1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market crows, and Bloomberg experts, along 4 00:00:11,560 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,479 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,000 Speaker 1: at Bloomberg dot com slash podcast. Matt, we are so 7 00:00:22,079 --> 00:00:24,919 Speaker 1: fortunate for our next guest here to help us with context. 8 00:00:24,960 --> 00:00:27,200 Speaker 1: Here um one of our all time favorites as we 9 00:00:27,240 --> 00:00:31,600 Speaker 1: think about these geopolitical military issues around the world. James Travitas, 10 00:00:31,840 --> 00:00:34,360 Speaker 1: Admiral the United States Navies retired adam all the US 11 00:00:34,440 --> 00:00:37,320 Speaker 1: Navies in the U S Navy thirty seven years, served 12 00:00:37,320 --> 00:00:40,960 Speaker 1: as a fifteen commander in US European Command and NATO's 13 00:00:41,000 --> 00:00:44,519 Speaker 1: sixteen Supreme Allied Commander. In your, Admiral, thank you so 14 00:00:44,600 --> 00:00:47,120 Speaker 1: much for joining us Right now, we just heard from 15 00:00:47,400 --> 00:00:51,840 Speaker 1: President Zelenski's chief of staff taking a very very hard 16 00:00:51,920 --> 00:00:55,040 Speaker 1: line about how far the people of Ukraine will take 17 00:00:55,080 --> 00:00:57,720 Speaker 1: this fight to Russia. What is your view of what 18 00:00:57,800 --> 00:01:02,880 Speaker 1: you're seeing on the ground. Well, first of all, what 19 00:01:02,960 --> 00:01:06,160 Speaker 1: we are learning is that the center of gravity in 20 00:01:06,200 --> 00:01:10,600 Speaker 1: this fight is not the Russian army and it's not 21 00:01:10,680 --> 00:01:15,520 Speaker 1: really the Ukrainian military arms. The center of gravity is 22 00:01:15,560 --> 00:01:20,360 Speaker 1: the spirit, the will of these Ukrainians. It's become remarkable 23 00:01:20,520 --> 00:01:25,039 Speaker 1: and it's personified by President Zelinski. And I agree with you. 24 00:01:25,120 --> 00:01:27,840 Speaker 1: I caught the tail end of the interview. The chief 25 00:01:27,840 --> 00:01:31,040 Speaker 1: of staff does a great job channeling his boss, who 26 00:01:31,160 --> 00:01:35,920 Speaker 1: is marching around the world doing these inspirational speeches at 27 00:01:35,959 --> 00:01:40,039 Speaker 1: every major parliament and congress in the world. Um so 28 00:01:40,120 --> 00:01:43,720 Speaker 1: there's a great deal to admire on the Ukrainian side 29 00:01:43,720 --> 00:01:47,440 Speaker 1: of this. In terms of his comments about negotiation, Hey, 30 00:01:47,480 --> 00:01:51,360 Speaker 1: it's Bloomberg right. We're a business network. We know how 31 00:01:51,400 --> 00:01:56,360 Speaker 1: you negotiate, and you negotiate in two ways. One is 32 00:01:56,920 --> 00:02:01,840 Speaker 1: you been as much positive of momentum for your side 33 00:02:01,880 --> 00:02:04,280 Speaker 1: as you possibly can. At number two, you start with 34 00:02:04,320 --> 00:02:08,280 Speaker 1: a hardline position, recognizing you're going to have to negotiated 35 00:02:08,320 --> 00:02:10,320 Speaker 1: in from that. And I think both those are true 36 00:02:10,360 --> 00:02:14,200 Speaker 1: in this case. In terms of the Russian response, Admiral, 37 00:02:14,240 --> 00:02:19,040 Speaker 1: we've seen UM more and more destructive weapons used. There 38 00:02:19,080 --> 00:02:23,320 Speaker 1: was a lot of criticism when the hypersonic missiles UM 39 00:02:23,480 --> 00:02:26,080 Speaker 1: were put into action, but isn't that to be expected, 40 00:02:26,120 --> 00:02:31,040 Speaker 1: as uh war rages on this long. Of course, they 41 00:02:31,040 --> 00:02:35,639 Speaker 1: expected to march in and you know, be greeted much 42 00:02:35,720 --> 00:02:39,679 Speaker 1: the way Hitler's troops were greeted when they um completed 43 00:02:39,680 --> 00:02:42,639 Speaker 1: on Schlis of Austria. That didn't happen, So they're going 44 00:02:42,680 --> 00:02:49,080 Speaker 1: to use bigger force. Indeed, they were expecting bouquets of 45 00:02:49,160 --> 00:02:51,880 Speaker 1: flowers and bottles of vodka, and what they got were 46 00:02:51,960 --> 00:02:55,160 Speaker 1: bottles of gas lead with rags, stuff to the top 47 00:02:55,240 --> 00:02:59,760 Speaker 1: Molotov cocktails. UM. It has been extraordinary to watch the 48 00:02:59,800 --> 00:03:04,200 Speaker 1: fit alire of Russian intelligence and the isolation of Vladimir 49 00:03:04,280 --> 00:03:08,680 Speaker 1: Putin personally, who clearly had no clue what this was 50 00:03:08,720 --> 00:03:12,280 Speaker 1: going to look like, and his people, uh failed miserably 51 00:03:12,400 --> 00:03:15,600 Speaker 1: at least thus far. So Plan A, you're exactly right, 52 00:03:15,800 --> 00:03:20,120 Speaker 1: was unchlus. It was sweep across the country, blitz creeb, 53 00:03:20,160 --> 00:03:23,760 Speaker 1: a little bit of fighting, find Zalinsky sued him and 54 00:03:23,800 --> 00:03:27,120 Speaker 1: put a public government in Kiev that was planned in UM. 55 00:03:27,240 --> 00:03:31,959 Speaker 1: That is over. Plan B, you're also correct, is kind 56 00:03:31,960 --> 00:03:36,200 Speaker 1: of looking like fifteenth century siege warfare. Bring all your 57 00:03:36,280 --> 00:03:40,240 Speaker 1: cannons around the city and just pounded to dirt, terrorized 58 00:03:40,320 --> 00:03:43,240 Speaker 1: the population, and UM at the end of the day, 59 00:03:43,280 --> 00:03:47,920 Speaker 1: then you can gain strength for negotiations. That's what Putin's 60 00:03:47,960 --> 00:03:50,640 Speaker 1: doing on his side of the coin. None of this 61 00:03:51,000 --> 00:03:54,280 Speaker 1: is unexpected in the way that worth typically unfold but 62 00:03:55,120 --> 00:03:58,600 Speaker 1: has got But Admiral concern is that Plan C is 63 00:03:58,840 --> 00:04:06,000 Speaker 1: a biological weapon and possibly tactical nukes. It certainly is 64 00:04:06,040 --> 00:04:08,720 Speaker 1: a deep concern, and you saw it addressed yesterday by 65 00:04:08,760 --> 00:04:11,600 Speaker 1: President Biden and the heads of NATO. UM. And so 66 00:04:11,680 --> 00:04:15,000 Speaker 1: what are we doing about it? We are send Putent 67 00:04:15,160 --> 00:04:18,560 Speaker 1: signals that if he crosses that kind of weapon of 68 00:04:18,680 --> 00:04:22,240 Speaker 1: mass destruction line, there will be serious consequences. What I 69 00:04:22,279 --> 00:04:25,640 Speaker 1: suspect would happen. That's what would finally lead NATO to 70 00:04:25,680 --> 00:04:29,039 Speaker 1: put a doe flies on up. That's very risky, very 71 00:04:29,200 --> 00:04:33,279 Speaker 1: potential confrontation between ducle ron pounds. But we've got to 72 00:04:33,320 --> 00:04:36,120 Speaker 1: tell Putin that if he does that, if he uses 73 00:04:36,200 --> 00:04:40,159 Speaker 1: a tactical nuke of biologic a chemical weapon, UM, he 74 00:04:40,279 --> 00:04:44,160 Speaker 1: will face the full might of the alliance. UM boy, 75 00:04:44,200 --> 00:04:46,719 Speaker 1: I hope we don't go there, because it is a 76 00:04:46,800 --> 00:04:50,920 Speaker 1: potential for real miscalculation at a higher level conflict. Admiral 77 00:04:50,960 --> 00:04:54,760 Speaker 1: I got to ask about not a day goes by 78 00:04:54,960 --> 00:04:57,200 Speaker 1: in this conflict when I'm not reminded of your novel. 79 00:04:57,600 --> 00:04:59,320 Speaker 1: And I was telling Paul earlier, I think you know, 80 00:04:59,360 --> 00:05:02,880 Speaker 1: in terms of a fictional entertaining work, it's up there 81 00:05:02,880 --> 00:05:05,280 Speaker 1: with anything that Jack Carr or or Lee Child has 82 00:05:05,279 --> 00:05:09,160 Speaker 1: ever written. But um, the problem with your book is 83 00:05:09,200 --> 00:05:12,520 Speaker 1: that it's so realistic, and it's ringing true truer and 84 00:05:12,560 --> 00:05:16,880 Speaker 1: truer as days go by. Here, how much of a 85 00:05:16,920 --> 00:05:21,520 Speaker 1: problem is China? And what what do you think President 86 00:05:21,640 --> 00:05:26,839 Speaker 1: She is thinking and doing here? Yeah, novel in the 87 00:05:26,880 --> 00:05:29,279 Speaker 1: Next World War, of course, has about a potential war 88 00:05:29,320 --> 00:05:32,520 Speaker 1: between the US and China, And I agree with you, 89 00:05:32,960 --> 00:05:35,000 Speaker 1: what's happening in front of us ought to act as 90 00:05:35,040 --> 00:05:38,080 Speaker 1: a real cautionary tale because if you think this is 91 00:05:38,200 --> 00:05:42,400 Speaker 1: destructive picture of war between US and China, what President 92 00:05:42,520 --> 00:05:45,200 Speaker 1: She is trying to do is kind of keep the 93 00:05:45,240 --> 00:05:48,880 Speaker 1: ball on the middle of the fairway. He doesn't want 94 00:05:48,920 --> 00:05:53,359 Speaker 1: to completely align his nation with Russia, partly because he 95 00:05:53,400 --> 00:05:56,279 Speaker 1: thinks Russia is looking weaker by the minute and it's 96 00:05:56,320 --> 00:05:59,320 Speaker 1: looking like a losing bet to do so. On the 97 00:05:59,360 --> 00:06:01,760 Speaker 1: other hand, doesn't want to align with the West and 98 00:06:02,200 --> 00:06:06,640 Speaker 1: fall in completely on these sanctions because he objects to 99 00:06:06,680 --> 00:06:09,880 Speaker 1: a great deal of how Russia and China, in his view, 100 00:06:09,880 --> 00:06:11,920 Speaker 1: are treated by the way, so he'll try and play 101 00:06:11,960 --> 00:06:15,120 Speaker 1: the ball down the middle of the field. He will violate. 102 00:06:15,200 --> 00:06:19,160 Speaker 1: I suspect some of the sanctions, perhaps about oil and gas, 103 00:06:19,240 --> 00:06:22,600 Speaker 1: will allow Russian banks that come off the Swift system 104 00:06:22,640 --> 00:06:25,719 Speaker 1: to go on his SIPs system, a kind of binib 105 00:06:26,040 --> 00:06:30,560 Speaker 1: version of the Swift system. He'll say some generally supportive things, 106 00:06:30,680 --> 00:06:34,360 Speaker 1: but on the other hand, he's given humanitarian aid to Ukraine, 107 00:06:34,680 --> 00:06:39,960 Speaker 1: he has spoken against invading other sovereign countries. Um. He 108 00:06:40,120 --> 00:06:44,279 Speaker 1: is also finally watching Taiwan and thinking how does this 109 00:06:44,400 --> 00:06:48,360 Speaker 1: play with my calculus? I think, interestingly, Matt, it makes 110 00:06:48,440 --> 00:06:52,320 Speaker 1: him less enthusiastic about an attack on Taiwan because he's 111 00:06:52,360 --> 00:06:55,200 Speaker 1: watching what happened to Russia not going so well. All Right, 112 00:06:55,240 --> 00:06:58,200 Speaker 1: we're speaking with James Travitas, Admiral United States Navy, and 113 00:06:58,400 --> 00:07:02,000 Speaker 1: most importantly for this conversation, and I think NATO's sixteen 114 00:07:02,360 --> 00:07:07,240 Speaker 1: supreme Allied Commander in Europe certainly has the you know, 115 00:07:07,320 --> 00:07:11,560 Speaker 1: informed opinion. Admiral, if you were advising President Biden right 116 00:07:11,680 --> 00:07:15,400 Speaker 1: now today, what would you tell him about what we 117 00:07:15,440 --> 00:07:17,760 Speaker 1: should do, what NATO should do over the coming days 118 00:07:17,760 --> 00:07:22,240 Speaker 1: and weeks, and maybe months. First, I'd say it's gone 119 00:07:22,520 --> 00:07:26,080 Speaker 1: as well as could be expected at this point. The 120 00:07:26,200 --> 00:07:30,040 Speaker 1: unity of the NATO alliance has been quite extraordinary. Continue 121 00:07:30,080 --> 00:07:33,520 Speaker 1: to encourage the Germans to increase their defense spending, which 122 00:07:33,520 --> 00:07:37,400 Speaker 1: they've done. Move NATO troops to the borders. The thing 123 00:07:37,480 --> 00:07:40,360 Speaker 1: I would say to do that we're not doing. I 124 00:07:40,400 --> 00:07:42,920 Speaker 1: would say, Mr President, We've got to look again at 125 00:07:42,920 --> 00:07:47,240 Speaker 1: giving the Ukrainians tactical aircraft Big twenty nine and others. 126 00:07:47,560 --> 00:07:50,160 Speaker 1: Let's give them the tools to implement a dough fly's 127 00:07:50,160 --> 00:07:52,960 Speaker 1: So that's a big advantage for Russia. It's a whole 128 00:07:53,000 --> 00:07:56,560 Speaker 1: in our strategy. Beyond that single point, I think we're 129 00:07:56,560 --> 00:08:01,000 Speaker 1: doing a reasonably good job. I wonder what you think about, UM, 130 00:08:01,040 --> 00:08:04,640 Speaker 1: the Middle East in this scenario, Uh, you know, because 131 00:08:05,480 --> 00:08:09,280 Speaker 1: this White House has snubbed Crown Prince Mohammed been Salmon 132 00:08:09,360 --> 00:08:14,280 Speaker 1: for understandable reasons. His humanitarian record and Yemen is not good, 133 00:08:14,440 --> 00:08:19,320 Speaker 1: and he allegedly dismembered a journalist. UM. On the other hand, 134 00:08:20,240 --> 00:08:23,120 Speaker 1: you know, Saudi Arabia is so important strategically for the 135 00:08:23,200 --> 00:08:25,840 Speaker 1: US as far as I understand it. What's your thought? 136 00:08:27,560 --> 00:08:31,080 Speaker 1: I agree with your assessment, and we um if we're 137 00:08:31,080 --> 00:08:34,760 Speaker 1: going to make up Russian oil and gas in the markets, 138 00:08:34,840 --> 00:08:36,880 Speaker 1: which we want to do because we don't want to 139 00:08:36,880 --> 00:08:41,800 Speaker 1: see inflationary pressures jump even more. We have got to 140 00:08:41,840 --> 00:08:44,640 Speaker 1: get not just the Saudis, but the Gulf States. You 141 00:08:44,840 --> 00:08:48,640 Speaker 1: a guitar, et cetera. UM, that is where you have 142 00:08:48,880 --> 00:08:52,280 Speaker 1: for capacity. Um. Last thought on the Middle East, by 143 00:08:52,280 --> 00:08:54,760 Speaker 1: the way, I think the events of this war in 144 00:08:54,920 --> 00:08:58,840 Speaker 1: Ukraine have elevated the chances of a deal with Iran. 145 00:08:59,320 --> 00:09:01,400 Speaker 1: And we could go back and forth on whether that's 146 00:09:01,440 --> 00:09:03,880 Speaker 1: a good deal or a bad deal, but it would 147 00:09:03,880 --> 00:09:08,800 Speaker 1: certainly also add capacity into the hydrocarbon marketplaces. I think 148 00:09:08,840 --> 00:09:12,320 Speaker 1: that puts upward pressure on concluding the deal. I would 149 00:09:12,360 --> 00:09:15,880 Speaker 1: say that is probably in the realm of that deal 150 00:09:15,920 --> 00:09:19,400 Speaker 1: will occur, sanctions will come off of the Iran and 151 00:09:19,440 --> 00:09:22,680 Speaker 1: Iran will rejoin global energy markets. How do you think, 152 00:09:22,720 --> 00:09:27,400 Speaker 1: Admiral we judge how does history judge? Angelomericle and kind 153 00:09:27,440 --> 00:09:32,480 Speaker 1: of the German appeasement of Putin, because I remember when 154 00:09:32,559 --> 00:09:34,640 Speaker 1: the US was over there begging them to put in 155 00:09:34,840 --> 00:09:37,000 Speaker 1: l en G terminals, and they didn't want to hear 156 00:09:37,040 --> 00:09:41,400 Speaker 1: it because they were so excited about Nordstream too. UM. 157 00:09:41,480 --> 00:09:43,800 Speaker 1: And believe me, I was part of that whole effort. 158 00:09:43,800 --> 00:09:47,960 Speaker 1: As Supreme elect's manner, I would talk to Chncellor Merkel 159 00:09:48,080 --> 00:09:52,559 Speaker 1: constantly about not only that but also defense spending. We 160 00:09:52,720 --> 00:09:56,400 Speaker 1: got nowhere. Vladimir Putin in four weeks has managed to 161 00:09:56,440 --> 00:09:59,480 Speaker 1: close those arguments and now Germany has going to the 162 00:09:59,600 --> 00:10:02,920 Speaker 1: right place. But Angela Merkel was chancellor for sixteen years, 163 00:10:02,920 --> 00:10:06,559 Speaker 1: elected four times. She has a very strong record overall. 164 00:10:06,920 --> 00:10:09,280 Speaker 1: But she'll look back. I hope she would look back 165 00:10:09,320 --> 00:10:11,680 Speaker 1: and say I made a mistake there. Nord Street two 166 00:10:12,040 --> 00:10:15,560 Speaker 1: was a mistake. Trust in Russia in any capacity was 167 00:10:15,600 --> 00:10:18,400 Speaker 1: a mistake. I think Germany gets yeah, and not raising 168 00:10:18,440 --> 00:10:21,640 Speaker 1: defense spending. I remember when I lived over there for 169 00:10:21,720 --> 00:10:26,760 Speaker 1: years as well. There military was practicing with broomsticks because 170 00:10:26,760 --> 00:10:30,880 Speaker 1: they didn't have enough rifles. They had one working sub 171 00:10:30,920 --> 00:10:35,160 Speaker 1: and like you know, twenty five working tanks. Um, it's 172 00:10:35,200 --> 00:10:37,600 Speaker 1: not going to be an easy you know, just like 173 00:10:37,720 --> 00:10:39,920 Speaker 1: getting l n G over there. It's not gonna happen 174 00:10:39,920 --> 00:10:42,800 Speaker 1: overnight or this year, next year, the year after building 175 00:10:42,840 --> 00:10:46,160 Speaker 1: their army back is going to take a decade. I 176 00:10:46,160 --> 00:10:49,640 Speaker 1: don't think it'll take a decade because there is a 177 00:10:49,720 --> 00:10:53,840 Speaker 1: reasonable base inside the German military. In my experience having 178 00:10:53,920 --> 00:10:58,800 Speaker 1: commanded those troops in combat. But you're absolutely correct that 179 00:10:58,960 --> 00:11:02,400 Speaker 1: it does not turn on a dime. So where do 180 00:11:02,480 --> 00:11:04,440 Speaker 1: I score it. I think it's a three to five 181 00:11:04,520 --> 00:11:06,920 Speaker 1: year project, and they made a great down payment on 182 00:11:07,000 --> 00:11:11,360 Speaker 1: it by effectively doubling their defense budget. UM. Think of 183 00:11:11,400 --> 00:11:14,480 Speaker 1: it this way. It's kind of like when Carter was 184 00:11:14,600 --> 00:11:18,280 Speaker 1: defeated and Ronald Reagan came in. It took us three 185 00:11:18,400 --> 00:11:20,640 Speaker 1: to five years to get the U. S. Military back 186 00:11:20,640 --> 00:11:22,800 Speaker 1: where it needed to be. That's what I think we're 187 00:11:22,800 --> 00:11:26,319 Speaker 1: going to see in Germany. Admiral, just lastly here thirty seconds. 188 00:11:26,920 --> 00:11:30,480 Speaker 1: Do you think President Putin ever resorts to nuclear and 189 00:11:30,760 --> 00:11:36,960 Speaker 1: or chemical weapons? I think not nuclear. He recognizes the 190 00:11:37,000 --> 00:11:39,920 Speaker 1: immense downside of that in every dimension. I think it's 191 00:11:39,960 --> 00:11:43,760 Speaker 1: possible he would attempt something with chemical weapons, try and 192 00:11:43,840 --> 00:11:47,839 Speaker 1: blame it on the Ukrainians and further terrorize the population 193 00:11:47,880 --> 00:11:50,680 Speaker 1: of Ukraine. He is a dark figure and I would 194 00:11:50,720 --> 00:11:53,160 Speaker 1: not put it past him. Adamal Sevidiz, thank you so 195 00:11:53,240 --> 00:11:54,679 Speaker 1: much for joining us. We've got a couple of extra 196 00:11:54,760 --> 00:11:56,959 Speaker 1: minutes with you, which we really appreciate. We really love 197 00:11:57,000 --> 00:12:01,160 Speaker 1: getting your perspective here, given your experiences in Europe and 198 00:12:01,200 --> 00:12:07,360 Speaker 1: with our military and NATO. They have a federal reserve 199 00:12:07,480 --> 00:12:10,719 Speaker 1: that's taken a very hawkish pivot, and City Group was 200 00:12:10,760 --> 00:12:14,480 Speaker 1: out this morning with an economics piece talking about multiple 201 00:12:14,760 --> 00:12:18,160 Speaker 1: fifty basis point rate increases from this federal reserve over 202 00:12:18,160 --> 00:12:20,880 Speaker 1: the next several months, getting even more hawkish. But there's 203 00:12:20,880 --> 00:12:24,319 Speaker 1: still some people that say, despite all that, the feed 204 00:12:24,440 --> 00:12:26,920 Speaker 1: is behind the curve? Is that a thing? We'll joining 205 00:12:26,960 --> 00:12:29,160 Speaker 1: us right now? Is Matt Winkler, Editor in Chief Emeritus 206 00:12:29,200 --> 00:12:32,679 Speaker 1: Bloomberg News, the founder of Bloomberg News. He joins us 207 00:12:32,679 --> 00:12:35,960 Speaker 1: here in our Bloomberg Interactive studio. He ain't phoning it 208 00:12:36,080 --> 00:12:38,720 Speaker 1: in from some of New Jersey. He is here, Matt, 209 00:12:38,840 --> 00:12:41,880 Speaker 1: Thanks for joining us here. Is the facts still behind 210 00:12:41,920 --> 00:12:44,160 Speaker 1: the curve? They seem pretty aggressive to me. And by 211 00:12:44,160 --> 00:12:48,240 Speaker 1: the way, we've heard people say this now, Matt, almost 212 00:12:48,240 --> 00:12:52,360 Speaker 1: every day. It's become um, it's become rope to say 213 00:12:52,360 --> 00:12:55,480 Speaker 1: the Fed is behind the curve. Well, that's that's really 214 00:12:55,640 --> 00:12:59,439 Speaker 1: the point, which is that you have this massive group 215 00:12:59,559 --> 00:13:04,480 Speaker 1: think uh with everyone if you like, led by Larry Summers, 216 00:13:05,080 --> 00:13:07,880 Speaker 1: probably the most prominent saying the FETE is behind the curb, 217 00:13:08,760 --> 00:13:13,160 Speaker 1: and uh, there are a handful of people very smart 218 00:13:13,200 --> 00:13:16,880 Speaker 1: people like Brad DeLong Is, an economist at Berkeley who 219 00:13:16,960 --> 00:13:22,040 Speaker 1: recently asked the question somewhat rhetorically, Um, okay, if the 220 00:13:22,040 --> 00:13:26,320 Speaker 1: FETE is behind the curb, then who are who are 221 00:13:26,360 --> 00:13:31,000 Speaker 1: the people who are the authorities who are supposed to 222 00:13:31,000 --> 00:13:35,760 Speaker 1: be directing us? And the evidence is there is nothing 223 00:13:36,040 --> 00:13:39,280 Speaker 1: out there other than the bond market, which in fact 224 00:13:39,679 --> 00:13:41,960 Speaker 1: shows that the FETE actually is not behind the curve. 225 00:13:42,040 --> 00:13:45,680 Speaker 1: The FETE is following in its data driven way what 226 00:13:45,840 --> 00:13:48,520 Speaker 1: the bond market is telling it. And so to assert 227 00:13:48,559 --> 00:13:51,360 Speaker 1: that the FETE is, you know, behind the curve, is 228 00:13:51,400 --> 00:13:53,920 Speaker 1: to assert that the bond market, which as you know, 229 00:13:54,160 --> 00:13:59,160 Speaker 1: is thirty trillion dollars and millions of people, is meaningless. 230 00:13:59,200 --> 00:14:02,199 Speaker 1: And of course it isn't meaningless because that's where people 231 00:14:02,360 --> 00:14:05,360 Speaker 1: have their reputations and everything that they have at stake 232 00:14:05,480 --> 00:14:09,439 Speaker 1: is on the line. And you're historically a bondman. Um 233 00:14:09,800 --> 00:14:12,080 Speaker 1: wrote about bonds for the Journal before you came and 234 00:14:12,120 --> 00:14:17,360 Speaker 1: created Bloomberg News. And at least as at least once 235 00:14:17,400 --> 00:14:19,960 Speaker 1: I've heard you mentioned Nick from The Great Gats He 236 00:14:20,040 --> 00:14:22,920 Speaker 1: was he a bond trader as well? Uh yeah, he was, 237 00:14:23,360 --> 00:14:25,920 Speaker 1: and uh very much so. I was gonna I was 238 00:14:25,920 --> 00:14:28,440 Speaker 1: gonna ask, so, so, what's the data that the bond 239 00:14:28,480 --> 00:14:33,640 Speaker 1: market provides us with um to help us decide, you know, 240 00:14:34,360 --> 00:14:39,520 Speaker 1: how how far behind the curve or or with um 241 00:14:39,600 --> 00:14:43,200 Speaker 1: the picture the FED is what inflation is expected to be? Like, 242 00:14:43,680 --> 00:14:45,440 Speaker 1: I guess the break evens are the best way to 243 00:14:45,440 --> 00:14:47,640 Speaker 1: look at this. So what the bond market does is 244 00:14:47,680 --> 00:14:51,280 Speaker 1: it's a huge bazaar, a global bazaar, and in that bazaar, 245 00:14:51,480 --> 00:14:54,480 Speaker 1: you have every kind of point of view, every kind 246 00:14:54,520 --> 00:15:00,160 Speaker 1: of activity that's possible, and it's all UH cataloged by 247 00:15:00,200 --> 00:15:04,200 Speaker 1: price and yield. And the bond market shows you every day, 248 00:15:04,240 --> 00:15:07,840 Speaker 1: going back in time to the present, what expectations are. 249 00:15:08,000 --> 00:15:10,440 Speaker 1: That's why it's so valuable. And what you just referred 250 00:15:10,440 --> 00:15:13,280 Speaker 1: to as what we call break even. If you want 251 00:15:13,320 --> 00:15:16,960 Speaker 1: to know what is the expectation of inflation, for example, 252 00:15:17,800 --> 00:15:20,760 Speaker 1: thirty years out, the bond market can show you that 253 00:15:20,840 --> 00:15:23,920 Speaker 1: what is the expectation of inflation ten years out and 254 00:15:24,040 --> 00:15:27,680 Speaker 1: five years out? UH, That is the measure that you 255 00:15:27,800 --> 00:15:30,280 Speaker 1: referred to called break even, and the break even rates 256 00:15:30,320 --> 00:15:34,320 Speaker 1: show sure enough, UH, people who are buying and selling 257 00:15:34,360 --> 00:15:39,080 Speaker 1: securities every day into the future expect inflation to surge 258 00:15:40,240 --> 00:15:43,080 Speaker 1: robustly over the next two years. But at some point 259 00:15:43,560 --> 00:15:47,400 Speaker 1: over the next eight years, uh, that will change and 260 00:15:47,440 --> 00:15:50,720 Speaker 1: there will be a precipitous decline in the expectation of inflation. 261 00:15:51,000 --> 00:15:54,080 Speaker 1: And that's why the bond market is so useful and 262 00:15:54,200 --> 00:15:58,720 Speaker 1: valuable because the FED, in its activity, can use the 263 00:15:58,760 --> 00:16:03,160 Speaker 1: bond market as a way to keep the economy stable. Actually, 264 00:16:03,560 --> 00:16:06,120 Speaker 1: how reliable are I mean, I'm looking at the break 265 00:16:06,160 --> 00:16:08,400 Speaker 1: evens I type I l B on the Bloomberg TERMAO, 266 00:16:08,480 --> 00:16:10,000 Speaker 1: I'm looking at the two year break even, and I 267 00:16:10,040 --> 00:16:14,120 Speaker 1: see it's almost five percent. I then here from people 268 00:16:14,160 --> 00:16:17,200 Speaker 1: like Michael McKee who covers economics for us, that that's 269 00:16:17,240 --> 00:16:19,840 Speaker 1: hardly likely considering we're going to be moving off of 270 00:16:19,880 --> 00:16:24,240 Speaker 1: base effects at that point. So this isn't saying it's 271 00:16:24,280 --> 00:16:26,880 Speaker 1: going to be five percent two years out right. So 272 00:16:27,680 --> 00:16:31,000 Speaker 1: what what is valuable about the bond market is people 273 00:16:31,160 --> 00:16:37,360 Speaker 1: are literally taking their wherewithal their assets, and they're making 274 00:16:37,440 --> 00:16:41,160 Speaker 1: bets about where things are today, where they're going to 275 00:16:41,240 --> 00:16:42,920 Speaker 1: be five years from now, where they're going to be 276 00:16:43,000 --> 00:16:46,640 Speaker 1: thirty years from now, and that's all reflected in price 277 00:16:46,920 --> 00:16:50,880 Speaker 1: and yield, And of course it could change. The point 278 00:16:50,960 --> 00:16:54,080 Speaker 1: here is that and it will change the point here 279 00:16:54,120 --> 00:16:57,200 Speaker 1: is that the FED is not behind the curve. If 280 00:16:57,520 --> 00:17:01,680 Speaker 1: what it's doing today is following what the data shows 281 00:17:01,800 --> 00:17:04,159 Speaker 1: us from the bond market, the FETE is simply doing 282 00:17:04,200 --> 00:17:09,000 Speaker 1: what's appropriate. And the argument, if you will, against the 283 00:17:09,119 --> 00:17:11,639 Speaker 1: people who are asserting that the FETE is behind the 284 00:17:11,640 --> 00:17:14,240 Speaker 1: curve is okay, Well, if it's not the bond market 285 00:17:14,280 --> 00:17:17,080 Speaker 1: where all this data exists, what is it and nobody 286 00:17:17,080 --> 00:17:20,160 Speaker 1: can say what it is? And as Brad DeLong has suggested, 287 00:17:20,200 --> 00:17:21,679 Speaker 1: what is it? The bond market is a bunch of 288 00:17:21,680 --> 00:17:24,920 Speaker 1: weirdos now and the bond vigilantes don't count. I mean, 289 00:17:25,320 --> 00:17:28,720 Speaker 1: no one is asserting that, so, uh, you can't have 290 00:17:28,800 --> 00:17:32,919 Speaker 1: it both ways. Um. This is why the criticism of 291 00:17:32,960 --> 00:17:36,160 Speaker 1: the FED seems to be unfounded, because there's no evidence 292 00:17:36,200 --> 00:17:38,680 Speaker 1: to suggest that there's an alternative for what the FET 293 00:17:38,800 --> 00:17:41,960 Speaker 1: is doing. As I mentioned earlier, Matt City came out 294 00:17:42,000 --> 00:17:44,840 Speaker 1: so research report this morning talking about, you know, multiple 295 00:17:44,880 --> 00:17:49,000 Speaker 1: fifty basis point rate hikes this year going into next year. 296 00:17:50,600 --> 00:17:53,240 Speaker 1: Is there a risk that this FED gets too aggressive 297 00:17:53,320 --> 00:17:56,280 Speaker 1: and does in fact push us into a recession and 298 00:17:56,320 --> 00:17:58,080 Speaker 1: the interest of trying to cool inflation, Well, there are 299 00:17:58,080 --> 00:18:01,160 Speaker 1: plenty of people who would suggest that and are suggesting that. 300 00:18:01,600 --> 00:18:04,480 Speaker 1: Having said that, UM, again, if you look at the 301 00:18:04,520 --> 00:18:08,000 Speaker 1: market right now, what might be surprising to people is 302 00:18:08,240 --> 00:18:12,600 Speaker 1: why is the stock market seemingly becalmed UH in the 303 00:18:12,640 --> 00:18:14,560 Speaker 1: face of it And if you look at something else 304 00:18:14,640 --> 00:18:17,480 Speaker 1: that is worth paying a lot of attention to. The 305 00:18:17,520 --> 00:18:25,359 Speaker 1: Bloomberg Financial Conditions Measure Index. Yeah, very valuable tool. If 306 00:18:25,840 --> 00:18:28,760 Speaker 1: we were suddenly de anchored, and if we had, you know, 307 00:18:28,800 --> 00:18:31,520 Speaker 1: the FED had lost its way, you would expect financial 308 00:18:31,560 --> 00:18:34,760 Speaker 1: markets to be turbulent, and you would expect great volatility. 309 00:18:34,800 --> 00:18:38,480 Speaker 1: But in fact, the Financial Conditions Index shows us we're 310 00:18:38,520 --> 00:18:41,800 Speaker 1: not too far from the average, the thirty year average, 311 00:18:42,119 --> 00:18:44,840 Speaker 1: just a little bit below it UM, and that kind 312 00:18:44,880 --> 00:18:49,800 Speaker 1: of suggests that UM investors worldwide, even with the invasion 313 00:18:49,800 --> 00:18:54,800 Speaker 1: of creating Ukraine and Mr Putin's war against it and 314 00:18:54,840 --> 00:19:00,080 Speaker 1: the sanctions against him, the market is relatively stable. So 315 00:19:00,200 --> 00:19:03,600 Speaker 1: in equities, the dumb money, so to speak, has have 316 00:19:03,720 --> 00:19:07,160 Speaker 1: recovered UM with strength. We were down fourteen percent from 317 00:19:07,520 --> 00:19:08,920 Speaker 1: UM the beginning of the year, just a couple of 318 00:19:08,920 --> 00:19:10,960 Speaker 1: weeks ago. Now we're only down five percent as the 319 00:19:11,040 --> 00:19:14,439 Speaker 1: SMP comes back. Yeah, I mean, look, there's always a 320 00:19:14,480 --> 00:19:18,960 Speaker 1: problem when you try to impose what happened before now 321 00:19:19,400 --> 00:19:21,880 Speaker 1: on what is happening today and what what people are 322 00:19:21,920 --> 00:19:25,879 Speaker 1: looking at is this period in the seventies when interest 323 00:19:26,000 --> 00:19:29,720 Speaker 1: rates went up, you know, fifteen percentage points between ninete 324 00:19:32,040 --> 00:19:34,399 Speaker 1: and you know, that was just a very different time 325 00:19:34,760 --> 00:19:37,280 Speaker 1: in place. And Matt, thanks so much for joining us 326 00:19:37,320 --> 00:19:39,800 Speaker 1: here in our Bloomberg Interactive Broker Studio. Matt Winkler, Editor, 327 00:19:39,880 --> 00:19:42,280 Speaker 1: Chief Emeritus and Bloomberg News. He did not get the 328 00:19:42,320 --> 00:19:45,520 Speaker 1: Friday casual memo. He's in a sharp navy blue suit 329 00:19:45,560 --> 00:19:47,960 Speaker 1: with the bow tie. He and Tom Keaney can't break 330 00:19:47,960 --> 00:19:53,359 Speaker 1: them of that habit. Jonathan Webb CEO and founder of 331 00:19:53,359 --> 00:19:55,720 Speaker 1: app Harvest. That's a public traded company a p p 332 00:19:56,560 --> 00:19:59,800 Speaker 1: u H building some of the largest greenhouses, combining conventional 333 00:20:00,119 --> 00:20:04,040 Speaker 1: cultural techniques with today's technology to grow non gmo chemical 334 00:20:04,080 --> 00:20:06,880 Speaker 1: free produce. Jonathan, thanks so much for joining us here. 335 00:20:07,280 --> 00:20:10,679 Speaker 1: I would love to get your view here of the 336 00:20:10,840 --> 00:20:14,760 Speaker 1: supply chain and the challenges that companies across so many 337 00:20:14,840 --> 00:20:17,280 Speaker 1: industries are dealing with it. How are you seeing it 338 00:20:17,760 --> 00:20:22,280 Speaker 1: in your business? Yeah? So uh, We're growing fruits and 339 00:20:22,440 --> 00:20:26,080 Speaker 1: vegetables and the controlled environment year round with far less 340 00:20:26,160 --> 00:20:30,080 Speaker 1: land and far less water and using technology. And I 341 00:20:30,080 --> 00:20:32,840 Speaker 1: think the general theme right now is it's it's it's 342 00:20:32,840 --> 00:20:34,840 Speaker 1: a it's a great time for us to rethink and 343 00:20:34,920 --> 00:20:39,800 Speaker 1: reimagine American agriculture and reinvest in farming across the US. 344 00:20:39,920 --> 00:20:43,440 Speaker 1: It's uh, you we clearly see what's been happening over 345 00:20:43,480 --> 00:20:45,640 Speaker 1: the last year or two years with COVID and then 346 00:20:45,680 --> 00:20:48,880 Speaker 1: now obviously you know the the very unfortunate events playing 347 00:20:48,920 --> 00:20:52,960 Speaker 1: out in Ukraine. But but there's there's no reason why 348 00:20:53,040 --> 00:20:55,359 Speaker 1: here in the US we're importing two thirds of our 349 00:20:55,400 --> 00:20:59,239 Speaker 1: fruits and vegetables. That's just unacceptable. We're, uh, you know, 350 00:20:59,280 --> 00:21:01,840 Speaker 1: one of the largest land rich, water rich regions in 351 00:21:02,119 --> 00:21:05,040 Speaker 1: the world, and yet we're importing two thirds of our 352 00:21:05,080 --> 00:21:07,520 Speaker 1: fruits and vegetables. And uh, you know, we can we 353 00:21:07,560 --> 00:21:11,080 Speaker 1: can change that dramatically and pretty quickly overnight by using 354 00:21:11,119 --> 00:21:14,520 Speaker 1: technology and creating a new innovative business models to grow 355 00:21:14,600 --> 00:21:17,119 Speaker 1: here here at home in the US. And I have 356 00:21:17,160 --> 00:21:19,760 Speaker 1: to say, I am married to a one from Spain, 357 00:21:20,320 --> 00:21:25,080 Speaker 1: from Valencia, so she is constantly unhappy about the produce 358 00:21:25,119 --> 00:21:28,159 Speaker 1: in this country. Really because where she's from, you just 359 00:21:28,240 --> 00:21:31,000 Speaker 1: walk down the street and pick up tomatoes and oranges 360 00:21:31,200 --> 00:21:33,840 Speaker 1: off the ground next to your neighbor's field, you know. So, 361 00:21:34,200 --> 00:21:40,760 Speaker 1: but how local can we make this um production? Jonathan, Yeah, 362 00:21:40,760 --> 00:21:44,520 Speaker 1: I mean hyperlocal, very local to two cities, to two 363 00:21:44,520 --> 00:21:47,240 Speaker 1: regions all across the US. So we at app Harvest 364 00:21:47,280 --> 00:21:50,240 Speaker 1: will have about eight million square feet operating by the 365 00:21:50,320 --> 00:21:53,880 Speaker 1: end of the year. We'll be growing strawberries, leafy greens, 366 00:21:53,920 --> 00:21:57,199 Speaker 1: a variety of tomatoes. But our focus is bringing that 367 00:21:57,280 --> 00:22:00,200 Speaker 1: fruit and vegetable production back to the US that's been 368 00:22:00,720 --> 00:22:03,280 Speaker 1: uh pushed south of the border. Uh. And yeah, Matt, 369 00:22:03,320 --> 00:22:06,280 Speaker 1: I mean many of the European countries, especially the Netherlands 370 00:22:06,359 --> 00:22:08,560 Speaker 1: really being kind of the world leader and in high 371 00:22:08,560 --> 00:22:14,159 Speaker 1: tech agriculture, Spain has a pretty good robust agriculture system 372 00:22:14,200 --> 00:22:18,320 Speaker 1: that that's utilizing technology. But uh, you know, again reshaping 373 00:22:18,320 --> 00:22:21,159 Speaker 1: what farming looks like. We we you know, we we 374 00:22:21,200 --> 00:22:25,560 Speaker 1: have the opportunity to grow much more nutritious, higher quality stuff. Uh. 375 00:22:25,720 --> 00:22:27,560 Speaker 1: And do that with with a lot less land and 376 00:22:27,600 --> 00:22:30,560 Speaker 1: a lot less water. Uh. And and that's you know, 377 00:22:30,720 --> 00:22:35,760 Speaker 1: that's bringing technology to farming. Where the last big technological 378 00:22:35,800 --> 00:22:38,440 Speaker 1: revolution in American farming is when the when the tractor 379 00:22:38,560 --> 00:22:43,280 Speaker 1: was introduced. My concern is the concern is Jonathan that 380 00:22:43,320 --> 00:22:48,080 Speaker 1: your hand, Yeah, The concern is that you displace American 381 00:22:48,119 --> 00:22:53,280 Speaker 1: family farmers, who I mean, frankly have been displaced already 382 00:22:53,320 --> 00:22:55,720 Speaker 1: but still managed to hang on somehow. How do you 383 00:22:56,359 --> 00:22:58,960 Speaker 1: how do you work around that? Well, I mean, Matt, 384 00:22:59,000 --> 00:23:01,720 Speaker 1: they've already we've already lost that. Two thirds of our 385 00:23:01,760 --> 00:23:04,360 Speaker 1: fruit and vegetables are imported into the US every year. 386 00:23:04,760 --> 00:23:07,879 Speaker 1: You know, four billion pounds of tomatoes alone are imported. 387 00:23:08,280 --> 00:23:10,240 Speaker 1: Why are we not growing that in the US. Why 388 00:23:10,240 --> 00:23:14,160 Speaker 1: are we not getting small farmers technology where you're using 389 00:23:14,320 --> 00:23:20,040 Speaker 1: led lights, hydroponic growing less water, thirty thirty plus, uh, 390 00:23:20,280 --> 00:23:23,399 Speaker 1: getting thirty times yield per acre. Uh, We've we've had 391 00:23:23,440 --> 00:23:26,359 Speaker 1: a lot of meetings in DC over the last few weeks. Uh. 392 00:23:26,480 --> 00:23:30,240 Speaker 1: Food resiliency has become a very high focus at the 393 00:23:30,320 --> 00:23:32,119 Speaker 1: U s d A. But on the right side and 394 00:23:32,200 --> 00:23:34,960 Speaker 1: left side of the aisle. And you know, if we 395 00:23:35,119 --> 00:23:37,600 Speaker 1: in the US want to take this seriously, you know, 396 00:23:37,600 --> 00:23:39,920 Speaker 1: there needs to be some policy around it. You look 397 00:23:39,960 --> 00:23:42,280 Speaker 1: at you know, look at what renewable energy was in 398 00:23:42,320 --> 00:23:45,840 Speaker 1: the US fifteen years ago. It was boutique, it was nascent, 399 00:23:46,040 --> 00:23:49,680 Speaker 1: non existent, and now you know, every state has large portfolios. 400 00:23:49,720 --> 00:23:52,400 Speaker 1: Look at electric vehicles. You know, you've got to put 401 00:23:52,480 --> 00:23:56,280 Speaker 1: policy in place that incentivizes the private sector to lead. 402 00:23:56,880 --> 00:23:58,960 Speaker 1: Uh and and we we do think that's gonna happen 403 00:23:59,000 --> 00:24:01,680 Speaker 1: with c E A can Gold Environment agriculture is really 404 00:24:01,680 --> 00:24:05,840 Speaker 1: a third wave of sustainable infrastructure in the US. First 405 00:24:05,840 --> 00:24:08,359 Speaker 1: it was renewables, then it was evs, you know, and 406 00:24:08,440 --> 00:24:11,840 Speaker 1: now it's is c A controlled environment agriculture. And you know, 407 00:24:11,880 --> 00:24:14,320 Speaker 1: we're pretty hopeful that uh, you know, we'll see some 408 00:24:14,400 --> 00:24:17,320 Speaker 1: policy in this new farm bill. Well, we'll see uh, 409 00:24:17,400 --> 00:24:19,480 Speaker 1: some policy come out of both sides of the aisle 410 00:24:19,480 --> 00:24:22,280 Speaker 1: of the next year or two to really give technology 411 00:24:22,320 --> 00:24:24,960 Speaker 1: to farmers and and let them innovate and build a 412 00:24:25,000 --> 00:24:28,040 Speaker 1: more resilient food system here in the US. Jonathan, really 413 00:24:28,040 --> 00:24:31,280 Speaker 1: fascinating stuff. Thanks for coming on and sharing some thoughts 414 00:24:31,280 --> 00:24:33,280 Speaker 1: that we'll have you back on to get an update here. 415 00:24:33,800 --> 00:24:41,760 Speaker 1: Jonathan Web, CEO and founder of app Harvest Boy, We've had, 416 00:24:42,000 --> 00:24:45,640 Speaker 1: as I said, a great slate of guests here today. 417 00:24:45,640 --> 00:24:48,240 Speaker 1: When we finish off our two hours here with another 418 00:24:48,320 --> 00:24:51,880 Speaker 1: a list in my opinion, Lizzie Saunders, chief investment strategists 419 00:24:51,920 --> 00:24:55,520 Speaker 1: at Charles Schwab. You know, liz An I kind of 420 00:24:55,560 --> 00:24:59,520 Speaker 1: grew up in the business with the adage don't fight 421 00:24:59,560 --> 00:25:02,280 Speaker 1: the FED. So now I see the Fed, you know, 422 00:25:02,400 --> 00:25:04,800 Speaker 1: raising race. City is out with a report this morning 423 00:25:04,800 --> 00:25:09,200 Speaker 1: talking about multiple fifty basis point rate hikes throughout the year. 424 00:25:09,880 --> 00:25:12,680 Speaker 1: What do you do in that kind of environment? By 425 00:25:12,680 --> 00:25:14,720 Speaker 1: the way, I didn't just grow up in that era. 426 00:25:14,920 --> 00:25:17,880 Speaker 1: I for thirteen my first thirteen years I worked for 427 00:25:17,920 --> 00:25:21,280 Speaker 1: the late Great Marty's wife. Very good phrase. So um 428 00:25:21,440 --> 00:25:25,520 Speaker 1: I I you know, lived and breathed it. Yes, um. 429 00:25:25,560 --> 00:25:27,040 Speaker 1: I think when you look at a day like today 430 00:25:27,080 --> 00:25:29,080 Speaker 1: where you saw a weakness kick in at the point 431 00:25:29,080 --> 00:25:31,960 Speaker 1: where yield started to pick up, and then you know, 432 00:25:32,000 --> 00:25:35,479 Speaker 1: added to the concern as you mentioned the City report 433 00:25:35,520 --> 00:25:38,760 Speaker 1: saying we would get a series of fifty basis points hikes, 434 00:25:38,800 --> 00:25:41,560 Speaker 1: a lot of adjustments of what the terminal rate is. 435 00:25:42,000 --> 00:25:44,480 Speaker 1: I think that's a recipe, especially in the aftermath of 436 00:25:44,480 --> 00:25:47,879 Speaker 1: a pretty sharp rally that may have uh sent a 437 00:25:48,040 --> 00:25:51,560 Speaker 1: certain technical levels to overball conditions that might have kicked 438 00:25:51,600 --> 00:25:54,760 Speaker 1: in some of the quant based strategies and and al 439 00:25:54,840 --> 00:25:58,199 Speaker 1: goes and the selling starts to pick back up. So 440 00:25:58,200 --> 00:26:00,320 Speaker 1: it's not surprising to me at all. One of the 441 00:26:00,600 --> 00:26:04,040 Speaker 1: I think most valuable things, um Lisianne about Schwab is 442 00:26:05,160 --> 00:26:08,040 Speaker 1: the knowledge you have from your huge investor base. And 443 00:26:08,040 --> 00:26:10,080 Speaker 1: I don't know how much assets under management you have, 444 00:26:10,240 --> 00:26:14,880 Speaker 1: but I know it's trillions of dollars trillion, it's amazing, 445 00:26:14,960 --> 00:26:20,240 Speaker 1: eight trillions dollars. What can you glean then from your clients, 446 00:26:20,320 --> 00:26:23,680 Speaker 1: what they're doing, what's what's their mood right now? Well, 447 00:26:23,720 --> 00:26:26,520 Speaker 1: because it's such a large client base, it spans this 448 00:26:26,680 --> 00:26:30,520 Speaker 1: spectrum of not just retail investors, but advisors. You know, 449 00:26:30,600 --> 00:26:32,879 Speaker 1: are as that are on our platform even among the 450 00:26:32,920 --> 00:26:36,840 Speaker 1: retail investors, everything from short term day traders to long 451 00:26:36,960 --> 00:26:40,840 Speaker 1: term advised investors. And I really think it depends on 452 00:26:41,680 --> 00:26:45,439 Speaker 1: risk tolerance, time arise, and whether you are just trading 453 00:26:45,480 --> 00:26:49,760 Speaker 1: on your own, whether you are taking a more disciplined approach, 454 00:26:50,080 --> 00:26:53,360 Speaker 1: maybe connected to an advisor or consultant. And what we 455 00:26:53,680 --> 00:26:56,200 Speaker 1: are finding in this more volatile period with it, which 456 00:26:56,240 --> 00:26:59,440 Speaker 1: is consistent with other periods of volatility, is that the 457 00:26:59,520 --> 00:27:02,720 Speaker 1: more longer term investors that have a plan, they've got 458 00:27:02,720 --> 00:27:07,440 Speaker 1: a strategic asset allocation, they're doing regular rebalancing, they tend 459 00:27:07,480 --> 00:27:10,560 Speaker 1: to ride through periods like this with a bit more 460 00:27:10,760 --> 00:27:14,800 Speaker 1: sense of calm. It's it's some of the shorter term, 461 00:27:14,800 --> 00:27:18,720 Speaker 1: more trading oriented folks. In some cases they look at 462 00:27:18,800 --> 00:27:23,080 Speaker 1: volatility as advantageous from a trading perspective. But that's where 463 00:27:23,119 --> 00:27:25,400 Speaker 1: you tend to see a little bit more of the 464 00:27:25,520 --> 00:27:28,520 Speaker 1: extremes of at times, you know, panic and greeds. It 465 00:27:28,560 --> 00:27:31,439 Speaker 1: really depends on what type of investor you're talking about. 466 00:27:31,960 --> 00:27:34,880 Speaker 1: Haylzen Matt and I've been noticing that we've been hearing 467 00:27:34,920 --> 00:27:39,480 Speaker 1: a lot more about recession in the last couple of weeks. 468 00:27:39,880 --> 00:27:43,080 Speaker 1: Is that something you think is on our horizon? I 469 00:27:43,119 --> 00:27:46,560 Speaker 1: think anytime you move from extremely loose monetary policy to 470 00:27:46,840 --> 00:27:51,080 Speaker 1: tighter monetary policy when you already have flower growth expected, 471 00:27:51,160 --> 00:27:56,399 Speaker 1: you have to dust off the recession playbook, recession checklist, 472 00:27:57,000 --> 00:27:59,639 Speaker 1: you know, including the yield curve. Yes, that tends to 473 00:27:59,800 --> 00:28:01,880 Speaker 1: is not the end all be all. The tense three 474 00:28:01,920 --> 00:28:06,560 Speaker 1: month has been considered the more reliable recession indicator, but 475 00:28:06,840 --> 00:28:10,760 Speaker 1: we've seen this flattening of the yield curve occur slowly 476 00:28:10,880 --> 00:28:16,200 Speaker 1: down the spectrum of maturities. And maybe the potential inversion 477 00:28:16,200 --> 00:28:18,919 Speaker 1: of the tents two doesn't signal a coming in version 478 00:28:19,480 --> 00:28:21,959 Speaker 1: in the tense three months, But if the set is aggressive, 479 00:28:22,359 --> 00:28:25,480 Speaker 1: as they're suggesting, they might need to be. I think 480 00:28:25,480 --> 00:28:31,080 Speaker 1: that that's somewhat inevitable. Um. So, I think it's prettymature 481 00:28:31,119 --> 00:28:33,600 Speaker 1: to make a recession call right now. The labor market 482 00:28:34,119 --> 00:28:36,840 Speaker 1: is very strong. But should we start to look at 483 00:28:36,960 --> 00:28:42,080 Speaker 1: what the typical indicators are that start to signal problems? Um? Yeah, absolutely. 484 00:28:42,680 --> 00:28:46,120 Speaker 1: What do you think about alternative assets, Luzianne, I mean, um, 485 00:28:46,160 --> 00:28:50,760 Speaker 1: I would think of the sixty portfolio as pretty standard 486 00:28:50,800 --> 00:28:53,920 Speaker 1: for a Schwab investor. As you point out, obviously you 487 00:28:53,960 --> 00:28:56,360 Speaker 1: have such a huge pool investors that you run the gamut. 488 00:28:56,400 --> 00:29:01,160 Speaker 1: But are are more and more people holding UM commodities 489 00:29:01,240 --> 00:29:05,720 Speaker 1: that previously wouldn't have Are people getting into digital assets 490 00:29:05,840 --> 00:29:09,320 Speaker 1: in a way that you see like substantial growth? Yeah. 491 00:29:09,360 --> 00:29:11,840 Speaker 1: I think that there is sort of a broader swap 492 00:29:11,880 --> 00:29:17,040 Speaker 1: of asset classes that are available to individual investors, even 493 00:29:17,080 --> 00:29:21,920 Speaker 1: at a relatively low portfolio size, and I think that 494 00:29:22,080 --> 00:29:27,560 Speaker 1: will continue to be democratized access to all sorts of alternatives, 495 00:29:27,640 --> 00:29:30,880 Speaker 1: some of which you mentioned even in areas eventually like 496 00:29:31,000 --> 00:29:35,120 Speaker 1: private equity and venture. So I think the individual does 497 00:29:35,160 --> 00:29:38,040 Speaker 1: have an opportunity to take a little bit more of 498 00:29:38,080 --> 00:29:41,200 Speaker 1: an endowment type approach and not limit themselves to just 499 00:29:41,440 --> 00:29:45,600 Speaker 1: the typical stocks, bonds, cash and in this environment where 500 00:29:45,640 --> 00:29:48,480 Speaker 1: on the bond side you've seen, you know, the worst 501 00:29:48,480 --> 00:29:52,440 Speaker 1: start in history. I think there is a focus on 502 00:29:52,960 --> 00:29:55,920 Speaker 1: where else can I get diversification, especially in a high 503 00:29:56,000 --> 00:30:00,280 Speaker 1: inflation environment. Commodities being um, you know, a perfect apple 504 00:30:00,320 --> 00:30:03,360 Speaker 1: of that. Hey, Lizianne, thank you so much for joining us. 505 00:30:03,360 --> 00:30:07,400 Speaker 1: Always appreciate getting your thoughts and perspective. Liz Anne Saunders, 506 00:30:07,760 --> 00:30:11,800 Speaker 1: chief investment strategist at Charles Schwab. Thanks for listening to 507 00:30:11,840 --> 00:30:15,360 Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to 508 00:30:15,400 --> 00:30:19,600 Speaker 1: interviews with Apple Podcasts or whatever podcast platform you prefer. 509 00:30:19,960 --> 00:30:23,920 Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three. 510 00:30:24,360 --> 00:30:26,840 Speaker 1: Put on Fall Sweeney. I'm on Twitter at pt Sweeney. 511 00:30:26,880 --> 00:30:29,520 Speaker 1: Before the podcast. You can always catch us worldwide at 512 00:30:29,560 --> 00:30:30,320 Speaker 1: Bloomberg Radio.