Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com,
Speaker 1: and of course on the Bloomberg terminal. Let's get right
Speaker 1: to in an advance or Global Wall Street the story
Speaker 1: of this February. We can do this with a side
Speaker 1: a lot of head of G ten rate strategy at
Speaker 1: America's at BMP Perry. But hey, I love your research.
Speaker 1: Note and what I note there is a migration from
Speaker 1: four to six rate hikes in the United States. What
Speaker 1: do you need to see to ever go more from
Speaker 1: six to eight rate hikes? Absolutely? Thank you, Tom, and
Speaker 1: thank you for having me. Um. Look, I think we've
Speaker 1: been on the hoky side for some time and really
Speaker 1: opening up the distribution to more UM. There is a
Speaker 1: question of of length of runway, and I think that
Speaker 1: question is even more asked now with the ECB and
Speaker 1: the Bank of England being a little more aggressive on
Speaker 1: on exit plants. The FED needs to move, The FED
Speaker 1: needs to move quickly, clearly, behind the curve M and
Speaker 1: six rate hikes may maybe more that the center of
Speaker 1: a distribution. We can see more. We could see one
Speaker 1: every meeting, and we don't rule out fifty or a
Speaker 1: FED funds right close to two year end. So hey,
Speaker 1: let's just build on what you just said. The length
Speaker 1: of the runway. Does it make it easier or harder
Speaker 1: that they're all trying to do this at the same time. Look,
Speaker 1: I mean we've heard from power this time is different
Speaker 1: that something we've said before. And how this time is different,
Speaker 1: we think is with velocity. This is about pace of
Speaker 1: the recovery, pace of the exit on both the fiscal
Speaker 1: and the monetary side. And the second is synchronization synchronization
Speaker 1: against again between the fiscal and monetary forces both heading
Speaker 1: for the exit post pandemic, but also the synchronization between
Speaker 1: different central banks moving at the same time. Look, ultimately,
Speaker 1: I think it might be more difficult press at markets
Speaker 1: and the global economy, you know, as central banks move
Speaker 1: increasingly together on the exits on both the balanty and
Speaker 1: the level of rate. This is what I think it's
Speaker 1: important to call it regime change, because in the previous
Speaker 1: regime we'd see a bond market sell off and believe
Speaker 1: it was self limiting in many ways because these central
Speaker 1: banks would have to back away when we think about
Speaker 1: a change in regime, Shahi, are you thinking about maybe
Speaker 1: that that dynamic doesn't exist anymore? Um? No, Actually, so,
Speaker 1: I think we can get to where we're going quicker,
Speaker 1: which is a velocity part, But I don't think the
Speaker 1: destination in itself has necessarily changed. We don't think that
Speaker 1: the new normal for the long term or neutral rate
Speaker 1: is above three. So we still feel like term yields
Speaker 1: somewhere cap below three probably intends two and a half
Speaker 1: or below. Do we think we can get We can
Speaker 1: get there quicker and get to two and above quicker,
Speaker 1: but we're not convinced we go above. There remains a
Speaker 1: lot of liquidity in the system and lots of fixed
Speaker 1: income duration demand, which we think comes in if and
Speaker 1: when the central banks reached their peak, perhaps quicker than before.
Speaker 1: So what you're describing sounds like it's screaming yield curve,
Speaker 1: yield curve going down, going negative for the first time
Speaker 1: in a long time, inversion. Excuse me, it's a Monday.
Speaker 1: I'm having trouble. But honestly, going forward how much is
Speaker 1: that a concern that basically you're saying the fet is
Speaker 1: way behind the curve, and that seems clear to you.
Speaker 1: Why are we not necessarily forecasting or sessions sooner if
Speaker 1: that really is your base case? Look, is a is
Speaker 1: a concern? We do have the curve flattening. We certainly
Speaker 1: see two stends of mechanically flattens basically to zero through
Speaker 1: the rate cycle and at the end of the rate
Speaker 1: cycle ends at zero. Like why five studies often moved
Speaker 1: the same So clearly the risk is the curve continues
Speaker 1: to flatten under the scenario with outline. But I would
Speaker 1: probably like to answer that with the counter which is
Speaker 1: what's worse a flat or slightly inverted curve or a
Speaker 1: super steep curve because maybe the market can't take all
Speaker 1: the duration, or because inflation becomes much more of a
Speaker 1: long term risk and fear than a relatively short term
Speaker 1: one which is priced. So I think the flat curve
Speaker 1: is not ideal for the FED, but I think it's
Speaker 1: perhaps a better evil than a very steep curve with
Speaker 1: credit implications as well. So you're talking about consumer sentiment,
Speaker 1: how much does that play into the e CBS perspective
Speaker 1: as well. We heard about their concern about oil prices. Sure,
Speaker 1: the labor market is not quite the same. How much
Speaker 1: they're trying to get ahead of people believing in inflation
Speaker 1: that they have not seen in decades. Sure, I mean
Speaker 1: look at the ECB and and I guess to some
Speaker 1: extent the b o J are in a very extreme
Speaker 1: level of monetary policy that they felt maybe they'd be
Speaker 1: stuck in for some time. And I'm talking about negative
Speaker 1: interest rate policy, and that comes with a bunch of
Speaker 1: costs and unintended consequences. So to some extent, I think
Speaker 1: the ECB should embrace the ability to get through negative
Speaker 1: rates back into positive territory, which we think they get
Speaker 1: to zero at the end of this year and positive
Speaker 1: next year. Um. But clearly we've seen from Belgium this week,
Speaker 1: Germany last week, and across the Eurozone in recent months,
Speaker 1: inflation is not a figment of the ECB or anyone
Speaker 1: else's imagination. It's real. Yes, the labor market is different,
Speaker 1: it will take time, probably for wage both in Europe,
Speaker 1: but we think it's coming and therefore we think the
Speaker 1: ECB needs to be a somewhat on the forefront of
Speaker 1: exiting and at least getting back to zero or positive rates.
Speaker 1: You've just finished on something that I think is is
Speaker 1: really important. We spent a long long time since the
Speaker 1: e C went into negative territory eight years ago in
Speaker 1: a summer of fourteen, discussing how beneficial that was actually
Speaker 1: for the CP to do so for the European economy.
Speaker 1: What do you think to the argument that maybe this
Speaker 1: might help the eurosound economy getting back to zero, getting
Speaker 1: back to positive territory. I think it can help. Um,
Speaker 1: I think it can help, you know, some some inflation,
Speaker 1: much better labor market wage both. I think we can
Speaker 1: change or we hope to see a shift in the
Speaker 1: structural level of growth and inflation in Europe to a
Speaker 1: better level or better plate. Hopefully we can see the
Speaker 1: same in Japan over time too. So now, yes, we're
Speaker 1: worried about inflation, and in the US and UK it's
Speaker 1: it's extremely high and perhaps it will be more of
Speaker 1: a challenge to bring it down. But in regions that
Speaker 1: have gone years, if not decades without proper you know,
Speaker 1: without positive inflation, and without a positive central bank, right, um,
Speaker 1: this is we think a positive outcome or good good
Speaker 1: evolution of b and Paige, she hate fantastic as always,
Speaker 1: super super smart and great to catch up with you,
Speaker 1: said John, As you know, and I think our audience
Speaker 1: has a good understanding of this, particularly global Wall Street.
Speaker 1: There's ways that you read research. And this was the
Speaker 1: weekend John, after the two models last week, where I
Speaker 1: really sat and read every word of the research. And
Speaker 1: what's fascinating is what this inflation report tells us about
Speaker 1: the importance of future inflation reports. Do we begin to
Speaker 1: embed seven or six or five percent inflation? Let's talk
Speaker 1: about the research from a b C. Laurie Camvasina, the
Speaker 1: head of US equity strategy at OBBC Capital Markets, joins us. Now, Laurie,
Speaker 1: you say five good things we sing in the dates
Speaker 1: right now? Can we start with the good stuff? Let's
Speaker 1: not that sure. I think you know one of those
Speaker 1: were right smack dab in the middle of right now.
Speaker 1: Earnings are holding it and I actually we've put out
Speaker 1: something over the weekend where we talked about how we've
Speaker 1: actually seen earnings estimates move up a little bit for
Speaker 1: this year and next year, complete opposite of what a
Speaker 1: lot of people were fearful of a few weeks ago.
Speaker 1: I would say another thing that's really good right now,
Speaker 1: John Um, I think that we've largely priced in a
Speaker 1: more aggressive fit now. We haven't priced in the economic
Speaker 1: damage that an aggressive FED bighting kerk. But if you
Speaker 1: look at the multiple contraction we've seen here to date,
Speaker 1: it's been about seventeen percent at the January lows. That's
Speaker 1: right in line with the average of the last five
Speaker 1: or six FED tightening cycles going back to the ES.
Speaker 1: So I think the FED is basically in the market
Speaker 1: right now. Again, if the FED damage is the economy,
Speaker 1: we still have to price het in and then I
Speaker 1: would lastly just give you a A II net bullishness.
Speaker 1: A couple of weeks ago, we got down to levels
Speaker 1: that we're actually below lows. Let that sink in for
Speaker 1: a second. But what we've seen historically is that when
Speaker 1: we get below minus ten percent on a four week
Speaker 1: average on the net bullishness, so the bears out number
Speaker 1: the bulls by ten percent or more, you see a
Speaker 1: fift pop in markets over the next twelve months. So
Speaker 1: that's something else that's telling me that we've priced in
Speaker 1: a lot of this bad news from that already. Laurid
Speaker 1: bed Layler Overdytrel calculates out of twenty lift and earnings.
Speaker 1: He makes a note that it's coming in again better
Speaker 1: than expected. Can you already model that confidence forward? Can you?
Speaker 1: Can you taken can you construct this morning a confidence
Speaker 1: in earnings for this Q one? So I think that
Speaker 1: we you know, Q one, As I've read through transcript,
Speaker 1: it seems to me like it's going to be a
Speaker 1: messy quarter. Now. We haven't really seen companies, you know,
Speaker 1: sit here and say things are a disaster, right like
Speaker 1: if you look at the consumer in particular, people are
Speaker 1: being vigilant, they're watching the low end. But I would
Speaker 1: say that the confidence level does seem to me a
Speaker 1: little bit shakier than what we've seen, um, you know,
Speaker 1: sort of the past few quarters, whether you're looking at demand,
Speaker 1: whether you're looking at reads on confidence less uncertainty, I
Speaker 1: would say there's maybe a little bit more, you know,
Speaker 1: kind of a nervousness right now. But by and large,
Speaker 1: companies are being given the opportunity to kind of re
Speaker 1: set expectations in a nasty way for this year, reset
Speaker 1: expectations in a nasty way for the quarter, and they're
Speaker 1: simply not doing it. They're still telling us that demand
Speaker 1: is generally okay, even though you know that we've we've
Speaker 1: come through a little bit of a rough patch and
Speaker 1: they've maybe had a little bit more trouble than usual
Speaker 1: dealing with that. Is there a sense, Laurie, of how
Speaker 1: much pricing power these corporate executives feel they have. It's
Speaker 1: a great question, Lisa, and we actually used the Bloomberg
Speaker 1: Transcript Analyzer tool. I'm gonna give you guys a little
Speaker 1: bit of a plug. It's a fantastic tool, and we
Speaker 1: did a search on pricing and we found that it's
Speaker 1: absolutely spiked so far this year. It had been moving
Speaker 1: up last year, and we've seen a really big spike
Speaker 1: this year. And I've noticed that, frankly, as I've gone
Speaker 1: through the transcripts, maybe a little bit less discussion on
Speaker 1: supply chain, obviously a lot of discussion on labor that
Speaker 1: seems to be the new big issue right now, but
Speaker 1: pricing has been much more in focus in a way
Speaker 1: that we haven't seen in the past. And I would
Speaker 1: tell you even companies that are expressing a little bit
Speaker 1: of concern about the low end consumer, they're saying, we're
Speaker 1: going to manage pricing very careful. We're taking as much
Speaker 1: as we can get, but we'll we'll we'll pull back
Speaker 1: a little bit if we feel like we need to
Speaker 1: be to the market that actually started delivering something for
Speaker 1: me last week With the banks. Banks had a massive
Speaker 1: week last week, Laurie, finally starting to see high rights
Speaker 1: translate into better performance for US banks. Do you see
Speaker 1: that continuing? You know, it's interesting, John, because we've seen
Speaker 1: that banks actually start in the financial space broadly. They
Speaker 1: looked they weren't cheap anymore coming into this recording season.
Speaker 1: They had a repricing you know, for about a week
Speaker 1: or so, and and the news has generally been fine
Speaker 1: outside of the higher comp expences. Um So, I think
Speaker 1: we kind of got some of that bad news out
Speaker 1: of the way. We reset the expectations on the valuation side,
Speaker 1: and it's allowed, you know, sort of the good fundamentals
Speaker 1: that are in place right now to propel the banks
Speaker 1: higher again. So we'll watch for that to continue a
Speaker 1: little bit longer. I was a little bit concerned that
Speaker 1: we wiped out the valuation story so quickly to start
Speaker 1: the year, but it's fact, so let's enjoy it as
Speaker 1: long as it lasts. Laurie, thank you as always. Lori
Speaker 1: canvasina of our BC capital markets. Right now, we're gonna
Speaker 1: get a clinic here. Every house is different HSBC as anything,
Speaker 1: you unique responsibility with a London and Hong Kong heritage.
Speaker 1: Stephen King and Janet Henry writing her there over just
Speaker 1: a wonderful interesting look and equities, bonds, currencies, commodities. Janet Henry,
Speaker 1: their global chief Economists, joins to synthesize this morning. Janet,
Speaker 1: I want to go to the idea that inflation is
Speaker 1: elevated and it's going to come down. Do you have
Speaker 1: a framework that it reversed to something we knew or
Speaker 1: is there a new higher level of inflation we need
Speaker 1: to get used to. I think it comes down, but
Speaker 1: I don't think it goes back to pre pandemic rates.
Speaker 1: Um so not in that sense of fully transit trade.
Speaker 1: But it's not just about yet when it comes down
Speaker 1: or how much it comes down. It's what happens in
Speaker 1: between and how much policy tightening actually has to be
Speaker 1: delivered in order to bring it back down. And that's
Speaker 1: for instance, what you saw on the on the Bank
Speaker 1: of England, wasn't it where you have fight for members
Speaker 1: voting for fifty basis points five members voting for five.
Speaker 1: The four members took the view that you needed to
Speaker 1: bring it down more swiftly to prevent it becoming more
Speaker 1: of a I suppose a wage price dynamic, and they
Speaker 1: were prepared to take the growth consequences by voting for
Speaker 1: a more aggressive response at an earlier stage. I would
Speaker 1: suggest Janitor cross Finance and Investment. There's gonna be a
Speaker 1: lot of discussion in your world of where the new
Speaker 1: neutral radars? Do you are critically PhD s at the FED,
Speaker 1: bo E, E, C B, etcetera. Does anybody have a
Speaker 1: clue at this point where the new neutral raders. I'm
Speaker 1: sure people have lots of thoughts, but there is just
Speaker 1: so much uncertainty about the pandemic itself and about some
Speaker 1: of the behavior changing behavior in labor markets, how permanent
Speaker 1: it is. We're all trying to get to grips. We've
Speaker 1: what the structural influence of energy transition costs are and
Speaker 1: indeed the longer term implications of this breadth of central
Speaker 1: bank mandates that we now have and some of the
Speaker 1: inflation risk premium that might be associated with that. If
Speaker 1: central banks are increasingly focusing not just on labor markets
Speaker 1: but flight that financial stability and incommin equality and climate
Speaker 1: change itself. So no, in terms of the long term
Speaker 1: neutral rate, I don't think anyone has a firm handle
Speaker 1: on where it is um and a lot of it
Speaker 1: really comes down to where do you see long term
Speaker 1: potential growth? Do you think as a consequence the consequence
Speaker 1: of the pandemic that long term potential growth has risen
Speaker 1: or has it fallen? And if so, how much has
Speaker 1: it's fallen. Ultimately that's will contribute toward is the long
Speaker 1: term neutral rate. Jennet, you're speaking against a lot of
Speaker 1: the harkishness where everyone's trying to out haark each other
Speaker 1: right now on the street talking about how the new
Speaker 1: normal will be very different from the old normal. And
Speaker 1: I think about your colleagues, Steve Major, who has believes
Speaker 1: still a one and a half percent target for the
Speaker 1: treasury ll tenure treasury by year end. Can you talk
Speaker 1: a little bit about why negative real rates will not
Speaker 1: necessarily disappear so quickly as a lot of people think, well,
Speaker 1: they can in the short term, but they might not
Speaker 1: over over the longer term. And I think this is
Speaker 1: where we are at the moment. You know, what if
Speaker 1: you think about policy rates. When central banks set policy rates,
Speaker 1: they're thinking, how will this influence really demand? You know,
Speaker 1: That's what central banks do. They try to align out
Speaker 1: periods of cyclical weakness or cyclical strength to bring it
Speaker 1: in line with where they see the potential supply of
Speaker 1: the economy. Now, where they see the potential supply right
Speaker 1: now in a world of extreme bottlenecks um and indeed
Speaker 1: some of these relate to energies, some of these relate
Speaker 1: to labor markets. Is that going to be more persistent
Speaker 1: or will we once the pandemic has eased, Actually, and
Speaker 1: maybe people have used up their financial cushion, whether that's
Speaker 1: from government handouts or indeed whether that's from bitcoin trading
Speaker 1: and search like, if that fiscal cushion has come back,
Speaker 1: will we see actually people return to the labor market.
Speaker 1: And I think this is the issue about the long
Speaker 1: term supply issues might be quite different to what we
Speaker 1: face currently. The current picture is actually, in the short term,
Speaker 1: demand has been stronger than expected, the supply constraints have
Speaker 1: been worse than expected, and monetary conditions are too loose,
Speaker 1: and therefore do we need just in the very short
Speaker 1: term slightly more aggressive tightening. We think the Bank of
Speaker 1: England will be done in August, if not before. In
Speaker 1: terms of policy rate tightening, it doesn't mean that the
Speaker 1: long term termin or rate is necessarily higher. It just means,
Speaker 1: given the looseness of monetary conditions, they need to get
Speaker 1: there a little bit more quickly. Jen, what would you
Speaker 1: have to see to think that inflation is a bit
Speaker 1: more entrenched than what you're describing? Well, I think I
Speaker 1: would need to see when you say in trench, I
Speaker 1: think we're getting back to what period it And increasingly,
Speaker 1: if inflation does continue to build and wages respond to it,
Speaker 1: the question will be do central banks play catch up?
Speaker 1: Are they willing to accept a much sharper downturning growth,
Speaker 1: possibly even something worse than a slow down in growth?
Speaker 1: We know that a lot of tightening cycles typically end
Speaker 1: in some kind of contraction in g d P or
Speaker 1: do they sit back and still take it to gradually
Speaker 1: and you see the wage pressures start to build, and
Speaker 1: I think the risks are that that the FED does
Speaker 1: have to move a bit more aggressively than the e
Speaker 1: c B. I think the ECB has got a bit
Speaker 1: more time on its hands, and arguably in the market's
Speaker 1: already pricing in too much in the near term um
Speaker 1: in terms of interest rate rises to to have to
Speaker 1: play catch up regarding bringing monetary conditions back in line
Speaker 1: with what needs to happen to lower inflation. Jen with
Speaker 1: a mental respect and we're thrilled your with us today.
Speaker 1: I want to stop the show and I want to
Speaker 1: ask you something inside baseball and four. This is for
Speaker 1: Global Wall Street listening on radio, listening on television, and
Speaker 1: I think back to Steve Roach and the way he
Speaker 1: built Morgan Stanley Economics and all of their research capability,
Speaker 1: and you've done the same thing with Stephen King at HSBC.
Speaker 1: I want you to explain how you at HSBC Economic
Speaker 1: synthesize the fixed income call of Steve Major over in
Speaker 1: Hong Kong. I think for our Global Wall Street audience
Speaker 1: this is of critical importance to talk about how a
Speaker 1: given house has such interesting research, not controversial, but just
Speaker 1: so thought provoking his major looks for lower rates. Talk
Speaker 1: about that well. We discuss everything about the global economy.
Speaker 1: And I don't pretend to tell any fixed income strategists
Speaker 1: how bond markets work, but we know at the moment
Speaker 1: when we're moving into a world where we're getting different
Speaker 1: rates of rate rates increases coming through from central banks
Speaker 1: and also talking quite calmly about the rate with which
Speaker 1: they're willing to scale back their balance sheets in this world.
Speaker 1: As much as I suppose many of us try to
Speaker 1: assume a certain degree of science with which this works,
Speaker 1: even the most qualified economists in academics circles, and indeed
Speaker 1: in central banks have a different view on how that
Speaker 1: increase in rates and that shrinkage of the balance sheet
Speaker 1: is actually going to operate. Um. I suppose as a
Speaker 1: house we do not subscribe to the view that actually
Speaker 1: shrinking the balance sheet at the same time as raising
Speaker 1: interest rates is necessarily going to be successful at pushing
Speaker 1: up long term interest rates. Um. The fact is, if
Speaker 1: we do see a lot of monetary tightening, it wouldn't
Speaker 1: be unusual to see the yield curve reach some kind
Speaker 1: of inversion. Janet, awesome as always, thanks for being with us.
Speaker 1: Janet Henry there of HSBC right now angin us during
Speaker 1: US She is well known resident senior fellow at Brookings
Speaker 1: Holds Court at George Town as well. But far more
Speaker 1: is our definitive voice on Mr putin her book of
Speaker 1: a number of years ago, was absolutely definitive, on reframing,
Speaker 1: reframing the early Putin to the later Putin, and right
Speaker 1: now with the Putent Doctrine in Foreign Affairs magazine, she
Speaker 1: holds the high ground and on our analysis of this moment.
Speaker 1: Dr Stan, thank you so much for joining us this morning.
Speaker 1: I want to talk about a single sentence in your
Speaker 1: the Putent doctrine. This is his fifth president. I found
Speaker 1: that extraordinary. Explained to me the importance of the Putent
Speaker 1: longevity and that Mr Biden is his fifth president. Well,
Speaker 1: thank you very much for having me on. So, you know,
Speaker 1: Putin said side in the Kremlin, he's seen these U
Speaker 1: S presidents come and go. He's become quite cynical about everything. Uh,
Speaker 1: he hasn't been very impressed by a lot of these presidents.
Speaker 1: And he's now at the point where he looks at
Speaker 1: the US. We obviously have our domestic political troubles. He
Speaker 1: throws down the bout like these two ultimatums at the
Speaker 1: US and NATO um and we are essentially dancing to
Speaker 1: his tomb. We're responding to his agenda. You have a
Speaker 1: flurry of diplomatic activity going on all the time, and
Speaker 1: he's sitting there watching us essentially scrambled to try and
Speaker 1: avoid obviously a major war in Europe. Angela's stand. You
Speaker 1: brilliantly review the three choices here were all very familiar
Speaker 1: with the collapse of the Soviet Union. I think Lisa
Speaker 1: has got some important questions on that. But you go back,
Speaker 1: you have the courage to go back to Yalta and
Speaker 1: to say there was a tripolar outcome of the Yalta system.
Speaker 1: Explain what a shock that would be to America to
Speaker 1: see Russia, China in America with their own parts of
Speaker 1: this world. So they Alta is prutents model. He has
Speaker 1: praised it all the time. And now and we've just
Speaker 1: seen Putin and jes and paying together in Beijing talking
Speaker 1: about a new world order. This would be a shock.
Speaker 1: We thought we had ended this kind of system with
Speaker 1: two spheres of influence uh and domination by the great
Speaker 1: powers of the smaller powers. And this is precisely what
Speaker 1: would like to restore. And the Chinese, of course, would
Speaker 1: get best sphere of influence. And if you ask the Japanese,
Speaker 1: or the Koreans or a number of other countries how
Speaker 1: they would feel about that, you can imagine what they
Speaker 1: would say and certainly the Central and East European countries
Speaker 1: do not want to go back to being in a
Speaker 1: Russian sphere of influence, Angela, How close are the allies
Speaker 1: in terms of coordinating to try to counteract exactly the
Speaker 1: outcome that Vladimir Putin is looking for. So the Biden
Speaker 1: administration I think has done very well trying to coordinate things.
Speaker 1: We have the German Chancellor in Washington today talking to
Speaker 1: President Biden, hoping again to get him on board with say,
Speaker 1: tough sanctions, including energy sanctions if there is to be
Speaker 1: a war there. President Markran is in Moscow today trying
Speaker 1: to talk Puttin down. Apparently he is in close contact
Speaker 1: with the White House. So I think the co ordination
Speaker 1: is pretty good. But of course there are differences of
Speaker 1: interest between different European countries in the US, particularly again,
Speaker 1: if you think about sanctions, Angela is, why do we
Speaker 1: are put In winning? Well at the moment he looks
Speaker 1: as if he is, because we've there's been no de escalation,
Speaker 1: In fact as more escalation. We read today of the
Speaker 1: troops that would be needed for an invasion are already
Speaker 1: amassed on the border, and we are all running around
Speaker 1: again trying to find a solution to this, and he
Speaker 1: has China's back, and he him thing had put out
Speaker 1: this extraordinary statement invajing on Friday where they are in,
Speaker 1: China will support Russia and whatever it does. So it
Speaker 1: looks as if he's winning. This is concerning considering the
Speaker 1: fact they are concluding. Paragraph of your essay was that
Speaker 1: Putin's overarching aim is reversing the consequences of the Soviet collapses.
Speaker 1: We were talking about splitting the treads Atlantic Alliance, which
Speaker 1: sounds like it's still is relatively firm, and renegotiating the
Speaker 1: geographic settlement that ended the Cold War. Can you game
Speaker 1: out what type of altercation would sort of lead to
Speaker 1: his goals being achieved. So I think it's highly unlikely
Speaker 1: that he will achieve the goals of NATO is saying
Speaker 1: that will never enlarge and essentially handing him back a
Speaker 1: sphere of influence, including in countries like Poland, because he
Speaker 1: has said that NATO should retreat to where it was
Speaker 1: in Um if there is or a major incursion. Obviously
Speaker 1: this would be terribly destructive for Europe, but it's very
Speaker 1: hard to see that ending in giving him what he wants.
Speaker 1: We do have an Alliance of thirty countries NATO, and
Speaker 1: we would resist that. Are we at a point of
Speaker 1: negotiation now? I mean the diplomacy is US talking to
Speaker 1: ourselves elves and maybe Mr Putin talking to himself or
Speaker 1: the guy over in China as well. Is there any
Speaker 1: dialogue actually going on now? I don't sense it. Well,
Speaker 1: there is dialogue going on. You know, we have responded
Speaker 1: to the Soviet demands and we've said we the US
Speaker 1: and NATO, let's talk about this defense. Let's talk about
Speaker 1: troop deployments in Europe. Let's talk about other ways in
Speaker 1: which we can build you know, rebuild confidence. Let's revitalize
Speaker 1: the Native Russia Council. So we have made all these proposals,
Speaker 1: the Russians have responded to them. That was you know,
Speaker 1: leaked the other day to El pais um So and
Speaker 1: there are conversations going on um and there there are
Speaker 1: dialogues between the US and Russia and other issues. But
Speaker 1: the diplomacy does seem to be stolen. Angela Ston, thank
Speaker 1: you so much writing in Foreign Affairs. I can't say
Speaker 1: enough about the essay the Putin doctor, and I will
Speaker 1: put that out on Twitter as well, just to really
Speaker 1: superb USEL. This is the Bloomberg Surveillance Podcast. Thanks for listening.
Speaker 1: Join us live weekdays from seven to ten a m.
Speaker 1: Eastern on Bloomberg Radio and on Bloomberg Television each day
Speaker 1: from six to nine a m. For insight from the
Speaker 1: best in economics, finance, investment, and international relations. And subscribe
Speaker 1: to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com,
Speaker 1: and of course on the terminal. I'm Tom Keene, and
Speaker 1: this is Bloomberg