steepening in the yield curve. Why aren't we seeing 424 00:25:58,520 --> 00:26:02,840 Speaker 1: longer high, longer term high inflation. It reads, We're just 425 00:26:03,000 --> 00:26:05,000 Speaker 1: not seeing it in the markets. Does this makes sense 426 00:26:05,000 --> 00:26:08,200 Speaker 1: to you? Um? Well, I think yields should be higher. 427 00:26:08,400 --> 00:26:11,560 Speaker 1: I mean, I think reflecting the growth we have, particularly 428 00:26:11,560 --> 00:26:14,560 Speaker 1: for fiscal stimulus, less about the FED, but more about 429 00:26:14,600 --> 00:26:18,480 Speaker 1: fiscal stimulus, which has been really pretty powerful so far 430 00:26:18,560 --> 00:26:21,360 Speaker 1: and has the potential I think to continue to keep 431 00:26:21,359 --> 00:26:25,439 Speaker 1: the economy pretty strong, and we have enough income growth, 432 00:26:25,520 --> 00:26:30,240 Speaker 1: particularly in the lower income cohorts, that we should start 433 00:26:30,280 --> 00:26:34,280 Speaker 1: to see aggregate demand pick up relative to supply and 434 00:26:34,280 --> 00:26:37,400 Speaker 1: and for a longer term prospects keep inflation a bit 435 00:26:37,480 --> 00:26:40,480 Speaker 1: higher and real yields a bit higher. I don't think 436 00:26:40,520 --> 00:26:42,720 Speaker 1: the market is quite convinced that that's going to happen. 437 00:26:42,800 --> 00:26:45,240 Speaker 1: You know, we have a twenty year history of the 438 00:26:45,240 --> 00:26:49,960 Speaker 1: FED missing their inflation targets, of of the economy not 439 00:26:50,800 --> 00:26:54,520 Speaker 1: you know, coming into its full potential growth, and I 440 00:26:54,560 --> 00:26:57,280 Speaker 1: think the market is skeptical about that. At the same time, 441 00:26:57,640 --> 00:27:00,600 Speaker 1: just have tremendous demand. You know, there's us a lot 442 00:27:00,640 --> 00:27:03,520 Speaker 1: of demand for yield out there, and the lesson a 443 00:27:03,560 --> 00:27:06,840 Speaker 1: lot of institutional investors have learned is that you just 444 00:27:06,880 --> 00:27:10,040 Speaker 1: take every opportunity when yield flip up to to put 445 00:27:10,080 --> 00:27:13,680 Speaker 1: money to work exactly. That's increasingly what we've heard from 446 00:27:13,720 --> 00:27:17,000 Speaker 1: Matt Real even of Investo saying that the goliath sitting 447 00:27:17,040 --> 00:27:19,359 Speaker 1: on yield it might not be the FED, it's some 448 00:27:19,440 --> 00:27:21,600 Speaker 1: of the fore and overseas buyers where you wake up 449 00:27:21,640 --> 00:27:25,360 Speaker 1: every morning and Japan wants to be buying your bonds. 450 00:27:25,520 --> 00:27:30,199 Speaker 1: Do you see that changing anytime soon? I doubt that 451 00:27:30,240 --> 00:27:33,880 Speaker 1: it changes a lot um. It can ebbs and flows 452 00:27:33,920 --> 00:27:36,480 Speaker 1: over time. You know, if seasonal factors and you have 453 00:27:36,640 --> 00:27:40,160 Speaker 1: kind of sudden moves maybe make foreign investors pull back, 454 00:27:40,200 --> 00:27:42,600 Speaker 1: but you still look at those yield spreads whether a 455 00:27:42,720 --> 00:27:45,440 Speaker 1: nominal even then real terms. But in real terms ours 456 00:27:45,480 --> 00:27:48,480 Speaker 1: are low. But in nominal terms, which is what people 457 00:27:48,560 --> 00:27:51,639 Speaker 1: trade in the short run, Um, you still have a 458 00:27:51,720 --> 00:27:54,359 Speaker 1: big gap between where we are and where Japan is 459 00:27:54,440 --> 00:27:57,840 Speaker 1: or where Europe is. And if you're an institutional investor, 460 00:27:58,040 --> 00:28:00,399 Speaker 1: if you're a pensionbund insurance company, you have money that 461 00:28:00,480 --> 00:28:02,280 Speaker 1: has to go to work, has to be in a 462 00:28:02,359 --> 00:28:04,960 Speaker 1: high quality asset. Where do you go? Is that what 463 00:28:05,119 --> 00:28:07,679 Speaker 1: you also see? You migrate away from full faith and 464 00:28:07,680 --> 00:28:10,720 Speaker 1: credit to investment grade spreads. I'm looking at the Bloomberg 465 00:28:10,800 --> 00:28:14,840 Speaker 1: eight basis points of her treasuries high yield to eighty eight. 466 00:28:14,920 --> 00:28:19,920 Speaker 1: The minute you got above three hundred, the buyers came in. Yeah, 467 00:28:19,960 --> 00:28:22,760 Speaker 1: I think there is a fundamel story here. Um. I 468 00:28:22,760 --> 00:28:26,720 Speaker 1: think the yields darts ordinarily law obviously, but the fundamental 469 00:28:26,840 --> 00:28:29,600 Speaker 1: story is that we have strong enough gro good cash 470 00:28:29,640 --> 00:28:34,199 Speaker 1: flow incrporations. You know you have um manageable levels of 471 00:28:34,280 --> 00:28:38,560 Speaker 1: that for most companies, and so you know, again that's 472 00:28:38,560 --> 00:28:42,600 Speaker 1: the meld is really strong. Kathy Lisian Saunders yesterday age 473 00:28:42,720 --> 00:28:45,360 Speaker 1: the stock market was going up so fast. She's never 474 00:28:45,400 --> 00:28:48,280 Speaker 1: seen that in her career. How do you handle the 475 00:28:48,320 --> 00:28:52,520 Speaker 1: wall of money. I mean, can we revisit there's super 476 00:28:52,560 --> 00:28:56,440 Speaker 1: low yields like breakdown under one sixteen, breakdown under twelve, 477 00:28:56,480 --> 00:28:59,640 Speaker 1: price up, yield down. Can that happen with this wall 478 00:28:59,640 --> 00:29:03,160 Speaker 1: of money? Well, I think it's possible, but I think 479 00:29:03,240 --> 00:29:06,400 Speaker 1: we need some bad economic news to make it happen. 480 00:29:06,640 --> 00:29:10,080 Speaker 1: So we we visited those laws when you know there 481 00:29:10,160 --> 00:29:14,520 Speaker 1: was a big scare. Um, I think we need another 482 00:29:14,840 --> 00:29:17,520 Speaker 1: pretty big scare. And it just doesn't seem, at least 483 00:29:17,520 --> 00:29:19,160 Speaker 1: for the next six months or so, to be on 484 00:29:19,200 --> 00:29:21,760 Speaker 1: the horizon. And we're looking at pretty strong job growth. 485 00:29:22,160 --> 00:29:25,720 Speaker 1: We're looking despite the delta variant, the economy continues to 486 00:29:25,800 --> 00:29:29,840 Speaker 1: run at a pretty healthy rate UM, and I don't 487 00:29:29,920 --> 00:29:34,000 Speaker 1: think revisiting one twelve, one fifteen is very likely. There's 488 00:29:34,000 --> 00:29:36,880 Speaker 1: also a question about long term, whether the FED is 489 00:29:36,920 --> 00:29:38,720 Speaker 1: going to be too slow and we do get faster 490 00:29:38,800 --> 00:29:42,120 Speaker 1: than expected inflation. And this is almost sacrilegious to say, 491 00:29:42,280 --> 00:29:44,400 Speaker 1: especially to someone who's been in the bond market year 492 00:29:44,440 --> 00:29:46,720 Speaker 1: after year and watched the yield just go lower and 493 00:29:46,800 --> 00:29:49,920 Speaker 1: inflation go nowhere. But ragam Rajan of the North to 494 00:29:50,040 --> 00:29:53,080 Speaker 1: Chicago and formally the Bank of India really illuminated this 495 00:29:53,160 --> 00:29:56,800 Speaker 1: yesterday on Bloomberg Television saying, look, the FED is going 496 00:29:56,880 --> 00:29:59,800 Speaker 1: to remain on hold, but we are seeing movement. It 497 00:29:59,880 --> 00:30:02,920 Speaker 1: is a different world based on fiscal support. What do 498 00:30:02,960 --> 00:30:06,240 Speaker 1: you say the arguments like that, Um, you know, I 499 00:30:06,840 --> 00:30:10,880 Speaker 1: tend to agree that the fiscal support is the most important. 500 00:30:11,400 --> 00:30:15,760 Speaker 1: Whether the FED finds itself so far behind the curve 501 00:30:15,840 --> 00:30:19,200 Speaker 1: that they have to ratchet upgrates really fast, it's kind 502 00:30:19,200 --> 00:30:22,200 Speaker 1: of a question market in my mind, because they can 503 00:30:22,400 --> 00:30:25,360 Speaker 1: they have the ability to you know, taper more quickly, 504 00:30:25,440 --> 00:30:29,640 Speaker 1: taper more slowly, raise rates more quickly. Um. I think 505 00:30:29,680 --> 00:30:32,320 Speaker 1: it's premature to say that they're going to get behind 506 00:30:32,640 --> 00:30:35,960 Speaker 1: the curve. It's a risk, clearly. Uh. And I think 507 00:30:35,960 --> 00:30:40,080 Speaker 1: fiscal stimulus is the big game changer in this market 508 00:30:40,240 --> 00:30:44,880 Speaker 1: versus really the past thirty forty years. We haven't had 509 00:30:44,880 --> 00:30:47,880 Speaker 1: this kind of fiscal support for the economy in a 510 00:30:48,080 --> 00:30:51,480 Speaker 1: very long time, and monetary policy isn't set for that. 511 00:30:51,600 --> 00:30:53,760 Speaker 1: But I do think it's on the radar of the 512 00:30:53,760 --> 00:30:56,880 Speaker 1: Fed on that tone of the fiscal policy. You guys 513 00:30:56,880 --> 00:30:59,720 Speaker 1: sort of this idea within the equity markets of this 514 00:31:00,040 --> 00:31:03,640 Speaker 1: reflationary trade, and Kathy we joked that every equity analyst 515 00:31:03,800 --> 00:31:07,040 Speaker 1: is well now also a bond analyst and a bond strategist. 516 00:31:07,280 --> 00:31:10,320 Speaker 1: What are the equity guys next to you asking you? 517 00:31:10,440 --> 00:31:14,280 Speaker 1: What information do they want about your world of bonds? Yeah? 518 00:31:14,360 --> 00:31:16,200 Speaker 1: They just want to know what the BET's gonna do. 519 00:31:16,800 --> 00:31:20,040 Speaker 1: Um that that's really always the question. You know how 520 00:31:20,480 --> 00:31:24,880 Speaker 1: I got some shade there. I mean, it's it's obviously 521 00:31:24,920 --> 00:31:28,200 Speaker 1: it's important. The discount rate for equities is set by 522 00:31:28,200 --> 00:31:30,000 Speaker 1: the risk free rate, which is set for the fat. 523 00:31:30,120 --> 00:31:33,160 Speaker 1: So it's a logical question. I think there is some 524 00:31:33,760 --> 00:31:38,640 Speaker 1: concern amongst equity strategists that we're not saying yield move 525 00:31:38,640 --> 00:31:41,400 Speaker 1: off as quickly as inflation, and they're sort of like 526 00:31:41,520 --> 00:31:43,760 Speaker 1: everyone else, kind of scratching their heads and saying, is 527 00:31:43,760 --> 00:31:46,560 Speaker 1: this gonna, you know, come out and bite us in 528 00:31:46,640 --> 00:31:49,680 Speaker 1: the short run? Um? And so they're on the they're 529 00:31:49,760 --> 00:31:53,480 Speaker 1: on watch for that, but we're not hearing much more 530 00:31:53,560 --> 00:31:58,520 Speaker 1: than you know, focus on the fat, Kathy, completely unfair question. 531 00:31:58,640 --> 00:32:03,400 Speaker 1: But for the retirees America crushed is savers? When do 532 00:32:03,480 --> 00:32:06,880 Speaker 1: we see a positive real yield? Do you need to 533 00:32:06,920 --> 00:32:12,360 Speaker 1: go into two thousand, twenty three or four? Probably? Yeah, 534 00:32:12,400 --> 00:32:16,160 Speaker 1: I think it's gonna take some time. Um. Now, on 535 00:32:16,200 --> 00:32:19,240 Speaker 1: the other hand, if a if a retiree and a 536 00:32:19,280 --> 00:32:24,360 Speaker 1: saver has a balanced portfolio, there of appreciation on the 537 00:32:24,360 --> 00:32:27,560 Speaker 1: equity side. So let's not forget if you're hoping for 538 00:32:27,680 --> 00:32:30,920 Speaker 1: higher yield, it may have some sort of effect on 539 00:32:31,000 --> 00:32:34,360 Speaker 1: a second But Kathy, the implication there then being if 540 00:32:34,480 --> 00:32:37,560 Speaker 1: somebody has a balanced portfolio, and it's a good balanced portfolio, 541 00:32:37,640 --> 00:32:39,760 Speaker 1: does this mean that bonds can still serve as sort 542 00:32:39,760 --> 00:32:41,600 Speaker 1: of the buffer? I mean, this has been a perennial 543 00:32:41,680 --> 00:32:44,000 Speaker 1: question before we let you go. Do they serve as 544 00:32:44,040 --> 00:32:47,600 Speaker 1: that buffer or no? I think they do. I have 545 00:32:48,400 --> 00:32:51,760 Speaker 1: I reject the argument. I've rejected that argument for a 546 00:32:51,800 --> 00:32:55,880 Speaker 1: long time. They're still there when the stock market really 547 00:32:55,920 --> 00:32:59,840 Speaker 1: goes south. I just looked here. I'm looking up right now, 548 00:33:00,080 --> 00:33:04,160 Speaker 1: Lisa carefully balanced portfolio to see what that return has been. 549 00:33:04,280 --> 00:33:07,960 Speaker 1: Cathy Jones, thank you so much. This is the Bloomberg 550 00:33:08,000 --> 00:33:12,360 Speaker 1: Surveillance Podcast. Thanks for listening. Join us live weekdays from 551 00:33:12,400 --> 00:33:15,760 Speaker 1: seven to ten am Eastern on Bloomberg Radio and on 552 00:33:15,840 --> 00:33:20,120 Speaker 1: Bloomberg Television each day from six to nine am for 553 00:33:20,400 --> 00:33:25,320 Speaker 1: insight from the best in economics, finance, investment, and international relations. 554 00:33:25,800 --> 00:33:30,440 Speaker 1: And subscribe to the Surveillance Podcast on Apple podcast, SoundCloud, 555 00:33:30,600 --> 00:33:34,200 Speaker 1: Bloomberg dot com, and of course, on the terminal. I'm 556 00:33:34,240 --> 00:33:36,920 Speaker 1: Tom Keene, and this is Bloomberg