WEBVTT - Testing the AI Trade; US-Iran Peace Talks Continue 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.000 us live on YouTube. 0:00:27.120 --> 0:00:29.920 Trsten slocked his bulletproof economics. He does it with a 0:00:30.000 --> 0:00:33.440 continental europe feel out of Copenhagen and of courses work 0:00:33.479 --> 0:00:36.839 at Princeton as well iconic and definitive, i should say, 0:00:36.840 --> 0:00:40.559 at Deutsche Bank and now at Apollo Global Management. Torsten 0:00:40.680 --> 0:00:45.600 give us an update on real and nominal GDP in 0:00:45.720 --> 0:00:49.080 the United States of America. It's become a blur with 0:00:49.159 --> 0:00:52.400 the cacophity of the news twelve months forward. Where are 0:00:52.440 --> 0:00:56.120 you on real GDP? Where are you on a nominal statistic? 0:00:56.880 --> 0:00:59.960 Well, the US is having three very important ail instagrow 0:01:00.160 --> 0:01:02.760 at the moment, one coming from the AI boom, another 0:01:02.800 --> 0:01:04.640 coming from the one big bit of a bill, and 0:01:04.720 --> 0:01:07.520 another tailwind also coming from the industrial renaissance, meaning the 0:01:07.560 --> 0:01:10.720 political interest in bringing back production to the USS of 0:01:10.760 --> 0:01:13.880 manufacturing capacity. And were beginning to see all these three 0:01:13.920 --> 0:01:17.679 engines really fire very, very significantly because the AI boom 0:01:17.720 --> 0:01:19.880 obviously is very strong. We also had the one big 0:01:19.920 --> 0:01:21.880 bit of a bill especially for the next two to 0:01:21.920 --> 0:01:24.759 three quarters, is very strong. And we're also seeing ISSM 0:01:24.760 --> 0:01:27.839 manufacturing begin to accelerate in the last six months because 0:01:27.880 --> 0:01:30.440 now the trade more uncertainty is more behind us, and 0:01:30.480 --> 0:01:33.040 now we're beginning to see the positive effects. So therefore 0:01:33.080 --> 0:01:36.000 GDP over the next twelve months should be growing in 0:01:36.080 --> 0:01:39.680 nominal terms roughly around five percent, and in real terms 0:01:39.680 --> 0:01:41.920 we should have GDP growth at roughly two two and 0:01:41.959 --> 0:01:42.520 a half percent. 0:01:42.680 --> 0:01:44.959 Is it just a set of stimuli. 0:01:47.120 --> 0:01:48.960 Well, the key issue is of course that the AI 0:01:49.000 --> 0:01:52.160 spending boom plays such a significant role, and that's very 0:01:52.200 --> 0:01:54.280 important both because it plays a course of role in 0:01:54.320 --> 0:01:56.200 the data center build out but also the associated the 0:01:56.280 --> 0:01:58.440 energy build out. And that's why the AI boom is 0:01:58.440 --> 0:02:01.200 so interesting from a fit and an inflation perspective, because 0:02:01.240 --> 0:02:04.320 the AI boom is certainly inflationary initially. 0:02:04.120 --> 0:02:06.440 Because we are spending a lot of dollars. 0:02:06.200 --> 0:02:08.400 About seven hundred billions from the hyper skill as alone 0:02:08.800 --> 0:02:11.959 on the buildout, and that of course means more pricing 0:02:12.080 --> 0:02:15.440 and more therefore higher inflation when it comes to semiconductor prices. 0:02:15.440 --> 0:02:17.400 When it comes to labor, when it comes to energy, 0:02:17.400 --> 0:02:20.720 when it comes to construction workers. So initially it is 0:02:20.880 --> 0:02:22.880 something that is not just driven by the one big 0:02:22.919 --> 0:02:25.240 bill of a bill, but it's also important driven by 0:02:25.720 --> 0:02:28.280 ultimately how long time you think the AI boom will continue. 0:02:29.480 --> 0:02:32.120 What is your inflation call here at Torsten? Is it 0:02:32.680 --> 0:02:36.480 a transitory energy driven inflation or is there something more 0:02:36.480 --> 0:02:36.880 out there? 0:02:37.440 --> 0:02:40.120 Yeah, you know, this is the fast debate that they 0:02:40.120 --> 0:02:42.120 don't like the word transitoris and now they call it 0:02:42.160 --> 0:02:44.760 temporary instead. Okay, And this is of course why this 0:02:44.919 --> 0:02:47.400 is of course the dangerous game, because well, what if 0:02:47.440 --> 0:02:50.200 this boom in particular of course when it comes to 0:02:50.240 --> 0:02:53.360 the AI spending is going to last several years, and 0:02:53.400 --> 0:02:55.480 if at the same time you also have seen terrorsts 0:02:55.480 --> 0:02:58.160 put up by pleasure and inflation, you've also seen of 0:02:58.240 --> 0:03:01.160 course ultimately energy price is also putting off by pressure 0:03:01.160 --> 0:03:04.320 on inflation. So that's why if you're tied ECFC, go 0:03:04.440 --> 0:03:06.880 on your bluebelg streen I look at the quarterly profile. 0:03:07.000 --> 0:03:09.680 You will see, as you all know, that the inflation 0:03:10.000 --> 0:03:12.799 levels both for headline and for coll infation is going 0:03:12.800 --> 0:03:14.880 to be about three at least for the next twelve 0:03:14.919 --> 0:03:17.000 months and that's of course the call problem for the 0:03:17.040 --> 0:03:19.640 twelve voting members on their form. See namely that eleven 0:03:19.680 --> 0:03:21.760 of them have said that we're not cutting interest rates 0:03:21.760 --> 0:03:24.440 and infavation is going up. It becomes pretty complicated for 0:03:24.520 --> 0:03:26.320 them to lower interest rates in this environment. 0:03:26.400 --> 0:03:28.360 Turston. I don't want you to get in trouble with 0:03:28.400 --> 0:03:31.040 compliance folks, and we don't take cheap shots, particularly with 0:03:31.160 --> 0:03:34.519 someone like doctor Slock. Here's a headline, and I want 0:03:34.520 --> 0:03:36.520 to make clear I'm not going to be snarky here 0:03:36.840 --> 0:03:41.560 and go directly to this Blackstone, not related to doctor Slock. 0:03:42.120 --> 0:03:48.160 Blackstone private credit fund caps investor redemptions at five percent. Okay, 0:03:48.160 --> 0:03:52.080 that headline just came out. That's like a huge deal, Torston. 0:03:52.200 --> 0:03:56.080 Forget about that headline. But when you're sitting there, Torston, 0:03:56.760 --> 0:03:59.720 looking at your World Cup card and what Denmark's going 0:03:59.800 --> 0:04:04.200 to do, I mean, where are the Torsten Slock shadows 0:04:04.240 --> 0:04:07.400 out there in leverage or ill liquidity. 0:04:08.440 --> 0:04:12.760 Yeah, so Denmark didn't qualify unfortunately for the work. So 0:04:12.880 --> 0:04:15.720 I will be having a very relaxed sumwhe here. But 0:04:15.960 --> 0:04:18.400 you're right, Tom So it's frankly in terms of the 0:04:18.520 --> 0:04:21.000 risks to the outlook, the key risk of course, Number 0:04:21.000 --> 0:04:22.720 one is that we still need to get the straight 0:04:22.760 --> 0:04:24.640 up a moose open in some form so that OLI 0:04:24.720 --> 0:04:27.440 prices are not at risk of suddenly spiking higher if 0:04:27.440 --> 0:04:30.239 some tank runs dry somewhere in the world, in particular 0:04:30.440 --> 0:04:33.080 somewhere in Europe. So the risk of higher ALIL prices 0:04:33.120 --> 0:04:35.320 at absolutely the number one risk to the outlook at 0:04:35.320 --> 0:04:35.679 the moment. 0:04:35.880 --> 0:04:37.839 The second risk is this issue of inflation. 0:04:38.279 --> 0:04:40.600 Because there's the strait of a moose remains closed, then 0:04:40.600 --> 0:04:43.640 there's even more upside risk to infasion than my ECFC 0:04:43.680 --> 0:04:45.200 ghostcreen is telling me at the moment. 0:04:45.400 --> 0:04:47.599 And the last thing that's also a risk is, of course, 0:04:47.600 --> 0:04:48.520 what's happening with AI. 0:04:49.120 --> 0:04:51.039 AI is a risk in the sense that if it 0:04:51.120 --> 0:04:54.200 is successful, it will create new challenges. If it's not successful, 0:04:54.279 --> 0:04:56.920 it will also create new challenges. So these three things 0:04:56.960 --> 0:04:59.880 they need enterprises, what's happening with inflation, and what's hap 0:05:00.200 --> 0:05:02.360 with AI. Those are the three areas that we spend 0:05:02.360 --> 0:05:04.880 a lot of time looking at Tourson. 0:05:04.960 --> 0:05:08.920 With the current immigration policy, population and growth in the 0:05:09.040 --> 0:05:15.000 US is essentially stalled. Can I guess the performance of AI. 0:05:15.120 --> 0:05:17.599 Can that improve productivity to the point where this economy 0:05:17.600 --> 0:05:18.159 can still grow? 0:05:19.080 --> 0:05:21.159 But It's probably going to take a longer time because 0:05:21.200 --> 0:05:24.200 initially the AI spending boom is going to be inflationary 0:05:24.240 --> 0:05:27.560 and we will probably not see much initial productivity gains. 0:05:27.760 --> 0:05:30.239 This is why this transition period that we're going through. 0:05:30.520 --> 0:05:33.520 What is the world ultimately going to look like once 0:05:33.560 --> 0:05:36.560 AI has been fully implemented and installed. Is it going 0:05:36.600 --> 0:05:39.440 to be dramatically higher productivity or is only going to 0:05:39.440 --> 0:05:42.080 be modestly higher productivity? It will be positive for sure, 0:05:42.440 --> 0:05:45.400 but the question becomes what is the level of investment 0:05:45.440 --> 0:05:48.440 that deployed today relative to what the end result is? 0:05:48.480 --> 0:05:50.600 And if that's the case that this is the discussion, 0:05:50.640 --> 0:05:53.120 then executly to your question here, well, then we do 0:05:53.240 --> 0:05:55.880 need to think about, well, if that endpoint becomes so important, 0:05:56.000 --> 0:05:57.720 what is that endpoint going to look like? 0:05:57.880 --> 0:06:02.680 So is our efficiency or product activity now not AI? 0:06:03.680 --> 0:06:07.119 And is it something else going on? Including Nicholas booth 0:06:07.200 --> 0:06:11.839 Out at Stanford saying work from home is an efficiency 0:06:12.040 --> 0:06:14.880 and productivity boost, what are your thoughts on that? 0:06:15.400 --> 0:06:17.320 Yeah, this has been a very important debate in the 0:06:17.400 --> 0:06:20.200 academic literature and Nick Bloom has been absolutely in front 0:06:20.240 --> 0:06:22.840 of all this because the discussion has been you would 0:06:22.839 --> 0:06:26.000 normally have the logical conclusion, Well, if people work for home, 0:06:26.080 --> 0:06:27.919 they don't work too much, they relax, they go and 0:06:27.960 --> 0:06:30.279 have a cup of coffee. But he is actually shown 0:06:30.320 --> 0:06:32.880 in a series of papers exactly what you're saying, Tom, 0:06:33.040 --> 0:06:35.920 namely that people working from home actually increases productivity. 0:06:36.160 --> 0:06:38.240 So you're right, it's not only about AI, or. 0:06:38.240 --> 0:06:40.240 You can call that a version of AI, but it's 0:06:40.240 --> 0:06:42.360 also a lot of other factors that really are all 0:06:42.400 --> 0:06:44.760 about how are capsul and labor working together. 0:06:45.040 --> 0:06:47.840 In other words, with capuson and labor. Ultimately, the way they. 0:06:47.760 --> 0:06:50.240 Work together creates, as you know very well, total factor 0:06:50.240 --> 0:06:53.480 of productivity, and total factor productivity can be higher if 0:06:53.480 --> 0:06:54.480 you give the tools to. 0:06:54.480 --> 0:06:56.120 Capusul and labor to work better together. 0:06:56.160 --> 0:06:58.920 And AI is exactly one of those tools that does 0:06:59.120 --> 0:07:01.760 do increase total factor of productivities in Europe. 0:07:01.960 --> 0:07:03.960 Do what you just said. 0:07:04.080 --> 0:07:06.760 I mean, the challenge for Europe is that they are 0:07:06.800 --> 0:07:09.360 not enjoying the AI boom that we're seeing in the US. 0:07:09.360 --> 0:07:11.440 And this is very important. Normally, my job is easy. 0:07:11.720 --> 0:07:13.760 If the US is good, Europe is good. If the 0:07:13.840 --> 0:07:16.160 US is bad, Europe is bad. But at the moment, 0:07:16.200 --> 0:07:18.840 the three tailwinds to the US, the AI boom they 0:07:18.840 --> 0:07:20.880 wan't to be beautiful Bill the industrial renaissance. 0:07:21.080 --> 0:07:23.160 None of these tailwinds exist in Europe. 0:07:23.240 --> 0:07:25.360 And as a footnote, remember also none of these tailwinds 0:07:25.400 --> 0:07:27.080 that are growth enhancing in the US. 0:07:27.160 --> 0:07:28.920 They are not sensitive to interest rates. 0:07:29.080 --> 0:07:31.520 In other words, it's really unique that the US is 0:07:31.600 --> 0:07:34.320 driven by factors that are not particularly sensitive to whether 0:07:34.400 --> 0:07:37.120 rates go up or down. Those sectors in the economy 0:07:37.160 --> 0:07:39.600 that are senteni to that is housing and autos, they 0:07:39.640 --> 0:07:41.880 are not doing very well because they are very interest 0:07:41.960 --> 0:07:44.080 rates sensitive. But the sources of growth in. 0:07:44.080 --> 0:07:47.000 The US are really unique in the US at the moment, and. 0:07:46.960 --> 0:07:49.960 We don't have them in Europe, Canada and Australia unfortunately 0:07:50.000 --> 0:07:50.920 for the rest of the world. 0:07:51.480 --> 0:07:57.400 Torson how is Europe missing this AI story? Here one 0:07:57.440 --> 0:08:00.560 could argue they miss just the technology, the boom of 0:08:00.560 --> 0:08:04.840 the last thirty years. How can they afford to miss 0:08:05.160 --> 0:08:08.160 this AI boom which is reshaping the planet. 0:08:08.680 --> 0:08:10.880 I would suggest that this is exactly a topic for 0:08:10.960 --> 0:08:16.760 Scarlet and Tom's Money Show, because here we have a 0:08:16.880 --> 0:08:19.160 very critical thing. Maybe why is it Europe is falling 0:08:19.200 --> 0:08:22.280 behind so much an AI? And there are several oecd 0:08:22.360 --> 0:08:24.480 answers to this. Number one, they do not have a 0:08:24.560 --> 0:08:27.480 very flexible label market. It's very difficult to hire people, 0:08:27.640 --> 0:08:29.240 it's very difficult to fire people. 0:08:29.440 --> 0:08:32.400 That means that risk taking among entrepreneurs is a. 0:08:32.320 --> 0:08:35.280 Lot lower because it becomes much more expensive if you 0:08:35.360 --> 0:08:38.160 go out and hire and fire people. That's particularly pronounced 0:08:38.160 --> 0:08:40.320 in Germany and France. But this has been a problem 0:08:40.320 --> 0:08:43.000 for decades. The second thing that's also very critical for 0:08:43.040 --> 0:08:46.040 Europe is that we need much more access to capucul, 0:08:46.320 --> 0:08:49.040 much more access to venture capusil, much more access to 0:08:49.080 --> 0:08:52.679 long term capitul, and financial markets are simply not as developed. 0:08:52.880 --> 0:08:53.840 It's difficult if. 0:08:53.760 --> 0:08:56.400 You want an entrepreneur to find financing in Europe, where 0:08:56.400 --> 0:08:57.720 it's really easy to do. 0:08:57.800 --> 0:08:58.360 In the US. 0:08:58.480 --> 0:09:01.000 Okay, so, folks of Vignette here to set this up. 0:09:01.040 --> 0:09:03.480 I'm in Davos and it's like the Blur and it's 0:09:03.520 --> 0:09:07.240 the beautiful people and all that, and my my fourth espresso. 0:09:07.320 --> 0:09:10.760 I'm standing by the bar. Torsten comes up to me 0:09:10.840 --> 0:09:15.960 with some guy and he introduces me to somebody nobody knew, 0:09:16.080 --> 0:09:19.880 Christian Saving, who at the time is retail German banking 0:09:19.920 --> 0:09:21.959 with Deutsche Bank, and all of a sudden he's running 0:09:22.000 --> 0:09:26.920 the ship. Torsten slam it forward. Simon Foy Florian Miller 0:09:27.679 --> 0:09:30.920 in the Ft last week, how Deutsche Bank Torsten slacks 0:09:30.960 --> 0:09:36.200 Deutsche Bank learned to stop chasing America. That's the heart 0:09:36.240 --> 0:09:40.120 of the matter, isn't it. It's not chase America, but 0:09:40.280 --> 0:09:43.480 do it within like soft Bank in France or the 0:09:43.520 --> 0:09:46.040 Deutsche Bank revolution and the continent right. 0:09:46.800 --> 0:09:49.480 Well, I think the Europeans o beginning to recognize that 0:09:49.559 --> 0:09:52.920 something needs to change, especially in financial markets solvency two. 0:09:53.320 --> 0:09:56.320 The rules are simply so rigid that they're not very 0:09:56.320 --> 0:09:59.640 supportive fault growth, and that's a real chinnese for the Europeans. 0:10:00.600 --> 0:10:03.280 They can also use last language models, that's all very helpful, 0:10:03.400 --> 0:10:06.199 but they should themselves really begin to realize more. 0:10:06.240 --> 0:10:08.000 And I think that is where we are going. 0:10:08.200 --> 0:10:11.199 That they need to also themselves invent the new anthropics 0:10:11.200 --> 0:10:13.360 and open AI in spasics. And the only way to 0:10:13.400 --> 0:10:15.560 do that is to get a more flexible label market 0:10:15.679 --> 0:10:17.439 and to change rules in cavisel let. 0:10:17.400 --> 0:10:19.840 Me ask one more question, is Paul's got fourteen questions 0:10:19.880 --> 0:10:22.240 of being route towards to the heart of the matter, 0:10:22.280 --> 0:10:25.600 And this is like a Noi Rabini question. It's old world, 0:10:25.679 --> 0:10:30.200 new world. We have a heritage of failure, bankruptcy and 0:10:30.240 --> 0:10:34.160 a hyachien clearing of the market, and they do not. 0:10:34.600 --> 0:10:36.760 It's as simple as that, isn't it. 0:10:36.760 --> 0:10:38.720 It is indeed quite as simple as that. 0:10:38.800 --> 0:10:41.280 It is very important that bankruptcy laws also in the 0:10:41.360 --> 0:10:44.680 US give you quote unquote a second chance. Bankruptcy laws 0:10:44.760 --> 0:10:47.760 in most of European countries do not give you a 0:10:47.800 --> 0:10:51.280 second chance. That's all these issues about recalls non recalls. 0:10:51.400 --> 0:10:53.480 If I go bankrupt in the US, I can have 0:10:53.520 --> 0:10:55.480 a clean slate, I can start a new business. In 0:10:55.520 --> 0:10:58.200 many European countries, if I go bankrupt, I owe people 0:10:58.240 --> 0:11:01.080 money for decades. So that's why this whole issue about 0:11:01.120 --> 0:11:03.400 how quickly can you come out of bankruptcy codes? Can 0:11:03.400 --> 0:11:06.199 you start a new business? How dynamic issue economy? All 0:11:06.200 --> 0:11:08.560 these things are really important for the Europeans, and I 0:11:08.559 --> 0:11:10.320 think they're moving in the right direction on a number 0:11:10.320 --> 0:11:13.640 of different fronts. But unfortunately it's just not moving fast enough, 0:11:13.800 --> 0:11:15.719 because as we all know, and as we exactly talk 0:11:15.760 --> 0:11:18.480 about here, the US is just ahead, especially in this 0:11:18.559 --> 0:11:20.360 case when it comes to AI and Torsten. 0:11:20.440 --> 0:11:23.360 I mean, you know, Ai, Tom and I were forcing 0:11:23.360 --> 0:11:27.200 ourselves to learn AI, to adapt AI to our workflows. 0:11:27.559 --> 0:11:30.320 The young people here, it's just part of their life. 0:11:30.720 --> 0:11:32.880 How about the young people in Europe. Aren't they pushing 0:11:32.960 --> 0:11:36.720 for change? Aren't they pushing for adaptation of new technologies? 0:11:37.520 --> 0:11:39.480 I think they are, and that's also why there is 0:11:39.559 --> 0:11:44.199 also an emerging venture capitul and small business and entrepreneur 0:11:44.880 --> 0:11:46.880 ara industry in Europe. 0:11:47.040 --> 0:11:48.960 But the issue is still that there's a lot of 0:11:49.080 --> 0:11:50.000 visited interests. 0:11:50.200 --> 0:11:52.280 There's a lot of balances between On the one hand, 0:11:52.280 --> 0:11:54.640 we want a dynamic economy, but we don't want to 0:11:54.880 --> 0:11:57.680 dismantle trade unions. We don't want to make all the 0:11:57.840 --> 0:12:00.480 existing structures that we have, we don't want to dismanted 0:12:00.520 --> 0:12:03.560 them completely. So that's why this transition to go from 0:12:03.679 --> 0:12:05.680 the old world that Europe has been for a long 0:12:05.720 --> 0:12:08.000 time to the new world where they can also contribute 0:12:08.120 --> 0:12:12.200 with GDP growth, new technologies, new innovations in renewable energy. 0:12:12.280 --> 0:12:14.760 They I ahead on a number of fronts, but broadly speaking, 0:12:14.800 --> 0:12:17.440 you're right, it is indeed this which is the key issue. 0:12:17.600 --> 0:12:20.560 Turch and slock Apollo of Global Management, thank you for 0:12:20.600 --> 0:12:24.840 the correct conversation. Stay with us. More from Bloomberg Surveillance 0:12:24.920 --> 0:12:26.240 coming up after this. 0:12:33.520 --> 0:12:37.080 You're listening to the Bloomberg Surveillance Podcast. Catch US live 0:12:37.160 --> 0:12:40.280 weekday afternoons from seven to ten am Eastern. Listen on 0:12:40.400 --> 0:12:44.080 Applecarplay and Android Auto with the Bloomberg Business app, or 0:12:44.200 --> 0:12:45.720 watch us live on YouTube. 0:12:45.760 --> 0:12:49.160 This is beyond Time. Lindsay Newman steps in. Now she's 0:12:49.320 --> 0:12:53.400 with Chathamhouse and we're told that she could join this morning. Lindsey, 0:12:53.400 --> 0:12:55.960 what are you writing into the weekend giving the chaos 0:12:56.000 --> 0:12:56.440 out there? 0:12:57.880 --> 0:12:59.960 Yeah, thanks so much, Tom. I just have to plug 0:13:00.080 --> 0:13:02.520 for England. We can't forget England harcane going for a 0:13:02.559 --> 0:13:04.360 bellow and day or in the World Cup. It would 0:13:04.360 --> 0:13:07.240 be really missing me not to raise that. So look, 0:13:08.760 --> 0:13:12.120 there has been so much speculation and back and forth 0:13:12.200 --> 0:13:15.200 about what's going on with the conflict in Iran. At 0:13:15.200 --> 0:13:17.440 any given moment, it's hard to tell whether we're inching 0:13:17.520 --> 0:13:20.680 forward towards a resolution of this conflict or actually, in fact, 0:13:20.720 --> 0:13:25.200 we're inching backwards towards resumption of wider hostilities. We know 0:13:25.320 --> 0:13:28.680 that President Trump and the US administration want the American 0:13:28.720 --> 0:13:31.680 people and they want markets to feel as though there's 0:13:31.760 --> 0:13:34.400 optimism that they're going to reach a deal. That this 0:13:34.520 --> 0:13:37.880 memorandum of understanding that's been floating out there for a 0:13:37.960 --> 0:13:42.120 couple of weeks now is actually nearly resolved. But this 0:13:42.160 --> 0:13:45.079 is not a reality television show we are watching. This 0:13:45.240 --> 0:13:48.040 is reality. While we all want to sort of stream 0:13:48.120 --> 0:13:50.600 to the next episode where we find out what happens. 0:13:50.640 --> 0:13:53.640 It's not the case that Trump can control all eventualities, 0:13:53.640 --> 0:13:56.400 you know, he tweeted earlier, he posted earlier this week 0:13:56.600 --> 0:13:58.680 that we should just sit back and relax and let 0:13:58.679 --> 0:14:01.840 things resolve. They always do. But it's not that he 0:14:01.920 --> 0:14:05.120 has control over everything. There are misalignments and mistrust that 0:14:05.240 --> 0:14:08.160 runs rife between these parties and has been going that 0:14:08.240 --> 0:14:10.680 way since all the way back to last year. So 0:14:11.080 --> 0:14:13.559 I don't personally have a ton of optimism at this moment. 0:14:13.600 --> 0:14:17.200 We know that Iron's form. Minister Ragi said that there 0:14:17.200 --> 0:14:21.640 has basically been no further progress on negotiations and we 0:14:21.680 --> 0:14:23.960 still have a lot of runway ahead of us before 0:14:24.000 --> 0:14:26.360 we're going to actually see some sort of deal here. 0:14:27.160 --> 0:14:29.480 Do we have a sense of kind of who on 0:14:29.520 --> 0:14:32.280 the US side is kind of driving the conversation for 0:14:32.880 --> 0:14:35.560 Is it the administration, is it the State Department, which 0:14:35.920 --> 0:14:37.840 I think that's their job, or is it a couple 0:14:37.920 --> 0:14:40.880 of lawyers from New York Well, Paul, I. 0:14:40.880 --> 0:14:43.520 Mean, I think we always have to resort to mean 0:14:43.600 --> 0:14:46.280 here that it is Donald Trump and the Donald Trump Show. 0:14:46.520 --> 0:14:49.040 We of course saw a Secretary of State Marco Rivio 0:14:49.480 --> 0:14:53.520 involved in testimony yesterday, and he is obviously driving the 0:14:53.560 --> 0:14:58.240 state departments as emphasis and efforts in that way. But 0:14:58.440 --> 0:15:01.320 in terms of the negotiations selves, we know that last 0:15:01.360 --> 0:15:04.720 week Trump called his cabinet and said, I want to 0:15:04.760 --> 0:15:07.080 review the deal that's on the table. I have some 0:15:07.160 --> 0:15:09.320 further comments that I want to raise with the Iranian 0:15:09.360 --> 0:15:13.480 delegation around Iran's nuclear program, around the Strait of Hormuse, 0:15:13.520 --> 0:15:17.000 these major outstanding issues, and it seems as though neither 0:15:17.080 --> 0:15:19.720 the US nor Iran are eager to be the first 0:15:19.760 --> 0:15:21.680 one to raise their hand and say we will approve 0:15:21.720 --> 0:15:24.800 this deal. And that's really where things stand. It is 0:15:24.840 --> 0:15:28.600 this mistrust and miscalculation. The two sides have not agreed 0:15:28.680 --> 0:15:32.920 upon these open issues, either the sort of near term 0:15:32.960 --> 0:15:34.960 pressing ones like the straight of Hoe Moose, nor the 0:15:35.000 --> 0:15:38.160 longer term ones that have been outstanding forever, like Aron's 0:15:38.240 --> 0:15:42.200 nuclear program, what happens with its enriched uranium. And they 0:15:42.280 --> 0:15:44.560 also don't even agree about whether they're willing to talk 0:15:44.600 --> 0:15:48.480 about certain issues right hearing anymore about Iran's missile program. 0:15:48.680 --> 0:15:51.960 Trump last week said that Gulf states need to sign 0:15:52.080 --> 0:15:54.480 up to the Abraham Accords. That went over like a 0:15:54.560 --> 0:15:57.720 lead balloon. So we are continuing to see that these 0:15:57.720 --> 0:16:00.880 two sides are really talking past each other, even though 0:16:01.520 --> 0:16:03.800 the market forces want there to be a deal, and 0:16:03.880 --> 0:16:06.760 even though the administration wants market to believe that a 0:16:06.800 --> 0:16:07.600 deal is impending. 0:16:09.480 --> 0:16:12.200 I've been so waiting for you, Lindsey, to come on 0:16:12.280 --> 0:16:16.320 at Chathamhouse in London, because the Telegraph in London a 0:16:16.400 --> 0:16:20.280 number of days ago did an extraordinary article. This is 0:16:20.360 --> 0:16:25.200 Conser Rabbi and Sai Goldcar talking about the two new 0:16:25.560 --> 0:16:31.240 unknown leaders of the IRGC and within that without going 0:16:31.240 --> 0:16:35.440 into this incredibly intense article about the new future of 0:16:35.480 --> 0:16:39.840 the Iranian military. From where you sit, do you have 0:16:40.480 --> 0:16:44.360 a knowledge base of the new leadership of the IRGC. 0:16:46.000 --> 0:16:47.920 Yeah, I mean what we know, Tom, I mean, obviously 0:16:47.920 --> 0:16:51.640 I should say caveat that. Sunanvakil at Chathamhouse is our 0:16:51.720 --> 0:16:54.280 lead expert on Iran and she's best positioned to talk 0:16:54.320 --> 0:16:56.640 about that. But what we do know is that Auran 0:16:56.760 --> 0:16:59.440 took away a lot of lessons learned from last year's 0:16:59.520 --> 0:17:03.520 June operation against it, also led by Israel and the 0:17:03.640 --> 0:17:06.840 US and quickly and sort of look to do a 0:17:06.960 --> 0:17:11.080 very intensive post mortem and reorganized various components, including the ERGCY, 0:17:11.080 --> 0:17:14.760 including its military capabilities, including its leadership structure and plans 0:17:14.760 --> 0:17:17.919 going forward. And we've seen that in action over the 0:17:18.000 --> 0:17:21.640 course of Operation Epic Fury. Right. So, the fact that 0:17:21.880 --> 0:17:24.880 the US has pursued all of this degradation on Iran's 0:17:24.920 --> 0:17:28.720 missile capabilities, perhaps some of its nuclear capabilities, its naval 0:17:28.760 --> 0:17:33.479 capabilities has not necessarily translated, as we know, into Iran 0:17:33.560 --> 0:17:37.720 being overall degraded. The regime remains very much intact, although 0:17:38.240 --> 0:17:40.440 what we know is it's been sort of more diversified, 0:17:40.480 --> 0:17:43.640 dispersed across the country. It's sort of in a moret 0:17:43.680 --> 0:17:47.920 of guerrilla style approach. It has also been maybe perhaps 0:17:48.280 --> 0:17:52.880 de emphasizing some of the more ideological components instead of 0:17:52.920 --> 0:17:56.840 pursuing this new leadership structure pursues more of sort of 0:17:56.960 --> 0:18:00.440 nationalistic approach to leadership. And what that means is Iran 0:18:00.480 --> 0:18:04.280 has been able to develop and pursue very intensive tools 0:18:04.280 --> 0:18:08.240 of leverage, including over the Strait of Hormuz, which sort 0:18:08.240 --> 0:18:10.680 of is its new tool going forward beyond even its 0:18:10.720 --> 0:18:14.399 new capabilities, even as we think that perhaps rob Is 0:18:14.440 --> 0:18:16.480 didn't continue to pursue its nuclear program. 0:18:16.640 --> 0:18:18.960 Just one more quick questions. We've got confabs, we got 0:18:19.200 --> 0:18:23.280 I think Paul NATO's in Turkey. Yeah, there's G sevens 0:18:24.600 --> 0:18:28.879 give us Lindsey an allied update in their relationship, the 0:18:29.119 --> 0:18:33.760 traditional allies relationship with the President of the United States. 0:18:34.720 --> 0:18:36.600 Yeah, so we know that Trump has said that he 0:18:36.800 --> 0:18:40.320 is going to the G seven meetings in just a 0:18:40.359 --> 0:18:43.199 couple weeks time. It will be an interesting dance that 0:18:43.200 --> 0:18:45.159 we're going to be watching. We know, of course that 0:18:45.240 --> 0:18:48.760 the relationships there have been strained. There hasn't actually been 0:18:48.840 --> 0:18:54.160 a lot of sort of news breaking public facing conversations 0:18:54.200 --> 0:18:56.960 between the sides of late. It's all sort of been 0:18:57.040 --> 0:18:59.960 mostly back channeling. But there is tension there that has 0:19:00.119 --> 0:19:04.479 not been resolved. It's interestingly enough, we see today that 0:19:04.520 --> 0:19:08.040 the UK, Germany and France are talking about developing their 0:19:08.040 --> 0:19:11.960 own track to conversations with Puchin about resolving the war 0:19:12.119 --> 0:19:15.040 with Ukraine. That just shows that Europe is getting the 0:19:15.040 --> 0:19:17.760 message that the US is not going to be participating 0:19:17.760 --> 0:19:20.880 in the same way that has always been historically participating. 0:19:20.920 --> 0:19:23.360 Since the post Cold War period and that facts are 0:19:23.520 --> 0:19:26.399 moving on. And that doesn't mean that Europe is willing 0:19:26.440 --> 0:19:31.320 to jump into supporting Trump and the US administration in Iran, 0:19:32.080 --> 0:19:34.639 but it does mean that we should be watching us 0:19:34.760 --> 0:19:36.840 very closely to see how this dance plays out. 0:19:37.080 --> 0:19:39.760 Lindsey, thank you so much. Lindzie Newman with Chathamhouse, stay 0:19:39.800 --> 0:19:43.680 with us. More from Bloomberg Surveillance coming up after this. 0:19:50.920 --> 0:19:54.520 You're listening to the Bloomberg Surveillance podcast. Catch US Live 0:19:54.560 --> 0:19:58.080 weekday afternoons from seven to ten am Eastern Listen on Apple, 0:19:58.119 --> 0:20:01.480 Karplay and Android Otto with the work Business up, or 0:20:01.640 --> 0:20:03.040 watch US live on YouTube. 0:20:03.240 --> 0:20:08.439 Juliet Cornado joins US right now, hugely competent, definitive in 0:20:08.480 --> 0:20:13.880 the crisis at BMP. Perry about Julia link tomorrow's jobs 0:20:13.960 --> 0:20:18.600 report to how the newly minted chairman will think. 0:20:20.720 --> 0:20:23.280 Yeah, I mean, before I go there, tom I just 0:20:23.359 --> 0:20:27.919 want to say Ghostpurs go. I will be at the 0:20:27.960 --> 0:20:32.640 game tomorrow, So season ticket holder. 0:20:33.359 --> 0:20:35.400 Which color shirt are you're gonna wear? 0:20:36.000 --> 0:20:40.240 I mean, well, the Fiesta colors are only for game one, 0:20:40.440 --> 0:20:43.240 So if you've been paying attention to the Spurs, every 0:20:43.320 --> 0:20:47.240