1 00:00:00,040 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,800 --> 00:00:17,880 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app. 4 00:00:22,320 --> 00:00:25,640 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,000 Speaker 1: us live on YouTube. 6 00:00:27,200 --> 00:00:29,600 Speaker 2: Scheduled is Greg Daker. Let me explain this, folks. 7 00:00:29,600 --> 00:00:32,800 Speaker 3: The National Association for Business Economics, of which I was 8 00:00:32,840 --> 00:00:36,840 Speaker 3: a member for years, is really viscerally within the economic 9 00:00:36,920 --> 00:00:41,400 Speaker 3: dialogue of American business. Mister Daco has served gloriously as 10 00:00:41,520 --> 00:00:42,960 Speaker 3: president of the shop. 11 00:00:42,760 --> 00:00:44,280 Speaker 2: And he joins us this morning. 12 00:00:44,600 --> 00:00:47,080 Speaker 3: Greg, let me start with the boom economy before we 13 00:00:47,120 --> 00:00:50,560 Speaker 3: get to the FED. John Writing writes to Ethan Harris 14 00:00:50,560 --> 00:00:54,680 Speaker 3: this morning on LinkedIn that consumption puts business investment is 15 00:00:54,720 --> 00:00:58,040 Speaker 3: something like an eight percent GDP. Do we have a 16 00:00:58,120 --> 00:01:02,320 Speaker 3: two boomy of an economy right now? Is it too effervescent? 17 00:01:03,720 --> 00:01:06,479 Speaker 4: I don't think it's too effervescent, but we are seeing 18 00:01:06,600 --> 00:01:09,679 Speaker 4: strong growth in underlying momentum. When it comes to consumer 19 00:01:09,720 --> 00:01:11,319 Speaker 4: spending activity and business investment. 20 00:01:11,680 --> 00:01:13,240 Speaker 5: I would actually flip it slightly. 21 00:01:13,240 --> 00:01:14,920 Speaker 4: I would say that we have too much of a 22 00:01:15,040 --> 00:01:19,280 Speaker 4: concentrated growth environment because when you look at what's driving growth. 23 00:01:19,400 --> 00:01:24,080 Speaker 4: It's really more the affluent consumers and AI driven business investment. 24 00:01:24,280 --> 00:01:26,880 Speaker 4: If you exclude those, you don't really have much of 25 00:01:27,280 --> 00:01:29,880 Speaker 4: breadth in terms of economic momentum. And that's really the 26 00:01:30,000 --> 00:01:31,039 Speaker 4: risk to get to the. 27 00:01:30,959 --> 00:01:33,960 Speaker 3: Press conference disaster that we saw this week. If we 28 00:01:34,040 --> 00:01:38,160 Speaker 3: see yield shift as they shifted in the press conference, 29 00:01:38,520 --> 00:01:40,720 Speaker 3: what will that mean for American business? 30 00:01:41,760 --> 00:01:43,800 Speaker 5: I think that's a key element to focus on. 31 00:01:43,840 --> 00:01:45,760 Speaker 4: That's really one of the key points that I've been 32 00:01:45,840 --> 00:01:48,240 Speaker 4: highlighting with a lot of the CFOs I talk to, 33 00:01:48,320 --> 00:01:51,000 Speaker 4: which is this notion that the cost of capital is 34 00:01:51,120 --> 00:01:54,640 Speaker 4: going to be structurally higher going forward, not because of 35 00:01:54,680 --> 00:01:56,600 Speaker 4: what the fence next move is going to be, but 36 00:01:56,680 --> 00:01:59,080 Speaker 4: because we have fiscal imbalances that. 37 00:01:59,040 --> 00:02:01,400 Speaker 5: Are likely to be present for the foreseeable future. 38 00:02:01,720 --> 00:02:04,760 Speaker 4: Because we have a very large pull for private capital 39 00:02:04,800 --> 00:02:08,240 Speaker 4: that's putting upward pressure on yields, including the big AI 40 00:02:08,360 --> 00:02:11,720 Speaker 4: investment surge. Because we have inflation that is much more 41 00:02:11,840 --> 00:02:15,760 Speaker 4: volatile in this environment of layered supply shocks, and because 42 00:02:15,960 --> 00:02:19,320 Speaker 4: we have questions about central bank credibility and those were 43 00:02:19,480 --> 00:02:23,480 Speaker 4: even more visible after the most recent press conference. So 44 00:02:23,840 --> 00:02:26,840 Speaker 4: those elements are likely to keep long term interest rates 45 00:02:26,880 --> 00:02:29,880 Speaker 4: higher than they've historically been and be a constraint in 46 00:02:29,960 --> 00:02:32,040 Speaker 4: terms of private sector investment, and. 47 00:02:32,040 --> 00:02:33,280 Speaker 6: Greg, you're higher for longer. 48 00:02:33,400 --> 00:02:35,680 Speaker 7: Was echoed by a note from Torsten Slock at Apollo 49 00:02:35,720 --> 00:02:36,120 Speaker 7: this morning. 50 00:02:36,120 --> 00:02:38,239 Speaker 6: He basically said the exact same thing here. 51 00:02:38,320 --> 00:02:40,720 Speaker 7: We love to get your thoughts, Greg, as it relates 52 00:02:40,760 --> 00:02:43,120 Speaker 7: to what we saw from the Federal Reserve this week, 53 00:02:43,160 --> 00:02:45,680 Speaker 7: what we saw from Fed Chairman Wash What were your takeaways. 54 00:02:46,919 --> 00:02:49,040 Speaker 4: I think we have to distinguish two elements here when 55 00:02:49,040 --> 00:02:53,160 Speaker 4: it comes to the critics as to Fed Chair Warsh's performance. 56 00:02:53,760 --> 00:02:56,640 Speaker 4: You can essentially have a view that maybe a rate 57 00:02:56,720 --> 00:02:58,680 Speaker 4: hike is not necessary in September. 58 00:02:58,720 --> 00:03:01,560 Speaker 5: That's very possible. You've seen the likes. 59 00:03:01,360 --> 00:03:04,600 Speaker 4: Of Governor Waller, Governor Cook, Vice Jir Jefferson, New York 60 00:03:04,639 --> 00:03:07,760 Speaker 4: Fed chair President williams All arguing. 61 00:03:07,600 --> 00:03:09,200 Speaker 5: That we'll have to watch the data. 62 00:03:09,280 --> 00:03:11,720 Speaker 4: If core inflation does not show signs of moving back 63 00:03:11,720 --> 00:03:14,920 Speaker 4: towards the two percent target, then a tighter monetary policy 64 00:03:14,919 --> 00:03:16,200 Speaker 4: stance will be required. 65 00:03:16,440 --> 00:03:17,000 Speaker 5: I think what. 66 00:03:16,960 --> 00:03:21,080 Speaker 4: Markets are penalizing right now is essentially the inconsistencies having 67 00:03:21,080 --> 00:03:23,679 Speaker 4: a new FED chair that's criticizing the old FED. 68 00:03:23,680 --> 00:03:25,200 Speaker 5: But not doing much about it. 69 00:03:25,240 --> 00:03:27,640 Speaker 4: Seeing that inflation is a choice, but not doing much 70 00:03:27,680 --> 00:03:30,920 Speaker 4: about it, that's a risk. Talking about resolute commitment to 71 00:03:30,919 --> 00:03:34,320 Speaker 4: the two percent inflation target and then delivering actual thinking 72 00:03:34,560 --> 00:03:37,920 Speaker 4: again an issue. And then finally saying that you're going 73 00:03:37,960 --> 00:03:40,120 Speaker 4: to deliver on the two percent target, but then talking 74 00:03:40,200 --> 00:03:43,640 Speaker 4: about moving the goalpost at the next strategy review is 75 00:03:43,720 --> 00:03:46,680 Speaker 4: another inconsistency. And those are the real issues, not so 76 00:03:46,800 --> 00:03:48,520 Speaker 4: much whether you tighten or not in September. 77 00:03:48,600 --> 00:03:51,360 Speaker 3: You know, I have no idea, folks, see academic Craig here. 78 00:03:51,720 --> 00:03:55,560 Speaker 3: Credibility I should say here, Greg Dotco came out of 79 00:03:55,640 --> 00:03:58,680 Speaker 3: Levin in Belgium, and that is where the giant Mark 80 00:03:58,760 --> 00:04:02,680 Speaker 3: blog was on economic epistemology and theory. 81 00:04:03,440 --> 00:04:04,640 Speaker 2: Let's layer on that. Greg. 82 00:04:04,720 --> 00:04:08,720 Speaker 3: Is one final question here this morning. The chairman is 83 00:04:08,920 --> 00:04:13,240 Speaker 3: trying to do economic philosophy. He's trying to do almost 84 00:04:13,360 --> 00:04:17,719 Speaker 3: economic politics with his comments. Can he get away with that? Or, 85 00:04:17,800 --> 00:04:21,159 Speaker 3: like Claudia Sam says, should he just look at inflation 86 00:04:21,279 --> 00:04:25,200 Speaker 3: and PCEE is a data point, a measurement point, and 87 00:04:25,240 --> 00:04:28,640 Speaker 3: not a lot of you know Mark blog, George Sorow's theory. 88 00:04:30,000 --> 00:04:31,720 Speaker 4: I think you have to be very careful in trying 89 00:04:31,760 --> 00:04:35,479 Speaker 4: to be too intellectually out there in terms of trying 90 00:04:35,520 --> 00:04:39,200 Speaker 4: to comment. During the press conference, in particular, the questions 91 00:04:39,240 --> 00:04:42,599 Speaker 4: from the journalists, including Mike McKee's question, were very clear. 92 00:04:43,040 --> 00:04:45,520 Speaker 4: What is your reaction function? How would you react in 93 00:04:45,600 --> 00:04:49,600 Speaker 4: terms of monetary policy in different circumstances. That's not very complicated. 94 00:04:49,600 --> 00:04:50,600 Speaker 4: That's the basic for. 95 00:04:50,680 --> 00:04:51,279 Speaker 5: A fet chair. 96 00:04:51,680 --> 00:04:54,680 Speaker 4: If inflation moves in one direction, what are you going 97 00:04:54,720 --> 00:04:57,040 Speaker 4: to be doing? If inflation moves in another direction, what 98 00:04:57,080 --> 00:04:59,440 Speaker 4: are you going to be doing? You can't hide behind 99 00:05:00,320 --> 00:05:03,720 Speaker 4: the Lucas critique or potentially the good Hearts law. I mean, 100 00:05:03,760 --> 00:05:07,520 Speaker 4: these are valuable laws and valuable theories, but they're not 101 00:05:07,560 --> 00:05:09,520 Speaker 4: going to help you when it comes to setting policy 102 00:05:09,800 --> 00:05:10,839 Speaker 4: in the very near term. 103 00:05:10,880 --> 00:05:11,800 Speaker 2: Greg, thank you so much. 104 00:05:11,839 --> 00:05:14,159 Speaker 3: Thank you for your service to NAB as well, mister 105 00:05:14,240 --> 00:05:16,320 Speaker 3: docos with ey parts of it. 106 00:05:16,600 --> 00:05:17,320 Speaker 2: Stay with us. 107 00:05:17,520 --> 00:05:20,760 Speaker 3: More from Bloomberg Surveillance coming up after this. 108 00:05:28,000 --> 00:05:31,600 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live 109 00:05:31,680 --> 00:05:34,800 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 110 00:05:34,920 --> 00:05:38,560 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 111 00:05:38,720 --> 00:05:40,200 Speaker 1: watch us live on YouTube. 112 00:05:40,360 --> 00:05:44,279 Speaker 3: Victoria Fernandez is and she's Deck Police Chief Market strategist 113 00:05:44,320 --> 00:05:49,040 Speaker 3: Crossmark Global Investors. What's the biggest argument, Victoria, of families 114 00:05:49,720 --> 00:05:53,919 Speaker 3: or couples are having in this booming economy, this big 115 00:05:53,960 --> 00:05:54,719 Speaker 3: bull market. 116 00:05:56,120 --> 00:05:58,160 Speaker 8: Like Tom, it's got to be how they're going to 117 00:05:58,279 --> 00:05:59,680 Speaker 8: invest around tech? Right? 118 00:05:59,760 --> 00:06:02,599 Speaker 9: Do we buy chips? Do we not? Do we buy memory? 119 00:06:02,640 --> 00:06:03,120 Speaker 10: Do we not? 120 00:06:03,640 --> 00:06:06,680 Speaker 8: With the volatility that we're seeing in these markets. I 121 00:06:06,720 --> 00:06:09,279 Speaker 8: think that's going to be the biggest conversation people are having. 122 00:06:09,400 --> 00:06:12,320 Speaker 8: And really and truly we need to be tactical. It's 123 00:06:12,360 --> 00:06:14,960 Speaker 8: what we're doing for our investors. There is so much 124 00:06:15,000 --> 00:06:18,280 Speaker 8: going on underneath the surface right now. Even though you've 125 00:06:18,320 --> 00:06:22,279 Speaker 8: got a VIX that's like an eighteen handle, the correlations 126 00:06:22,360 --> 00:06:26,000 Speaker 8: are not high, and anything except energy and utilities you 127 00:06:26,000 --> 00:06:29,239 Speaker 8: don't have high correlations. So stockpicking is important. 128 00:06:28,960 --> 00:06:32,159 Speaker 3: Bloomberg Money question. Then we'll do that at twelve noon today, 129 00:06:32,240 --> 00:06:35,640 Speaker 3: Victoria Fernandez. What does it mean for rebalancing? Do you 130 00:06:35,880 --> 00:06:39,560 Speaker 3: less rebalance and let tech go or do you have 131 00:06:39,720 --> 00:06:43,000 Speaker 3: increased scrutiny on rebalancing a portfolio. 132 00:06:43,960 --> 00:06:44,960 Speaker 9: I think it's going to be. 133 00:06:44,880 --> 00:06:47,480 Speaker 8: More of the latter, Tom, and I think that's because 134 00:06:47,520 --> 00:06:50,120 Speaker 8: of what we're talking about in regards to these correlations. 135 00:06:50,440 --> 00:06:53,360 Speaker 8: I mean every day a stock can change, right. I mean, 136 00:06:53,400 --> 00:06:55,680 Speaker 8: we've seen that with Microsoft, We've seen it with s 137 00:06:55,760 --> 00:06:57,800 Speaker 8: k Heini, so we've seen it with a ton of names. 138 00:06:58,120 --> 00:07:01,160 Speaker 8: You have to be able to be tactical. So little 139 00:07:01,200 --> 00:07:03,640 Speaker 8: bites at the apple is what we're saying. Don't go 140 00:07:03,680 --> 00:07:05,640 Speaker 8: in and make big bets because it can turn around 141 00:07:05,680 --> 00:07:07,440 Speaker 8: the next day and kind of bite you in the rear. 142 00:07:07,800 --> 00:07:10,880 Speaker 8: So little bits and pieces here and there when the 143 00:07:10,880 --> 00:07:12,080 Speaker 8: stock comes down, add a. 144 00:07:12,080 --> 00:07:13,320 Speaker 9: Little bit to your portfolio. 145 00:07:13,400 --> 00:07:16,080 Speaker 8: When it runs high, say thank you very much, take 146 00:07:16,120 --> 00:07:17,280 Speaker 8: some profits off the table. 147 00:07:17,400 --> 00:07:18,760 Speaker 9: That's what we're doing for our clients. 148 00:07:18,800 --> 00:07:21,680 Speaker 8: I think that's the best way to approach this volatility 149 00:07:21,680 --> 00:07:22,920 Speaker 8: we're seeing in the tech sector. 150 00:07:23,560 --> 00:07:26,200 Speaker 6: Victoria, we're right in the teeth of earnings here. We've 151 00:07:26,200 --> 00:07:28,520 Speaker 6: got a lot of technic earnings this past week. 152 00:07:28,560 --> 00:07:28,840 Speaker 3: Here. 153 00:07:29,640 --> 00:07:32,000 Speaker 7: What's your view of kind of how Corporate America is 154 00:07:32,000 --> 00:07:33,120 Speaker 7: delivering on the earnings front. 155 00:07:34,120 --> 00:07:36,440 Speaker 8: It seems like they're doing quite well. Right when we 156 00:07:36,480 --> 00:07:39,880 Speaker 8: look at the blended earnings expectations, those that have reported 157 00:07:39,920 --> 00:07:43,000 Speaker 8: plus expectations, I mean, you're what, you're close to thirty 158 00:07:43,040 --> 00:07:46,880 Speaker 8: a little over thirty percent earnings growth for the second quarter. 159 00:07:47,200 --> 00:07:47,960 Speaker 9: That's amazing. 160 00:07:48,160 --> 00:07:50,000 Speaker 8: And I think we have to be a little bit 161 00:07:50,040 --> 00:07:52,960 Speaker 8: worried about is that as good as it gets looking 162 00:07:53,040 --> 00:07:56,440 Speaker 8: at coming up quarters. But they're actually performing quite well. 163 00:07:56,480 --> 00:07:58,800 Speaker 8: The problem is they're not all getting rewarded for that. 164 00:07:58,840 --> 00:08:01,040 Speaker 8: We've seen that in some of the high yer scaler names. 165 00:08:01,320 --> 00:08:04,240 Speaker 8: A lot of that coming down to the communication around 166 00:08:04,600 --> 00:08:08,040 Speaker 8: what the ROI is on these names, what the future 167 00:08:08,080 --> 00:08:10,280 Speaker 8: looks like in terms of this spending that we're seeing. 168 00:08:10,280 --> 00:08:13,760 Speaker 8: When you're upping your capex by ten twenty percent, investors 169 00:08:13,800 --> 00:08:16,440 Speaker 8: want to know exactly how they're going to get rewarded 170 00:08:16,480 --> 00:08:19,320 Speaker 8: for that. But all in all, earning so far and profits, 171 00:08:19,360 --> 00:08:22,160 Speaker 8: I mean, look at the energy names this morning. Profits 172 00:08:22,160 --> 00:08:24,560 Speaker 8: are off the chart. So so far, so good. 173 00:08:24,960 --> 00:08:28,080 Speaker 7: It was also a big week for central bankers, particularly 174 00:08:28,200 --> 00:08:31,320 Speaker 7: the US FED and Chairman Walsh. 175 00:08:31,400 --> 00:08:33,760 Speaker 6: What did you take away from this midweek meeting? 176 00:08:34,840 --> 00:08:38,640 Speaker 8: You know, Paul, it's interesting after the press conference, you 177 00:08:38,720 --> 00:08:41,600 Speaker 8: had so many people coming out saying how horrible it 178 00:08:41,800 --> 00:08:45,240 Speaker 8: was that all the credibility issues around Warsh and what's happening. 179 00:08:45,240 --> 00:08:47,480 Speaker 9: And I had to kind of, you know. 180 00:08:47,440 --> 00:08:49,520 Speaker 8: Do a double take, because isn't this kind of what 181 00:08:49,640 --> 00:08:50,360 Speaker 8: we expected? 182 00:08:50,400 --> 00:08:53,240 Speaker 9: Isn't this what he told us? Was going to happen. 183 00:08:53,520 --> 00:08:55,880 Speaker 8: I mean, he's not going to front run these task 184 00:08:55,960 --> 00:08:58,760 Speaker 8: forces that he's put in place, So we shouldn't have 185 00:08:58,840 --> 00:09:01,400 Speaker 8: expected there to be a lot of discussion around that. 186 00:09:01,760 --> 00:09:04,160 Speaker 9: We didn't think there'd be hikes. The market wasn't pricing 187 00:09:04,200 --> 00:09:05,319 Speaker 9: in really a hike for this. 188 00:09:05,400 --> 00:09:08,560 Speaker 8: Meeting, So I'm really kind of surprised at the reaction 189 00:09:08,679 --> 00:09:10,600 Speaker 8: that we've seen. I do think it sets up a 190 00:09:10,600 --> 00:09:13,000 Speaker 8: lot more from now till the September meeting in terms 191 00:09:13,080 --> 00:09:14,400 Speaker 8: of FED speak and what. 192 00:09:14,400 --> 00:09:16,400 Speaker 9: We're going to hear. People will be listening closely. 193 00:09:16,600 --> 00:09:19,240 Speaker 3: Do you take advantage of price down, yield up out 194 00:09:19,280 --> 00:09:21,720 Speaker 3: the curve ten year, twenty years, thirty year paper? 195 00:09:22,960 --> 00:09:25,960 Speaker 8: Well, I am in our fixed income portfolios. I want 196 00:09:25,960 --> 00:09:28,240 Speaker 8: to lock in some of that because our clients are 197 00:09:28,360 --> 00:09:32,199 Speaker 8: using fixed income, high quality fixed income for cash flow. 198 00:09:32,440 --> 00:09:34,880 Speaker 8: So if we're going to get some better yields, then 199 00:09:35,000 --> 00:09:36,800 Speaker 8: why not go ahead and lock a little bit of 200 00:09:36,840 --> 00:09:39,760 Speaker 8: that in, maybe up to ten years or so and 201 00:09:39,880 --> 00:09:42,160 Speaker 8: have that in your portfolio, set it aside and just 202 00:09:42,200 --> 00:09:42,840 Speaker 8: collect your caps. 203 00:09:43,240 --> 00:09:45,760 Speaker 2: It's like Sweeny Gospel, Yeah right away there. 204 00:09:46,720 --> 00:09:50,079 Speaker 7: What are the risks here Victoria to this economy and 205 00:09:50,120 --> 00:09:52,240 Speaker 7: the consumer seems to be kind of hanging in there. 206 00:09:52,280 --> 00:09:54,800 Speaker 6: Earning seem pretty solid. I don't know what are the 207 00:09:54,840 --> 00:09:55,320 Speaker 6: risks here. 208 00:09:56,160 --> 00:09:59,560 Speaker 8: Those are the exact risks fall if we see earning 209 00:09:59,600 --> 00:10:02,920 Speaker 8: start to turn next quarter or even later in the 210 00:10:02,960 --> 00:10:04,600 Speaker 8: second quarter, when we start to get more of the 211 00:10:04,640 --> 00:10:09,160 Speaker 8: consumer facing retail names report, if those are weak, then 212 00:10:09,200 --> 00:10:10,960 Speaker 8: I think we have to start getting a little bit 213 00:10:11,000 --> 00:10:14,760 Speaker 8: concerned because we've got consumption higher than Income's right, real 214 00:10:14,800 --> 00:10:19,960 Speaker 8: disposable income was down with consumption higher. That's unsustainable over 215 00:10:20,000 --> 00:10:23,120 Speaker 8: the long run. So I think let's watch earnings. If 216 00:10:23,160 --> 00:10:25,280 Speaker 8: they start to drift a little bit, we have to 217 00:10:25,280 --> 00:10:27,640 Speaker 8: start worrying a little bit more about the consumer. And 218 00:10:27,679 --> 00:10:30,520 Speaker 8: we did see credit and debit spending up over six 219 00:10:30,640 --> 00:10:33,080 Speaker 8: percent last month, so let's keep an eye on that. 220 00:10:33,520 --> 00:10:37,960 Speaker 3: And now, folks, on July thirty, First we look towards August, 221 00:10:38,440 --> 00:10:42,080 Speaker 3: the first tinge of the leaves across Central part in 222 00:10:42,120 --> 00:10:44,439 Speaker 3: the discussion. You're not even thinking about it. Why are 223 00:10:44,440 --> 00:10:48,240 Speaker 3: you here on Tria. Now let's start with the autumnal 224 00:10:48,280 --> 00:10:50,800 Speaker 3: glow is upon us, and we do that always and 225 00:10:50,840 --> 00:10:54,160 Speaker 3: only with Victoria Fernandez. First of all, do you have 226 00:10:54,200 --> 00:10:58,160 Speaker 3: your Texas Texas A and M tickets for November twenty seventh. 227 00:10:59,280 --> 00:11:01,320 Speaker 8: I do not have them yet, but don't worry. It 228 00:11:01,400 --> 00:11:03,280 Speaker 8: is on my to do list, so we. 229 00:11:03,320 --> 00:11:03,960 Speaker 9: Will have them. 230 00:11:04,040 --> 00:11:04,760 Speaker 2: I'll bet it is. 231 00:11:04,840 --> 00:11:05,960 Speaker 9: Are you going to come join me? 232 00:11:06,200 --> 00:11:08,040 Speaker 3: Are you going to go? Well, we said we would 233 00:11:08,120 --> 00:11:11,160 Speaker 3: love to do a remote round there, Hallabalu, Canuck Kanuck. 234 00:11:11,160 --> 00:11:14,600 Speaker 3: We would love to do that Texas at College station, folks, 235 00:11:14,840 --> 00:11:18,760 Speaker 3: November twenty seventh. That's Friday day after thanks coming small 236 00:11:18,760 --> 00:11:21,800 Speaker 3: It's it's like a state holiday. I'll be working in 237 00:11:21,880 --> 00:11:23,120 Speaker 3: Texas to see that. 238 00:11:23,320 --> 00:11:25,800 Speaker 9: I won't be joining you on that day for the radio. 239 00:11:25,960 --> 00:11:29,200 Speaker 3: As we get to Q three ending September thirty, as 240 00:11:29,240 --> 00:11:32,439 Speaker 3: we stagger into Q four. In your research note, Victoria, 241 00:11:32,800 --> 00:11:34,080 Speaker 3: you say it best. 242 00:11:34,320 --> 00:11:36,640 Speaker 2: Sometime this earning's joy is going to end? 243 00:11:37,280 --> 00:11:39,360 Speaker 3: Is it going to end Q four or do we 244 00:11:39,400 --> 00:11:42,760 Speaker 3: stagger into twenty twenty seven as Texas A and. 245 00:11:42,880 --> 00:11:44,040 Speaker 2: M goes to the Rose Bowl. 246 00:11:45,720 --> 00:11:48,120 Speaker 8: I like the way you think, Tom for the Rose 247 00:11:48,160 --> 00:11:50,880 Speaker 8: bul At least, I do think that we'll probably do 248 00:11:50,960 --> 00:11:52,880 Speaker 8: a little bit of staggering here at the end of 249 00:11:52,880 --> 00:11:56,200 Speaker 8: the year into the first quarter of next year, mainly 250 00:11:56,240 --> 00:11:59,600 Speaker 8: because we know how consumers are. We don't underestimate the 251 00:11:59,720 --> 00:12:02,680 Speaker 8: US consumer in the fourth quarter of the year. Around holiday, 252 00:12:03,040 --> 00:12:06,320 Speaker 8: they spend whether they have it or not. Unfortunately, and 253 00:12:06,360 --> 00:12:09,200 Speaker 8: we know that the bottom consumer and some of the 254 00:12:09,280 --> 00:12:12,000 Speaker 8: younger consumers are being held up by baby boomers and 255 00:12:12,120 --> 00:12:14,320 Speaker 8: Gen X money supply there. 256 00:12:14,440 --> 00:12:16,320 Speaker 9: So I think we'll continue to see. 257 00:12:16,080 --> 00:12:18,480 Speaker 8: A little bit of support in the fourth quarter, but 258 00:12:18,720 --> 00:12:20,640 Speaker 8: will need to be cautious going into the new year. 259 00:12:20,800 --> 00:12:21,720 Speaker 2: Victoria, thank you. 260 00:12:21,840 --> 00:12:25,160 Speaker 3: Victoria Fernandez with is the Crossmark at Global Investments. 261 00:12:25,559 --> 00:12:26,280 Speaker 2: Stay with us. 262 00:12:26,520 --> 00:12:29,760 Speaker 3: More from Bloomberg Surveillance coming up after this. 263 00:12:37,000 --> 00:12:40,600 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch US Live 264 00:12:40,640 --> 00:12:43,800 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 265 00:12:43,880 --> 00:12:47,560 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 266 00:12:47,720 --> 00:12:49,319 Speaker 1: watch US Live on YouTube. 267 00:12:49,600 --> 00:12:51,000 Speaker 2: She is the worst job in London. 268 00:12:51,120 --> 00:12:53,920 Speaker 3: Can you imagine waking up at Deutsche Bank over by 269 00:12:53,960 --> 00:12:56,160 Speaker 3: the wall, like the Roman Wall is across the street 270 00:12:56,559 --> 00:12:59,320 Speaker 3: and you have to work with George Saravellos. I mean 271 00:12:59,480 --> 00:13:03,000 Speaker 3: it's it's it's like difficult joining us now at Queen 272 00:13:03,080 --> 00:13:07,920 Speaker 3: Victoria Street. Finally, Malika Sakeva joins US FX strategist at 273 00:13:07,920 --> 00:13:08,520 Speaker 3: Deutsche Bank. 274 00:13:08,600 --> 00:13:10,959 Speaker 2: Her research just jumps out of the screen. 275 00:13:11,520 --> 00:13:13,839 Speaker 3: Of course, coming out of Chicago, I got to start 276 00:13:13,880 --> 00:13:16,400 Speaker 3: with something I didn't think i'd start with. Malika. When 277 00:13:16,400 --> 00:13:18,560 Speaker 3: you talk to Matt Lozetti in New York at the 278 00:13:18,640 --> 00:13:22,880 Speaker 3: Deutsche Bank building at the southwest corner of Central Park. 279 00:13:23,080 --> 00:13:25,400 Speaker 11: It's not the time warn out, not anywhere, It's the 280 00:13:25,440 --> 00:13:28,679 Speaker 11: Deutsche Bank Tower, Maliki when you get briefed by Lozetti, 281 00:13:29,200 --> 00:13:32,640 Speaker 11: how did the Chairman of the Federal Reserve System change 282 00:13:32,720 --> 00:13:36,280 Speaker 11: our foreign exchange strategy at that press conference. 283 00:13:38,160 --> 00:13:40,320 Speaker 12: So there's been a lot of focus on central banks 284 00:13:40,320 --> 00:13:44,200 Speaker 12: this week, especially in the currency market. Certainly, the FED 285 00:13:44,280 --> 00:13:46,880 Speaker 12: meeting earlier in the week was a big focus for 286 00:13:46,960 --> 00:13:51,200 Speaker 12: the dollar, which weekend after we didn't perhaps get the 287 00:13:51,280 --> 00:13:56,040 Speaker 12: degree of commitment to immediately acting on some of the 288 00:13:56,080 --> 00:13:59,559 Speaker 12: price stability conviction that we'd had in June. But the 289 00:13:59,600 --> 00:14:01,920 Speaker 12: other sime bank which has been in focus this week 290 00:14:01,960 --> 00:14:04,600 Speaker 12: and where I spend a lot of attention is the 291 00:14:04,640 --> 00:14:08,240 Speaker 12: Bank of Japan, which met this morning and had a 292 00:14:08,240 --> 00:14:11,280 Speaker 12: hawkish hold and put a lot of emphasis on the currency. Obviously, 293 00:14:11,280 --> 00:14:13,480 Speaker 12: going into the Bank of Japan meeting this morning, we 294 00:14:13,559 --> 00:14:17,800 Speaker 12: had some signs of FX intervention in DOLLI n yesterday 295 00:14:18,320 --> 00:14:21,160 Speaker 12: and so they certainly are sort of growing signs of 296 00:14:21,160 --> 00:14:23,600 Speaker 12: policy discomfort with where the yen is. 297 00:14:23,840 --> 00:14:26,720 Speaker 3: But you know of Durant Bush one oh one. Can 298 00:14:26,760 --> 00:14:34,320 Speaker 3: an intervention be successful if it's alone and repeated, So I. 299 00:14:34,280 --> 00:14:37,080 Speaker 12: Think four four yen for the end to truly strengthen 300 00:14:37,160 --> 00:14:39,640 Speaker 12: back The path really is the Bank of Japan has 301 00:14:39,680 --> 00:14:43,480 Speaker 12: to lift rates, but if officials want to give them 302 00:14:43,480 --> 00:14:45,800 Speaker 12: a bit of a runway, you know, give them some 303 00:14:45,920 --> 00:14:50,040 Speaker 12: time to raise rates, then FX intervention can be very helpful. 304 00:14:50,560 --> 00:14:53,480 Speaker 12: Japan not only has a lot of central bank reserves, 305 00:14:53,520 --> 00:14:55,800 Speaker 12: they also have a tremendous amount of other fics assets 306 00:14:56,280 --> 00:14:59,760 Speaker 12: across pension fund insurance balance sheet. So I would say 307 00:15:00,280 --> 00:15:03,160 Speaker 12: does have the resources to defend the currency if they 308 00:15:03,160 --> 00:15:03,680 Speaker 12: so wish. 309 00:15:03,640 --> 00:15:03,960 Speaker 5: To do that. 310 00:15:04,640 --> 00:15:07,840 Speaker 7: Markot Bloomberg News is reporting that Japan likely spent around 311 00:15:07,840 --> 00:15:11,160 Speaker 7: fifty three billion dollars US dollars intervening. 312 00:15:10,720 --> 00:15:12,360 Speaker 6: In the currency market on Thursday. 313 00:15:12,720 --> 00:15:15,200 Speaker 7: I prop up the end that would likely be the 314 00:15:15,240 --> 00:15:19,960 Speaker 7: biggest ever intervention on a single day by Hokyo. The 315 00:15:20,040 --> 00:15:21,760 Speaker 7: question I think a lot of people are asking is 316 00:15:21,760 --> 00:15:24,640 Speaker 7: that enough did these interventions really work or they just 317 00:15:24,720 --> 00:15:26,760 Speaker 7: kind of short term in nature typically. 318 00:15:27,920 --> 00:15:30,920 Speaker 12: So it's not the first time that we've seen intervention 319 00:15:31,040 --> 00:15:34,560 Speaker 12: in Japan this year. The Bank of Japan did intervene 320 00:15:34,680 --> 00:15:37,920 Speaker 12: in April and in May. I would actually argue that 321 00:15:38,120 --> 00:15:40,240 Speaker 12: considering what we've seen this year, We've seen a war, 322 00:15:40,520 --> 00:15:43,120 Speaker 12: we've seen an energy shock, who've seen a tremendous amount 323 00:15:43,200 --> 00:15:46,840 Speaker 12: of FED volatility. Dolly in has actually been relatively stable 324 00:15:47,160 --> 00:15:50,200 Speaker 12: around one sixty. I do think the market will need 325 00:15:50,240 --> 00:15:52,520 Speaker 12: the Bank of Japan to walk the hawkish talk that 326 00:15:52,600 --> 00:15:54,840 Speaker 12: we heard today. They will need to accelerate the pace 327 00:15:54,840 --> 00:15:57,800 Speaker 12: of rate hikes. They are talking about inflation being north 328 00:15:57,800 --> 00:16:00,560 Speaker 12: of two percent over their forecast horizon, and so keeping 329 00:16:00,640 --> 00:16:03,200 Speaker 12: rates at one percent is simply not enough. But I 330 00:16:03,240 --> 00:16:05,640 Speaker 12: do think that, you know, there is a runway here 331 00:16:05,680 --> 00:16:09,160 Speaker 12: for them to use FX intervention to provide some room 332 00:16:09,200 --> 00:16:11,840 Speaker 12: and some support for the currency and malca. 333 00:16:11,840 --> 00:16:13,720 Speaker 7: As we came into twenty twenty six, I think as 334 00:16:13,760 --> 00:16:16,120 Speaker 7: it relates to the US dollar, the consensus was probably 335 00:16:16,280 --> 00:16:20,680 Speaker 7: weaker dollar, but then the war in Iran started and 336 00:16:20,760 --> 00:16:23,800 Speaker 7: that kind of reversed pretty subdly. But now I'm looking 337 00:16:23,840 --> 00:16:26,480 Speaker 7: at the d X Y indexit you know, one hundred 338 00:16:26,520 --> 00:16:28,880 Speaker 7: spot three. We did trade a little bit below one 339 00:16:28,960 --> 00:16:31,520 Speaker 7: hundred today on the d X Y How do you 340 00:16:31,520 --> 00:16:32,400 Speaker 7: think this plays out? 341 00:16:34,040 --> 00:16:36,320 Speaker 12: So, I think the focus of my research over the 342 00:16:36,400 --> 00:16:39,320 Speaker 12: last few weeks has been something very interesting is happening 343 00:16:39,360 --> 00:16:42,240 Speaker 12: in the US dollar. We are seeing a sort of 344 00:16:42,240 --> 00:16:46,360 Speaker 12: a swap from a lot of interest in US treasuries 345 00:16:46,560 --> 00:16:49,080 Speaker 12: to a lot of foreign interest in US equities, and 346 00:16:49,120 --> 00:16:52,240 Speaker 12: this tremendous amount of inflow into the US stock market 347 00:16:52,280 --> 00:16:55,000 Speaker 12: over the last year or so has actually provided a 348 00:16:55,000 --> 00:16:57,880 Speaker 12: good amount of support for the dollar. Now, my thesis 349 00:16:58,120 --> 00:17:01,840 Speaker 12: is that looking ahead, the risk profile of the dollar 350 00:17:01,880 --> 00:17:05,560 Speaker 12: could start to change. So in the next big equity correction, 351 00:17:05,880 --> 00:17:08,639 Speaker 12: it's not necessary that the dollar will necessarily do well 352 00:17:09,240 --> 00:17:11,679 Speaker 12: because the dollar is now much more linked to and 353 00:17:11,760 --> 00:17:14,000 Speaker 12: much more sensitive to equity capital than it has been 354 00:17:14,040 --> 00:17:16,840 Speaker 12: in the past. So I think the change in correlations 355 00:17:16,880 --> 00:17:19,680 Speaker 12: between stocks and the dollar is really going to be 356 00:17:19,720 --> 00:17:20,919 Speaker 12: a big focus for the market. 357 00:17:21,080 --> 00:17:23,240 Speaker 3: Okay, so where are we six months or a year 358 00:17:23,280 --> 00:17:24,720 Speaker 3: out give us levels there? 359 00:17:25,080 --> 00:17:28,200 Speaker 2: Where are we on euro dollar, where are we on sterling? 360 00:17:30,000 --> 00:17:31,800 Speaker 12: So I think when we think about the dollar, I 361 00:17:31,800 --> 00:17:35,000 Speaker 12: mean the interesting things about currencies are they're relative prices. Right, 362 00:17:35,040 --> 00:17:37,280 Speaker 12: So the dollar is strong because something else is weak 363 00:17:37,320 --> 00:17:40,520 Speaker 12: against it, And if we look across the global currency universe, 364 00:17:40,840 --> 00:17:43,840 Speaker 12: the currencies that are particularly cheap at the moment, our Japan, 365 00:17:44,000 --> 00:17:46,359 Speaker 12: our career, and a lot of other currencies in Asia. 366 00:17:46,480 --> 00:17:48,720 Speaker 12: So really, I would argue that the outlook for the 367 00:17:48,760 --> 00:17:50,960 Speaker 12: dollar in six months and twelve months is not really 368 00:17:51,000 --> 00:17:53,119 Speaker 12: about what happens to the euro or what happens to 369 00:17:53,160 --> 00:17:55,760 Speaker 12: the sterling. It's what happens to currencies in Asia. It's 370 00:17:55,800 --> 00:17:58,760 Speaker 12: what the boj does. It's whether we see repatriation from 371 00:17:58,840 --> 00:18:03,000 Speaker 12: Japanese investors back into Japan rather dolly in is significantly 372 00:18:03,000 --> 00:18:05,080 Speaker 12: lower from here. That's what's going to drive the broad dollar. 373 00:18:05,359 --> 00:18:12,160 Speaker 3: So is Chairman Worsh central banker to the Pacific RIM. 374 00:18:12,280 --> 00:18:15,280 Speaker 12: So so, I mean, I think, you know, we're central 375 00:18:15,280 --> 00:18:17,760 Speaker 12: banks everywhere. There's there's a lot of focus on whether 376 00:18:17,800 --> 00:18:20,480 Speaker 12: they're going to be really really serious about price stability. 377 00:18:21,080 --> 00:18:24,359 Speaker 12: And I think what we've seen this week is, you know, 378 00:18:24,440 --> 00:18:28,080 Speaker 12: where the market catches a whiff that they may not 379 00:18:28,160 --> 00:18:31,199 Speaker 12: be than currencies could could come under pressure. So I 380 00:18:31,200 --> 00:18:33,000 Speaker 12: think Japan is going to be very focused on that. 381 00:18:33,400 --> 00:18:35,280 Speaker 12: Probably in the US as well, the central bank is 382 00:18:35,280 --> 00:18:36,360 Speaker 12: going to be very focused on that. 383 00:18:36,480 --> 00:18:38,840 Speaker 2: Malika, thank you so much. Really appreciate it. Thank you 384 00:18:38,920 --> 00:18:39,679 Speaker 2: so much for being on. 385 00:18:39,720 --> 00:18:44,359 Speaker 3: Malika Sacheva with this FX strategist with George Saravella's at 386 00:18:44,800 --> 00:18:45,600 Speaker 3: Deutsche Bank, and. 387 00:18:45,800 --> 00:18:46,520 Speaker 2: Stay with us. 388 00:18:46,720 --> 00:18:49,960 Speaker 3: More from Bloomberg Surveillance coming up after this. 389 00:18:57,200 --> 00:19:00,800 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live 390 00:19:00,840 --> 00:19:04,000 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 391 00:19:04,119 --> 00:19:07,480 Speaker 1: Apple Karplay and Android Otto with the Bloomberg Business app, 392 00:19:07,680 --> 00:19:09,400 Speaker 1: or watch us live on YouTube. 393 00:19:09,800 --> 00:19:12,520 Speaker 3: Major shout out to all of our team in Dubai 394 00:19:12,560 --> 00:19:15,760 Speaker 3: and across up to Istanbul and over actually to Dublin, 395 00:19:15,800 --> 00:19:18,359 Speaker 3: Ireland for the coverage on the war. 396 00:19:19,040 --> 00:19:20,639 Speaker 2: Ellen Wald is definitive on this. 397 00:19:20,840 --> 00:19:23,840 Speaker 3: She's senior Fellow at Atlantic Council and has a one 398 00:19:23,920 --> 00:19:28,119 Speaker 3: volume in Saudi Arabia that is a required read for 399 00:19:28,160 --> 00:19:32,600 Speaker 3: those that need to learn of the of the Arab Peninsula. 400 00:19:32,960 --> 00:19:35,159 Speaker 3: What does the media get most wrong? 401 00:19:35,359 --> 00:19:36,119 Speaker 2: Ellen Wald? 402 00:19:36,680 --> 00:19:40,919 Speaker 3: About the Arab Peninsula from the Persian Gulf over to 403 00:19:40,960 --> 00:19:41,600 Speaker 3: the Red Sea. 404 00:19:43,240 --> 00:19:45,200 Speaker 13: I think the media I would say that the most 405 00:19:45,240 --> 00:19:50,280 Speaker 13: common misperception is that everything is defined by the Sunishia conflict. 406 00:19:50,400 --> 00:19:54,960 Speaker 13: I think that that's a very simplistic way to look 407 00:19:55,000 --> 00:19:57,360 Speaker 13: at it. There's a lot going on. You know, there's 408 00:19:57,400 --> 00:20:01,560 Speaker 13: a lot going on between different of sex, Islamic sex, 409 00:20:01,600 --> 00:20:04,360 Speaker 13: that kind of it really transcends it. On the other hand, 410 00:20:04,359 --> 00:20:06,720 Speaker 13: I would say that the one thing that has really 411 00:20:06,760 --> 00:20:10,119 Speaker 13: stood out for me in conversations with people in the 412 00:20:10,160 --> 00:20:14,399 Speaker 13: Gulf right now is that they, at least the people 413 00:20:14,920 --> 00:20:19,879 Speaker 13: are fairly united in their sentiment against Iran. That a 414 00:20:19,920 --> 00:20:22,760 Speaker 13: lot of the attacks that Iran has leveled against these 415 00:20:22,800 --> 00:20:27,200 Speaker 13: countries uh in you know, in Saudi Arabia, in the UAE, 416 00:20:27,720 --> 00:20:30,840 Speaker 13: uh you know, in Inkuait have really kind of solidified 417 00:20:30,840 --> 00:20:36,199 Speaker 13: at least popular popular sentiment against Iran, and that they 418 00:20:36,200 --> 00:20:41,320 Speaker 13: are potentially much more united in efforts to fight Iran 419 00:20:41,520 --> 00:20:45,000 Speaker 13: than is I think being really portrayed in the United 420 00:20:45,040 --> 00:20:48,200 Speaker 13: States and the media and from state takes at this point. 421 00:20:48,440 --> 00:20:51,320 Speaker 7: Ellen, if I were an insurer whose job it is 422 00:20:51,359 --> 00:20:54,960 Speaker 7: to ensure these tankers, I think my base case today 423 00:20:55,040 --> 00:20:57,880 Speaker 7: has to be as long as this leadership is still 424 00:20:57,920 --> 00:21:01,679 Speaker 7: in position of power in Iran, straight will never be open. 425 00:21:02,040 --> 00:21:03,160 Speaker 6: Is that a fair assumption. 426 00:21:04,760 --> 00:21:06,920 Speaker 13: That's what I would advise. You know, if I was 427 00:21:06,960 --> 00:21:09,520 Speaker 13: an insurer, I would not be ensuring these ships. I 428 00:21:09,520 --> 00:21:12,360 Speaker 13: think you're taking an absolutely massive risk if you are 429 00:21:12,400 --> 00:21:16,000 Speaker 13: going to you know, provide insurance for a ship that's 430 00:21:16,040 --> 00:21:19,320 Speaker 13: that's transitting. I really think right now we are at 431 00:21:19,720 --> 00:21:23,200 Speaker 13: basically kind of a status quo, kind of stands still 432 00:21:23,240 --> 00:21:23,720 Speaker 13: in pass. 433 00:21:24,440 --> 00:21:25,800 Speaker 14: Iran is not. 434 00:21:25,680 --> 00:21:29,160 Speaker 13: Going to give up any way to control this straight 435 00:21:29,240 --> 00:21:34,760 Speaker 13: unless something really really shifts internally or with their firepower ability, 436 00:21:35,240 --> 00:21:37,240 Speaker 13: They're not going to give it up. And the United 437 00:21:37,240 --> 00:21:39,040 Speaker 13: States seems like it's not going to give up its 438 00:21:39,080 --> 00:21:41,840 Speaker 13: position either. So either we have to just dig in 439 00:21:41,880 --> 00:21:45,919 Speaker 13: here for the long haul until something changes economically on 440 00:21:46,000 --> 00:21:50,920 Speaker 13: either side, or we have to you know, change something militarily. 441 00:21:51,680 --> 00:21:53,920 Speaker 13: But otherwise we're kind of we're kind of stuck. This 442 00:21:53,960 --> 00:21:57,919 Speaker 13: is going to become a situation of attrition, and the 443 00:21:57,960 --> 00:22:01,240 Speaker 13: world may have to adjust to this new normal. 444 00:22:01,760 --> 00:22:05,000 Speaker 7: But if I'm Saudi Arabia, not to mention all the 445 00:22:05,040 --> 00:22:08,600 Speaker 7: other countries in that region, can I live with that? 446 00:22:08,840 --> 00:22:11,520 Speaker 7: Can I live with that reality that the strait is closed? 447 00:22:11,920 --> 00:22:14,840 Speaker 7: I would like to think those neighbors could exert some 448 00:22:15,080 --> 00:22:16,040 Speaker 7: type of pressure on. 449 00:22:16,040 --> 00:22:20,720 Speaker 13: Iran, you know, I think that they absolutely do have 450 00:22:20,800 --> 00:22:23,760 Speaker 13: that ability. I think that the pressure they can exert 451 00:22:23,880 --> 00:22:27,200 Speaker 13: is really finding the workarounds, and it's an interesting situation 452 00:22:27,240 --> 00:22:31,159 Speaker 13: because Saudi Arabia is actually you know, differently positioned I 453 00:22:31,200 --> 00:22:35,440 Speaker 13: would say than say Kuwait or Iraq or buck Rain 454 00:22:35,800 --> 00:22:39,600 Speaker 13: or Qatar or even the UAE, because it has a 455 00:22:39,600 --> 00:22:40,520 Speaker 13: different geography. 456 00:22:40,840 --> 00:22:42,960 Speaker 14: It has access to the Red. 457 00:22:42,760 --> 00:22:45,320 Speaker 13: Sea and it's been using that and it can continue 458 00:22:45,359 --> 00:22:48,159 Speaker 13: to use that access to its advantage. 459 00:22:48,200 --> 00:22:49,800 Speaker 14: Now that has all come into. 460 00:22:49,640 --> 00:22:54,160 Speaker 13: Question now that we're getting other actors in other geographic 461 00:22:54,200 --> 00:22:57,200 Speaker 13: regions involved. The who they's getting involved in the Red 462 00:22:57,240 --> 00:23:01,680 Speaker 13: Sea absolutely threatens that. And then we have militias apparently 463 00:23:01,960 --> 00:23:06,320 Speaker 13: Irenian back milicias in Iraq that are now threatening ports 464 00:23:06,320 --> 00:23:09,640 Speaker 13: in the Mediterranean, and so that definitely, you know, kind 465 00:23:09,680 --> 00:23:15,560 Speaker 13: of enlarges the regional aspect of this of this conflict. 466 00:23:15,640 --> 00:23:18,000 Speaker 3: Okay, here's why you watch Bloomberg surveillance, folks, and we're 467 00:23:18,040 --> 00:23:19,200 Speaker 3: thrilled to do this. Our team. 468 00:23:19,440 --> 00:23:21,240 Speaker 2: It wasn't Eric Marlow, it was it was one of 469 00:23:21,240 --> 00:23:21,719 Speaker 2: the interns. 470 00:23:22,320 --> 00:23:25,720 Speaker 3: They put ellen Wald back to back with leslie venjer Murray. 471 00:23:26,080 --> 00:23:27,520 Speaker 2: It's too much, folks. 472 00:23:27,760 --> 00:23:30,639 Speaker 3: Ellen Wald's senior fellow of the Atlantic Council and joining 473 00:23:30,760 --> 00:23:35,080 Speaker 3: us now dropping in with ellen Wald. It's a panel, folks, 474 00:23:35,240 --> 00:23:39,800 Speaker 3: a surveillance Bloomberg panel. Leslie Ven Jean Murray, Chicago Council 475 00:23:40,160 --> 00:23:44,360 Speaker 3: on Global Affairs. Ellen Wald explained to doctor Vin Jamary 476 00:23:45,200 --> 00:23:49,320 Speaker 3: the relationship of the tribes of the Arab world. Does 477 00:23:49,359 --> 00:23:53,120 Speaker 3: Saudi get along with the UAE, Does the UAE get 478 00:23:53,119 --> 00:23:57,000 Speaker 3: along with Byren, Does Biering get along with Kuwait, et cetera. 479 00:23:57,320 --> 00:23:58,520 Speaker 2: Ellen discussed that. 480 00:23:59,800 --> 00:24:02,280 Speaker 13: They definitely do get along, but it's not like they're 481 00:24:02,280 --> 00:24:06,320 Speaker 13: all just brothers here, you know, they're they're definitely different 482 00:24:06,320 --> 00:24:11,000 Speaker 13: sex and they've definitely taken different approaches in uh particularly. 483 00:24:10,440 --> 00:24:12,320 Speaker 14: In modern times. 484 00:24:12,720 --> 00:24:16,040 Speaker 13: But there's absolutely, you know, you could say, kind of 485 00:24:16,080 --> 00:24:20,560 Speaker 13: long seated bad blood in some respects. One particularly fascinating 486 00:24:20,600 --> 00:24:23,919 Speaker 13: part it has to do with Jordan, Okay, Jordan is 487 00:24:23,960 --> 00:24:26,840 Speaker 13: actually you know, the Hashamite kingdom of Jordan that comes 488 00:24:26,840 --> 00:24:31,200 Speaker 13: from a family that the Saudi king, the original king 489 00:24:31,640 --> 00:24:36,560 Speaker 13: Abdola disease, and so he actually kicked out the ancestor 490 00:24:36,640 --> 00:24:38,679 Speaker 13: of the current king of Jordan from Mecca. 491 00:24:38,880 --> 00:24:40,520 Speaker 14: Way to make it over Saudi Arabia. 492 00:24:40,600 --> 00:24:42,080 Speaker 2: We're going to stop the show, Ellen. 493 00:24:42,520 --> 00:24:45,720 Speaker 3: In Lawrence of Arabia was the Hashemike king that went 494 00:24:45,760 --> 00:24:50,000 Speaker 3: to Jordan were their great grandfather was that played by Anthony. 495 00:24:49,640 --> 00:24:53,000 Speaker 14: Quinn, I believe, so you believe. 496 00:24:53,040 --> 00:24:56,640 Speaker 2: So I nailed that. Leslie's impressed Leslievinger. 497 00:24:56,119 --> 00:24:58,960 Speaker 3: Murray helps us out with ellen Wall this morning there's 498 00:24:59,000 --> 00:25:02,560 Speaker 3: Leslie's been just on fire with discussion at Chicago Consul 499 00:25:02,560 --> 00:25:06,760 Speaker 3: and global affairs all over work previously at Chatham Mouse Leslie. 500 00:25:06,840 --> 00:25:10,000 Speaker 3: The question every listener wants to know, including ellen Wald, 501 00:25:10,600 --> 00:25:14,520 Speaker 3: how do we extricate ourselves from this mess? 502 00:25:16,160 --> 00:25:19,840 Speaker 10: If you mean the United States? I think the answer 503 00:25:20,000 --> 00:25:22,240 Speaker 10: is we don't. We started. 504 00:25:22,280 --> 00:25:24,639 Speaker 9: You know, it's a little bit of the pottery barn rule. Tom. 505 00:25:25,240 --> 00:25:28,399 Speaker 9: You break it, you own it. You have to fix it. 506 00:25:29,440 --> 00:25:33,600 Speaker 10: President Trump, I'm sure and many Americans would like nothing more, 507 00:25:34,160 --> 00:25:35,320 Speaker 10: quite frankly. 508 00:25:35,000 --> 00:25:38,240 Speaker 9: Than to return to the you know, pre late. 509 00:25:38,080 --> 00:25:42,360 Speaker 10: Feb status quo. But I think we all know at 510 00:25:42,359 --> 00:25:45,520 Speaker 10: this point it's not on offer. So this is a 511 00:25:45,760 --> 00:25:49,160 Speaker 10: manage it. Try to get things into a stable position, 512 00:25:50,240 --> 00:25:54,359 Speaker 10: and I think, from the US administration perspective, sooner rather 513 00:25:54,400 --> 00:25:58,560 Speaker 10: than later, and certainly sooner than the early November midterm elections. 514 00:25:59,400 --> 00:26:03,160 Speaker 10: But there's no sign right now of any plan coming 515 00:26:03,200 --> 00:26:06,800 Speaker 10: into place that brings that stability. You know, the US 516 00:26:06,920 --> 00:26:11,560 Speaker 10: is kind of doubling down on sanctions force and Iran 517 00:26:12,080 --> 00:26:14,760 Speaker 10: has demonstrated that it is in it to win it, 518 00:26:14,760 --> 00:26:18,160 Speaker 10: it can bear those costs, It has that leverage over 519 00:26:18,200 --> 00:26:22,359 Speaker 10: the Strait, and it doesn't seem to be flinching. 520 00:26:22,720 --> 00:26:24,120 Speaker 9: So at the. 521 00:26:24,119 --> 00:26:28,960 Speaker 10: Moment again we're seeing escalation tip for tat, and the 522 00:26:29,400 --> 00:26:32,280 Speaker 10: few proposals on the table don't seem to be getting 523 00:26:32,320 --> 00:26:34,159 Speaker 10: the kind of traction that we need to see to 524 00:26:34,200 --> 00:26:35,800 Speaker 10: get back to some sort of stability. 525 00:26:36,480 --> 00:26:40,199 Speaker 7: Leslie with a little bit of a time here that 526 00:26:40,240 --> 00:26:42,480 Speaker 7: we've had to kind of study this last few months. 527 00:26:43,440 --> 00:26:45,720 Speaker 6: How did we misread this so terribly wrong? 528 00:26:47,720 --> 00:26:48,040 Speaker 2: Again? 529 00:26:48,520 --> 00:26:50,000 Speaker 9: I would ask who is the we here? 530 00:26:50,800 --> 00:26:53,520 Speaker 10: I think if you go back to the very deep 531 00:26:54,040 --> 00:26:59,800 Speaker 10: bench of US geopolitical experts, Middle East experts, folks who 532 00:27:00,119 --> 00:27:04,400 Speaker 10: worked in the national security and intelligence agencies for decades, 533 00:27:05,320 --> 00:27:09,399 Speaker 10: they've played out this scenario of Iran weaponizing the Strait 534 00:27:09,400 --> 00:27:10,000 Speaker 10: of horror moves. 535 00:27:10,080 --> 00:27:14,520 Speaker 9: They understood the the you know, the very. 536 00:27:14,359 --> 00:27:21,000 Speaker 10: Disproportionate power advantage, the asymmetric leverage that was possible. And 537 00:27:21,280 --> 00:27:23,960 Speaker 10: I think, you know, we're sort of telling the same 538 00:27:24,000 --> 00:27:27,199 Speaker 10: story that we've been telling for a while. Originally it 539 00:27:27,240 --> 00:27:31,200 Speaker 10: looked like the United States was being pulled in by Israel. 540 00:27:31,359 --> 00:27:34,719 Speaker 10: Trump by Netsan Yahoo. That equation has changed. That's one 541 00:27:34,760 --> 00:27:37,199 Speaker 10: of the more surprising things that has come out of 542 00:27:37,200 --> 00:27:40,479 Speaker 10: the last few months that Donald Trump no longer seems 543 00:27:40,520 --> 00:27:44,040 Speaker 10: to be playing along with that playbook, but now he 544 00:27:44,040 --> 00:27:46,440 Speaker 10: has his own considerations and concerns. 545 00:27:46,520 --> 00:27:49,960 Speaker 3: Ellen Well brief, Leslie, Venjamury and all of us here 546 00:27:50,480 --> 00:27:53,760 Speaker 3: and a royal family that goes back to seventeen twenty seven, 547 00:27:54,320 --> 00:27:56,280 Speaker 3: those of us, Leslie and you were too young to 548 00:27:56,320 --> 00:28:00,760 Speaker 3: remember this, but I remember Faisal clearly a huge dominant 549 00:28:01,000 --> 00:28:04,120 Speaker 3: in the minds of Americans coming out of World War too. 550 00:28:04,200 --> 00:28:07,520 Speaker 3: You're going to prize in all that brief us now 551 00:28:08,040 --> 00:28:12,240 Speaker 3: on the royal family of Saudi Arabia. How stable is it, 552 00:28:12,400 --> 00:28:14,760 Speaker 3: How dominant are they in the discussion? 553 00:28:17,080 --> 00:28:19,560 Speaker 14: The Saudi royal family is quite stable. 554 00:28:19,640 --> 00:28:23,440 Speaker 13: I don't think we're concerned really about any destabilization in 555 00:28:23,520 --> 00:28:27,479 Speaker 13: terms of the leadership there. But it is interesting to 556 00:28:27,600 --> 00:28:30,840 Speaker 13: see as the conflict has gone on that they really 557 00:28:30,880 --> 00:28:34,760 Speaker 13: have not been the most vocal, at least publicly, you know, 558 00:28:34,800 --> 00:28:38,400 Speaker 13: in terms of the you know, the the Gulf States. 559 00:28:38,400 --> 00:28:40,840 Speaker 13: I mean, I think we've seen the UEE maybe taking 560 00:28:40,920 --> 00:28:46,680 Speaker 13: much more of a vocal stand on certain issues, particularly 561 00:28:46,720 --> 00:28:52,760 Speaker 13: concerning the fact that that stay free passage through the 562 00:28:52,840 --> 00:28:55,640 Speaker 13: straight of war moves is not negotiable for them, and 563 00:28:55,680 --> 00:28:59,760 Speaker 13: they've been the ones really taking this stand, though Saudi 564 00:28:59,840 --> 00:29:02,600 Speaker 13: has has also borne the brunt of a lot of 565 00:29:03,000 --> 00:29:07,480 Speaker 13: the you know damage also obviously create Bakrain have too, 566 00:29:08,000 --> 00:29:12,440 Speaker 13: but they do seem to be pretty resolute in their 567 00:29:13,200 --> 00:29:15,560 Speaker 13: you know opposition, and I don't think that we're really 568 00:29:15,600 --> 00:29:20,200 Speaker 13: concerned about any kind of destabilizing UH measures taking place 569 00:29:20,240 --> 00:29:22,800 Speaker 13: in at least in Saudi Arabia Leslie. 570 00:29:22,840 --> 00:29:26,440 Speaker 7: One of the I think objectives of the administration for 571 00:29:26,480 --> 00:29:31,240 Speaker 7: the initial attack on Iran was regime change. And granted 572 00:29:31,240 --> 00:29:34,040 Speaker 7: there are different players now leading around, but they are 573 00:29:34,080 --> 00:29:38,840 Speaker 7: still theocrats. Is there any reason to believe that continued 574 00:29:38,880 --> 00:29:41,400 Speaker 7: military action on the part of the US that the 575 00:29:41,440 --> 00:29:43,440 Speaker 7: pressure would be so great that there may be an 576 00:29:43,520 --> 00:29:45,480 Speaker 7: uprising of the people to change the government. 577 00:29:45,480 --> 00:29:47,200 Speaker 6: How do we look at that these days? 578 00:29:47,720 --> 00:29:49,959 Speaker 10: I mean, I see no evidence of that, and I 579 00:29:50,000 --> 00:29:52,840 Speaker 10: don't My reading of those who have been following this 580 00:29:52,920 --> 00:29:56,000 Speaker 10: for a very long time is that they see no 581 00:29:56,240 --> 00:30:01,080 Speaker 10: evidence of that. It is is not really in America's gift, 582 00:30:01,160 --> 00:30:05,640 Speaker 10: I think, unfortunately, coming out of the removal of Maduro 583 00:30:05,800 --> 00:30:10,520 Speaker 10: Venezuela's leader that President Trump perhaps was kind of leaning 584 00:30:10,560 --> 00:30:18,520 Speaker 10: into America's unwielding power. And you know, power is very 585 00:30:18,560 --> 00:30:23,280 Speaker 10: contextual and so we haven't seen that delivered in this case. 586 00:30:23,320 --> 00:30:25,760 Speaker 10: But I think we're long past the moment where we 587 00:30:25,800 --> 00:30:27,360 Speaker 10: believe that this is going to lead. 588 00:30:27,240 --> 00:30:28,200 Speaker 9: To regime change. 589 00:30:28,240 --> 00:30:31,640 Speaker 10: At best, we're hoping for, you know, getting into a 590 00:30:31,760 --> 00:30:35,440 Speaker 10: direction which can lead to some sort of stability over 591 00:30:35,480 --> 00:30:37,640 Speaker 10: the Strait. I even think the question of getting to 592 00:30:37,680 --> 00:30:41,600 Speaker 10: a nuclear deal is you know, very far away at 593 00:30:41,600 --> 00:30:42,400 Speaker 10: this point time. 594 00:30:42,640 --> 00:30:46,560 Speaker 3: Leslie, help us with how we've shattered our relationships. I mean, 595 00:30:46,600 --> 00:30:49,520 Speaker 3: you were at Chathamouse and now doing this wonderful work 596 00:30:49,560 --> 00:30:55,120 Speaker 3: in Chicago, like Britain. Can Britain like show up along 597 00:30:55,200 --> 00:30:57,560 Speaker 3: the Persian golf like that did in eighteen oh nine 598 00:30:57,640 --> 00:31:01,200 Speaker 3: eighteen ten, or we just shattered the West in the 599 00:31:01,520 --> 00:31:02,240 Speaker 3: Arab world. 600 00:31:03,360 --> 00:31:07,200 Speaker 9: Well, well, first of all, the West was already dividing internally. 601 00:31:07,640 --> 00:31:08,200 Speaker 9: First thing. 602 00:31:08,280 --> 00:31:12,400 Speaker 10: First, Tom, you know it better than anyone. The UK 603 00:31:13,600 --> 00:31:16,680 Speaker 10: also the United States, but not nearly as much as 604 00:31:16,720 --> 00:31:20,080 Speaker 10: had its own domestic internal problems. And you know, the 605 00:31:20,120 --> 00:31:23,520 Speaker 10: new Prime Minister, Andy Burnham is going to be very 606 00:31:23,560 --> 00:31:27,840 Speaker 10: focused internally on as Jillian Ted told me earlier this week, growth, 607 00:31:28,040 --> 00:31:30,360 Speaker 10: growth and growth top three priorities. 608 00:31:31,480 --> 00:31:34,280 Speaker 9: So the West has a lot of internal economic. 609 00:31:33,880 --> 00:31:38,200 Speaker 10: Problems, but that division has been a long time coming. 610 00:31:38,240 --> 00:31:41,080 Speaker 10: Europe is leaning in, not to the golf, it's leaning 611 00:31:41,120 --> 00:31:43,680 Speaker 10: into you know what it perceives to be. It's number 612 00:31:43,720 --> 00:31:47,920 Speaker 10: one security threat, which is coming from Russia and from Putin, 613 00:31:47,960 --> 00:31:49,600 Speaker 10: and Donald Trump has been back. 614 00:31:49,440 --> 00:31:51,280 Speaker 2: And fronts on that one. I want to do one 615 00:31:51,280 --> 00:31:52,360 Speaker 2: final question to both you. 616 00:31:52,440 --> 00:31:54,880 Speaker 3: This has been so special folks, Leslie, vin Ja Murray, 617 00:31:55,120 --> 00:31:57,240 Speaker 3: and Ellen Wald with us. Allen, let me start with 618 00:31:57,280 --> 00:32:00,600 Speaker 3: you same question, then to Leslie. We seem to have 619 00:32:00,640 --> 00:32:04,440 Speaker 3: a new diplomacy out of the State Department running out 620 00:32:04,480 --> 00:32:07,200 Speaker 3: of the Oval Office in the White House. Ellen, how 621 00:32:07,320 --> 00:32:11,000 Speaker 3: is our diplomacy perceived in the world of your book 622 00:32:11,080 --> 00:32:11,800 Speaker 3: Saudi Inc. 623 00:32:13,360 --> 00:32:16,280 Speaker 13: I would say there's probably a lot of confusion, because 624 00:32:16,280 --> 00:32:18,880 Speaker 13: it does seem like there's one kind of diplomacy maybecoming 625 00:32:18,960 --> 00:32:20,640 Speaker 13: a State Department and another kind coming. 626 00:32:20,520 --> 00:32:21,360 Speaker 14: Out of the White House. 627 00:32:21,480 --> 00:32:25,960 Speaker 13: And I think for states in the Gulf who are 628 00:32:26,000 --> 00:32:30,840 Speaker 13: looking at there for security, this is a really volatile 629 00:32:30,880 --> 00:32:33,560 Speaker 13: thing and is probably a bit concerning Leslie. 630 00:32:33,600 --> 00:32:38,440 Speaker 3: Along that line, can we repair our shattered diplomacy. 631 00:32:39,360 --> 00:32:41,000 Speaker 9: Not under this administration. 632 00:32:41,280 --> 00:32:45,600 Speaker 10: I don't feel, unfortunately, we're not seeing the strategy. We 633 00:32:45,680 --> 00:32:49,320 Speaker 10: don't see the quite frankly, the interest in doing that. 634 00:32:49,920 --> 00:32:53,760 Speaker 10: If anything, on the current administration is aiming to do 635 00:32:53,880 --> 00:33:00,800 Speaker 10: exactly the opposite, to disrupt America's most recent long stand alliances, 636 00:33:00,920 --> 00:33:05,160 Speaker 10: to really rethink how they do just diplomacy right, just 637 00:33:05,160 --> 00:33:06,160 Speaker 10: simply not the goal. 638 00:33:06,240 --> 00:33:08,320 Speaker 9: It's not the project. So I don't see it happening 639 00:33:08,360 --> 00:33:09,080 Speaker 9: anytime soon. 640 00:33:09,280 --> 00:33:12,080 Speaker 3: You two have made a Friday Morning in the summer special. 641 00:33:12,080 --> 00:33:14,960 Speaker 3: I mean, that's a world class panel. Paul Yeah, ellen Wald, 642 00:33:15,120 --> 00:33:19,760 Speaker 3: Senior Fellow Atlantic Council, Leslie vin Ja Murray, President of 643 00:33:19,840 --> 00:33:23,920 Speaker 3: the Chicago Council and Global Affairs. Just really special to 644 00:33:23,960 --> 00:33:26,000 Speaker 3: have the two of you together, Ellen Wald and Leslie 645 00:33:26,040 --> 00:33:26,600 Speaker 3: Vinja Murray. 646 00:33:26,640 --> 00:33:26,960 Speaker 7: Thank you. 647 00:33:27,640 --> 00:33:32,480 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 648 00:33:32,600 --> 00:33:36,880 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 649 00:33:37,000 --> 00:33:40,240 Speaker 1: seven to ten am Easter and on Bloomberg dot Com, 650 00:33:40,400 --> 00:33:44,200 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 651 00:33:44,480 --> 00:33:47,600 Speaker 1: You can also watch us live every weekday on YouTube 652 00:33:47,920 --> 00:33:49,920 Speaker 1: and always on the Bloomberg terminal