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Speaker 2: Paul, and I can't remember a guest a half hour ago.
Speaker 2: To remember a guest two days ago is unthinkable. It's
Speaker 2: a blur what we do. We have a great team,
Speaker 2: including said Benson, who keep us going forward. I remember exactly, Paul,
Speaker 2: what Nancy Lazar said ninety days ago or one hundred
Speaker 2: days ago, Folcus, this was the single most important piece
Speaker 2: of American wisdom from Nancy Lazarre. And she joins us
Speaker 2: again here this morning with too short a visit. She's
Speaker 2: with Piper Sandler. You said, it's a blogey reality for America.
Speaker 2: We're investing in government and all these derivative jobs, and
Speaker 2: we're not investing in the private sector to create a
Speaker 2: backbone of job formation and prosperity in America. Has that
Speaker 2: been amended in all the theatrics of the last three months.
Speaker 3: Well, the Big Beautiful Bill did indeed incentivize companies to
Speaker 3: invest more in the United States, and that is one
Speaker 3: of the positives you can say about the current the
Speaker 3: current legislation, companies can now fully expense their capital spending exactly.
Speaker 2: It sounds like LBJ one oh one.
Speaker 3: I'm not sure it's LBJ one on one. I might
Speaker 3: go to Ronald Reagan one oh one. He was really
Speaker 3: the first president to articulate the importance of investing in
Speaker 3: the economy through his accelerated Appreciation tax legislation. So now
Speaker 3: I wouldn't go back to the sixties. That's actually an
Speaker 3: inflationary period. I would certainly hope we're not going back here.
Speaker 2: You should just put me in the time this little
Speaker 2: bizarre time out you, Paul, Why don't you pick it
Speaker 2: up here?
Speaker 4: So there are some positive obviously, some positive pro growth
Speaker 4: parts of the legislation, which is the market had been
Speaker 4: anticipating when this president was elected. On the flip side,
Speaker 4: we've got the uncertainty of terriffs, a the cost of
Speaker 4: tariffs and who's going to bear that and be just
Speaker 4: kind of the uncertainty that that brings into corporate America.
Speaker 2: How do you balance those too?
Speaker 5: Well?
Speaker 3: I think near term, obviously terriffs are going to be
Speaker 3: the driving force creating the soft patch, as we're calling it,
Speaker 3: weaker economic activity. They are near term a negative. We're
Speaker 3: going to see it in two Q growth. Even though
Speaker 3: headline GDP will be two to three percent in the
Speaker 3: second quarter. Underneath the hood, if you look at private
Speaker 3: domestic demand, it's going to be closer to zero point
Speaker 3: five percent. The swing is due to trade.
Speaker 6: Right.
Speaker 3: Trade is a big drag on one Q. It's going
Speaker 3: to be an incremental support for two Q. So right
Speaker 3: now private demand is shifting down to abouzero point five
Speaker 3: two Q probably also into three Q. So near turm.
Speaker 3: The terriffs are indeed the driving force in the economy.
Speaker 3: But as we go into twenty six, I think these
Speaker 3: other incentives to invest in the United States capital spending,
Speaker 3: supporting private sector in investment and in turn eventually jobs
Speaker 3: are going to be more important and the market quite
Speaker 3: frankly maybe looking through that. Except tariffs, they're here. They're
Speaker 3: here to stay. We even built them into our forecast.
Speaker 3: Near terms, they are going to show up in the
Speaker 3: inflation data more clearly as we go into three Q.
Speaker 3: You can already see it in the data. We highlight
Speaker 3: that this morning three Q will be a little bit
Speaker 3: more evident with price higher prices, both businesses and consumers
Speaker 3: are going to are paying these higher prices. That's giving
Speaker 3: us the soft Are we going to have a.
Speaker 2: David Stackman moment and later Reagan where we go, Oops,
Speaker 2: there went the fiscal budget.
Speaker 3: I think I think we may already be in that
Speaker 3: environment right now. I actually, when I look at the
Speaker 3: government spending data, I can see some incremental restraint. I
Speaker 3: think I get booed when I talk about that, but
Speaker 3: you can see it if you look very closely at
Speaker 3: the monthly Treasury statement. The federal outlaid data are starting
Speaker 3: to stall out. You're hearing it from companies, software, defense consultants.
Speaker 3: You are hearing companies say the government's being a little
Speaker 3: bit more stringy. You're seeing it in the job data.
Speaker 3: Federal employment has declined for the past five months. It's
Speaker 3: going to given what happened yesterday, it's likely to accelerate.
Speaker 3: Federal employment is likely to continue to decline. So I'm
Speaker 3: seeing government spending being chipped away. I might almost like
Speaker 3: a David Stockman moment, which is like, you know, wake
Speaker 3: up and smell the coffee. The the the deficit is
Speaker 3: way too big. Government spending is way too big. I think,
Speaker 3: I think people, some people within the administration understand that,
Speaker 3: and you are starting to see some incremental restraint, and
Speaker 3: not this year, but maybe next year. The deficit can
Speaker 3: come in a little bit better than expected.
Speaker 4: But definitely, I mean, just one big, beautiful bill. It
Speaker 4: adds to deficits debt and billions of dollars. The market
Speaker 4: doesn't care.
Speaker 3: Well again, it's it's it does incrementally add to the deficit.
Speaker 3: It keeps it about six and a half percent of
Speaker 3: gd of GDP. It's not going to be bigger than
Speaker 3: it otherwise would have been. Again, you're just extending these
Speaker 3: tax cuts. I don't disagree with you if the market
Speaker 3: doesn't care. And one of the reasons the market's looking
Speaker 3: through this is because, as I've said before to you,
Speaker 3: all capital spending is ugly duckling of economic data. And
Speaker 3: this bill reinforces the need to invest in this country.
Speaker 4: Right.
Speaker 2: Let's go to first principles here, because some folks Nancy
Speaker 2: Lazar with this, with Piper Sandler thrilled she could be
Speaker 2: with this absolutely iconic and a view of the American economy. Okay,
Speaker 2: so consumption is sixty nine to seventy percent of GDP.
Speaker 2: How much is that private investment that Lazar need? How
Speaker 2: is it eleven?
Speaker 7: Now it's fourteen.
Speaker 3: Capital spending is about fourteen percent of GDP, So it
Speaker 3: is clearly less than the consumer. But again it's it's
Speaker 3: it's therefore it is underappreciated as a driver. It's the
Speaker 3: it's the multiply effects from capital spending that are so important.
Speaker 3: If you go around the country and you look at
Speaker 3: states from Georgia to South Carolina to Indiana where you've
Speaker 3: had very clear investment booms, those economies are doing well
Speaker 3: because of the multiplier you create services associated with these factories.
Speaker 5: And so listen to you.
Speaker 2: Are we back to a nineteen fifties nineteen sixties multiplier
Speaker 2: superiority of capital investment in manufacturing?
Speaker 3: I think so it's actually been unfolding for about fifteen years,
Speaker 3: and so I think at the end of the day, yes.
Speaker 4: Real quickly, how's a consumer out there?
Speaker 3: We call it the new smarter consumer. The consumer right
Speaker 3: now is reacting to these higher tariffy. Real consumer spending
Speaker 3: is stalling out. From services to machine to hardware. You
Speaker 3: are seeing the consumer pull back. The only thing we're
Speaker 3: buying right now are clothes. I'm certainly helping to do that.
Speaker 3: But yeah, the consumer is reacting to the uncertainty, to
Speaker 3: the higher prices. But we don't think the consumer is
Speaker 3: going to push us into our session. It takes a
Speaker 3: lot to push the consumer into negative territory. So stall speed,
Speaker 3: yes for session now.
Speaker 2: Nancy Lasare thank you so much. Viper SANDLERC.
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Speaker 2: Now for Global Wall Street to treat Iconic I Lincoln
Speaker 2: at the Bank of Montreal, PIMO Capital Markets and what
Speaker 2: happens to John Tucker, Paul Sweeney and Tom King's world.
Speaker 2: If I get a five twenty five or a five
Speaker 2: point fifty yield and a thirty year bond.
Speaker 6: I think we would see some excitement in the equity market.
Speaker 6: By excitement, I mean to the downside. We've already tried
Speaker 6: to retest those levels in the past, and the reality
Speaker 6: is that risk assets can't handle it. We're not an
Speaker 6: economy made for thirty year bond yields at high So it.
Speaker 4: Seems like we're going to be getting tariffs here in
Speaker 4: that seems to be and probably aggressively.
Speaker 1: So what is it?
Speaker 4: What does that mean for the bond market?
Speaker 6: So I'll argue that to a large extent, tariffs are
Speaker 6: already priced in. We see it in tenure break evens,
Speaker 6: we see it in inflation futures. The reality is that
Speaker 6: we are looking for a summer of reflation, certainly on
Speaker 6: the good side. I think the fascinating aspect is that
Speaker 6: we still haven't seen it materialize in the realized data yet.
Speaker 6: Now next week we get CPI, there should be some
Speaker 6: signs of upward pressure, but the consensus is just zero
Speaker 6: point three, and that's relatively benign and good for the
Speaker 6: bond market overall.
Speaker 4: So the ten year treasury, I mean, we're sitting here
Speaker 4: at roughly four point four zero percent. What do you
Speaker 4: think maybe we end the year on the ten year
Speaker 4: US Treasury?
Speaker 6: Our forecast is that we end twenty twenty five with
Speaker 6: ten year yields at three eighty five. Now that might
Speaker 6: sound somewhat dramatic, but we were just at four eighteen
Speaker 6: at the beginning of July. So more than anything, it's
Speaker 6: going to be a range.
Speaker 2: So describe the bond vigilantes is an important statement here
Speaker 2: for mister Lingen. For the jargon is the linkage here, folks,
Speaker 2: of the bond price movement which changes the yield as
Speaker 2: we're buffeted in the economy and all and Lincoln are
Speaker 2: the bond vigilantes just so powerful the White House has
Speaker 2: to listen to ed Yard Denny and I and Lingoln.
Speaker 6: That's an interesting that's interesting question. I think to some
Speaker 6: extent the bond vigilantes had their day on the budget debate,
Speaker 6: and to some extent we've heard from Bessent that he
Speaker 6: is going to focus borrowing in the bills market, not
Speaker 6: further out the curve. So arguably the bond vigilantes won
Speaker 6: this round.
Speaker 2: I mean, we got to stop the show, folks. Ian
Speaker 2: knows how to press my buttons. Okay, Ian cut to
Speaker 2: the chase.
Speaker 6: The head of.
Speaker 2: CEA hugely criticized by the economic establishment, pushing against the giant.
Speaker 2: Peter Fisher from years ago says, we're going to load
Speaker 2: the boat on short term paper and change our duration
Speaker 2: and maybe we're then going to go out of my
Speaker 2: twenty year paper. My right Paul French, perpetuity bonds and
Speaker 2: the rest and discuss this should we shift the distribution
Speaker 2: of our debt because Steve Marin says we should.
Speaker 6: Well. One thing that I'll note is that the rest
Speaker 6: of the world is already doing this. The UK is
Speaker 6: doing this. We've heard from Bank of Japan that they're
Speaker 6: willing to be responsive to how the market is pricing
Speaker 6: in their borrowing needs. And we even saw Yellen do
Speaker 6: that in twenty and twenty three. And so the idea
Speaker 6: that Bessent is taking advantage of the low rates in
Speaker 6: the front end of the market is consistent with what
Speaker 6: the rest of the global sovereign debt market's doing.
Speaker 4: Ye, and I'm looking at the two ten spread here.
Speaker 4: I got my two year treasury let's call it three ninety,
Speaker 4: my tenure at four forty, So a fifty basis points
Speaker 4: steepening of the curve. Historically has that been a normalized
Speaker 4: level or how should we think about that?
Speaker 6: So it's positive it's upward sloping. That's consistent with what
Speaker 6: a curve normally is. I think the unique aspect of
Speaker 6: this is all it's being equal. We would expect the
Speaker 6: curve to be steeper led by the front end of
Speaker 6: the market. But the FED has so much uncertainty on
Speaker 6: whether or not they can start cutting again anytime soon
Speaker 6: that that's what's keeping the curve from being a steeper
Speaker 6: in here, which has been to the surprise. I would
Speaker 6: say to a lot of market participants of this cycle, Ian.
Speaker 2: Lincoln, too short a visit. We got to go talk Copper,
Speaker 2: Doctor Copper. We've been talking with doctor Lingoln of Female Capital.
Speaker 2: Market's absolutely brunt.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: Truman over and I'm sure Douglas Serwin joins, US Professor
Speaker 2: of Economics at Dartmouth. Paul, you had a brilliant insight there.
Speaker 2: And where are we right now, Professor.
Speaker 8: Well, it depends on whether we're talking about the US
Speaker 8: or the rest of the world. You know, the rest
Speaker 8: of the world continues to trade, has not raised tariffs significantly,
Speaker 8: and I think what's hanging over the US is we're
Speaker 8: in between two possible equilibria. One could be higher tariffs,
Speaker 8: liberation day tariffs take effect, or maybe taking infect August first,
Speaker 8: or this uncertainty. So we have tarifs about ten percent
Speaker 8: or so. That's uncertainty about whether they're going to go
Speaker 8: higher and whether the deadlines will be extended or not,
Speaker 8: and they're both sort of bad equilibria. We don't want
Speaker 8: the high tariffs, but we also don't want to really
Speaker 8: live with us uncertainty about whether the tariffs that we
Speaker 8: have are going to be jumping up in coming months.
Speaker 4: Professor, from your perspective, who pays the cost of tariffs?
Speaker 4: Do we know?
Speaker 8: Actually we do know because we have these experiments from
Speaker 8: the first Trump term, and there's been about a half
Speaker 8: a dozen economics papers that have studying the issue. And
Speaker 8: it's domestic consumers. That is, the importers can't absorb those
Speaker 8: in those margins. In their margins, they can't absorb the tariffs,
Speaker 8: so they pass them along. Now that doesn't mean that
Speaker 8: final consumers us as households, necessarily pay all the tariff,
Speaker 8: because there are various stages and imported products sometimes are
Speaker 8: a small part of the final price that we pay.
Speaker 8: But there's no doubt that it's passed within this country.
Speaker 8: So it's not other countries paying the tariffs, it's we
Speaker 8: in the US will be paying for these tariffs.
Speaker 4: So, in terms of tariff policy, I think most people
Speaker 4: have kind of understood it and experienced it on a
Speaker 4: maybe a product by product or country by country basis.
Speaker 4: How affective are tariffs on kind of this kind of
Speaker 4: global approach that we're seeing from the Trump administration, and
Speaker 4: kind of what's the net effect.
Speaker 8: Well, you're absolutely right that in the past tariffs have
Speaker 8: been sort of piecemeal, either imposed on a particular product
Speaker 8: or particlar product coming from a particular country, anti dumping duties,
Speaker 8: duties target at China, and what have you. And so
Speaker 8: the easy thing about them, or one element of them,
Speaker 8: is that they're easily evaded. You just shift where you're
Speaker 8: importing from. You it's called trade diversion. You start importing
Speaker 8: more from Mexico, Vietnam instead of China.
Speaker 2: What happened.
Speaker 8: But if you're imposing these blanket tariffs on everyone, it
Speaker 8: really has a much bigger effect than all those piecemeal
Speaker 8: of tariffs that we've seen in the past.
Speaker 2: Dougr when I went back and I read the McKinley
Speaker 2: speech in Buffalo, New York, the day before President McKinley
Speaker 2: was assassinated. You've been eloquent on this. You said there
Speaker 2: was a shift in McKinley's certitude about tariffs. Can we
Speaker 2: see the same shift from President Trump?
Speaker 8: I don't think we see it yet, But I think
Speaker 8: what you see is this conviction that we ought to
Speaker 8: be imposing these tariffs being tempered by some of these advisors,
Speaker 8: particularly Scott Best at Treasury. And I think the market
Speaker 8: reaction to the April second announcement of the Liberation Day tariffs,
Speaker 8: that is, three or four days of consecutive one percent
Speaker 8: declines in major equities, the rise in bond yields, that
Speaker 8: may have spooked the administration and may temper how much
Speaker 8: they're willing to follow through.
Speaker 2: Your iconic book Against the Tide, I mean when you
Speaker 2: published that the glacier was just pulling back north of Hanover,
Speaker 2: New Hampshire. If you move to the modern day, Doug Irwin,
Speaker 2: with a new financialization of American capitalism, can the financial vigilantes,
Speaker 2: the copper vigilantes, Can they join ed Yard Denny's vigilantes.
Speaker 8: In some sense? Yes, I mean the dramatic rise in
Speaker 8: copper prices yesterday. I mean users are going to be
Speaker 8: paying a lot. This idea that you know, once again,
Speaker 8: other countries are going to pay the tariff. It won't
Speaker 8: be passed through to domestic crisis. We saw that with
Speaker 8: copper just yesterday. And when we see this on shoes
Speaker 8: and t shirts and electronics and all the other things
Speaker 8: that these broad terraffs may be applied on August first,
Speaker 8: you know, we're going to have a major impact on
Speaker 8: the economy and I think temper the ability to house
Speaker 8: make say yeah, we're going to go full speed ahead
Speaker 8: on this.
Speaker 2: For all of you across the nation. At treat Douglas,
Speaker 2: Erwin and Dartmouth College, we continue Paul Sweeny and Tom Keen.
Speaker 2: It is Bloomberg surveillance, Paul Professor.
Speaker 4: Some of the pushback on the tariff policies is centered
Speaker 4: on this concern that it may slow US economic growth
Speaker 4: and it may push up inflation. How do you few
Speaker 4: view those risks.
Speaker 8: I think they're absolutely correct to be thinking in those terms.
Speaker 8: You know, once again, there is about a dozen different
Speaker 8: simulations and models out there. Private sector, academia, think tanks
Speaker 8: and what have you, And there's never a positive GDP
Speaker 8: impact from tariffs, and there's never a negative price effect
Speaker 8: of these tariffs. The questions of the magnitudes, and of
Speaker 8: course the magnitudes will depend a lot on what tariffs
Speaker 8: we actually see implemented. You know about a commentator say,
Speaker 8: we don't see the data today. Well, we haven't really
Speaker 8: imposed a lot of the tariffs that have been proposed.
Speaker 8: We haven't imposed those that have been proposed, and so
Speaker 8: when we do, I think that's when we'll start seeing
Speaker 8: big effects on the data.
Speaker 2: Discuss, professor, the reciprocity. McKinley in that famous speech before
Speaker 2: his tragic death, he mentioned reciprocity is a path to
Speaker 2: get out of onerous tariffs. If I look at Korea
Speaker 2: or Japan, the President's correct, they won't take our General Motors,
Speaker 2: our GM, Cadillac Escalades or whatever. Tell me about reciprocity
Speaker 2: with Asia, Professor.
Speaker 8: Sure, Well, the interesting thing about Korea is we have
Speaker 8: a free trade agreement with Korea, so the tariff that
Speaker 8: they apply in US products is zero. So then you
Speaker 8: have to say, well, what's exactly the problem of selling
Speaker 8: in Korea? Are there non tariff barriers? Are there other
Speaker 8: financial factors and capital flows that are driving the bilateral imbalance,
Speaker 8: and because that's what the administration is really focused on.
Speaker 8: The you know, with those reciprocal tears that they announced
Speaker 8: on Liberation Day, they said, well, we're just taxing them
Speaker 8: the way they tax us. Well it wasn't that way
Speaker 8: at all in terms of the formula they used. It's
Speaker 8: all based on the trade deficit that we have bilaterally,
Speaker 8: and once again, trade deficits don't really necessarily indicate trade barriers.
Speaker 8: We have trade surplus and trade deaths with countries that
Speaker 8: we have free trade rooms with where the tariffs are
Speaker 8: zero on both sides. We have a trade surplus with Australia.
Speaker 8: So those are very imperfect measures of what government policy
Speaker 8: worth respect trade are.
Speaker 2: What is the best path or process for our central
Speaker 2: bank to deal with this tariff shock.
Speaker 8: That's a great question, a very important one. You know,
Speaker 8: I think the standard responses you sort of have to
Speaker 8: look through the price effects, but you can't look through
Speaker 8: the GDP effects.
Speaker 2: Thank you.
Speaker 8: If so, This is really why the said will be
Speaker 8: in a conundrum if we see higher prices and lower growth.
Speaker 8: You know, on one hand, you want a titan to
Speaker 8: take care of the price impact. On the other hand,
Speaker 8: you want to loosen to take care of the GDP effect.
Speaker 8: I think it really depends on what sort of configuration
Speaker 8: of chaffs we see in August and coming months.
Speaker 2: Brilliant. I can't say enough about that. I was a
Speaker 2: set up question, folks. I knew where Professor Irwin was
Speaker 2: going and a major shout out to all the work
Speaker 2: of Jeffrey Frankel at a college. It's in Boston. It's
Speaker 2: on the Charles Rivers. It's one of those schools in Boston.
Speaker 2: Jeffrey Frankel said, don't forget GDP and the calculus of
Speaker 2: what Central Bank should and could and will do. Douglas
Speaker 2: Irwin is it Dartmouth.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: A little perspective. Chicago long ago was the bedrock of
Speaker 2: American isolationism. I lived it with my grandparents. Were entities
Speaker 2: out there a million years ago and out of nineteen
Speaker 2: twenty two, one organization in Chicago battled the inherent Midwest
Speaker 2: isolizationism of America. It was sort of like Ike out
Speaker 2: in Kansas a million years ago, and that was the
Speaker 2: Chicago Council on Global Affairs. It is a sterling, sterling group.
Speaker 2: Michael Moscow, all sorts of great names of Midwest, William Day,
Speaker 2: all sorts of names of a Midwest business, Eva Adalder
Speaker 2: as well as the chief executive officer. And they have
Speaker 2: scored a coup. It's like the Cubs getting a middle relief.
Speaker 2: In September. Avenja Murray from London to Chicago now President,
Speaker 2: chief Executive Officer of Chicago Council of Global Affairs Leslie
Speaker 2: first of all for all of Bloomberg, congratulations. What is
Speaker 2: it like to go from London and parachute into Chicago, Illinois.
Speaker 7: You know, in today's world, it feels exciting, it feels
Speaker 7: normal in one sense. I mean, and thank you for
Speaker 7: that brilliant welcome and introduction the Chicago Council on Global Affairs.
Speaker 7: You just nailed it. Nineteen twenty two, on the back
Speaker 7: of America's rejection of the Treaty of Versailles of the
Speaker 7: League of Nations and that group of men and women
Speaker 7: being very concerned about keeping America globally engaged. But you know,
Speaker 7: as you know, I was at Chathamhouse. Chutthamhouse and the
Speaker 7: Chicago Council are both nonpartisan, independent membership base organizations in
Speaker 7: two really tremendously vibrant, dynamic cities with very large financial bases.
Speaker 7: So in that sense it feels very familiar. But Chicago,
Speaker 7: as you know, tomas a deeply, in the best of
Speaker 7: all possible ways, a deeply American city, and so I
Speaker 7: thought it was time to bring it home. And a
Speaker 7: time when, as we know, America is staying engaged is
Speaker 7: absolutely critical.
Speaker 2: Two brilliant essays in the last twenty four hours on
Speaker 2: the folly of seeking manufacturing renaissance in America. It's not
Speaker 2: there because of technology whatever whatever. You're now in the
Speaker 2: absolute heartbed of the hopes and dreams of manufacturing America.
Speaker 2: Can we create manufacturing jobs.
Speaker 7: We can have manufacturing jobs, We should have some manufacturing jobs.
Speaker 7: We're clearly not going back to where we were. I
Speaker 7: don't think very many, if any economists.
Speaker 2: Really believe that.
Speaker 7: And you know, the call the demand for that is
Speaker 7: one that's intensely political and not really very strategic or
Speaker 7: forward looking or economic. We know the challenges of the
Speaker 7: future are going to be about automation, about artificial and
Speaker 7: artificial and intelligence. We're actually going deep on quantum in
Speaker 7: a few weeks in Chicago, and so it's that looking
Speaker 7: forward and retraining and retooling and educating that that are
Speaker 7: going to be essential. Unfortunately, we're stuck in a moment
Speaker 7: in the US where the headline news and the kind
Speaker 7: of push by the administration is not really one that's
Speaker 7: tackling the the the challenges and the possibilities and potentials
Speaker 7: of the future. So I think those those pieces that
Speaker 7: you're referring to are the headline is right there.
Speaker 4: Leslie, How would you as we think about global affairs,
Speaker 4: global geopolitics, and we know President Trump favors the America
Speaker 4: First approach, how do you think this plays out in
Speaker 4: the coming weeks months, a couple of three years.
Speaker 7: Look, President Trump came into office. We know he wanted
Speaker 7: to do those deals, to be the president who delivered peace,
Speaker 7: who really moved things forward, kept things come. The campaign
Speaker 7: promises was was the aspiration was things were quiet with me,
Speaker 7: they were come with me. You got President Biden, you
Speaker 7: got all these wars so far that's been very hard
Speaker 7: to deliver on it, and to be fair to President Trump,
Speaker 7: it was a tall mountain to climb to deliver peace
Speaker 7: in the Middle East, Peace in Ukraine when Russia has
Speaker 7: really no interest right now in ending the war and
Speaker 7: settling what is bound to be a very intense geopolitical
Speaker 7: rivalry with China for decades to come, was always going
Speaker 7: to be difficult. So these are you know, very big challenges,
Speaker 7: and unsurprisingly they remain largely unresolved. I think the the
Speaker 7: best that we can hope for in Ukraine is that
Speaker 7: there is some effort to buy the US US to
Speaker 7: sustain Ukraine's fight in that conflict, which is likely to
Speaker 7: go on for quite some time, and to get into
Speaker 7: a sort of landing position with China so that there
Speaker 7: is a steady diplomatic engagement and a dialing down of tensions.
Speaker 7: But this is extremely difficult and now, and of course
Speaker 7: in the Middle East, we have a situation where Iran
Speaker 7: appears to still have its nuclear capabilities and the risk
Speaker 7: now absent any negotiation, and that's I think where we
Speaker 7: should definitely try to head that that Iron accelerates it's
Speaker 7: its desire to get a nuclear weapon.
Speaker 2: A few years ago, you were kinds on foreign relations
Speaker 2: with Charles Kopchain on isolationism. Is the character of Trump
Speaker 2: isolationism changing from the rhetoric of the election. He's got
Speaker 2: a job now, he's dealing with mister Putin, as Paul mentioned,
Speaker 2: literally on a what daily basis. I think, so once
Speaker 2: a week phone calls something like that, Leslie, is it
Speaker 2: a new Trumpean isolationism that we're going to confront?
Speaker 7: You know, Tom, I've never seen President Trump as isolationist.
Speaker 7: I have seen him as certainly transactional, as being having
Speaker 7: a desire to work bilaterally and unilaterally and not through
Speaker 7: multilateral venues. All of that is true. But he's deeply
Speaker 7: engaged in the world. He's you know, very recently used
Speaker 7: military force against Iran. He's, as you said, talking to Putin.
Speaker 7: He's very ambitious globally. He's got a big personality at
Speaker 7: book footprint. This is not in America that's retreating and
Speaker 7: ignoring the rest.
Speaker 2: Of the world, Leslie. No one cares. All we care
Speaker 2: about cubs or white Sox, and you get Pope Leota
Speaker 2: show up. So Chicago Council and Global Affairs can have
Speaker 2: an event. The nuk Miski Park. It is.
Speaker 7: It is a fabulous city and I hope to go
Speaker 7: to all those games.
Speaker 2: No clue, nighting doctor. Just remember there's only one hockey team.
Speaker 2: Remember this name Stan Makita, and he's got a diner
Speaker 2: you could go to. I saw the movie once, Leslie
Speaker 2: Ben Jamurry, Thank you.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: I have the clearest memories of anry Horden from the
Speaker 2: Polish border at the beginning of the war, trying to
Speaker 2: explain the distance from the cities of western Ukraine US
Speaker 2: to Keeve into the battleground of eastern Ukraine. We've covered
Speaker 2: a course, the horror of destruction in the Black Sea,
Speaker 2: and within this and the moment we're in right now,
Speaker 2: including President Trump's important comments yesterday, life goes on. We
Speaker 2: are thrilled to bring you now Alexander Kamarov, who is
Speaker 2: a businessman, a simple businessman in Ukraine. It involves telecommunications,
Speaker 2: it involves us work out of Stockholm School of Economics,
Speaker 2: and we're just thrilled he could give us it a brief.
Speaker 2: This morning, life goes on, sir, with great respect for
Speaker 2: the tragedy. What is the state of the economy in
Speaker 2: your Ukraine?
Speaker 9: You know, in general it is okay taken into account
Speaker 9: the circumstances.
Speaker 5: I think that we are doing well.
Speaker 9: Of course, Ukraine and economy right now is around eighty
Speaker 9: percent in comparison to twenty twenty one before the invasion,
Speaker 9: But it is growing, okay, and with national support, we
Speaker 9: have demonstrated on average four plus percent grows since twenty
Speaker 9: twenty two. Okay, And you know business is working, so
Speaker 9: all services I in place, critical services are in place.
Speaker 9: So I think the situation is quite okay taken into
Speaker 9: account the full scale invasion and war in Ukraine.
Speaker 2: Away from your remed and we've done this with Admunster Vitas. Particularly,
Speaker 2: is the economy of the Ukraine Black Sea region? Is
Speaker 2: the grain exports there operable right now? Are you moving
Speaker 2: out your core export commodity across the Black Sea to
Speaker 2: the Mediterranean?
Speaker 5: Yes, it is fully active. Okay.
Speaker 9: There are of course there are some limitations imposed by
Speaker 9: the war, but there is no blockout, you know, so,
Speaker 9: and business is running quite well.
Speaker 5: Of course, it's not my area, let's say, of expertise.
Speaker 5: I'm much more.
Speaker 9: About digital business, telco infrastructure and critical infrastructure.
Speaker 5: But what I see that we are able to expert okay.
Speaker 9: So agriculture, so overseas okay, without any kind of extra limitations.
Speaker 5: Yes, there are let's say, war risks, but in general
Speaker 5: it works quite well.
Speaker 4: Alexander, your company, Kivstar is a leading telecommunications company there.
Speaker 4: I would think a reliable telecommunications systems would be critical,
Speaker 4: particularly for a country that is at war. What's the
Speaker 4: status of your telecom infrastructure today?
Speaker 9: Across areas that are under Ukrainian control. We are fully operational, okay,
Speaker 9: So we are running network almost like during the pre
Speaker 9: war period. We are developing, we are investing into the infrastructure.
Speaker 9: Let me give you a few figures. In the beginning
Speaker 9: of the war, we build more than three thousand new
Speaker 9: sites and actually more than ten thousand new base stations.
Speaker 9: So we are trying to ensure almost the whole population
Speaker 9: coverage with the modern technologies like lt SO. We already
Speaker 9: achieved ninety six percent, and this is one of our
Speaker 9: focuses is actually to provide reliable and redundant services to
Speaker 9: our customers.
Speaker 5: We are well prepared for the national blackouts right now.
Speaker 9: We can run our fixed and mobile networks up to
Speaker 9: ten hours without electricity. And on the top of this
Speaker 9: kind of critical technical infrastructure, we are developing digital services
Speaker 9: and digital propositions to our clients right now.
Speaker 5: Keepstar is not just that telco provider, It is a
Speaker 5: provider of the.
Speaker 9: Digital services with TELCA license based on the modern and
Speaker 9: the biggest and the most advanced infrastructure in the country.
Speaker 4: So, Alexandre, are you finding that your infrastructure is being
Speaker 4: targeted by the Russians and perhaps part of their strategy
Speaker 4: to disrupt communications.
Speaker 9: Yes, of course, So since the beginning of the war,
Speaker 9: we lost around three core sights. So these are technological
Speaker 9: platforms allocated around Ukraine. But due to the mitigate efforts, okay,
Speaker 9: you are to a quite extensive i will say technical project. Okay,
Speaker 9: so we were able to sustain and maybe you know
Speaker 9: that Keith Star was targeted and as a result of
Speaker 9: this cyber terrorism Okay, So Keith Star was the victim
Speaker 9: of one of the biggest cyber Terrorism Act in the
Speaker 9: global telecom world. But still we are doing business, we
Speaker 9: are providing services, and we are demonstrating a very high
Speaker 9: level of resilience.
Speaker 2: We would like you to come back on again. So
Speaker 2: this has been a wonderful brief and realities. I've got
Speaker 2: so many more questions. Alexander Kamarov, thank you so much
Speaker 2: with Kifstar sell your telephone operations. Tours of duty in
Speaker 2: Kazakhstan and Ukraine. Here's Ukraine, I should say, have been
Speaker 2: just extraordinary. We'll have mister Kahmer again.
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