WEBVTT - Surveillance: Davos, Day 3 (Podcast) 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.200 --> 0:00:13.200 with Jonathan Farrell and Lisa Bramowitz. Daily we bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com, 0:00:23.920 --> 0:00:30.640 and of course on the Bloomberg Terminal. Someone who has 0:00:30.720 --> 0:00:34.760 written about the torrential reign of the world landscape is 0:00:34.840 --> 0:00:38.080 Daniel Jurgen. He is vice chairman at SMP Global and 0:00:38.159 --> 0:00:40.640 yes the prize and oil and yes Brent Crudz a 0:00:40.720 --> 0:00:44.159 hundred and fift. But in this more somber Dabos, we 0:00:44.280 --> 0:00:48.040 must speak to Daniel Jurgen about the Commanding Heights that 0:00:48.080 --> 0:00:52.839 he codified a good thirty years ago. Daniel Jurgen, in 0:00:53.000 --> 0:00:57.720 Commanding Heights, you spoke of the journey of Communism, What 0:00:57.920 --> 0:01:01.080 is the journey of Putin? I think what we are 0:01:01.280 --> 0:01:03.920 really at an end of an era, and it's bracketed 0:01:04.000 --> 0:01:06.160 by Davos, because it was in Davos where you saw 0:01:06.200 --> 0:01:08.840 the opening up the reconnection of what had been the 0:01:08.840 --> 0:01:12.600 Soviet Union and the Soviet satellites with the world economy 0:01:12.680 --> 0:01:16.280 in one global economy that's now fragmenting. Of course, no 0:01:16.400 --> 0:01:19.679 Russians here, no Chinese here, and it's back to a 0:01:19.760 --> 0:01:23.320 more fragmented, less globalized world. How much finger pointing has 0:01:23.360 --> 0:01:25.759 there been, both in conversations on and off the record, 0:01:25.800 --> 0:01:28.720 that you've had a Germany and the reluctance to move 0:01:28.760 --> 0:01:31.800 away from Russia in terms of their dependence on oil, Well, 0:01:31.800 --> 0:01:34.240 I haven't heard. The German economics ministers said it was 0:01:34.280 --> 0:01:36.600 a strategic mistake to what they've done for the last 0:01:36.640 --> 0:01:38.920 year and a half, a decade and a half rather 0:01:39.319 --> 0:01:41.039 and that he said in a matter of weeks we've 0:01:41.040 --> 0:01:44.000 got to change that. So it really is a big change. 0:01:44.319 --> 0:01:46.840 And meanwhile, going forward, do you get the sense that 0:01:46.880 --> 0:01:50.280 there is a cohesive plan to really move away and 0:01:50.360 --> 0:01:53.520 substitute that those supplies or do you think that that 0:01:53.560 --> 0:01:56.680 plan is still lacking? I would say it's an uncohesive plan. 0:01:56.840 --> 0:02:00.360 I mean Europe wants to the EU wants to bargo 0:02:00.480 --> 0:02:03.480 Russian crude oil. They can't get Hungry on board, so 0:02:03.520 --> 0:02:06.400 they keep postponing it. But I think individual countries are 0:02:06.440 --> 0:02:09.120 going to cut cut back. And what Putin has done 0:02:09.160 --> 0:02:12.360 is he's basically over the law next two years has 0:02:12.840 --> 0:02:16.079 undercut his what is his baseload market, and that's why 0:02:16.120 --> 0:02:18.800 Russia is not going to be an energy superpower anymore. 0:02:19.000 --> 0:02:23.600 Dr you're in. George Will September twelfth, two thousand one, 0:02:23.840 --> 0:02:27.880 wrote of our holiday from history is over. Robert Gates, 0:02:28.040 --> 0:02:31.600 esteemed by all in politics in Washington, has spoken of 0:02:31.680 --> 0:02:36.119 our holiday from history is over, and acclaimed Infantry Officer 0:02:36.280 --> 0:02:39.800 General Mark Kimmitt says, our holiday from history is over. 0:02:40.360 --> 0:02:42.840 You more than anyone in the modern you're have written 0:02:42.880 --> 0:02:46.920 about this. If our holiday from history is over, what 0:02:47.000 --> 0:02:49.240 are we going to? Well? I think we've moved from 0:02:49.240 --> 0:02:51.680 what I have called the w t O consensus, which 0:02:51.720 --> 0:02:54.960 is globalization to great power competition. Which do you agree 0:02:54.960 --> 0:02:59.360 in deglobalization. I think fragmented globalization is what we have 0:02:59.800 --> 0:03:03.160 and it's the problem for companies, of course, multinationals. They're 0:03:03.160 --> 0:03:07.040 played by the playbook of globalization, but that playbook doesn't 0:03:07.040 --> 0:03:10.560 work anymore in the world's fragmenting. In Commanding Heights, you 0:03:10.600 --> 0:03:13.520 do a beautiful job of bouncing between the elites and 0:03:13.560 --> 0:03:16.800 the people. I remember in the chapter on Brazil was 0:03:16.840 --> 0:03:20.480 just brilliant in this regard. A great theme here is 0:03:20.480 --> 0:03:25.240 the elites are disassociated from the broader middle class, higher inflation, 0:03:25.280 --> 0:03:27.960 which crushes the middle class. You know the story and 0:03:28.000 --> 0:03:32.120 the drill. What's your prescription for institutions and elites to 0:03:32.240 --> 0:03:34.720 reconnect with their middle class. I don't think it's a 0:03:34.800 --> 0:03:39.320 it's a simple thing. Obviously, the inflation is so undercutting 0:03:39.320 --> 0:03:42.240 of society and build so much anger. So I think 0:03:42.240 --> 0:03:45.120 they're dealing with inflation. But you're dealing at a time 0:03:45.160 --> 0:03:48.080 when world energy is going to is disrupted food and 0:03:48.080 --> 0:03:51.160 of course of the cost of food is actually energy 0:03:51.440 --> 0:03:54.000 processing and everything. So I think these are still going 0:03:54.040 --> 0:03:56.520 to be very much. I think it's a troubled period 0:03:56.560 --> 0:03:59.240 I had, and you're gonna see a social instability as 0:03:59.240 --> 0:04:01.360 a result of this in countries. Is it appropriate that 0:04:01.440 --> 0:04:04.280 China isn't here, given the fact that that economy has 0:04:04.280 --> 0:04:07.760 such a massive influence and whether we get a global recession. Yeah, absolutely, 0:04:07.760 --> 0:04:09.920 But they're not here because of COVID and because you'd 0:04:09.960 --> 0:04:13.200 have to go back and uh and and uh quarantine. 0:04:13.520 --> 0:04:16.400 But you know, Russia, you understand. But but the lack 0:04:16.440 --> 0:04:20.320 of China here is actually more significant and probably more 0:04:20.480 --> 0:04:22.960 of the reason why there is so much uncertainty. I 0:04:23.000 --> 0:04:25.039 was looking at a number of reports that came out. 0:04:25.120 --> 0:04:27.880 If we keep getting these waves of COVID, China remains 0:04:27.880 --> 0:04:30.039 in lockdown for longer. All of a sudden, you have 0:04:30.080 --> 0:04:33.440 a very different parameter of risks in terms of the 0:04:33.480 --> 0:04:36.719 downside to growth. What's your view on this in terms 0:04:36.760 --> 0:04:38.720 of how much of a swing factor that will be? Well, 0:04:38.720 --> 0:04:40.640 I think you see it, because once again means you 0:04:40.680 --> 0:04:44.040 get the supply chain problems. Again that adds to the disruption, 0:04:44.120 --> 0:04:46.800 that adds to the inflation. So waves of COVID, if 0:04:47.080 --> 0:04:49.680 and that is what continues to unfold, is in itself 0:04:50.279 --> 0:04:54.120 deglobalizing factor in the world. Learning Aaron Dubos of the 0:04:54.160 --> 0:04:57.280 I'm going to call its certification by the Philippine Congress 0:04:57.800 --> 0:05:00.760 of Mr Marcos Jr. You may of the name from 0:05:00.760 --> 0:05:04.800 many years ago. Dan Jurgen certainly does huge debate within 0:05:04.880 --> 0:05:08.839 Philippine society of his resounding win over Ms Robetto and 0:05:08.839 --> 0:05:12.240 other candidates as well. And some would say not me, 0:05:12.360 --> 0:05:15.800 but some would say this has an autocratic tendency or 0:05:15.880 --> 0:05:19.280 return to autocracy, as maybe we see in Hungry. I'll 0:05:19.360 --> 0:05:24.160 let you suggest other nations. How does a liberal society 0:05:24.160 --> 0:05:27.200 fight against a trend of autocracy? Well, I think it 0:05:27.600 --> 0:05:28.960 is you can see it in a in a lot 0:05:29.000 --> 0:05:31.400 of countries. I mean, the most important thing is actually 0:05:31.400 --> 0:05:34.160 elections that people. Once people are in power for eight 0:05:34.240 --> 0:05:36.839 or ten years, you're in a different game. And we've 0:05:36.880 --> 0:05:38.919 seen that. Look what happened with Russia. Well look what 0:05:39.000 --> 0:05:41.480 up with Russia. But we're all hinged on the Chinese 0:05:41.520 --> 0:05:45.280 Party Congress, where it's I believe you for life. I mean, 0:05:45.360 --> 0:05:47.800 is that an important meeting coming up? That's a late 0:05:47.839 --> 0:05:49.919 autumn central meeting, because it will set the course for 0:05:50.040 --> 0:05:54.080 China for some time to come, and obviously they're struggling 0:05:54.120 --> 0:05:59.120 with party control at the same time maintaining a vibrant economy. 0:05:59.279 --> 0:06:01.679 Do you get the sense that the conversation around moving 0:06:01.760 --> 0:06:05.200 away from fossil fuels and oil in particular is taking 0:06:05.200 --> 0:06:08.479 on a new geopolitical significance at this Davos rather than 0:06:08.560 --> 0:06:11.159 just good wishes of people who want to do the 0:06:11.240 --> 0:06:13.440 right thing. Yeah, I think it's it's cutting both ways 0:06:13.480 --> 0:06:15.720 because it also means that there's much more concerned about 0:06:15.760 --> 0:06:18.600 access to fossil fuels investment and the kind of pre 0:06:18.640 --> 0:06:21.640 emptive under investment that there's been. So a lot of 0:06:21.640 --> 0:06:24.919 the discussions I've heard is actually you need you're gonna 0:06:24.920 --> 0:06:28.000 need more investment resources and you can't just count on 0:06:28.000 --> 0:06:30.520 a smooth path ahead. But I think it's the bigger 0:06:30.560 --> 0:06:33.960 problem now. It's it's a more discordant discussion now than 0:06:34.000 --> 0:06:36.160 it's been in the past. Here Global Wall Street doesn't 0:06:36.200 --> 0:06:39.000 give a damn about international relations. None of them were 0:06:39.000 --> 0:06:43.160 at the commanding heights. JP Morgan's London desk models out 0:06:43.160 --> 0:06:46.680 a hundred hundred and fifty dollar brand. Is that feasible? 0:06:46.960 --> 0:06:49.279 I think you could have that happened. Where see this 0:06:49.360 --> 0:06:53.440 market tightening right now, and if Chinese comes out of 0:06:53.480 --> 0:06:55.599 COVID and demand goes up, the pressure will be there, 0:06:55.839 --> 0:06:58.120 and the responses to that are gonna be there's gonna 0:06:58.120 --> 0:07:00.279 be a political response, and there's going to be obviously 0:07:00.320 --> 0:07:03.080 big economic crisip. Where does even gasoline prices go? Then 0:07:03.080 --> 0:07:05.839 with the refined goods listen to your gloom, Well, no, 0:07:06.000 --> 0:07:10.320 I like Brent, we're having. We're having not only a 0:07:10.360 --> 0:07:12.960 problem with crude oil is the problem. We're refining. That's 0:07:12.960 --> 0:07:15.600 where the real problem is. And that's where diesel gasoline 0:07:15.720 --> 0:07:18.280 all those prices. And you know we had a global 0:07:18.320 --> 0:07:21.520 refining system and that's been disrupted too by as a 0:07:21.600 --> 0:07:24.600 result of putent. We're out of time with a new map. 0:07:24.680 --> 0:07:31.680 Danielgan with us of course of SMP Global. Right now, 0:07:31.840 --> 0:07:35.160 this is a joy within the sphere of international relations. 0:07:35.160 --> 0:07:37.120 There can be vogues, It could be moments, and one 0:07:37.120 --> 0:07:40.040 of those moments was I'm going to guess twenty years 0:07:40.080 --> 0:07:45.000 ago for read Zacaria with the post American world. He says, 0:07:45.040 --> 0:07:49.040 there is a revolutionary moment now and a required read 0:07:49.160 --> 0:07:53.200 is Ian Bremer's The Power of Crisis. Dr Bremer joins 0:07:53.280 --> 0:07:55.360 us this morning, of course, you raise your group, of 0:07:55.360 --> 0:07:58.360 which we do an annual beginning of the year visit. 0:07:58.400 --> 0:08:02.080 I thought free Zakaria was dead on about the moment 0:08:02.240 --> 0:08:07.400 we're in in the power of crisis, except it's not crisis. 0:08:07.440 --> 0:08:09.120 I don't know what the plural is a crisis. You're 0:08:09.160 --> 0:08:13.240 the fav sees the crisis descend upondas. Don't think. Why 0:08:13.240 --> 0:08:15.280 are you shaking your head? That is the plural of christ. 0:08:15.440 --> 0:08:17.440 I know. It's just that really has to deal with 0:08:17.480 --> 0:08:21.160 me on a daily things. The many crisis we have now, 0:08:21.200 --> 0:08:24.200 which matters, uh well, Russia Ukraine is the one that 0:08:24.240 --> 0:08:26.800 matters to everyone here. It's also the one that's least 0:08:26.840 --> 0:08:30.360 well understood because for the last three months, the focus 0:08:30.360 --> 0:08:33.800 has been Ukraine, but of course the confrontation is also 0:08:33.880 --> 0:08:37.640 between Russia and NATO. The potential for negotiations to bear 0:08:37.720 --> 0:08:41.200 fruit virtually zero. It's the first time in history that 0:08:41.320 --> 0:08:45.680 we have forcibly decoupled a G twenty economy from the 0:08:45.679 --> 0:08:48.319 world's advanced industrial economies. That is a very big deal, 0:08:48.400 --> 0:08:51.920 especially for a forum that traffics in globalization. It is 0:08:52.000 --> 0:08:55.280 purely because of the acts that Russia has taken, and 0:08:55.280 --> 0:08:57.480 and this is the fact of the matter. Is not 0:08:57.559 --> 0:09:00.280 just a cold war between Russia and NATO, but there 0:09:00.280 --> 0:09:03.079 are elements of a hot war. So of course people 0:09:03.080 --> 0:09:05.720 are rather disconcerted by that. People are focused on that, 0:09:05.760 --> 0:09:07.320 but are they focused on the right thing. We were 0:09:07.360 --> 0:09:11.000 just speaking with Daniel Jurgen just moments ago, and he said, frankly, 0:09:11.440 --> 0:09:14.320 the bigger news is that China is not here because 0:09:14.320 --> 0:09:16.720 of COVID, and that that has a much more substantive 0:09:16.800 --> 0:09:19.920 impact on the global economy. Should we be more focused 0:09:19.920 --> 0:09:23.440 on a decoupling there, Uh no, because we are not 0:09:23.679 --> 0:09:27.720 doing a significant decoupling there. I mean, look, yesterday everyone 0:09:27.800 --> 0:09:30.760 was asking about the Biden Taiwan statement, which was much 0:09:30.800 --> 0:09:33.000 ado about the exact same thing that he said a 0:09:33.000 --> 0:09:35.800 couple of times already, and that the White House backtrack. China, 0:09:35.880 --> 0:09:38.640 of course, is the most important rising power in the world, 0:09:38.640 --> 0:09:40.720 second large economy. We're not taking anyway from that, but 0:09:40.760 --> 0:09:43.320 the fact is that U S. China relations are very 0:09:43.400 --> 0:09:46.880 interdependent and they are more stable where Russia has just 0:09:47.080 --> 0:09:52.040 completely subverted a thirty year piece dividend that Europe has enjoyed. 0:09:52.080 --> 0:09:54.280 And I mean, I understand that I'm a New Yorker, 0:09:55.240 --> 0:09:57.920 but also we are in Europe, and so this is 0:09:58.000 --> 0:10:00.840 this is truly a generation will change. That is what 0:10:00.840 --> 0:10:02.680 we should be focused on. So how much is this 0:10:02.760 --> 0:10:06.200 an issue of supply chains of food and issues with 0:10:06.320 --> 0:10:08.760 just what we're seeing in terms of a widening divide 0:10:08.800 --> 0:10:11.520 if nothing else, in the quality of life between wealthy 0:10:11.559 --> 0:10:15.200 and the number of times that I have heard from 0:10:15.240 --> 0:10:17.320 people in the last three months that well, you're focused 0:10:17.360 --> 0:10:20.040 on Ukraine because it's white people, because it's Europeans. You 0:10:20.080 --> 0:10:22.920 don't care about Syria, you don't care about Afghanistan. There 0:10:23.040 --> 0:10:25.439 is a point to that argument, But the fact is 0:10:25.480 --> 0:10:27.120 that the poorest people in the world are going to 0:10:27.160 --> 0:10:30.079 be vastly more impacted by the Ukraine crisis than any 0:10:30.160 --> 0:10:32.320 of those other crisis that have for precisely the reason 0:10:32.360 --> 0:10:34.560 you just mentioned. How much is this also an existential 0:10:34.640 --> 0:10:37.319 threat of the geopolitical order of Europe? And that's why 0:10:37.520 --> 0:10:39.800 you made the point. We're in Europe and people are 0:10:39.800 --> 0:10:42.440 focused on that. How much are people concerned about this 0:10:42.520 --> 0:10:47.079 trickling out into some sort of bigger challenge that is unanticipated? Well, 0:10:47.160 --> 0:10:49.640 I mean, how much are they concerned that gas from 0:10:49.720 --> 0:10:53.920 Russia through Ukraine to Europe could be cut off at 0:10:53.960 --> 0:10:56.719 any moment by the Russians, by the Europeans, or by 0:10:56.760 --> 0:10:59.880 the Ukrainians, or by a non state terrorist actor for 0:11:00.040 --> 0:11:03.880 that matter. I mean, seriously, They're the vulnerability that comes 0:11:03.920 --> 0:11:07.400 from the mistake, the strategic mistake made by Europeans to 0:11:07.440 --> 0:11:10.319 allow themselves to become as dependent as they had on 0:11:10.600 --> 0:11:14.640 energy as Dan was discussing, from Russia, is an enormous 0:11:14.760 --> 0:11:18.560 vulnerability right now. And and furthermore, the fact that a 0:11:18.679 --> 0:11:21.040 country in Ukraine is a big delegation here right now 0:11:21.520 --> 0:11:24.760 is fighting fighting for their survival, fighting to avoid being 0:11:24.760 --> 0:11:27.680 wiped off the map by the President of Russia. And 0:11:27.679 --> 0:11:30.360 they're doing that fighting in part so that the polls 0:11:30.559 --> 0:11:33.240 don't have to so the balls don't have to. The 0:11:33.280 --> 0:11:36.400 Europeans do feel that, not all of them. Okay, maybe 0:11:36.400 --> 0:11:38.160 you talk to Belgians here, maybe they don't feel as 0:11:38.200 --> 0:11:41.079 strong about that. The Germans do. The polls do they matter? 0:11:41.160 --> 0:11:42.719 The Fins and the Swedes who are about to join 0:11:42.760 --> 0:11:47.400 NATO do so. I mean, don't underestimate how much of 0:11:47.440 --> 0:11:50.559 a change this reflects for a europe that for thirty 0:11:50.640 --> 0:11:54.440 years felt like national security didn't matter for them. How 0:11:54.480 --> 0:11:57.079 do we support them? We had always understood here and 0:11:57.120 --> 0:12:00.520 if it's every nation for itself a phrase Ian that 0:12:00.640 --> 0:12:04.280 you codified from eight miles of the finished border down 0:12:04.320 --> 0:12:07.720 to air Twan with Turkish learror through sixteen and the 0:12:07.800 --> 0:12:12.120 incredible calculus he has with the Boss, the Darknells, the 0:12:12.120 --> 0:12:15.440 Bosphorus and up to the Black See in that huge 0:12:15.480 --> 0:12:20.920 span of the new Eastern Front. How does America respond? Well, 0:12:21.000 --> 0:12:27.959 forty billion dollars is the one way. Look, when I'll 0:12:27.960 --> 0:12:30.880 bring back the Biden Taiwan thing. When Biden says the 0:12:30.920 --> 0:12:34.160 United States will defend Taiwan, my view is what he's 0:12:34.160 --> 0:12:37.200 saying is not changing the policy. Biden feels like we're 0:12:37.200 --> 0:12:40.800 defending Ukraine, not because there aren't boots on the ground, 0:12:41.360 --> 0:12:43.160 They're not doing a no fly zone. But are the 0:12:43.200 --> 0:12:46.079 Americans defending Ukraine? And when you talk about the level 0:12:46.160 --> 0:12:49.880 of sanctions when you literally freeze half of Russia's global 0:12:50.160 --> 0:12:53.640 assets the central Bank, when you literally cut them off 0:12:53.679 --> 0:12:56.040 from the G seven, when you support with the Ukrainians 0:12:56.040 --> 0:12:58.720 with the intelligence, put the money with the arms. The 0:12:58.800 --> 0:13:03.160 reason the Ukrainian still exists is first and foremost because 0:13:03.200 --> 0:13:06.960 of the courageousness of the Ukrainian fighters, but secondarily because 0:13:06.960 --> 0:13:09.280 of what the Americans and the American allies are actually doing. 0:13:09.320 --> 0:13:11.680 And if Putin had any clue that that was going 0:13:11.720 --> 0:13:15.160 to happen, he wouldn't have invaded. Is an advantage for 0:13:15.360 --> 0:13:20.080 Mr Putin? The new character of American isolationism? Is it 0:13:20.120 --> 0:13:23.320 a different isolation He thought it was. He thought it was. 0:13:23.360 --> 0:13:25.040 I thought it, well, what is the character of our 0:13:25.080 --> 0:13:28.400 new isolationism if we're going to choose to engage in 0:13:28.520 --> 0:13:32.520 China or choose to engage in Ukraine. I think that 0:13:32.600 --> 0:13:37.080 if Trump gets the nomination for the Republican presidency and 0:13:37.120 --> 0:13:40.920 he says, why are you sending forty billion dollars to 0:13:40.960 --> 0:13:43.520 the Ukraine's wise is our fight? Why would we antagonize 0:13:43.520 --> 0:13:45.920 the Russians, which, by the way his son has been 0:13:45.920 --> 0:13:47.720 tweeting over the course of the past few days, I 0:13:47.760 --> 0:13:50.480 think the view will be different there it is today. Meanwhile, 0:13:50.480 --> 0:13:53.520 we just saw the Treasury Department agree to end some 0:13:53.679 --> 0:13:57.080 of the exemptions that's basically going to force Russia into 0:13:57.120 --> 0:13:59.520 the fall and its people surprise, they didn't do that 0:13:59.520 --> 0:14:01.840 a month ago. Correct, But how much of a liability 0:14:01.880 --> 0:14:05.000 does this become? That the US is using and weaponizing 0:14:05.040 --> 0:14:07.480 the financial prowess of the nation in a way that 0:14:07.600 --> 0:14:11.840 it really hasn't before. Um. I think that the United 0:14:11.880 --> 0:14:15.400 States is showing that some red lines actually matter. Maybe 0:14:15.400 --> 0:14:19.280 not Obama's red line on Syrian chemical weapons use. Um, 0:14:19.400 --> 0:14:22.800 but this maybe maybe not you know, Bush's line. But 0:14:22.960 --> 0:14:25.000 is that how it's being perceived by the rest of 0:14:25.040 --> 0:14:27.120 the world. It depends on who you're talking to. I 0:14:27.160 --> 0:14:29.800 think the Chinese are taking lessons from the fact that 0:14:29.840 --> 0:14:32.640 the Americans and the Europeans actually really do care. Certainly 0:14:32.680 --> 0:14:34.960 that affects the way they think about Taiwan. Um. But 0:14:35.160 --> 0:14:37.880 you're right, I mean, the dollar is being weaponized, American 0:14:37.920 --> 0:14:40.000 financial systems and weaponized. But you know, what where else 0:14:40.040 --> 0:14:42.480 are you going? I mean, if there were credible alternatives, 0:14:42.960 --> 0:14:45.880 then I think that there would be a significant challenge 0:14:46.000 --> 0:14:50.320 to America's global reserve status. But if my grandmother had wheels, 0:14:50.320 --> 0:14:53.600 should be a bicycle. I mean, those are not useful comparison. Well, 0:14:53.600 --> 0:14:56.520 do you see any kind of move away from the US. 0:14:56.640 --> 0:14:59.880 Is this basically increase the fragmentation that we're seeing in 0:15:00.000 --> 0:15:02.880 frankly the strength of the alliance between say, China and 0:15:02.960 --> 0:15:06.320 Russia and even Saudi Arabia. No, you don't think so, No, 0:15:06.400 --> 0:15:08.520 I don't. I think that the Chinese are angry, and 0:15:08.520 --> 0:15:11.400 I understand why they're angry because they have a similar 0:15:11.440 --> 0:15:14.600 worldview with Putin that's very aligned. But the Chinese economy 0:15:14.680 --> 0:15:17.480 is ten x the Russian economy. So are we seeing 0:15:17.480 --> 0:15:20.080 them break American sanctions? No? Why because they don't want 0:15:20.080 --> 0:15:22.360 to lose their business with the Americans, the Europeans, the Japanese, 0:15:22.360 --> 0:15:24.440 and we seen them provide military support to the Russians. 0:15:24.480 --> 0:15:27.520 Know what we saw is that a China that feels 0:15:27.520 --> 0:15:32.120 antagonized and annoyed did some military exercises with the Chinese. 0:15:32.160 --> 0:15:36.640 Wild Biden was in Asia symbolically important, economically useless. The 0:15:36.760 --> 0:15:39.880 single biggest thing I've gotten wrong in international relations was 0:15:39.880 --> 0:15:42.200 the end of yelts. What does the end of Putin 0:15:42.280 --> 0:15:45.880 look like no time soon? I mean, the likelihood that 0:15:45.880 --> 0:15:50.880 Putin is gonna removed is extremely low until after it happens, right, 0:15:51.000 --> 0:15:53.760 I mean, clearly, if you're thinking about trying it, you're 0:15:53.800 --> 0:15:55.840 not letting anybody know, or it's it for you and 0:15:55.840 --> 0:15:57.880 your friends and your family. Um. But the fact is 0:15:57.920 --> 0:16:01.000 the Putin is quite popular in Russia right now, and 0:16:01.040 --> 0:16:03.440 it's not just because they control information. It's also because 0:16:03.640 --> 0:16:06.200 they believe that they've been humiliated by the West four 0:16:06.280 --> 0:16:08.040 decades and Putin is the guy that is saying I 0:16:08.080 --> 0:16:11.360 won't have it. Um, that's populism. You've seen in the 0:16:11.440 --> 0:16:13.400 United States, you seen Brazilians in a lot of countries. 0:16:13.920 --> 0:16:19.240 If Putin leaves that feeling of resentment and antagonism towards 0:16:19.240 --> 0:16:21.040 the West West kind of well, no, it'll be someone 0:16:21.120 --> 0:16:23.880 else from the National Security Council. I got ten seconds. 0:16:23.920 --> 0:16:26.200 How many times did you rewrite the power of crisis 0:16:27.160 --> 0:16:29.560 since it had to go to press on the six 0:16:29.800 --> 0:16:33.040 of May. Uh those last two days were very significant, 0:16:33.480 --> 0:16:41.360 Dr brother, thank you. So is with Eurasia Grove, we 0:16:41.400 --> 0:16:44.640 will attempt to migrate to what matters. And with Scott Miner, 0:16:44.760 --> 0:16:47.240 who has been of such support to us in our 0:16:47.240 --> 0:16:51.320 coverage of the Federal Reserve. As Chief Investment Officer of Guggenheim, 0:16:51.360 --> 0:16:53.640 we are going to digress because we are three days 0:16:53.680 --> 0:16:57.640 in here and we have yet to mention the collapse 0:16:57.840 --> 0:17:00.640 of bitcoin and the rest of critical it. So this 0:17:00.760 --> 0:17:04.040 is a side topic for Mr Minor is certainly not 0:17:04.119 --> 0:17:07.639 his wheelhouse. But you've been focused on it. When you 0:17:07.720 --> 0:17:11.640 talk about crypto, what does everyone else at Guggenheim think? 0:17:11.760 --> 0:17:16.280 Are they? Do they leave forward and hang on every word? Uh? Well, yes, 0:17:16.320 --> 0:17:19.040 because I'm probably the only person who spends enough time 0:17:19.119 --> 0:17:22.520 looking at it. Um, I mean it's it's uh, you know, Tom, 0:17:22.560 --> 0:17:26.320 I was an early believer in crypto. I remember getting 0:17:26.600 --> 0:17:30.240 looking into bitcoin first when it was at a hundred dollars. Uh. 0:17:30.400 --> 0:17:35.320 I did a presentation up at the Nantucket Project on crypto, Uh, 0:17:35.400 --> 0:17:37.320 you know, how to deal with it, how to invest 0:17:37.359 --> 0:17:40.080 in it? And I really thought that, um, you know, 0:17:40.200 --> 0:17:44.119 this is a viable investment vehicle. But one of my 0:17:44.160 --> 0:17:48.879 big concerns is that no one has cracked the paradigm 0:17:48.920 --> 0:17:52.480 in crypto. And when I say they cracked the paradigm, uh, 0:17:52.520 --> 0:17:56.119 it's use as a currency, right, as you know, the 0:17:56.200 --> 0:17:58.879 definition of a currency is that it's a medium of exchange, 0:17:58.880 --> 0:18:01.280 it's a store of value, it's a unit of account 0:18:01.280 --> 0:18:03.959 that the last ninety days not at all. And so 0:18:04.160 --> 0:18:07.280 we we've learned that none of this stuff stable coins, 0:18:07.720 --> 0:18:10.720 the whole bit everything is suspect. You're a really, really 0:18:10.760 --> 0:18:14.280 bright guy. I want you to explain the divide between 0:18:14.359 --> 0:18:18.080 Alan Hour at the Bank of International Settlements, who owns 0:18:18.080 --> 0:18:20.879 a high ground, with Ken Rogoff at Harvard on the 0:18:21.080 --> 0:18:27.880 study of bitcoin and in the entire scarcity that derives 0:18:27.880 --> 0:18:31.720 scarcity of it, with the community of bitcoin that just 0:18:31.760 --> 0:18:36.320 seems miles apart, and they won't read Alan Hour right now. Well, 0:18:36.359 --> 0:18:42.440 I think, look, because bitcoin and any any cryptocurrency at 0:18:42.440 --> 0:18:46.680 this point has not really established itself as a credible 0:18:47.160 --> 0:18:53.040 institutional investment, right Uh, It's really become the market of 0:18:53.080 --> 0:18:56.600 a bunch of Yahoo's and backwaters. And I know I'm 0:18:56.600 --> 0:18:59.199 already going to be plastered on Twitter now for what 0:18:59.280 --> 0:19:01.800 I just said. You get back to your desk exactly. 0:19:02.040 --> 0:19:05.760 Use the cell phone just melted down over there. But 0:19:05.800 --> 0:19:09.080 you know, when you consider we have nineteen thousand digital 0:19:09.160 --> 0:19:12.240 currencies or cryptos or whatever we want to call them today, 0:19:12.720 --> 0:19:15.360 most of them are junk. They don't make any sense whatsoever. 0:19:15.520 --> 0:19:18.359 Do you have any crypto asset investments? We did. We 0:19:18.440 --> 0:19:21.800 had bitcoin. We bought it around twenty thousand. We soldered 0:19:21.800 --> 0:19:25.199 at forty thousand UM, and I really thought we were 0:19:25.240 --> 0:19:28.280 going to correct, you know, after we got to sixty, 0:19:28.359 --> 0:19:31.360 I thought we would correct to thirty. We got there. Uh, 0:19:31.400 --> 0:19:33.880 and then I began to look at it and say, 0:19:34.280 --> 0:19:37.160 why are we stopping here? And so my latest work, 0:19:37.680 --> 0:19:40.280 which is entirely technical because there's nothing else to look 0:19:40.320 --> 0:19:42.960 at here, is that we were probably going to hit 0:19:43.000 --> 0:19:46.080 eight thousand dollars before what was the number eight thousand 0:19:46.160 --> 0:19:50.880 until we totally flush. I mean, if I were, i'd 0:19:50.880 --> 0:19:55.119 be short. That'll get me shot to You've been predictably 0:19:55.200 --> 0:19:57.960 barished for a while talking about how you do think 0:19:58.000 --> 0:20:00.720 that the US is heading towards recession, but you've remained 0:20:00.720 --> 0:20:03.560 a sanguine on certain risk assets amid this because of 0:20:03.640 --> 0:20:06.800 the short term. Has that changed as people bring forward 0:20:07.080 --> 0:20:10.399 the slow slowing growth narrative, It definitely. It isn't the 0:20:10.440 --> 0:20:15.040 slowing growth narrative that caused me to change. It was 0:20:15.240 --> 0:20:17.919 my time at Stanford a few weeks ago at the 0:20:17.920 --> 0:20:23.360 Hoover Central Bank Conference, and I saw current FED officials, 0:20:24.000 --> 0:20:29.840 ex Fed officials and the uniformly were extremely hawkish. Um 0:20:29.880 --> 0:20:33.000 I engaged in opportunities to talk about the market and 0:20:33.160 --> 0:20:35.240 the functioning of the market, and so on and so forth. 0:20:35.600 --> 0:20:41.199 The bottom line is is that short of uh a 0:20:41.320 --> 0:20:44.919 sudden collapse in in equity prices, I don't believe the 0:20:44.920 --> 0:20:48.359 Federal Reserve is going to respond. The words I kept 0:20:48.400 --> 0:20:52.520 saying is as long as the decline remains orderly, we 0:20:52.560 --> 0:20:56.880 would like to see financial conditions tighten. And that that 0:20:57.160 --> 0:20:59.399 I think is the game plan in the land of 0:20:59.480 --> 0:21:02.800 Michael us In, particularly in the land of John Taylor, 0:21:02.920 --> 0:21:06.400 in the Taylor rule. Obviously this is a whole original 0:21:06.480 --> 0:21:10.640 architecture for everybody involved in economics. But if a central 0:21:10.640 --> 0:21:14.080 bank blinks, how is that expressed? Is it going to 0:21:14.119 --> 0:21:18.520 be expressed through dollar dynamics? Absolutely? I think give the 0:21:18.520 --> 0:21:20.560 Fed blinks, we're gonna make some news here, give me 0:21:20.600 --> 0:21:23.359 a dollar call. Well, I think as long as we 0:21:23.440 --> 0:21:25.520 stay the course on tightening, which I think we will 0:21:25.560 --> 0:21:27.920 through the summer, the dollar is going to do fun. 0:21:28.480 --> 0:21:32.359 But if the Fed blinks because of of financial panic, 0:21:32.440 --> 0:21:35.040 which I think there's a high probability of towards the 0:21:35.080 --> 0:21:37.040 second half of the year, and then I think that 0:21:37.320 --> 0:21:39.840 the dollar will come under pressure. What happens though, if 0:21:39.880 --> 0:21:41.639 it doesn't, if the FED doesn't blink because of that, 0:21:41.720 --> 0:21:44.040 but because growth is actually slowing, which is basically what 0:21:44.080 --> 0:21:46.440 people are pricing in right now, right. But I think 0:21:46.480 --> 0:21:50.040 that for the FED, the dynamic is not the slowing growth, 0:21:50.600 --> 0:21:54.880 it's the inflation number, right, and the the growth can 0:21:54.920 --> 0:21:58.199