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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along

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Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com,

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Speaker 1: and of course on the Bloomberg terminal. Let's get right

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Speaker 1: to in an advance or Global Wall Street the story

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Speaker 1: of this February. We can do this with a side

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Speaker 1: a lot of head of G ten rate strategy at

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Speaker 1: America's at BMP Perry. But hey, I love your research.

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Speaker 1: Note and what I note there is a migration from

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Speaker 1: four to six rate hikes in the United States. What

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Speaker 1: do you need to see to ever go more from

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Speaker 1: six to eight rate hikes? Absolutely? Thank you, Tom, and

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Speaker 1: thank you for having me. Um. Look, I think we've

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Speaker 1: been on the hoky side for some time and really

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Speaker 1: opening up the distribution to more UM. There is a

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Speaker 1: question of of length of runway, and I think that

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Speaker 1: question is even more asked now with the ECB and

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Speaker 1: the Bank of England being a little more aggressive on

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Speaker 1: on exit plants. The FED needs to move, The FED

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Speaker 1: needs to move quickly, clearly, behind the curve M and

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Speaker 1: six rate hikes may maybe more that the center of

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Speaker 1: a distribution. We can see more. We could see one

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Speaker 1: every meeting, and we don't rule out fifty or a

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Speaker 1: FED funds right close to two year end. So hey,

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Speaker 1: let's just build on what you just said. The length

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Speaker 1: of the runway. Does it make it easier or harder

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Speaker 1: that they're all trying to do this at the same time. Look,

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Speaker 1: I mean we've heard from power this time is different

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Speaker 1: that something we've said before. And how this time is different,

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Speaker 1: we think is with velocity. This is about pace of

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Speaker 1: the recovery, pace of the exit on both the fiscal

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Speaker 1: and the monetary side. And the second is synchronization synchronization

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Speaker 1: against again between the fiscal and monetary forces both heading

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Speaker 1: for the exit post pandemic, but also the synchronization between

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Speaker 1: different central banks moving at the same time. Look, ultimately,

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Speaker 1: I think it might be more difficult press at markets

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Speaker 1: and the global economy, you know, as central banks move

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Speaker 1: increasingly together on the exits on both the balanty and

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Speaker 1: the level of rate. This is what I think it's

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Speaker 1: important to call it regime change, because in the previous

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Speaker 1: regime we'd see a bond market sell off and believe

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Speaker 1: it was self limiting in many ways because these central

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Speaker 1: banks would have to back away when we think about

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Speaker 1: a change in regime, Shahi, are you thinking about maybe

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Speaker 1: that that dynamic doesn't exist anymore? Um? No, Actually, so,

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Speaker 1: I think we can get to where we're going quicker,

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Speaker 1: which is a velocity part, But I don't think the

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Speaker 1: destination in itself has necessarily changed. We don't think that

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Speaker 1: the new normal for the long term or neutral rate

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Speaker 1: is above three. So we still feel like term yields

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Speaker 1: somewhere cap below three probably intends two and a half

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Speaker 1: or below. Do we think we can get We can

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Speaker 1: get there quicker and get to two and above quicker,

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Speaker 1: but we're not convinced we go above. There remains a

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Speaker 1: lot of liquidity in the system and lots of fixed

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Speaker 1: income duration demand, which we think comes in if and

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Speaker 1: when the central banks reached their peak, perhaps quicker than before.

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Speaker 1: So what you're describing sounds like it's screaming yield curve,

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Speaker 1: yield curve going down, going negative for the first time

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Speaker 1: in a long time, inversion. Excuse me, it's a Monday.

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Speaker 1: I'm having trouble. But honestly, going forward how much is

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Speaker 1: that a concern that basically you're saying the fet is

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Speaker 1: way behind the curve, and that seems clear to you.

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Speaker 1: Why are we not necessarily forecasting or sessions sooner if

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Speaker 1: that really is your base case? Look, is a is

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Speaker 1: a concern? We do have the curve flattening. We certainly

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Speaker 1: see two stends of mechanically flattens basically to zero through

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Speaker 1: the rate cycle and at the end of the rate

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Speaker 1: cycle ends at zero. Like why five studies often moved

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Speaker 1: the same So clearly the risk is the curve continues

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Speaker 1: to flatten under the scenario with outline. But I would

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Speaker 1: probably like to answer that with the counter which is

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Speaker 1: what's worse a flat or slightly inverted curve or a

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Speaker 1: super steep curve because maybe the market can't take all

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Speaker 1: the duration, or because inflation becomes much more of a

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Speaker 1: long term risk and fear than a relatively short term

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Speaker 1: one which is priced. So I think the flat curve

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Speaker 1: is not ideal for the FED, but I think it's

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Speaker 1: perhaps a better evil than a very steep curve with

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Speaker 1: credit implications as well. So you're talking about consumer sentiment,

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Speaker 1: how much does that play into the e CBS perspective

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Speaker 1: as well. We heard about their concern about oil prices. Sure,

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Speaker 1: the labor market is not quite the same. How much

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Speaker 1: they're trying to get ahead of people believing in inflation

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Speaker 1: that they have not seen in decades. Sure, I mean

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Speaker 1: look at the ECB and and I guess to some

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Speaker 1: extent the b o J are in a very extreme

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Speaker 1: level of monetary policy that they felt maybe they'd be

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Speaker 1: stuck in for some time. And I'm talking about negative

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Speaker 1: interest rate policy, and that comes with a bunch of

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Speaker 1: costs and unintended consequences. So to some extent, I think

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Speaker 1: the ECB should embrace the ability to get through negative

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Speaker 1: rates back into positive territory, which we think they get

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Speaker 1: to zero at the end of this year and positive

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Speaker 1: next year. Um. But clearly we've seen from Belgium this week,

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Speaker 1: Germany last week, and across the Eurozone in recent months,

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Speaker 1: inflation is not a figment of the ECB or anyone

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Speaker 1: else's imagination. It's real. Yes, the labor market is different,

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Speaker 1: it will take time, probably for wage both in Europe,

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Speaker 1: but we think it's coming and therefore we think the

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Speaker 1: ECB needs to be a somewhat on the forefront of

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Speaker 1: exiting and at least getting back to zero or positive rates.

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Speaker 1: You've just finished on something that I think is is

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Speaker 1: really important. We spent a long long time since the

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Speaker 1: e C went into negative territory eight years ago in

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Speaker 1: a summer of fourteen, discussing how beneficial that was actually

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Speaker 1: for the CP to do so for the European economy.

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Speaker 1: What do you think to the argument that maybe this

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Speaker 1: might help the eurosound economy getting back to zero, getting

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Speaker 1: back to positive territory. I think it can help. Um,

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Speaker 1: I think it can help, you know, some some inflation,

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Speaker 1: much better labor market wage both. I think we can

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Speaker 1: change or we hope to see a shift in the

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Speaker 1: structural level of growth and inflation in Europe to a

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Speaker 1: better level or better plate. Hopefully we can see the

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Speaker 1: same in Japan over time too. So now, yes, we're

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Speaker 1: worried about inflation, and in the US and UK it's

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Speaker 1: it's extremely high and perhaps it will be more of

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Speaker 1: a challenge to bring it down. But in regions that

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Speaker 1: have gone years, if not decades without proper you know,

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Speaker 1: without positive inflation, and without a positive central bank, right, um,

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Speaker 1: this is we think a positive outcome or good good

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Speaker 1: evolution of b and Paige, she hate fantastic as always,

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Speaker 1: super super smart and great to catch up with you,

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Speaker 1: said John, As you know, and I think our audience

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Speaker 1: has a good understanding of this, particularly global Wall Street.

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Speaker 1: There's ways that you read research. And this was the

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Speaker 1: weekend John, after the two models last week, where I

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Speaker 1: really sat and read every word of the research. And

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Speaker 1: what's fascinating is what this inflation report tells us about

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Speaker 1: the importance of future inflation reports. Do we begin to

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Speaker 1: embed seven or six or five percent inflation? Let's talk

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Speaker 1: about the research from a b C. Laurie Camvasina, the

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Speaker 1: head of US equity strategy at OBBC Capital Markets, joins us. Now, Laurie,

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Speaker 1: you say five good things we sing in the dates

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Speaker 1: right now? Can we start with the good stuff? Let's

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Speaker 1: not that sure. I think you know one of those

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Speaker 1: were right smack dab in the middle of right now.

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Speaker 1: Earnings are holding it and I actually we've put out

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Speaker 1: something over the weekend where we talked about how we've

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Speaker 1: actually seen earnings estimates move up a little bit for

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Speaker 1: this year and next year, complete opposite of what a

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Speaker 1: lot of people were fearful of a few weeks ago.

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Speaker 1: I would say another thing that's really good right now,

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Speaker 1: John Um, I think that we've largely priced in a

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Speaker 1: more aggressive fit now. We haven't priced in the economic

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Speaker 1: damage that an aggressive FED bighting kerk. But if you

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Speaker 1: look at the multiple contraction we've seen here to date,

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Speaker 1: it's been about seventeen percent at the January lows. That's

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Speaker 1: right in line with the average of the last five

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Speaker 1: or six FED tightening cycles going back to the ES.

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Speaker 1: So I think the FED is basically in the market

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Speaker 1: right now. Again, if the FED damage is the economy,

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Speaker 1: we still have to price het in and then I

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Speaker 1: would lastly just give you a A II net bullishness.

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Speaker 1: A couple of weeks ago, we got down to levels

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Speaker 1: that we're actually below lows. Let that sink in for

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Speaker 1: a second. But what we've seen historically is that when

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Speaker 1: we get below minus ten percent on a four week

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Speaker 1: average on the net bullishness, so the bears out number

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Speaker 1: the bulls by ten percent or more, you see a

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Speaker 1: fift pop in markets over the next twelve months. So

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Speaker 1: that's something else that's telling me that we've priced in

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Speaker 1: a lot of this bad news from that already. Laurid

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Speaker 1: bed Layler Overdytrel calculates out of twenty lift and earnings.

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Speaker 1: He makes a note that it's coming in again better

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Speaker 1: than expected. Can you already model that confidence forward? Can you?

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Speaker 1: Can you taken can you construct this morning a confidence

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Speaker 1: in earnings for this Q one? So I think that

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Speaker 1: we you know, Q one, As I've read through transcript,

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Speaker 1: it seems to me like it's going to be a

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Speaker 1: messy quarter. Now. We haven't really seen companies, you know,

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Speaker 1: sit here and say things are a disaster, right like

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Speaker 1: if you look at the consumer in particular, people are

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Speaker 1: being vigilant, they're watching the low end. But I would

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Speaker 1: say that the confidence level does seem to me a

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Speaker 1: little bit shakier than what we've seen, um, you know,

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Speaker 1: sort of the past few quarters, whether you're looking at demand,

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Speaker 1: whether you're looking at reads on confidence less uncertainty, I

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Speaker 1: would say there's maybe a little bit more, you know,

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Speaker 1: kind of a nervousness right now. But by and large,

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Speaker 1: companies are being given the opportunity to kind of re

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Speaker 1: set expectations in a nasty way for this year, reset

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Speaker 1: expectations in a nasty way for the quarter, and they're

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Speaker 1: simply not doing it. They're still telling us that demand

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Speaker 1: is generally okay, even though you know that we've we've

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Speaker 1: come through a little bit of a rough patch and

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Speaker 1: they've maybe had a little bit more trouble than usual

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Speaker 1: dealing with that. Is there a sense, Laurie, of how

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Speaker 1: much pricing power these corporate executives feel they have. It's

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Speaker 1: a great question, Lisa, and we actually used the Bloomberg

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Speaker 1: Transcript Analyzer tool. I'm gonna give you guys a little

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Speaker 1: bit of a plug. It's a fantastic tool, and we

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Speaker 1: did a search on pricing and we found that it's

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Speaker 1: absolutely spiked so far this year. It had been moving

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Speaker 1: up last year, and we've seen a really big spike

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Speaker 1: this year. And I've noticed that, frankly, as I've gone

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Speaker 1: through the transcripts, maybe a little bit less discussion on

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Speaker 1: supply chain, obviously a lot of discussion on labor that

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Speaker 1: seems to be the new big issue right now, but

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Speaker 1: pricing has been much more in focus in a way

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Speaker 1: that we haven't seen in the past. And I would

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Speaker 1: tell you even companies that are expressing a little bit

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Speaker 1: of concern about the low end consumer, they're saying, we're

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Speaker 1: going to manage pricing very careful. We're taking as much

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Speaker 1: as we can get, but we'll we'll we'll pull back

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Speaker 1: a little bit if we feel like we need to

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Speaker 1: be to the market that actually started delivering something for

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Speaker 1: me last week With the banks. Banks had a massive

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Speaker 1: week last week, Laurie, finally starting to see high rights

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Speaker 1: translate into better performance for US banks. Do you see

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Speaker 1: that continuing? You know, it's interesting, John, because we've seen

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Speaker 1: that banks actually start in the financial space broadly. They

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Speaker 1: looked they weren't cheap anymore coming into this recording season.

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Speaker 1: They had a repricing you know, for about a week

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Speaker 1: or so, and and the news has generally been fine

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Speaker 1: outside of the higher comp expences. Um So, I think

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Speaker 1: we kind of got some of that bad news out

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Speaker 1: of the way. We reset the expectations on the valuation side,

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Speaker 1: and it's allowed, you know, sort of the good fundamentals

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Speaker 1: that are in place right now to propel the banks

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Speaker 1: higher again. So we'll watch for that to continue a

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Speaker 1: little bit longer. I was a little bit concerned that

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Speaker 1: we wiped out the valuation story so quickly to start

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Speaker 1: the year, but it's fact, so let's enjoy it as

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Speaker 1: long as it lasts. Laurie, thank you as always. Lori

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Speaker 1: canvasina of our BC capital markets. Right now, we're gonna

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Speaker 1: get a clinic here. Every house is different HSBC as anything,

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Speaker 1: you unique responsibility with a London and Hong Kong heritage.

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Speaker 1: Stephen King and Janet Henry writing her there over just

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Speaker 1: a wonderful interesting look and equities, bonds, currencies, commodities. Janet Henry,

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Speaker 1: their global chief Economists, joins to synthesize this morning. Janet,

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Speaker 1: I want to go to the idea that inflation is

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Speaker 1: elevated and it's going to come down. Do you have

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Speaker 1: a framework that it reversed to something we knew or

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Speaker 1: is there a new higher level of inflation we need

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Speaker 1: to get used to. I think it comes down, but

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Speaker 1: I don't think it goes back to pre pandemic rates.

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Speaker 1: Um so not in that sense of fully transit trade.

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Speaker 1: But it's not just about yet when it comes down

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Speaker 1: or how much it comes down. It's what happens in

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Speaker 1: between and how much policy tightening actually has to be

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Speaker 1: delivered in order to bring it back down. And that's

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Speaker 1: for instance, what you saw on the on the Bank

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Speaker 1: of England, wasn't it where you have fight for members

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Speaker 1: voting for fifty basis points five members voting for five.

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Speaker 1: The four members took the view that you needed to

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Speaker 1: bring it down more swiftly to prevent it becoming more

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Speaker 1: of a I suppose a wage price dynamic, and they

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Speaker 1: were prepared to take the growth consequences by voting for

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Speaker 1: a more aggressive response at an earlier stage. I would

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Speaker 1: suggest Janitor cross Finance and Investment. There's gonna be a

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Speaker 1: lot of discussion in your world of where the new

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Speaker 1: neutral radars? Do you are critically PhD s at the FED,

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Speaker 1: bo E, E, C B, etcetera. Does anybody have a

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Speaker 1: clue at this point where the new neutral raders. I'm

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Speaker 1: sure people have lots of thoughts, but there is just

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Speaker 1: so much uncertainty about the pandemic itself and about some

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Speaker 1: of the behavior changing behavior in labor markets, how permanent

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Speaker 1: it is. We're all trying to get to grips. We've

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Speaker 1: what the structural influence of energy transition costs are and

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Speaker 1: indeed the longer term implications of this breadth of central

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Speaker 1: bank mandates that we now have and some of the

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Speaker 1: inflation risk premium that might be associated with that. If

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Speaker 1: central banks are increasingly focusing not just on labor markets

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Speaker 1: but flight that financial stability and incommin equality and climate

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Speaker 1: change itself. So no, in terms of the long term

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Speaker 1: neutral rate, I don't think anyone has a firm handle

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Speaker 1: on where it is um and a lot of it

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Speaker 1: really comes down to where do you see long term

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Speaker 1: potential growth? Do you think as a consequence the consequence

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Speaker 1: of the pandemic that long term potential growth has risen

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Speaker 1: or has it fallen? And if so, how much has

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Speaker 1: it's fallen. Ultimately that's will contribute toward is the long

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Speaker 1: term neutral rate. Jennet, you're speaking against a lot of

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Speaker 1: the harkishness where everyone's trying to out haark each other

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Speaker 1: right now on the street talking about how the new

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Speaker 1: normal will be very different from the old normal. And

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Speaker 1: I think about your colleagues, Steve Major, who has believes

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Speaker 1: still a one and a half percent target for the

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Speaker 1: treasury ll tenure treasury by year end. Can you talk

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Speaker 1: a little bit about why negative real rates will not

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Speaker 1: necessarily disappear so quickly as a lot of people think, well,

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Speaker 1: they can in the short term, but they might not

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Speaker 1: over over the longer term. And I think this is

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Speaker 1: where we are at the moment. You know, what if

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Speaker 1: you think about policy rates. When central banks set policy rates,

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Speaker 1: they're thinking, how will this influence really demand? You know,

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Speaker 1: That's what central banks do. They try to align out

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Speaker 1: periods of cyclical weakness or cyclical strength to bring it

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Speaker 1: in line with where they see the potential supply of

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Speaker 1: the economy. Now, where they see the potential supply right

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Speaker 1: now in a world of extreme bottlenecks um and indeed

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Speaker 1: some of these relate to energies, some of these relate

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Speaker 1: to labor markets. Is that going to be more persistent

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Speaker 1: or will we once the pandemic has eased, Actually, and

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Speaker 1: maybe people have used up their financial cushion, whether that's

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Speaker 1: from government handouts or indeed whether that's from bitcoin trading

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Speaker 1: and search like, if that fiscal cushion has come back,

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Speaker 1: will we see actually people return to the labor market.

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Speaker 1: And I think this is the issue about the long

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Speaker 1: term supply issues might be quite different to what we

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Speaker 1: face currently. The current picture is actually, in the short term,

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Speaker 1: demand has been stronger than expected, the supply constraints have

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Speaker 1: been worse than expected, and monetary conditions are too loose,

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Speaker 1: and therefore do we need just in the very short

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Speaker 1: term slightly more aggressive tightening. We think the Bank of

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Speaker 1: England will be done in August, if not before. In

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Speaker 1: terms of policy rate tightening, it doesn't mean that the

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Speaker 1: long term termin or rate is necessarily higher. It just means,

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Speaker 1: given the looseness of monetary conditions, they need to get

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Speaker 1: there a little bit more quickly. Jen, what would you

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Speaker 1: have to see to think that inflation is a bit

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Speaker 1: more entrenched than what you're describing? Well, I think I

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Speaker 1: would need to see when you say in trench, I

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Speaker 1: think we're getting back to what period it And increasingly,

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Speaker 1: if inflation does continue to build and wages respond to it,

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Speaker 1: the question will be do central banks play catch up?

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Speaker 1: Are they willing to accept a much sharper downturning growth,

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Speaker 1: possibly even something worse than a slow down in growth?

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Speaker 1: We know that a lot of tightening cycles typically end

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Speaker 1: in some kind of contraction in g d P or

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Speaker 1: do they sit back and still take it to gradually

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Speaker 1: and you see the wage pressures start to build, and

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Speaker 1: I think the risks are that that the FED does

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Speaker 1: have to move a bit more aggressively than the e

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Speaker 1: c B. I think the ECB has got a bit

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Speaker 1: more time on its hands, and arguably in the market's

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Speaker 1: already pricing in too much in the near term um

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Speaker 1: in terms of interest rate rises to to have to

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Speaker 1: play catch up regarding bringing monetary conditions back in line

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Speaker 1: with what needs to happen to lower inflation. Jen with

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Speaker 1: a mental respect and we're thrilled your with us today.

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Speaker 1: I want to stop the show and I want to

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Speaker 1: ask you something inside baseball and four. This is for

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Speaker 1: Global Wall Street listening on radio, listening on television, and

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Speaker 1: I think back to Steve Roach and the way he

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Speaker 1: built Morgan Stanley Economics and all of their research capability,

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Speaker 1: and you've done the same thing with Stephen King at HSBC.

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Speaker 1: I want you to explain how you at HSBC Economic

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Speaker 1: synthesize the fixed income call of Steve Major over in

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Speaker 1: Hong Kong. I think for our Global Wall Street audience

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Speaker 1: this is of critical importance to talk about how a

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Speaker 1: given house has such interesting research, not controversial, but just

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Speaker 1: so thought provoking his major looks for lower rates. Talk

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Speaker 1: about that well. We discuss everything about the global economy.

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Speaker 1: And I don't pretend to tell any fixed income strategists

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Speaker 1: how bond markets work, but we know at the moment

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Speaker 1: when we're moving into a world where we're getting different

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Speaker 1: rates of rate rates increases coming through from central banks

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Speaker 1: and also talking quite calmly about the rate with which

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Speaker 1: they're willing to scale back their balance sheets in this world.

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Speaker 1: As much as I suppose many of us try to

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Speaker 1: assume a certain degree of science with which this works,

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Speaker 1: even the most qualified economists in academics circles, and indeed

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Speaker 1: in central banks have a different view on how that

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Speaker 1: increase in rates and that shrinkage of the balance sheet

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Speaker 1: is actually going to operate. Um. I suppose as a

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Speaker 1: house we do not subscribe to the view that actually

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Speaker 1: shrinking the balance sheet at the same time as raising

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Speaker 1: interest rates is necessarily going to be successful at pushing

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Speaker 1: up long term interest rates. Um. The fact is, if

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Speaker 1: we do see a lot of monetary tightening, it wouldn't

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Speaker 1: be unusual to see the yield curve reach some kind

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Speaker 1: of inversion. Janet, awesome as always, thanks for being with us.

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Speaker 1: Janet Henry there of HSBC right now angin us during

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Speaker 1: US She is well known resident senior fellow at Brookings

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Speaker 1: Holds Court at George Town as well. But far more

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Speaker 1: is our definitive voice on Mr putin her book of

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Speaker 1: a number of years ago, was absolutely definitive, on reframing,

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Speaker 1: reframing the early Putin to the later Putin, and right

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Speaker 1: now with the Putent Doctrine in Foreign Affairs magazine, she

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Speaker 1: holds the high ground and on our analysis of this moment.

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Speaker 1: Dr Stan, thank you so much for joining us this morning.

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Speaker 1: I want to talk about a single sentence in your

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Speaker 1: the Putent doctrine. This is his fifth president. I found

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Speaker 1: that extraordinary. Explained to me the importance of the Putent

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Speaker 1: longevity and that Mr Biden is his fifth president. Well,

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Speaker 1: thank you very much for having me on. So, you know,

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Speaker 1: Putin said side in the Kremlin, he's seen these U

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Speaker 1: S presidents come and go. He's become quite cynical about everything. Uh,

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Speaker 1: he hasn't been very impressed by a lot of these presidents.

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Speaker 1: And he's now at the point where he looks at

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Speaker 1: the US. We obviously have our domestic political troubles. He

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Speaker 1: throws down the bout like these two ultimatums at the

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Speaker 1: US and NATO um and we are essentially dancing to

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Speaker 1: his tomb. We're responding to his agenda. You have a

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Speaker 1: flurry of diplomatic activity going on all the time, and

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Speaker 1: he's sitting there watching us essentially scrambled to try and

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Speaker 1: avoid obviously a major war in Europe. Angela's stand. You

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Speaker 1: brilliantly review the three choices here were all very familiar

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Speaker 1: with the collapse of the Soviet Union. I think Lisa

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Speaker 1: has got some important questions on that. But you go back,

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Speaker 1: you have the courage to go back to Yalta and

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Speaker 1: to say there was a tripolar outcome of the Yalta system.

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Speaker 1: Explain what a shock that would be to America to

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Speaker 1: see Russia, China in America with their own parts of

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Speaker 1: this world. So they Alta is prutents model. He has

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Speaker 1: praised it all the time. And now and we've just

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Speaker 1: seen Putin and jes and paying together in Beijing talking

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Speaker 1: about a new world order. This would be a shock.

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Speaker 1: We thought we had ended this kind of system with

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Speaker 1: two spheres of influence uh and domination by the great

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Speaker 1: powers of the smaller powers. And this is precisely what

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Speaker 1: would like to restore. And the Chinese, of course, would

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Speaker 1: get best sphere of influence. And if you ask the Japanese,

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Speaker 1: or the Koreans or a number of other countries how

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Speaker 1: they would feel about that, you can imagine what they

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Speaker 1: would say and certainly the Central and East European countries

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Speaker 1: do not want to go back to being in a

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Speaker 1: Russian sphere of influence, Angela, How close are the allies

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Speaker 1: in terms of coordinating to try to counteract exactly the

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Speaker 1: outcome that Vladimir Putin is looking for. So the Biden

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Speaker 1: administration I think has done very well trying to coordinate things.

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Speaker 1: We have the German Chancellor in Washington today talking to

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Speaker 1: President Biden, hoping again to get him on board with say,

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Speaker 1: tough sanctions, including energy sanctions if there is to be

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Speaker 1: a war there. President Markran is in Moscow today trying

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Speaker 1: to talk Puttin down. Apparently he is in close contact

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Speaker 1: with the White House. So I think the co ordination

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Speaker 1: is pretty good. But of course there are differences of

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Speaker 1: interest between different European countries in the US, particularly again,

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Speaker 1: if you think about sanctions, Angela is, why do we

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Speaker 1: are put In winning? Well at the moment he looks

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Speaker 1: as if he is, because we've there's been no de escalation,

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Speaker 1: In fact as more escalation. We read today of the

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Speaker 1: troops that would be needed for an invasion are already

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Speaker 1: amassed on the border, and we are all running around

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Speaker 1: again trying to find a solution to this, and he

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Speaker 1: has China's back, and he him thing had put out

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Speaker 1: this extraordinary statement invajing on Friday where they are in,

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Speaker 1: China will support Russia and whatever it does. So it

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Speaker 1: looks as if he's winning. This is concerning considering the

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Speaker 1: fact they are concluding. Paragraph of your essay was that

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Speaker 1: Putin's overarching aim is reversing the consequences of the Soviet collapses.

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Speaker 1: We were talking about splitting the treads Atlantic Alliance, which

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Speaker 1: sounds like it's still is relatively firm, and renegotiating the

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Speaker 1: geographic settlement that ended the Cold War. Can you game

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00:24:14,320 --> 00:24:18,159
Speaker 1: out what type of altercation would sort of lead to

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Speaker 1: his goals being achieved. So I think it's highly unlikely

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Speaker 1: that he will achieve the goals of NATO is saying

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Speaker 1: that will never enlarge and essentially handing him back a

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Speaker 1: sphere of influence, including in countries like Poland, because he

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Speaker 1: has said that NATO should retreat to where it was

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00:24:35,600 --> 00:24:41,560
Speaker 1: in Um if there is or a major incursion. Obviously

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00:24:41,720 --> 00:24:45,199
Speaker 1: this would be terribly destructive for Europe, but it's very

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00:24:45,280 --> 00:24:48,440
Speaker 1: hard to see that ending in giving him what he wants.

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Speaker 1: We do have an Alliance of thirty countries NATO, and

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00:24:52,280 --> 00:24:54,720
Speaker 1: we would resist that. Are we at a point of

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Speaker 1: negotiation now? I mean the diplomacy is US talking to

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Speaker 1: ourselves elves and maybe Mr Putin talking to himself or

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Speaker 1: the guy over in China as well. Is there any

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00:25:05,840 --> 00:25:10,280
Speaker 1: dialogue actually going on now? I don't sense it. Well,

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00:25:10,359 --> 00:25:13,440
Speaker 1: there is dialogue going on. You know, we have responded

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Speaker 1: to the Soviet demands and we've said we the US

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Speaker 1: and NATO, let's talk about this defense. Let's talk about

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00:25:19,600 --> 00:25:23,280
Speaker 1: troop deployments in Europe. Let's talk about other ways in

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Speaker 1: which we can build you know, rebuild confidence. Let's revitalize

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Speaker 1: the Native Russia Council. So we have made all these proposals,

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Speaker 1: the Russians have responded to them. That was you know,

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Speaker 1: leaked the other day to El pais um So and

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Speaker 1: there are conversations going on um and there there are

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00:25:44,200 --> 00:25:47,359
Speaker 1: dialogues between the US and Russia and other issues. But

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Speaker 1: the diplomacy does seem to be stolen. Angela Ston, thank

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Speaker 1: you so much writing in Foreign Affairs. I can't say

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Speaker 1: enough about the essay the Putin doctor, and I will

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00:25:56,520 --> 00:25:59,080
Speaker 1: put that out on Twitter as well, just to really

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Speaker 1: superb USEL. This is the Bloomberg Surveillance Podcast. Thanks for listening.

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Speaker 1: Join us live weekdays from seven to ten a m.

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Speaker 1: to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com,

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Speaker 1: and of course on the terminal. I'm Tom Keene, and

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00:26:28,320 --> 00:26:30,159
Speaker 1: this is Bloomberg