WEBVTT - Geopolitics, EM, and Consumers 0:00:00.120 --> 0:00:04.360 Bloomberg is now on your dashboard with Apple CarPlay and 0:00:04.360 --> 0:00:08.160 Android Auto. It gives you access to every Bloomberg podcast, 0:00:08.280 --> 0:00:11.560 live audio feeds from Bloomberg Radio, print stories from Bloomberg 0:00:11.640 --> 0:00:14.920 News in audio form, and the latest headlines of the 0:00:14.920 --> 0:00:18.600 click of a button with Bloomberg News. Now it's free 0:00:18.680 --> 0:00:21.439 with the latest version of the Bloomberg Business App. That's 0:00:21.680 --> 0:00:24.400 the Bloomberg Business App. Get it on your phone in 0:00:24.440 --> 0:00:27.760 the Apple App Store or on Google Play. Just download 0:00:27.800 --> 0:00:30.560 the app, connect your phone to your car and get started. 0:00:30.960 --> 0:00:34.400 And it's all presented by our sponsor, Interactive Brokers. 0:00:35.400 --> 0:00:38.600 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:38.640 --> 0:00:39.800 my co host Matt Miller. 0:00:40.200 --> 0:00:44.279 Every business day we bring you interviews from CEOs, market pros, 0:00:44.320 --> 0:00:48.160 and Bloomberg experts, along with essential market movin news. 0:00:48.720 --> 0:00:51.839 I'm the Bloomberg Markets Podcast called Apple Podcasts or wherever 0:00:51.960 --> 0:00:55.080 you listen to podcasts, and at Bloomberg dot Com Slash podcast. 0:00:56.040 --> 0:00:58.760 Thank everybody on their yearhead twenty twenty three, we're saying 0:00:59.000 --> 0:01:03.000 the reopening of China was going to be a major, 0:01:03.280 --> 0:01:07.320 major play. It doesn't feel like it's really played out. 0:01:07.440 --> 0:01:10.000 So you know the question is kind of what happened 0:01:10.360 --> 0:01:12.119 and where do we go from here? Julie, let's say 0:01:12.600 --> 0:01:15.600 she joined as she covers all the emerging markets for 0:01:15.880 --> 0:01:21.319 Bloomberg News. She's based in South Paolo, Brazil. Julia, Again, 0:01:21.440 --> 0:01:25.200 the China call seemed like a reasonable call, seemed like 0:01:25.240 --> 0:01:27.319 an easy call to make a year ago. 0:01:27.880 --> 0:01:31.880 What happened, and it was a total consensus call. 0:01:32.000 --> 0:01:32.160 Right. 0:01:32.200 --> 0:01:35.800 We've had Goldman, Morgan, Stanley, Bank of America, everybody saying, 0:01:35.840 --> 0:01:37.640 you know, China's going to reopen and kind of be 0:01:37.680 --> 0:01:40.840 a wave that lifts all boats and it's super positive 0:01:40.840 --> 0:01:43.319 for emerging markets. And what you ended up seeing was 0:01:43.360 --> 0:01:46.880 the exact opposite, Right, China has been a drag on 0:01:47.080 --> 0:01:49.240 emerging markets as a whole. If you look at it, 0:01:50.400 --> 0:01:53.360 the EM index, which is very very heavy China, it's 0:01:53.360 --> 0:01:59.960 about thirty percent China waiting. It's down fifteen percent, underperforming 0:02:00.160 --> 0:02:02.000 US stocks by the most and I think thirty five 0:02:02.080 --> 0:02:05.560 years or something. If you strip China, it's up by 0:02:05.600 --> 0:02:07.920 the most in four years, by about the same amount. 0:02:08.080 --> 0:02:11.320 So it ended up being a problem for those calling 0:02:11.320 --> 0:02:13.360 for the decade of emerging markets or you know, the 0:02:13.400 --> 0:02:17.040 beginning of a massive rally in EM particularly because of China, 0:02:17.080 --> 0:02:19.480 and it just all the hopes that with the COVID 0:02:19.520 --> 0:02:22.040 restrictions easing, it would lift everything, and it. 0:02:22.080 --> 0:02:22.959 Just didn't happen. 0:02:23.240 --> 0:02:25.440 And that's why, for example, we're just getting a call 0:02:25.480 --> 0:02:28.680 out of Goldman can allow over there had a global 0:02:28.680 --> 0:02:31.480 currency rates Emerging markets in general saying look now think 0:02:31.480 --> 0:02:34.000 about EM and em X China going forward. 0:02:34.040 --> 0:02:36.400 It feels like that's right. 0:02:36.440 --> 0:02:39.519 It's a theme we keep seeing. We saw a couple 0:02:39.560 --> 0:02:43.959 of weeks ago the em X China ETF. 0:02:44.919 --> 0:02:46.560 Just surging in inflows. 0:02:46.639 --> 0:02:50.000 It's now bigger than the inflows are bigger than for 0:02:50.080 --> 0:02:53.640 the China ETF, which a few years ago was fifty 0:02:53.680 --> 0:02:56.359 times bigger than the X China ETF. So you're seeing 0:02:56.720 --> 0:02:58.639 a lot of money flow out of China and all 0:02:58.680 --> 0:03:01.919 acid classes and go. And then it depends on the call, 0:03:02.000 --> 0:03:04.560 but you're seeing Latin America benefit. You're seeing a lot 0:03:04.600 --> 0:03:09.000 of India flows, a lot of money managers calling for 0:03:09.160 --> 0:03:12.960 you know, the growth prospects of India and the reforms, 0:03:13.440 --> 0:03:16.079 and just money just keeps flowing out of China. 0:03:16.160 --> 0:03:19.360 So, you know, Julie, I wonder what EM investors are 0:03:19.400 --> 0:03:22.000 saying today because to me, as you mentioned, it's a 0:03:22.040 --> 0:03:24.520 big part of the MSCI see kind of have to 0:03:24.560 --> 0:03:28.120 be there, but to me it feels almost uninvestable. This 0:03:28.280 --> 0:03:31.600 quote unquote China risk where the government can come in 0:03:31.639 --> 0:03:34.519 and just really recavoc on my business. I think about 0:03:34.560 --> 0:03:38.160 Ali Baba, which is kind of the IBM of China. 0:03:38.360 --> 0:03:41.360 It just took Ali Baba out to the woodshed. What 0:03:41.400 --> 0:03:44.400 are investors saying about the ability to invest in China 0:03:44.440 --> 0:03:44.920 these days? 0:03:46.040 --> 0:03:47.800 And what you see a lot too is the is 0:03:47.800 --> 0:03:50.920 the surprises, right. I think the property crisis was a 0:03:50.960 --> 0:03:54.680 big kind of nobody saw coming in. It wiped out 0:03:54.880 --> 0:03:58.920 seventy billion of value, so it is harder to invest in. 0:03:58.960 --> 0:04:01.320 What you're seeing from what hearing from investors a lot 0:04:01.400 --> 0:04:03.840 is the gauges that we usually look at. So the 0:04:03.960 --> 0:04:08.480 MSCIM for stocks, it's kind of losing its place as 0:04:08.480 --> 0:04:11.840 a benchmark just because you have to look at China 0:04:11.880 --> 0:04:15.120 and ex China, and because this index is so heavy, 0:04:15.280 --> 0:04:17.880 it's kind of not representative of what's happening in emerging 0:04:17.880 --> 0:04:21.000 markets where you're seeing a broad rarely once you discount 0:04:21.040 --> 0:04:23.080 the thirty percent that's China. 0:04:23.279 --> 0:04:25.600 I mean, just look at what happened on Friday of 0:04:25.680 --> 0:04:28.800 last week. With the gaming sector tencent down twelve percent. 0:04:28.839 --> 0:04:32.559 You saw NETS is down sixteen percent in the ADR training, 0:04:32.600 --> 0:04:35.920 I mean extraordinary bait and switch. It felt like once 0:04:35.960 --> 0:04:38.560 again in terms of the overall view of gaming and 0:04:38.560 --> 0:04:40.279 whether or not you're going to be having to be 0:04:40.400 --> 0:04:43.360 charged for an adult using the gaming section, in particular 0:04:43.400 --> 0:04:45.040 when you're making in app purchases and the like. 0:04:45.120 --> 0:04:46.640 And then of course later. 0:04:46.520 --> 0:04:48.599 China approves one hundred and five new video games on 0:04:48.600 --> 0:04:50.760 Monday to try and sort of calm the concerns that 0:04:50.839 --> 0:04:55.560 it immediately rifled. So it does feel as though ultimately 0:04:55.600 --> 0:04:58.440 people are feeling very misguided by what happens with China. 0:04:58.520 --> 0:05:00.640 Ultimately, therefore, where do they invest? 0:05:00.760 --> 0:05:03.120 Is there any new country that we single out overall? 0:05:03.279 --> 0:05:07.000 Is there a viewpoint that you need to be elsewhere? 0:05:07.080 --> 0:05:10.880 Julia at the moment, I think the most consensus call 0:05:10.920 --> 0:05:11.960 at the moment is India. 0:05:12.160 --> 0:05:13.839 It's what we keep hearing from everyone. 0:05:13.920 --> 0:05:16.880 You have to invest in India. Saudi Arabia comes up 0:05:16.880 --> 0:05:20.760 a lot, as does Latin America. Brazil has been cutting rates, 0:05:20.880 --> 0:05:22.720 Chile has been cutting rates and kind of giving a 0:05:22.760 --> 0:05:26.200 boost to markets. Mexico is another destination. It's close to 0:05:26.240 --> 0:05:29.360 the US, we have a lot of companies moving factories 0:05:29.400 --> 0:05:32.720 into Mexico, which is a boom to the economy. So 0:05:33.360 --> 0:05:36.479 those are the geographies that we're hearing most about while 0:05:37.520 --> 0:05:40.479 money managers leave China, kind of leave it alone for 0:05:40.520 --> 0:05:42.440 a little bit, Julia, let. 0:05:42.360 --> 0:05:44.159 Change so great to have some time with you. 0:05:44.080 --> 0:05:47.400 You really appreciate you dialing in from Latin America or 0:05:47.440 --> 0:05:51.080 of course based over there, thinking all things of managing 0:05:51.160 --> 0:05:53.440 editor for the EM at Markets Americas. 0:05:54.520 --> 0:05:58.359 You're listening to the team can't live program Bloomberg Markets 0:05:58.400 --> 0:06:01.440 weekdays at ten am eastering on Bloomberg dot com, the 0:06:01.520 --> 0:06:04.680 iHeartRadio app and the Bloomberg Business app, or listen on 0:06:04.760 --> 0:06:06.680 demand wherever you get your podcast. 0:06:09.000 --> 0:06:14.360 Thy Art Shamali, CEO and founder of Greenwich Media Strategies, 0:06:14.720 --> 0:06:16.640 Gard thanks so much for joining us here. I don't 0:06:16.680 --> 0:06:18.680 know where to start in that part of the world. 0:06:18.720 --> 0:06:21.720 There are so many uncertainties here. So much is such 0:06:21.760 --> 0:06:25.440 a fluid situation. Let's start with the Red Sea. What's 0:06:25.520 --> 0:06:29.440 the status of shipping in the Red Sea? Is everybody 0:06:29.480 --> 0:06:32.800 diverting or people taking their chances? Where are we? 0:06:32.800 --> 0:06:33.040 Well? 0:06:33.120 --> 0:06:35.280 You had as as you heard you had over the 0:06:35.360 --> 0:06:35.960 last few weeks. 0:06:36.000 --> 0:06:39.799 You had the houthy militants in Yemen, which are backed 0:06:39.800 --> 0:06:43.279 by Iran and funded and armed by Iran, attacking vessels 0:06:43.320 --> 0:06:47.080 in the Middle in the Red Sea, vessels Israeli flagged ships, 0:06:47.080 --> 0:06:49.919 but also commercial ships of all times, in order to 0:06:50.040 --> 0:06:52.720 create trouble, in order to destabilize things, and frankly, it 0:06:52.800 --> 0:06:54.719 is kind of an effort on the part of Iran 0:06:54.800 --> 0:06:57.279 really to destabilize things without declaring it all out or 0:06:57.560 --> 0:06:59.880 and instigating a response from the United States at least 0:07:00.080 --> 0:07:03.400 major response. And so we had shipping companies say that 0:07:03.440 --> 0:07:06.839 they were going to divert traffic around around Africa, which 0:07:06.880 --> 0:07:09.240 is we all know would increase costs majorly and then 0:07:09.400 --> 0:07:15.120 also and also create delay times, could contribute to global 0:07:15.120 --> 0:07:16.040 inflation and so on. 0:07:16.280 --> 0:07:18.640 And so the US responded was saying, you know. 0:07:18.600 --> 0:07:22.320 What, we're creating an international navy coalition. And so the 0:07:22.400 --> 0:07:24.760 United States has it has a number of countries that 0:07:24.800 --> 0:07:28.160 have participated in that in order to patrol, if you will, 0:07:28.200 --> 0:07:30.680 the Red Sea and the Suez Canal to continue to 0:07:30.760 --> 0:07:31.520 allow shipping. 0:07:31.840 --> 0:07:32.960 And so they've created it. 0:07:33.040 --> 0:07:35.080 We don't have all the details on how many vessels 0:07:35.160 --> 0:07:37.200 or ships are there from the United States and which 0:07:37.240 --> 0:07:40.560 countries but we do know that it has already diminished 0:07:40.560 --> 0:07:44.560 the risk. It hasn't decreased it entirely or eliminated it entirely, but. 0:07:44.560 --> 0:07:45.600 It has decreased the risk. 0:07:45.640 --> 0:07:49.520 And already you have as of yesterday, some shipping companies 0:07:49.600 --> 0:07:51.800 like Marisk for example, have announced that they're going to 0:07:51.840 --> 0:07:54.320 resume shipping through the Red Sea and the sews Canal. 0:07:54.800 --> 0:07:56.840 Not all of them yet, but I expect as people 0:07:56.920 --> 0:08:00.360 see that things are tad commer that are going to 0:08:00.400 --> 0:08:01.520 resume shipping entirely. 0:08:02.280 --> 0:08:05.120 So maybe that takes off some of the anxiety that 0:08:05.120 --> 0:08:08.720 we've seen from a price perspective, shown in oil prices. However, 0:08:09.440 --> 0:08:12.800 the conflict, as we see it, all of this stemming from, 0:08:12.840 --> 0:08:17.920 of course, conflict between Hamas Israel, and I'm interested, of 0:08:17.960 --> 0:08:21.240 course in ultimately how you see that particularly ramping up 0:08:21.280 --> 0:08:24.760 because it has been increased concerns particularly around Iran visa 0:08:24.840 --> 0:08:28.560 VI Israel. How we seeing that particularly ratcheting up its 0:08:28.600 --> 0:08:29.760 concerns for you as well? 0:08:30.800 --> 0:08:33.920 Yeah, I don't see any let up in that conflict 0:08:34.800 --> 0:08:37.240 or in the aggression pursued by Israel, and by the way, 0:08:37.240 --> 0:08:40.319 also the aggression pursued by Hamas in this conflict. There 0:08:40.320 --> 0:08:42.680 have been since last week a number of efforts to 0:08:42.720 --> 0:08:46.440 try and reopen a truce. The Israeli president offered a 0:08:46.440 --> 0:08:51.080 one week truce in exchange for another round of hostage 0:08:51.120 --> 0:08:54.040 and prisoner exchanges. Then Egypt has come up with a 0:08:54.160 --> 0:08:57.040 very ambitious plan that I don't think will stick, for 0:08:57.280 --> 0:09:00.679 a more permanency spire that would include even and not 0:09:00.720 --> 0:09:03.920 only releasing hostages, but also changing the power structure in 0:09:04.000 --> 0:09:06.960 Gaza to include one that's a technocratic Palestinian government and 0:09:06.960 --> 0:09:09.600 not one led by Hamas, which Hamas outright and rejected. 0:09:09.640 --> 0:09:14.080 Amasa has outright rejected both both offers of these ceasefires. Now, 0:09:14.120 --> 0:09:17.160 I do think that you're going to see small humanitarian 0:09:17.600 --> 0:09:20.760 lauses and truces that are short in nature again, because 0:09:20.760 --> 0:09:23.720 we know that Hamas and the Israeli government have agreed 0:09:23.720 --> 0:09:29.400 in principle already two humanitarian causes that yield a Palestinian 0:09:29.440 --> 0:09:32.560 prisoner slash hostage Israeli hostage exchange. 0:09:32.880 --> 0:09:34.480 So I bet we'll see that again. 0:09:34.520 --> 0:09:37.600 But in the meantime, until that happens, the Israeli government 0:09:37.640 --> 0:09:39.960 and Natanya, who has been very public about this, have 0:09:40.040 --> 0:09:41.960 said that there's really no let up. Nata Yah, who 0:09:41.960 --> 0:09:44.280 just yesterday or two days ago said that there is 0:09:44.400 --> 0:09:47.960 no stop to what we're seeing on the ground in Gaza. 0:09:48.000 --> 0:09:50.559 And I will tell you in my own experience when 0:09:50.559 --> 0:09:53.680 I worked at the White House working on conflicts, including 0:09:53.760 --> 0:09:57.160 past conflicts between Israel and Tamas, these wars are short 0:09:57.280 --> 0:09:59.560 in the grand scheme of wars, and so I don't 0:09:59.559 --> 0:10:03.400 expect it to last at this intensely past the new year. 0:10:03.400 --> 0:10:05.160 I mean into the new year, maybe a month or so, 0:10:05.280 --> 0:10:08.400 but after that I expect somewhere around February it'll die down, 0:10:08.559 --> 0:10:11.800 but it will not stop until the Israeli government really 0:10:11.840 --> 0:10:14.559 gets at the heart of Hamas's leadership in han Yunis 0:10:14.600 --> 0:10:16.520 in the South, Goazagara. 0:10:16.640 --> 0:10:20.440 What's the support for President Netanyahu at this point, and 0:10:20.520 --> 0:10:24.160 I guess by extension just the overall war effort here. 0:10:24.240 --> 0:10:26.360 Where are we in that right now? 0:10:26.840 --> 0:10:27.720 That's a great question. 0:10:28.280 --> 0:10:31.960 Israelis have really spoken very loudly against against Netanyahu, and 0:10:31.960 --> 0:10:34.640 by the way, they were speaking loudly against him before 0:10:34.960 --> 0:10:39.800 before October seventh, because of his own corruption scandals, because 0:10:39.800 --> 0:10:42.840 of how he was trying to overhaul the judiciary inside 0:10:42.920 --> 0:10:46.599 Israel in order to protect himself from these corruption investigations, 0:10:46.800 --> 0:10:49.480 and so there was already a lot of animosity toward him, 0:10:49.480 --> 0:10:52.320 a lot of protests against him, and this is only 0:10:52.360 --> 0:10:56.080 increased that sentiment further because a lot of his policies 0:10:56.400 --> 0:10:59.800 created the vulnerabilities that Hamas took advantage of when they 0:10:59.840 --> 0:11:03.280 went and pursued their horrific terrorist attack on October seventh. 0:11:03.400 --> 0:11:05.120 But that said, they are in the middle of this 0:11:05.200 --> 0:11:05.880 intense war. 0:11:05.920 --> 0:11:08.320 And so while you have what seems to be a 0:11:08.440 --> 0:11:11.120 majority of Israelis, and there's been a lot of Israeli 0:11:11.120 --> 0:11:15.000 polling on that against Natanya Who add more in favor 0:11:15.040 --> 0:11:17.960 of Benny Gantz, who is in the wartime cabinet. I 0:11:18.000 --> 0:11:20.679 don't expect Natanya Who to leave or resign or be 0:11:20.760 --> 0:11:23.240 forced out at this moment. But like I said, when 0:11:23.800 --> 0:11:27.360 those intense operations slow down a bit, which I expect 0:11:27.559 --> 0:11:30.480 sometime after the new year, that's when the Israelis will 0:11:30.520 --> 0:11:32.400 turn and say, all right, now it's time to kick 0:11:32.440 --> 0:11:35.160 Natanya Who out, and I expect Benny Gantz to be 0:11:35.200 --> 0:11:35.839 put in place. 0:11:36.880 --> 0:11:40.719 Hega, what then of the administration, we of course are 0:11:40.720 --> 0:11:43.400 heading towards an election in twenty twenty four. With your 0:11:43.400 --> 0:11:47.199 twelve years of experience of working within government, what will 0:11:47.200 --> 0:11:50.560 the response level end up being from the White House 0:11:50.559 --> 0:11:51.080 at the moment. 0:11:52.080 --> 0:11:55.120 I don't expect the position of the White House when 0:11:55.120 --> 0:11:57.760 it comes to calling for a ceasefire or to place 0:11:57.760 --> 0:12:01.280 conditions on USA to Israel to change at all. And 0:12:02.360 --> 0:12:04.080 some of it could be because they're banking on the 0:12:04.120 --> 0:12:06.600 fact that it will be short lived, and it will be, 0:12:07.280 --> 0:12:09.400 like I said, the grand scheme of how wars go 0:12:09.440 --> 0:12:12.560 around the world and in history, these wars between Israel 0:12:12.600 --> 0:12:15.000 and Hamas tend to be relatively short and so they 0:12:15.080 --> 0:12:16.560 may be banking on that. But a lot of it 0:12:16.600 --> 0:12:20.160 really does stem from a genuine desire to defeat Hamas completely, 0:12:20.559 --> 0:12:23.280 a belief that the Israeli government can do so. And 0:12:23.320 --> 0:12:25.719 by the way, I agree with that, given that we 0:12:25.800 --> 0:12:29.120 saw it happen with the international Coalition against Isis, that 0:12:29.240 --> 0:12:31.679 might not mean that they could eradicate Hamas completely the 0:12:31.720 --> 0:12:35.120 way in Etanyahu says, But defeating Hamas and its military 0:12:35.120 --> 0:12:38.880 and governing capabilities is a real achievable goal in my opinion, 0:12:38.960 --> 0:12:40.840 and you can see that the Biden administration wants that, 0:12:41.160 --> 0:12:43.360 and they also don't want to show any kind of 0:12:44.160 --> 0:12:46.719 lack of support for Israel at this time, and that's 0:12:46.720 --> 0:12:49.560 why they're not going to place additional conditions that already 0:12:49.600 --> 0:12:53.880 exist on the weaponry equipment vehicles going going to Israel. 0:12:54.520 --> 0:12:57.080 That said, you do see them heightening this rhetoric on 0:12:57.120 --> 0:13:00.599 the US side, calling on Israel to really limit or 0:13:00.600 --> 0:13:03.280 avoid civilian casualties at all costs, to be as targeted 0:13:03.280 --> 0:13:06.240 as possible, to transfer to low intensity operations. 0:13:06.400 --> 0:13:08.199 And that's because not only is. 0:13:08.120 --> 0:13:10.360 That morally the right thing to do, but in terms 0:13:10.400 --> 0:13:15.040 of the strategic goal of a broader, secure Israeli state 0:13:15.520 --> 0:13:19.400 that harming civilians this way, killing them this way, doesn't 0:13:19.400 --> 0:13:22.760 help them achieve that goal. As Lloyd Austin says, Secretary 0:13:22.800 --> 0:13:26.079 of Austin, it would replace a tactical victory with a 0:13:26.120 --> 0:13:28.840 strategic defeat. And that's why you see the US continuing 0:13:28.840 --> 0:13:29.760 to advise them this way. 0:13:30.280 --> 0:13:32.880 So are the Middle East is not the only hot 0:13:32.920 --> 0:13:35.440 spot out there. We still have the war in Ukraine. 0:13:35.440 --> 0:13:38.400 And I spoke to Admiral James Tervitas a couple of 0:13:38.440 --> 0:13:41.240 weeks ago, the former NATO chairman, and he said, basically, 0:13:41.280 --> 0:13:44.880 he just returned from Korea and he said what he 0:13:44.960 --> 0:13:47.160 believes is going to have to happen in Ukraine is 0:13:47.200 --> 0:13:50.240 what happened in Korea in nineteen fifty two or fifty three, 0:13:50.280 --> 0:13:55.360 which is basically swapping land for peace. Is there any 0:13:55.400 --> 0:13:57.960 feeling in that part of the world that that's even 0:13:58.040 --> 0:14:00.400 on the table or as possible? What's update? 0:14:01.800 --> 0:14:05.760 Well, it's not the feeling certainly coming from Ukraine, and 0:14:05.760 --> 0:14:08.760 it's not entirely yet the feeling in Europe, though you 0:14:08.800 --> 0:14:12.319 see things starting to become a little bit awkward or uncomfortable, 0:14:12.360 --> 0:14:14.320 if you will, so on that. So, first of all, 0:14:14.360 --> 0:14:16.920 I'm so glad you're asking about Ukraine, because nobody is 0:14:16.960 --> 0:14:20.320 really and just because the attention has diverted to Israelkauz, 0:14:20.360 --> 0:14:22.280 it does not mean that the war there has led 0:14:22.400 --> 0:14:23.160 up at all. 0:14:24.000 --> 0:14:26.440 Things there seem to be in somewhat of a stalemate. 0:14:26.480 --> 0:14:29.080 Though I have to really stress that while we see 0:14:29.080 --> 0:14:32.200 a lot of press articles saying that Ukraine is losing 0:14:32.240 --> 0:14:35.480 its counter offensive, that is not true. In July, Ukraine 0:14:35.560 --> 0:14:38.640 had regained fifty percent of the territory that Russia had 0:14:38.640 --> 0:14:40.680 seized since February twenty twenty two. 0:14:40.480 --> 0:14:41.520 And that is significant. 0:14:41.880 --> 0:14:43.840 That said, they are running out of ammunition and we 0:14:43.920 --> 0:14:46.280 know that, and Presidence Zelenski came to the United States 0:14:46.320 --> 0:14:49.960 and pleaded to Congress for more aid. A lot of 0:14:50.000 --> 0:14:53.200 experts say that they'll run out by March. Now that said, 0:14:53.440 --> 0:14:55.240 I do believe at the beginning of this year, at 0:14:55.280 --> 0:14:58.280 the beginning of twenty twenty four, that Congress will pass 0:14:58.360 --> 0:15:01.560 a new round of aid for Ukraine, for Israel, and 0:15:01.640 --> 0:15:03.720 also for the southern border, which has been which is 0:15:03.720 --> 0:15:06.280 what Republicans have said is holding up a They want 0:15:06.320 --> 0:15:09.000 to compromise on that. President Biden has said he's going 0:15:09.000 --> 0:15:10.520 to compromise on that, and I think they will. I 0:15:10.520 --> 0:15:12.920 think they'll come to an agreement. But that said, it 0:15:13.040 --> 0:15:17.920 shows that things are becoming more difficult in the garnering 0:15:18.200 --> 0:15:21.240 support for Ukraine. And that is in part because if 0:15:21.240 --> 0:15:24.920 it's an election year, Americans are growing a bit more weary. 0:15:25.200 --> 0:15:27.880 Not the majority, but but a lot are growing more 0:15:27.920 --> 0:15:31.080 weary of support for Ukraine. Obviously, you have inflation, and 0:15:31.120 --> 0:15:33.840 in Europe you're seeing the same. The Hungarian Prime Minister 0:15:33.920 --> 0:15:36.880 Victor Orbon he got in the way of the EU 0:15:37.120 --> 0:15:40.520 sending another aid package to Ukraine. The EU requires consensus 0:15:40.560 --> 0:15:43.080 of all of its twenty seven member states in order 0:15:43.120 --> 0:15:44.040 to pass something. 0:15:43.800 --> 0:15:46.240 Like that, and so you're seeing difficulties arise. 0:15:46.960 --> 0:15:49.560 Like I said, they will get there across the finish 0:15:49.640 --> 0:15:52.280 line in the new year. But given how difficult it's becoming, 0:15:52.400 --> 0:15:55.240 I'm not surprised that you're starting to see leaders say, hey, 0:15:55.440 --> 0:15:57.800 we don't want to leave Ukraine in the lurk like this, 0:15:58.160 --> 0:16:02.160 and so maybe we need to start considering how to 0:16:02.400 --> 0:16:04.840 lay the ground up for negotiations and position Ukraine in 0:16:04.960 --> 0:16:06.800 as strong a position as possible. 0:16:07.400 --> 0:16:09.640 Grey, thanks so much for joining us. Really really appreciate 0:16:09.640 --> 0:16:13.000 getting your perspective for Ur Shamali, CEO and founder of 0:16:13.120 --> 0:16:16.880 Greenwich Media Strategies. She's also an adjunct professor at Columbia 0:16:16.960 --> 0:16:19.640 University School of International Public Affairs and a non resident 0:16:19.760 --> 0:16:23.360 Senior Fellow at the Atlantic Council's at Geoeconomic Center. 0:16:23.520 --> 0:16:26.640 You're listening to the tape Can's are Live program Bloomberg 0:16:26.680 --> 0:16:30.280 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:16:30.360 --> 0:16:33.600 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:16:33.600 --> 0:16:36.440 You can also listen live on Amazon Alexa from our 0:16:36.440 --> 0:16:41.520 flagship New York station, Just say Alexa play Bloomberg eleven thirty. 0:16:42.520 --> 0:16:44.480 We want to be bringing in Jennifer Lee, senior economist 0:16:44.480 --> 0:16:47.560 at Remote Capital Markets, and Jennifer It has been an 0:16:47.600 --> 0:16:49.960 extraordinary year. If you think about the way in which 0:16:50.000 --> 0:16:53.280 basically every economists got it wrong in the direction of travel, well, 0:16:53.680 --> 0:16:57.000 how far we'd go in terms of boring costs going high. 0:16:57.080 --> 0:16:59.120 They never anticipated quite the ramp up. 0:16:59.360 --> 0:17:00.440 But now every. 0:17:00.280 --> 0:17:02.680 Economist thinking that we're going to be cutting an extraordinary 0:17:02.680 --> 0:17:05.440 debate degree. Well, the market see at least one point 0:17:05.480 --> 0:17:08.159 five paces, well one hundred and fifty basis points one 0:17:08.160 --> 0:17:11.000 point five percent for the next year. We feel as 0:17:11.000 --> 0:17:13.240 though the market's getting ahead of itself when it comes 0:17:13.240 --> 0:17:16.000 to overall federal reserve policy or what do you make 0:17:16.000 --> 0:17:16.280 of it? 0:17:17.600 --> 0:17:19.640 Good morning, and thank you for having me on. Yes, 0:17:19.760 --> 0:17:20.240 I think the. 0:17:20.200 --> 0:17:24.440 Market is a little bit ahead of itself, to put 0:17:24.480 --> 0:17:28.000 it gently. Uh, there's still some talk about, you know, earlier, 0:17:28.200 --> 0:17:31.120 earlier rate cuts for the federal reserve. But I don't 0:17:31.160 --> 0:17:32.800 see how that's going to happen. You know, it's sort 0:17:32.840 --> 0:17:35.720 of something dramatic happening. You know, we don't look, but 0:17:35.760 --> 0:17:37.919 we do look. We do look for rate cuts to 0:17:37.920 --> 0:17:39.800 come around the middle part of the year, at about 0:17:39.800 --> 0:17:44.480 one hundred basis points in total. It's just we've gotten 0:17:44.480 --> 0:17:47.280 so much momentum still building up. I mean, even though 0:17:47.320 --> 0:17:49.800 we saw three quarter growth and it seems like forever ago, 0:17:49.840 --> 0:17:51.920 you know, revised down last week for two four point 0:17:52.000 --> 0:17:54.480 nine percent. That's still a heck of a strong number. 0:17:54.560 --> 0:17:56.560 You know, there's nobody denying that. And that was, by 0:17:56.560 --> 0:17:59.160 the way, the very first estimate that that the BA 0:17:59.240 --> 0:18:02.040 came out was was four point nine percent. So four 0:18:02.080 --> 0:18:04.760 point nine percent Q four so far, you know, we've 0:18:04.800 --> 0:18:07.160 seen signs of slowing, but there is still a lot 0:18:07.200 --> 0:18:07.760 of momentum. 0:18:07.840 --> 0:18:10.080 And you know, we again it seems like for hour ago. 0:18:10.160 --> 0:18:12.000 But just last week we saw the personal spending and 0:18:12.000 --> 0:18:15.320 income data bully cow still very strong. You zero point 0:18:15.440 --> 0:18:19.080 three percent real spending and it was basically across the board. 0:18:19.119 --> 0:18:20.160 And I always look. 0:18:20.040 --> 0:18:22.359 At the key things you know, that people could be 0:18:22.440 --> 0:18:24.400 spending on or would not be spending on if they're 0:18:24.480 --> 0:18:27.920 really really worried, and there's still more spending on dining out. 0:18:28.200 --> 0:18:31.320 There's a lot more spending on recreational goods and vehicles 0:18:31.520 --> 0:18:33.560 things like that that you know, if things were really 0:18:33.600 --> 0:18:35.880 really tough, you wouldn't be doing all that, And there's 0:18:35.920 --> 0:18:38.400 still some spending on that front. So we are still 0:18:38.440 --> 0:18:41.920 seeing some decent momentum moving into the fourth court, into 0:18:41.960 --> 0:18:45.080 the turn of the year. So again, earlier rate cuts 0:18:45.119 --> 0:18:46.960 I think are just overblown. 0:18:47.040 --> 0:18:50.680 Those those those that sort of talk interesting. 0:18:50.840 --> 0:18:53.679 So if we do see still a lot resilience, if 0:18:53.720 --> 0:18:58.040 we do see ultimately also maybe wage inflation being sustained, 0:18:58.440 --> 0:19:02.600 do you do you ultimately think that the FED will 0:19:02.640 --> 0:19:06.040 have to become more joined up in its approach messaging 0:19:06.080 --> 0:19:08.000 as well, because that's where the whiplash seems to be 0:19:08.040 --> 0:19:11.440 coming in. We have FED chair Pale speaking of perhaps 0:19:11.480 --> 0:19:13.840 this necessity to start cutting in twenty twenty four, and 0:19:13.840 --> 0:19:16.400 then a couple of FED speak come out and try 0:19:16.440 --> 0:19:18.280 and weel us back in terms of how far how 0:19:18.320 --> 0:19:20.520 fast are we getting a consistent message? 0:19:21.720 --> 0:19:24.840 Up until last up until recently, I would say yes, 0:19:24.880 --> 0:19:25.919 But now it's like I. 0:19:25.880 --> 0:19:27.720 Don't know what to happen at FED meeting. 0:19:27.760 --> 0:19:31.199 But you know, obviously Fed Tairpal I feel took you know, 0:19:31.240 --> 0:19:32.760 through the markets for a loop when he you know, 0:19:32.960 --> 0:19:36.080 started talking about the fact that ray cuts had entered 0:19:36.080 --> 0:19:39.160 the discussion, you know, and he didn't really push back 0:19:39.160 --> 0:19:41.160 on too much of the questioning that he got during 0:19:41.200 --> 0:19:44.400