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 pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,080 Speaker 1: at Bloomberg dot com slash podcast. Matt, you know, I 7 00:00:22,079 --> 00:00:23,720 Speaker 1: think I'm probably like a lot of people trying to 8 00:00:23,760 --> 00:00:27,360 Speaker 1: figure out what exactly happened in Poland. I thought you're 9 00:00:27,360 --> 00:00:30,200 Speaker 1: gonna say, no, we're gonna go a little bit ten 10 00:00:30,280 --> 00:00:32,120 Speaker 1: fifteen minutes free here of that, We're gonna talk some 11 00:00:32,240 --> 00:00:36,440 Speaker 1: real stuff. Uh NATO and Poland see no intentional Russian 12 00:00:36,520 --> 00:00:40,600 Speaker 1: strike as crisis eases. That's the Bloomberg headline. But I 13 00:00:40,680 --> 00:00:43,640 Speaker 1: need to get the expert opinion, the boots on the ground, 14 00:00:43,680 --> 00:00:47,680 Speaker 1: and for that returned to Maria today. Oh she's your reporter, Bloomberg. 15 00:00:47,920 --> 00:00:50,040 Speaker 1: You're not Bloomberg Opinion anymore. You're back to Bloomberg News, 16 00:00:50,080 --> 00:00:52,879 Speaker 1: I believe, But no, I'm not. Guys, Yes, I know 17 00:00:53,880 --> 00:00:56,760 Speaker 1: that I caught that Maria in our notes, So you're 18 00:00:56,760 --> 00:00:59,320 Speaker 1: not a Bloomberg back backup Bloomberg News thankfully, because we 19 00:00:59,400 --> 00:01:03,160 Speaker 1: need or objective reporting here. What do we know now 20 00:01:03,200 --> 00:01:07,240 Speaker 1: about what happened in Poland yesterday? No opinion, just fact. 21 00:01:07,440 --> 00:01:10,640 Speaker 1: And I think we're mat Miller if I believe that 22 00:01:10,760 --> 00:01:14,840 Speaker 1: was his his side of relief, that that I overheard 23 00:01:14,920 --> 00:01:17,760 Speaker 1: that really yeah, I had even really actually encapsulates a 24 00:01:17,760 --> 00:01:20,360 Speaker 1: lot of the responses and and and and some of 25 00:01:20,400 --> 00:01:23,640 Speaker 1: the text messages that I've been exchanging with a number 26 00:01:23,680 --> 00:01:27,880 Speaker 1: of diplomats today in in Brussels. There was real concerned 27 00:01:27,920 --> 00:01:31,520 Speaker 1: yesterday when that AP headline hit two people that in 28 00:01:31,640 --> 00:01:35,640 Speaker 1: Poland a Russian missile that went over the border into Poland. 29 00:01:36,080 --> 00:01:38,800 Speaker 1: Of course, not to give anyone a history lesson here, 30 00:01:38,840 --> 00:01:41,440 Speaker 1: but we know that Poland is a member of NATO, 31 00:01:41,720 --> 00:01:44,760 Speaker 1: is a member of the European Union, had a very 32 00:01:45,120 --> 00:01:48,680 Speaker 1: very difficult relationship with Russia for a number of historical 33 00:01:49,280 --> 00:01:52,280 Speaker 1: reasons that I'm sure Mam Miller also uh well knows well, 34 00:01:52,440 --> 00:01:55,000 Speaker 1: going back to the Nazi Soviet Pact. This is a 35 00:01:55,120 --> 00:01:59,240 Speaker 1: very tense relationship that they have, and of course this 36 00:01:59,360 --> 00:02:01,960 Speaker 1: could have been a real game changer if Russia had 37 00:02:02,080 --> 00:02:08,120 Speaker 1: indeed intentionally no targeted Poland. Well, we've heard even accidentally right, 38 00:02:08,160 --> 00:02:12,840 Speaker 1: because the initial I think report, everybody thought, Okay, Russia 39 00:02:12,919 --> 00:02:16,280 Speaker 1: accidentally lobbed a missile into Poland because they're fighting close 40 00:02:16,360 --> 00:02:19,560 Speaker 1: to the border. If they don't, obviously the Ukrainian soldiers 41 00:02:19,600 --> 00:02:22,760 Speaker 1: will amass there as kind of a safe zone. Um, 42 00:02:22,800 --> 00:02:24,880 Speaker 1: that still would be bad. And now it seems like 43 00:02:24,919 --> 00:02:28,800 Speaker 1: everyone is trying as hard as possible to come up 44 00:02:28,840 --> 00:02:32,840 Speaker 1: with any other possibility. You know, maybe it was a 45 00:02:32,919 --> 00:02:36,960 Speaker 1: Ukrainian air defense missile that knocked the Russian missile into Poland. 46 00:02:37,080 --> 00:02:40,400 Speaker 1: Maybe it was a Ukrainian air defense missile itself that 47 00:02:40,760 --> 00:02:44,400 Speaker 1: caused the explosion in Poland. So what do we know? Indeed, 48 00:02:44,400 --> 00:02:46,919 Speaker 1: and you know, just too got trad actually answer the question. 49 00:02:47,120 --> 00:02:50,800 Speaker 1: Uh yeah, basically that's what we heard very early on 50 00:02:50,880 --> 00:02:53,880 Speaker 1: today from President Biden. A lot of people that I 51 00:02:53,919 --> 00:02:55,960 Speaker 1: was texting at seven a m. In the morning were 52 00:02:56,000 --> 00:02:58,360 Speaker 1: kind of very relieved by that, where he said the 53 00:02:58,440 --> 00:03:02,240 Speaker 1: trajectory of this uh well, miss ilead or air defense 54 00:03:02,240 --> 00:03:04,960 Speaker 1: potentially too, would suggest that it did not come directly 55 00:03:05,560 --> 00:03:08,800 Speaker 1: from Russia. Then of course you have the Polish uh 56 00:03:09,120 --> 00:03:11,560 Speaker 1: themselves come out and say we do not believe this 57 00:03:11,680 --> 00:03:15,440 Speaker 1: was intentional, and then NATO suggesting In fact, what happened 58 00:03:15,480 --> 00:03:18,840 Speaker 1: here is that on a day where Ukraine was pounded 59 00:03:19,680 --> 00:03:21,720 Speaker 1: by Russian missiles, and just to give you a little 60 00:03:21,720 --> 00:03:24,200 Speaker 1: bit of color here, it was so bad that even 61 00:03:24,600 --> 00:03:28,359 Speaker 1: neighboring countries like Moldova lost power. Because sometimes we talk 62 00:03:28,400 --> 00:03:31,000 Speaker 1: about the war in Ukraine, but just just imagine that 63 00:03:31,280 --> 00:03:33,400 Speaker 1: in your head for a moment. It was so bad 64 00:03:33,720 --> 00:03:37,440 Speaker 1: that even the neighbors had blackouts, they had powered down, 65 00:03:37,480 --> 00:03:40,240 Speaker 1: and they're not even related or fighting this war. And 66 00:03:40,320 --> 00:03:42,640 Speaker 1: essentially what happens is, you know very well, or defense 67 00:03:42,680 --> 00:03:44,360 Speaker 1: will try to blow up a missile in the air, 68 00:03:44,600 --> 00:03:46,600 Speaker 1: but then of course it falls down and you never 69 00:03:46,680 --> 00:03:48,400 Speaker 1: know where it's going to fall, the damage you can 70 00:03:48,440 --> 00:03:51,760 Speaker 1: do on the fall, and then allegedly, well today nature 71 00:03:51,800 --> 00:03:55,000 Speaker 1: suggesting this is exactly what happened Ukraine and our defense 72 00:03:55,000 --> 00:03:57,720 Speaker 1: shot it down. The ben fell on the Polish side, 73 00:03:57,800 --> 00:04:00,640 Speaker 1: and for a lot of people, that's massive lead in 74 00:04:00,720 --> 00:04:03,000 Speaker 1: a real reminder by the way, that this war is 75 00:04:03,040 --> 00:04:05,160 Speaker 1: in a very active stage and the risk of a 76 00:04:05,240 --> 00:04:08,720 Speaker 1: spillover are many and very real. By the way. Yeah, 77 00:04:08,760 --> 00:04:10,840 Speaker 1: and you know, one of the things I noticed yesterday, Maria, 78 00:04:11,200 --> 00:04:14,920 Speaker 1: after the initial reports was the number of I guess 79 00:04:14,960 --> 00:04:18,200 Speaker 1: tweets coming from countries all in that region, all around 80 00:04:18,360 --> 00:04:23,560 Speaker 1: NATO voicing very strong support for Poland going forward. So 81 00:04:24,360 --> 00:04:26,680 Speaker 1: and they and they have to I mean a NATO 82 00:04:26,760 --> 00:04:30,760 Speaker 1: member if they invoke Article five, then you know NATO 83 00:04:30,839 --> 00:04:34,120 Speaker 1: has to go to their defense. Now before that, as 84 00:04:34,160 --> 00:04:37,800 Speaker 1: a precursor, you invoke Article four. And the question I 85 00:04:37,839 --> 00:04:42,479 Speaker 1: think is will Poland today or this week invoke Article four? 86 00:04:42,520 --> 00:04:44,760 Speaker 1: What do we know on that you know it might 87 00:04:44,839 --> 00:04:48,680 Speaker 1: view they won't smack. I think the version that everyone 88 00:04:48,760 --> 00:04:51,039 Speaker 1: has agreed with, or that kind of sticks with, is 89 00:04:51,520 --> 00:04:54,120 Speaker 1: do you have use intelligence suggesting this is not Russia? 90 00:04:54,800 --> 00:04:57,880 Speaker 1: You have NATO come out Today's Secretary General say this 91 00:04:58,000 --> 00:05:01,560 Speaker 1: is our defense. Nobody, by the way, blaming Ukraine on 92 00:05:01,600 --> 00:05:04,440 Speaker 1: that too. They said, this is not Ukraine's faults. These 93 00:05:04,440 --> 00:05:07,840 Speaker 1: are the risks that happened when Russia, knowing full well 94 00:05:07,920 --> 00:05:10,479 Speaker 1: by the way, they're very close to the Polish border, 95 00:05:10,520 --> 00:05:13,960 Speaker 1: can actually happen. Nobody's blaming Ukraine. But I think what 96 00:05:14,080 --> 00:05:16,599 Speaker 1: I get today is that there's a sense that this 97 00:05:16,680 --> 00:05:19,279 Speaker 1: was so close to the brink everyone wants a breather. 98 00:05:19,520 --> 00:05:22,320 Speaker 1: Let's take a step back, Okay. I just and we 99 00:05:22,320 --> 00:05:25,720 Speaker 1: we reported that the President of Poland andre Duda said 100 00:05:25,760 --> 00:05:29,400 Speaker 1: his country is unlikely to invoke article for I have 101 00:05:29,480 --> 00:05:31,919 Speaker 1: seen the Fox News headline that says they're expected to. 102 00:05:32,760 --> 00:05:35,839 Speaker 1: So this once again is one of those confusing situations, 103 00:05:35,839 --> 00:05:37,600 Speaker 1: and I guess it will be we have to wait 104 00:05:37,640 --> 00:05:40,040 Speaker 1: for the smoke to clear to some extent. Maria, what 105 00:05:40,040 --> 00:05:42,320 Speaker 1: what should be the next data point that we should 106 00:05:42,320 --> 00:05:45,279 Speaker 1: look for in the next couple of days. Look, I 107 00:05:45,279 --> 00:05:48,560 Speaker 1: think in terms of data point, this this is anything 108 00:05:48,760 --> 00:05:51,000 Speaker 1: and and for a lot of Europeans this morning this 109 00:05:51,200 --> 00:05:54,920 Speaker 1: is really the reality check. We've kind of gotten used 110 00:05:54,920 --> 00:05:56,800 Speaker 1: to this idea that yes, there's a war going on 111 00:05:56,839 --> 00:06:00,000 Speaker 1: in Ukraine. Yes as brutal, Yes people die, Yes they're 112 00:06:00,040 --> 00:06:03,279 Speaker 1: fighters on. Yes, Vladimir Putting can be world less, Yes, 113 00:06:03,400 --> 00:06:05,479 Speaker 1: Ukraine answered fighting back. But today, I think for a 114 00:06:05,480 --> 00:06:08,080 Speaker 1: lot of Europeans was a real reminder that the war 115 00:06:08,240 --> 00:06:10,880 Speaker 1: is happening at the heart of Europe. Matt, you lived 116 00:06:10,920 --> 00:06:12,800 Speaker 1: in Berlin. I mean, you know the geography of this 117 00:06:12,800 --> 00:06:15,400 Speaker 1: place is this is really in the center of Europe. 118 00:06:15,440 --> 00:06:18,080 Speaker 1: This is not just somewhere in the middle of nowhere, 119 00:06:18,160 --> 00:06:20,440 Speaker 1: far from everything. And I think you alluded to this 120 00:06:21,080 --> 00:06:23,800 Speaker 1: in your question the Eastern Europeans yesterday came out of 121 00:06:23,880 --> 00:06:26,680 Speaker 1: Fort Seeing was a born NATO. We are NATO with 122 00:06:26,800 --> 00:06:29,120 Speaker 1: stand with Ukraine and with sand with poor and and 123 00:06:29,279 --> 00:06:31,480 Speaker 1: for them it is always this idea that Russia is 124 00:06:31,560 --> 00:06:34,159 Speaker 1: always a threat. Ye, Maria, thank you so much for 125 00:06:34,200 --> 00:06:36,719 Speaker 1: your time. We know you're super busy. You're based in Brussels, 126 00:06:36,720 --> 00:06:38,200 Speaker 1: so you're right in the middle of all of what's 127 00:06:38,200 --> 00:06:41,040 Speaker 1: happening in Europe. That's Maria today. Oh, she is our 128 00:06:41,520 --> 00:06:45,880 Speaker 1: outstanding European reporter for Bloomberg News, getting the latest on 129 00:06:46,320 --> 00:06:49,960 Speaker 1: Ukraine and appears they have avoided the worst case sent 130 00:06:50,000 --> 00:06:57,160 Speaker 1: there a little more coming up. This is Bloomberg. Let's 131 00:06:57,120 --> 00:06:59,080 Speaker 1: suck a little commodities here, and you want to talk 132 00:06:59,120 --> 00:07:02,400 Speaker 1: commodities in a serious way. On the Bloomberg terminal, you 133 00:07:02,440 --> 00:07:05,719 Speaker 1: type in BI space c O M D. That brings 134 00:07:05,800 --> 00:07:10,280 Speaker 1: up the Bloomberg Intelligence Commodities Dashboard. It's got it all 135 00:07:10,360 --> 00:07:12,520 Speaker 1: that you could ever need, the best research analysis on 136 00:07:12,560 --> 00:07:16,560 Speaker 1: the street, the best data for energy metals aggs, all 137 00:07:16,560 --> 00:07:19,559 Speaker 1: that kind of stuff, and now cryptos. And the person 138 00:07:19,600 --> 00:07:22,760 Speaker 1: who kind of runs this dashboarder runs our commodities researchers. 139 00:07:22,800 --> 00:07:25,600 Speaker 1: Mike mcgloan joins us here in a Bloomberg interactor broker 140 00:07:25,720 --> 00:07:29,040 Speaker 1: studio Mike, before we get the crypto, just give me 141 00:07:29,240 --> 00:07:33,480 Speaker 1: one real commodities thing that I need to focus on. 142 00:07:33,480 --> 00:07:36,040 Speaker 1: Here am I buying pork bellies? My buying corn? What 143 00:07:36,080 --> 00:07:39,640 Speaker 1: am I doing here? Gold? Gold? Let's bring it back 144 00:07:39,640 --> 00:07:43,560 Speaker 1: to little history. In ninety six, I did a report 145 00:07:43,600 --> 00:07:46,560 Speaker 1: for Social Studies class and the energy crisis and who 146 00:07:46,560 --> 00:07:49,280 Speaker 1: doesn't well exactly, And I just remember the key theme 147 00:07:49,320 --> 00:07:52,200 Speaker 1: back there when you're impressionable twelve year old was we 148 00:07:52,200 --> 00:07:54,080 Speaker 1: don't have enough supply, We're gonna run out of crude 149 00:07:54,120 --> 00:07:57,000 Speaker 1: oil and we're gonna go into recession. That was seventy six. 150 00:07:57,080 --> 00:07:59,400 Speaker 1: It's the same thing every time I remember hearing it, 151 00:07:59,640 --> 00:08:02,720 Speaker 1: you know, years ago, peak supply, and again again this 152 00:08:02,800 --> 00:08:07,280 Speaker 1: year peaks. Who was that, Charlie weiss er Um. Peak 153 00:08:07,360 --> 00:08:10,679 Speaker 1: oil just never kind of happened. It's peak consumption happened 154 00:08:10,680 --> 00:08:12,880 Speaker 1: in this country. We peaked around two thousand five, and 155 00:08:12,880 --> 00:08:14,760 Speaker 1: it's the same thing. So I think what's happening now 156 00:08:14,840 --> 00:08:18,400 Speaker 1: is we're entering I think one of the greatest macroeconomic 157 00:08:18,640 --> 00:08:21,960 Speaker 1: resets of our lifetimes. And it was somewhat spiked by 158 00:08:22,240 --> 00:08:25,080 Speaker 1: crude oil spiking, baiting the FED, the Titan More. Now 159 00:08:25,080 --> 00:08:27,160 Speaker 1: Crudel is doing what it always does, is going back down. 160 00:08:27,440 --> 00:08:29,679 Speaker 1: So I see it's still heading towards fifty. It's around 161 00:08:29,680 --> 00:08:32,160 Speaker 1: eighty six now and it's doing what it always does. 162 00:08:32,520 --> 00:08:35,040 Speaker 1: We're heading to a significant recession and this is Bloomberg 163 00:08:35,080 --> 00:08:37,880 Speaker 1: economics across the board. And the key thing I asked 164 00:08:37,880 --> 00:08:40,320 Speaker 1: myself is what stops this? And right now it's not 165 00:08:40,320 --> 00:08:43,520 Speaker 1: gonna be the fat but how so Bloomberg Economics does 166 00:08:43,520 --> 00:08:47,400 Speaker 1: say we're gonna have we have a chance of recession, right, 167 00:08:47,880 --> 00:08:50,000 Speaker 1: which is not so? But um, is it going to 168 00:08:50,080 --> 00:08:53,559 Speaker 1: be a deep, long recession or is it going to be, 169 00:08:53,679 --> 00:08:55,600 Speaker 1: you know, like a short, sharp shock. Is it going 170 00:08:55,640 --> 00:08:58,880 Speaker 1: to be shallow and hardly noticeable? That That's the key 171 00:08:58,960 --> 00:09:01,360 Speaker 1: question in my bias is how could we avoid a 172 00:09:01,440 --> 00:09:04,520 Speaker 1: deep recession after what happened? This is historic? Now we 173 00:09:04,520 --> 00:09:07,040 Speaker 1: had the biggest pump in money supply ever on the 174 00:09:07,080 --> 00:09:09,079 Speaker 1: back of the plague and we're now we're getting to 175 00:09:09,120 --> 00:09:11,800 Speaker 1: miss the biggest dump ever on a global scale. So 176 00:09:11,840 --> 00:09:13,720 Speaker 1: where is the demand pool going to come from? Clearly 177 00:09:13,720 --> 00:09:17,400 Speaker 1: not China, Clearly not Europe and our models from the US, 178 00:09:17,440 --> 00:09:19,640 Speaker 1: so to me, this is the big one and right now. 179 00:09:19,800 --> 00:09:22,760 Speaker 1: Typically by this stage we'd see signs of FED easing 180 00:09:22,880 --> 00:09:24,440 Speaker 1: on the forward curve at least a year from now, 181 00:09:24,480 --> 00:09:26,400 Speaker 1: and it's still at tightening. But why do you say, 182 00:09:26,520 --> 00:09:29,920 Speaker 1: why would you buy gold here, especially as inflation comes 183 00:09:29,960 --> 00:09:34,880 Speaker 1: down and UH monetary policy gets tight everywhere. Nobody can 184 00:09:34,920 --> 00:09:38,360 Speaker 1: open the fiscal gates anymore. Not yet, But it's typically 185 00:09:38,360 --> 00:09:40,240 Speaker 1: a sign that overall gold is one of the best 186 00:09:40,240 --> 00:09:43,280 Speaker 1: performing commodities on a totally turn basis, most notably versus 187 00:09:43,280 --> 00:09:45,760 Speaker 1: crude oil. But it's when you see that signs of 188 00:09:45,800 --> 00:09:49,280 Speaker 1: the FED, as as noorla Roubini says, wimping out. And 189 00:09:49,320 --> 00:09:51,720 Speaker 1: it's also key. Think piggyback in my colleaguey or Jersey, 190 00:09:51,720 --> 00:09:53,679 Speaker 1: he's nailed this year. He thinks yields have pete. If 191 00:09:53,720 --> 00:09:56,520 Speaker 1: that's the case, if that sledgehammer is done pounding, I'm 192 00:09:56,520 --> 00:09:58,280 Speaker 1: not saying they're gonna ease. Gold should be one of 193 00:09:58,320 --> 00:10:00,320 Speaker 1: the best performers as we tilt towards the res seshion, 194 00:10:01,080 --> 00:10:03,280 Speaker 1: So so as we get closer to a pause or 195 00:10:03,360 --> 00:10:08,360 Speaker 1: even dare I say a pivot, gold will soar on that. Yeah, 196 00:10:08,400 --> 00:10:10,120 Speaker 1: well it should. I mean that's been the key thing 197 00:10:10,160 --> 00:10:11,959 Speaker 1: holding it down this year. And again we're the signs 198 00:10:11,960 --> 00:10:14,320 Speaker 1: already there. Gold seems like it's bottom pretty good from that. 199 00:10:14,480 --> 00:10:16,600 Speaker 1: It got down around sixteen hundred for a while. Now 200 00:10:16,640 --> 00:10:19,040 Speaker 1: the dollars is peeked in the short term. But that's 201 00:10:19,080 --> 00:10:21,640 Speaker 1: the macro. It's that's pounding sledgehammer on a on a 202 00:10:21,679 --> 00:10:24,720 Speaker 1: scale one to ten, that's a ten everywhere fed pounding hard, 203 00:10:24,840 --> 00:10:27,640 Speaker 1: and it's already still showing signs of pivoty and oil 204 00:10:27,679 --> 00:10:30,679 Speaker 1: to fifty. Yes. So the key thing about that is now, 205 00:10:30,800 --> 00:10:33,960 Speaker 1: I he's got the big truck, so he needs that 206 00:10:34,000 --> 00:10:37,360 Speaker 1: bread Is that you gotta say? Even my wife's hybrid 207 00:10:38,280 --> 00:10:41,240 Speaker 1: as soon as the electric power ends, you know, after 208 00:10:41,920 --> 00:10:44,320 Speaker 1: fifty sixty miles or whatever, right then she gets the 209 00:10:44,360 --> 00:10:47,720 Speaker 1: same mileage as I get in my truck, but she 210 00:10:47,800 --> 00:10:49,200 Speaker 1: has it. I have the same thing. I have a 211 00:10:49,200 --> 00:10:51,120 Speaker 1: plug in hybrid and I've had it for almost ten years. 212 00:10:51,120 --> 00:10:53,040 Speaker 1: It's a wonderful vehicle. The vote we talked about that, 213 00:10:53,080 --> 00:10:56,920 Speaker 1: Ye love the thing about fifties, it's really not profound 214 00:10:57,400 --> 00:10:59,400 Speaker 1: if we have this recession, which we view as a 215 00:10:59,480 --> 00:11:01,920 Speaker 1: hundred percent Now it's not just us. You look at 216 00:11:01,960 --> 00:11:03,840 Speaker 1: demand pull you look imports from trying to have rolled 217 00:11:03,880 --> 00:11:05,960 Speaker 1: over Now people say that's because the COVID lockdowns, but 218 00:11:06,000 --> 00:11:08,000 Speaker 1: if you see what's happening with the property crisis and 219 00:11:08,040 --> 00:11:11,160 Speaker 1: the political situation, that's badness. Well, you know, we pointed 220 00:11:11,200 --> 00:11:14,080 Speaker 1: out for years, US unlended gas peaked on a fifty 221 00:11:14,080 --> 00:11:16,960 Speaker 1: two week basis unlended gas deman in June, which was 222 00:11:17,280 --> 00:11:19,959 Speaker 1: prime driving scenes. So that's rolling over just like two 223 00:11:20,360 --> 00:11:23,120 Speaker 1: eight fifty dollars is still above the US cost of production, 224 00:11:23,160 --> 00:11:25,599 Speaker 1: the world's largest producer. Average cost of production in this 225 00:11:25,640 --> 00:11:28,160 Speaker 1: country is around forty. And also the key thing that 226 00:11:28,240 --> 00:11:31,160 Speaker 1: people are missing its stocks to use, it's bottoming stocks 227 00:11:31,160 --> 00:11:33,560 Speaker 1: to use. Is just um it's a sign of the 228 00:11:33,640 --> 00:11:37,200 Speaker 1: stocks well to demand in the US, it's bottoming and 229 00:11:37,400 --> 00:11:40,200 Speaker 1: in the global basis body and typically signed a peak 230 00:11:40,240 --> 00:11:43,000 Speaker 1: and prices, but it's also not profound. Fifty is basically 231 00:11:43,000 --> 00:11:45,400 Speaker 1: about the average price since the big breakdown in two 232 00:11:45,400 --> 00:11:47,520 Speaker 1: thousand four for a barrel of what west X interviewed 233 00:11:47,640 --> 00:11:49,400 Speaker 1: w t I, w t I. It's a key thing. 234 00:11:49,400 --> 00:11:52,599 Speaker 1: Also recently Brent reached good resistance around hunter bucks of 235 00:11:52,640 --> 00:11:55,840 Speaker 1: barrel and I checked out the open interest plunging open 236 00:11:55,840 --> 00:11:58,959 Speaker 1: interests of futures, which meant shortcovering do you want to 237 00:11:58,960 --> 00:12:00,640 Speaker 1: talk crypto. I mean, we held off as long as 238 00:12:00,640 --> 00:12:03,640 Speaker 1: we pustle otherwise I'm going into port bellage. We kind 239 00:12:03,640 --> 00:12:06,280 Speaker 1: of I thought we kind of were. I mean, so 240 00:12:06,480 --> 00:12:09,240 Speaker 1: crypto affects all of these assets, and you do see 241 00:12:09,240 --> 00:12:12,600 Speaker 1: it as small as it is relative to obviously giant 242 00:12:12,679 --> 00:12:17,600 Speaker 1: markets like um oil and uh f X, it really 243 00:12:17,679 --> 00:12:21,840 Speaker 1: has affected for example, UM. Peter Cheer from Academy Securities 244 00:12:21,840 --> 00:12:24,640 Speaker 1: the other day was saying the f t X blow 245 00:12:24,720 --> 00:12:28,000 Speaker 1: up was responsible for a crappy ten year auction. That 246 00:12:28,080 --> 00:12:30,480 Speaker 1: was it's the contagion. I mean, it's the fastest horse 247 00:12:30,480 --> 00:12:32,800 Speaker 1: in the race. And man, you nailed this back in January. 248 00:12:32,840 --> 00:12:34,440 Speaker 1: You would get on air and you point out, well, 249 00:12:34,640 --> 00:12:37,079 Speaker 1: bitcoins moving. It was moving on Saturday and Sun and 250 00:12:37,120 --> 00:12:39,760 Speaker 1: giving indication where things are going. Obviously it started going down, 251 00:12:40,200 --> 00:12:42,280 Speaker 1: but it's not just bitcoin, it's crypto. So I like 252 00:12:42,320 --> 00:12:44,400 Speaker 1: to point out the boombergal because the crypto inex has 253 00:12:44,440 --> 00:12:46,200 Speaker 1: been still a good perform and went up too far, 254 00:12:46,280 --> 00:12:48,600 Speaker 1: too fast. But Bitcoin is the number one and it's 255 00:12:48,600 --> 00:12:50,760 Speaker 1: set contagion factors. So that some of my other colleagues 256 00:12:50,760 --> 00:12:52,880 Speaker 1: and b I started write about this means people are 257 00:12:52,960 --> 00:12:55,319 Speaker 1: more likely hit that trigger stop and I look at it. 258 00:12:55,480 --> 00:12:57,880 Speaker 1: I'm x X traitor, X hedge fund guy, and cover 259 00:12:57,960 --> 00:13:00,520 Speaker 1: those guys on the phones and they're just sitting there 260 00:13:00,520 --> 00:13:03,240 Speaker 1: with their algorithm systems, with their value at risk models, 261 00:13:03,240 --> 00:13:05,880 Speaker 1: and if it triggers something, they'll hit a stop and 262 00:13:05,880 --> 00:13:08,160 Speaker 1: it triggered. It's the it's the domino effect. By the way, 263 00:13:08,200 --> 00:13:12,760 Speaker 1: I don't know how many times we've left bitcoin for dead, um, 264 00:13:12,800 --> 00:13:16,800 Speaker 1: and I've been covering it for ten years, and every uh, 265 00:13:16,840 --> 00:13:19,520 Speaker 1: every time we have one of these draw downs, they 266 00:13:19,559 --> 00:13:24,319 Speaker 1: are huge, seventy five eight percent, you know. Um. People 267 00:13:24,320 --> 00:13:26,240 Speaker 1: are like, oh, that's the end of bitcoin, and now 268 00:13:26,440 --> 00:13:28,400 Speaker 1: you know the reputational damage is going to kill the 269 00:13:28,440 --> 00:13:31,840 Speaker 1: whole thing. But I just can't believe it will. I 270 00:13:31,880 --> 00:13:33,880 Speaker 1: completely agree with you there. But in the meantime, it's 271 00:13:33,920 --> 00:13:36,040 Speaker 1: the hammer hitting hard. And I like to use the 272 00:13:36,120 --> 00:13:38,960 Speaker 1: example bitcoins like the dollar. It never goes down a 273 00:13:38,960 --> 00:13:40,839 Speaker 1: lot unless it goes up a lot first. It has 274 00:13:40,880 --> 00:13:43,439 Speaker 1: to get those new highs. So it's bitcoin. Did cryptos dada? 275 00:13:43,440 --> 00:13:45,800 Speaker 1: We got really expensive last year. We're backing up. But 276 00:13:45,840 --> 00:13:48,480 Speaker 1: look at the theory. UM. Just a couple of years ago, 277 00:13:48,480 --> 00:13:50,600 Speaker 1: it was trained around a hundred bucks of a hundred dollars. 278 00:13:50,600 --> 00:13:53,000 Speaker 1: I'm sorry. Right now it's twelve, so it's up ten x. 279 00:13:53,040 --> 00:13:55,040 Speaker 1: It's gone up way too much. But it's part of 280 00:13:55,080 --> 00:13:58,400 Speaker 1: that revolution of this system. I look at it like futures, 281 00:13:58,440 --> 00:14:01,800 Speaker 1: what futures did into finance, Like what ets did for investing. 282 00:14:01,880 --> 00:14:04,240 Speaker 1: It's there just right now. We're in that. Yes, we 283 00:14:04,320 --> 00:14:08,000 Speaker 1: got two speculative, excessive, we got silly, you know, people 284 00:14:08,000 --> 00:14:10,840 Speaker 1: like FTX got extend. Imagine how much Imagine how much 285 00:14:10,920 --> 00:14:14,240 Speaker 1: ether you could fit into a barrel? Yes, exactly, all 286 00:14:14,280 --> 00:14:16,520 Speaker 1: of it, all of it, exactly. All right, we need 287 00:14:16,559 --> 00:14:18,920 Speaker 1: to get you at an audience with Jamie Diamond. That 288 00:14:18,920 --> 00:14:21,160 Speaker 1: would be a fun conversation to watch. Mike McLoone versus 289 00:14:21,240 --> 00:14:24,600 Speaker 1: Jamie Diamond. Yeah, well, you know what I guess Jamie 290 00:14:24,720 --> 00:14:28,200 Speaker 1: Diamond thinks it's worthless. He said that he thinks that 291 00:14:28,280 --> 00:14:30,840 Speaker 1: means it's going to zero. But when all right, we'll see, 292 00:14:30,840 --> 00:14:34,800 Speaker 1: all right. Mike mcglogan, senior commodity strategist Bloomberg Intelligence. Uh, 293 00:14:34,800 --> 00:14:36,360 Speaker 1: he's based out of Miami. We got him a couple 294 00:14:36,360 --> 00:14:37,960 Speaker 1: of days up here in New York. So we got 295 00:14:38,000 --> 00:14:44,200 Speaker 1: him in the studio, which is good stuff. I want 296 00:14:44,200 --> 00:14:46,440 Speaker 1: to get right to our next guest, Fernando Valley. He's 297 00:14:46,480 --> 00:14:50,280 Speaker 1: a senior energy analyst for Bloomberg Intelligence, and Fernando, we 298 00:14:50,280 --> 00:14:52,840 Speaker 1: were just talking to Mike mcgloan, who covers commodities for 299 00:14:53,360 --> 00:14:55,400 Speaker 1: b I, and he, you know, he's been out there 300 00:14:55,440 --> 00:14:58,720 Speaker 1: with this. He think oil goes to fifty dollars a 301 00:14:58,800 --> 00:15:01,720 Speaker 1: hour before it goes to one fifty. Is that kind 302 00:15:01,720 --> 00:15:04,880 Speaker 1: of what you're hearing from the big companies that you 303 00:15:05,000 --> 00:15:10,040 Speaker 1: talked to? Well, well, I kind of tend to agree 304 00:15:10,080 --> 00:15:13,000 Speaker 1: with Mike that that that is definitely a possibility. But 305 00:15:13,040 --> 00:15:17,400 Speaker 1: the companies themselves, they they typically refuse to answer questions 306 00:15:17,480 --> 00:15:20,520 Speaker 1: on their oil prices. Outlook, what they will say is 307 00:15:20,560 --> 00:15:23,680 Speaker 1: that there has been a lack of investment in in 308 00:15:23,800 --> 00:15:27,640 Speaker 1: growth um and which we agree with. And if you 309 00:15:27,720 --> 00:15:32,600 Speaker 1: look from twenty fifteen to today, UH investment levels have 310 00:15:32,680 --> 00:15:37,920 Speaker 1: been about twenty three below the period before proceeding that, 311 00:15:38,040 --> 00:15:41,600 Speaker 1: the twenty two thousand nine to two thousand fourteen period. 312 00:15:41,840 --> 00:15:45,280 Speaker 1: So that's a supply side issue. And Mike's argument is 313 00:15:45,320 --> 00:15:47,320 Speaker 1: that demand is going to fall off a cliff if 314 00:15:47,320 --> 00:15:50,280 Speaker 1: we go into a big global recession. How much of 315 00:15:50,320 --> 00:15:53,080 Speaker 1: a concern is that, especially with China opening, because it 316 00:15:53,120 --> 00:15:55,400 Speaker 1: seems like if China opens back up, that should be 317 00:15:55,560 --> 00:15:59,000 Speaker 1: a real boost to demand. Yeah, I would argue that 318 00:15:59,040 --> 00:16:01,840 Speaker 1: demand is already feeling some of those crimps when you 319 00:16:01,880 --> 00:16:04,480 Speaker 1: look at Europe for example. Uh, you know a lot 320 00:16:04,520 --> 00:16:07,520 Speaker 1: of the ways that they've managed to refill their inventories 321 00:16:07,520 --> 00:16:13,640 Speaker 1: has been by reducing industrial activity. Smelters, cement plants, refineries, 322 00:16:14,320 --> 00:16:18,480 Speaker 1: you name it. Uh. And I agree the China reopening 323 00:16:18,640 --> 00:16:22,360 Speaker 1: theoretically would be a big boost to consumption. The question 324 00:16:22,480 --> 00:16:25,480 Speaker 1: is when and how they reopen. And then the second 325 00:16:25,480 --> 00:16:29,200 Speaker 1: part is, as we saw with our own reopenings, there 326 00:16:29,240 --> 00:16:32,880 Speaker 1: are still effects on your economic activity. Remember that Chinese 327 00:16:32,880 --> 00:16:38,960 Speaker 1: consumer has significant leverage. Uh. They also have endured now 328 00:16:39,080 --> 00:16:42,560 Speaker 1: the paying of lockdowns and that strange savings. And then 329 00:16:42,560 --> 00:16:45,880 Speaker 1: you get into an issue where the real state marketing 330 00:16:46,000 --> 00:16:50,080 Speaker 1: China is significantly leveraged, as are the provinces and financial 331 00:16:50,120 --> 00:16:53,720 Speaker 1: systems to this real estate issue, and they are huge 332 00:16:53,760 --> 00:16:57,480 Speaker 1: consumers are not just oil directly, but also plastics, which 333 00:16:57,480 --> 00:17:01,440 Speaker 1: are petrochemicals, and energy in general. Hey, for now I'm 334 00:17:01,480 --> 00:17:05,600 Speaker 1: looking at the sp energy sector indexes where the stocks 335 00:17:05,600 --> 00:17:09,560 Speaker 1: have just ripped this year up close to when when 336 00:17:09,560 --> 00:17:12,000 Speaker 1: you talk to your institutional investor clients. I mean, is 337 00:17:12,000 --> 00:17:14,920 Speaker 1: the thinking the money has been made, this trade is 338 00:17:14,960 --> 00:17:17,480 Speaker 1: played out, or is there more room to go on 339 00:17:17,520 --> 00:17:22,800 Speaker 1: the energy space. Yeah, but we've doubled the weight of 340 00:17:22,920 --> 00:17:27,960 Speaker 1: energy and the s and P and uh. We start 341 00:17:28,040 --> 00:17:31,440 Speaker 1: to see folks saying the easy money has been made because, 342 00:17:31,480 --> 00:17:35,480 Speaker 1: as you said, the stocks are ripped. Um. We disagree 343 00:17:35,520 --> 00:17:39,080 Speaker 1: on a part of that, just because the pre cash flow, 344 00:17:39,240 --> 00:17:42,480 Speaker 1: it's story is continuing. Even if we get down to 345 00:17:42,680 --> 00:17:46,920 Speaker 1: sixty fifty is a little bit more challenging. But even 346 00:17:46,960 --> 00:17:49,480 Speaker 1: at sixty dollars, if you look at how they've cleaned 347 00:17:49,520 --> 00:17:52,480 Speaker 1: up their balance sheets, um, the kids of the Europeans, 348 00:17:52,520 --> 00:17:57,480 Speaker 1: They've resized their dividends, um, and they've taken costs out 349 00:17:57,480 --> 00:18:01,520 Speaker 1: of the system. These companies maintain their diffidends now even 350 00:18:01,560 --> 00:18:05,760 Speaker 1: in a fifty scenario, no problem. So their distribution will continue. 351 00:18:06,080 --> 00:18:09,000 Speaker 1: And then you have companies like Chevron and Exxon who 352 00:18:09,240 --> 00:18:12,000 Speaker 1: actually are building so much cash they could be net 353 00:18:12,000 --> 00:18:17,080 Speaker 1: cash as of the second quarter of this year. They 354 00:18:17,080 --> 00:18:20,000 Speaker 1: will continue to buy back. That's that's part of their 355 00:18:20,040 --> 00:18:23,119 Speaker 1: strategy is if prices dip and I guess, alluding to 356 00:18:23,160 --> 00:18:26,479 Speaker 1: your previous question, less about what they say, but what 357 00:18:26,520 --> 00:18:29,880 Speaker 1: they do. They're building significant cash reserves that they could 358 00:18:30,040 --> 00:18:35,280 Speaker 1: either buy back stock or acquire struggling producers if there 359 00:18:35,359 --> 00:18:38,159 Speaker 1: is a dip in in oil prices. UH. So we 360 00:18:38,560 --> 00:18:41,320 Speaker 1: think that there is still room to go just because 361 00:18:41,359 --> 00:18:44,200 Speaker 1: of how strong the balance streets are and because we've 362 00:18:44,200 --> 00:18:46,679 Speaker 1: see in the second half of the next year the 363 00:18:46,720 --> 00:18:51,000 Speaker 1: supply gap emergence. By the way, how well is Europe 364 00:18:51,000 --> 00:18:57,320 Speaker 1: set up for this winter better than we would have expected, 365 00:18:57,440 --> 00:19:02,480 Speaker 1: but because they've reduced consumption and um we we also 366 00:19:02,520 --> 00:19:05,879 Speaker 1: had the mild weather in October that's helped lower the 367 00:19:06,160 --> 00:19:10,920 Speaker 1: the UH, the draws and inventories, but they may still 368 00:19:10,960 --> 00:19:14,600 Speaker 1: have to refill if winter is as cold as is 369 00:19:14,640 --> 00:19:18,679 Speaker 1: currently expected, which is slightly above average, and we're starting 370 00:19:18,720 --> 00:19:22,240 Speaker 1: to see it shift in weather patterns here and in 371 00:19:22,280 --> 00:19:28,200 Speaker 1: the northern hemisphere in the northeastern from their current levels. 372 00:19:26,840 --> 00:19:32,760 Speaker 1: So oh well l m G primarily UH and there 373 00:19:32,800 --> 00:19:36,640 Speaker 1: there will be especially freeport comes back online, there will 374 00:19:36,640 --> 00:19:40,120 Speaker 1: be enough likely that they won't they won't go cold. 375 00:19:40,119 --> 00:19:43,160 Speaker 1: They may have to again restrict economic activity in order 376 00:19:43,200 --> 00:19:46,080 Speaker 1: to make it last. The bigger question is where the 377 00:19:46,119 --> 00:19:50,600 Speaker 1: inventories end up at the end of winter, and then 378 00:19:50,840 --> 00:19:56,280 Speaker 1: how does that look filling filling inventories into the following 379 00:19:56,359 --> 00:20:01,119 Speaker 1: winter because there will be less capacity from Russia, there 380 00:20:01,160 --> 00:20:04,679 Speaker 1: will be even less ability to refill those inventories at 381 00:20:04,720 --> 00:20:07,320 Speaker 1: the clip that they did this year. So for now, 382 00:20:07,359 --> 00:20:10,760 Speaker 1: do you followed the big big integrated oil companies. Are 383 00:20:10,760 --> 00:20:14,280 Speaker 1: they spending money to look for more energy like drill 384 00:20:14,400 --> 00:20:16,760 Speaker 1: on different places and stuff like that. Are they just 385 00:20:16,840 --> 00:20:19,840 Speaker 1: kind of keeping that in check and building up all 386 00:20:19,880 --> 00:20:24,879 Speaker 1: the cash flow that they've promised they are? They raised 387 00:20:24,960 --> 00:20:28,520 Speaker 1: spending by about eight percent relative to one Uh. They 388 00:20:29,160 --> 00:20:32,200 Speaker 1: we expect they're part of their increased free cash will 389 00:20:32,240 --> 00:20:35,520 Speaker 1: will go towards new exploration and development. There is an 390 00:20:35,520 --> 00:20:38,760 Speaker 1: issue though that uh. You know, when you look at 391 00:20:38,800 --> 00:20:42,760 Speaker 1: an investment in North America, it's tempered by the the 392 00:20:42,880 --> 00:20:47,679 Speaker 1: push to the carbonize and you look at uh California 393 00:20:47,760 --> 00:20:53,719 Speaker 1: banking ice vehicles by President Biden speaking similarly, Canada instituting 394 00:20:54,240 --> 00:20:57,280 Speaker 1: a large carbon tax and the renewable fuel standard. Uh, 395 00:20:57,359 --> 00:21:00,560 Speaker 1: the investments in North America become more challenging. And then 396 00:21:00,640 --> 00:21:02,720 Speaker 1: when you go elsewhere, there just hasn't been a lot 397 00:21:02,720 --> 00:21:05,679 Speaker 1: of money spent on exploration. So there has to be 398 00:21:05,720 --> 00:21:09,040 Speaker 1: a shift of where that money is spent, and we 399 00:21:09,080 --> 00:21:12,960 Speaker 1: need to find new province is to develop Brazilian giana 400 00:21:12,960 --> 00:21:15,440 Speaker 1: are two of those, but they are they aren't sufficient 401 00:21:15,480 --> 00:21:17,919 Speaker 1: to make up for the lack of growth that we 402 00:21:18,000 --> 00:21:20,960 Speaker 1: expect to see from from you a shale and u 403 00:21:21,359 --> 00:21:23,560 Speaker 1: lack of investment in other parts of the world. Right, 404 00:21:23,600 --> 00:21:25,760 Speaker 1: all right, good stuff. As always in Fernando, you still 405 00:21:25,760 --> 00:21:26,960 Speaker 1: owe me. You need to get me out of one 406 00:21:27,000 --> 00:21:29,240 Speaker 1: of those oil rigs out like the Gulf of Mexico. 407 00:21:29,240 --> 00:21:30,560 Speaker 1: I want to do it, shows you a trip to 408 00:21:30,600 --> 00:21:32,520 Speaker 1: a rig, I think, so I keep telling him he's 409 00:21:32,520 --> 00:21:33,600 Speaker 1: got to get me out there that I think that 410 00:21:33,600 --> 00:21:37,000 Speaker 1: would be pretty pretty cool, totally like the beginning of Armageddon. Yeah, 411 00:21:37,040 --> 00:21:40,000 Speaker 1: you know, and Bruce willis chasing around Ben Affleck shot on. 412 00:21:40,119 --> 00:21:42,919 Speaker 1: That's so Fernando owes me that. Fernando Vali, senior Annalys 413 00:21:42,960 --> 00:21:45,639 Speaker 1: Bloomberg Intelligence. He's been covering energy space for decades and 414 00:21:45,680 --> 00:21:53,760 Speaker 1: we love to get his global view. Well. The United 415 00:21:53,840 --> 00:21:58,400 Speaker 1: Nations Climate Change Conference that are known as COPE will 416 00:21:58,440 --> 00:22:01,520 Speaker 1: be finishing up this Friday. A It's been a two 417 00:22:01,560 --> 00:22:05,080 Speaker 1: week conference in Egypt. One of the key issues there 418 00:22:05,119 --> 00:22:09,879 Speaker 1: in terms has been food insecurity, and I think with 419 00:22:09,960 --> 00:22:13,160 Speaker 1: the war in Ukraine that's becoming an even bigger issue. 420 00:22:13,240 --> 00:22:14,640 Speaker 1: We kind of want to talk a little bit about 421 00:22:14,680 --> 00:22:18,879 Speaker 1: that with David Friedberg, founder of the Production Board. So, David, 422 00:22:19,880 --> 00:22:23,080 Speaker 1: give us your sense, give us your view of food 423 00:22:23,160 --> 00:22:26,840 Speaker 1: insecurity on a global scale, kind of where are we today, 424 00:22:26,880 --> 00:22:30,240 Speaker 1: how did we get here, and maybe where should we 425 00:22:30,240 --> 00:22:33,720 Speaker 1: be thinking about going over the next several years. Yeah, 426 00:22:33,880 --> 00:22:38,800 Speaker 1: So the world food supply, the store of food typically 427 00:22:38,800 --> 00:22:41,760 Speaker 1: gives us about ninety days of calories in terms of 428 00:22:41,760 --> 00:22:46,400 Speaker 1: what's consumed around the world, and the Ukraine crisis has 429 00:22:46,560 --> 00:22:50,600 Speaker 1: caused UM several acute shortfalls and a lot of the 430 00:22:50,720 --> 00:22:55,480 Speaker 1: key inputs that drive agricultural production. So the price for 431 00:22:55,560 --> 00:22:58,679 Speaker 1: your rea, which is like the nitrogen fertilizer that's used, 432 00:22:59,000 --> 00:23:01,680 Speaker 1: it's primarily driven by natural gas prices, which as we 433 00:23:01,720 --> 00:23:04,840 Speaker 1: all know, have spiked with the conflict, and that prices 434 00:23:04,880 --> 00:23:07,639 Speaker 1: two to three x where it was before the conflict began. 435 00:23:08,200 --> 00:23:11,760 Speaker 1: Same with FoST fates and potash they're also elevated. And 436 00:23:11,800 --> 00:23:16,200 Speaker 1: so we're seeing not just the acute food um supply 437 00:23:16,320 --> 00:23:19,800 Speaker 1: chain problem because we can't be exported from Russia Ukraine, 438 00:23:19,800 --> 00:23:22,679 Speaker 1: but we're seeing this longer range problem start to manifest, 439 00:23:23,200 --> 00:23:26,240 Speaker 1: where the amount of fertilizer that's being used to farm 440 00:23:26,280 --> 00:23:29,040 Speaker 1: around the world is going down because it's gotten so expensive. 441 00:23:29,400 --> 00:23:32,840 Speaker 1: And when fertilizer goes down, food production goes down. And 442 00:23:32,840 --> 00:23:34,879 Speaker 1: when you only have ninety days of calories on earth, 443 00:23:35,280 --> 00:23:37,359 Speaker 1: the folks that are most worried about that, that can 444 00:23:37,400 --> 00:23:40,080 Speaker 1: afford to buy more food, buy up all the crops, 445 00:23:40,080 --> 00:23:42,440 Speaker 1: buy up all the grains, and so then we see 446 00:23:42,440 --> 00:23:45,160 Speaker 1: the rich nation stock up, prices go through the roof, 447 00:23:45,520 --> 00:23:49,360 Speaker 1: and the poorer nation like Egypt, Bonisia, all the countries 448 00:23:49,359 --> 00:23:52,040 Speaker 1: in the Horn of Africa start to suffer because they 449 00:23:52,080 --> 00:23:55,760 Speaker 1: no longer can afford access to these crops in these grains, 450 00:23:55,800 --> 00:23:58,800 Speaker 1: and people start to march towards starvation. And so the 451 00:23:58,920 --> 00:24:02,840 Speaker 1: UN is estimating that an incremental million people are now 452 00:24:02,880 --> 00:24:06,200 Speaker 1: marching towards starvation because of this shortfall. And it's like 453 00:24:06,240 --> 00:24:09,639 Speaker 1: a slow moving train. It didn't happen overnight. It's that 454 00:24:09,800 --> 00:24:14,560 Speaker 1: production level they're declining, availability of declining. Rich nations are 455 00:24:14,560 --> 00:24:17,840 Speaker 1: stocking up on grain and the poorer nations are slowly 456 00:24:17,880 --> 00:24:21,200 Speaker 1: starting to eat through their grain and and struggle immensely. 457 00:24:21,240 --> 00:24:23,880 Speaker 1: So we could see, you know, going from a low 458 00:24:23,920 --> 00:24:26,960 Speaker 1: point of about five fifty million people that around the 459 00:24:26,960 --> 00:24:30,880 Speaker 1: world were declared under nourished um suddenly that number could 460 00:24:30,880 --> 00:24:33,480 Speaker 1: spike to over a billion. And so this is a 461 00:24:33,480 --> 00:24:36,880 Speaker 1: real humanitarian crisis. And I mean, I mean, the interesting 462 00:24:36,920 --> 00:24:39,800 Speaker 1: takeaway I think is that not only is Vladimir Putin, 463 00:24:41,640 --> 00:24:44,720 Speaker 1: you know, endangering the lives of a hundred million people 464 00:24:44,760 --> 00:24:49,040 Speaker 1: in Ukraine with his war there, but also possibly pushing 465 00:24:49,119 --> 00:24:54,240 Speaker 1: another billion people on planet Earth towards our starvation. The 466 00:24:54,320 --> 00:24:59,600 Speaker 1: whole conflict is causing a massive set of unintended maybe 467 00:24:59,600 --> 00:25:02,000 Speaker 1: on it in the second and third order consequences, and 468 00:25:02,080 --> 00:25:05,119 Speaker 1: this being one of I think the most significant of 469 00:25:05,160 --> 00:25:07,760 Speaker 1: a non economic nature. What can be done about it? 470 00:25:07,800 --> 00:25:10,520 Speaker 1: By the way, David, what is there anything you know, 471 00:25:10,600 --> 00:25:14,399 Speaker 1: short of stopping Putin? Is there anything the rest of 472 00:25:15,080 --> 00:25:21,280 Speaker 1: the world can do to try and prevent this starvation crisis? 473 00:25:22,520 --> 00:25:25,080 Speaker 1: The UN has an agency called the World Food Program 474 00:25:25,400 --> 00:25:27,520 Speaker 1: UH and the World's Food Program has asked for a 475 00:25:27,520 --> 00:25:30,280 Speaker 1: budget increase its twenty billion a year, which there are 476 00:25:30,320 --> 00:25:33,159 Speaker 1: then going to be using to effectively by grain on 477 00:25:33,200 --> 00:25:35,399 Speaker 1: the open market from the you know, at the higher 478 00:25:35,440 --> 00:25:39,120 Speaker 1: prices and make them available to the nations that are 479 00:25:39,160 --> 00:25:41,960 Speaker 1: most in need. That's kind of an acute solution. They're 480 00:25:42,000 --> 00:25:45,359 Speaker 1: also managing the logistics of getting weak supplied out of Russia, 481 00:25:45,440 --> 00:25:47,639 Speaker 1: Ukraine out of those ports and getting them to the 482 00:25:47,720 --> 00:25:50,600 Speaker 1: nations in need. So that work is underway. It's a 483 00:25:50,680 --> 00:25:53,320 Speaker 1: very expensive, very difficult work. The US is now covering 484 00:25:53,640 --> 00:25:58,280 Speaker 1: I believe, of that budget for the U n to 485 00:25:58,400 --> 00:26:01,480 Speaker 1: drive that that that availability. The longer range problem is, 486 00:26:01,840 --> 00:26:03,920 Speaker 1: I think needs to be resolved not just by saying, hey, 487 00:26:03,920 --> 00:26:07,360 Speaker 1: we can make more fertilizer, which we need to do, um, 488 00:26:07,400 --> 00:26:09,679 Speaker 1: but the prices are high. But there's a lot of 489 00:26:09,720 --> 00:26:14,880 Speaker 1: technologies and agriculture that can increase productivity without using as 490 00:26:14,960 --> 00:26:17,760 Speaker 1: much fertilizer and so were you know. But the problem 491 00:26:17,800 --> 00:26:19,440 Speaker 1: is that's not going to resolve in the next year. 492 00:26:19,720 --> 00:26:22,359 Speaker 1: But over time, we do believe that we should be 493 00:26:22,359 --> 00:26:24,560 Speaker 1: able to see a doubling of ag productivity around the 494 00:26:24,560 --> 00:26:27,639 Speaker 1: world through a number of novel technologies that are that 495 00:26:27,680 --> 00:26:30,040 Speaker 1: are in market or you know, starting to kind of 496 00:26:30,040 --> 00:26:33,959 Speaker 1: come to market. So what role do you guys at 497 00:26:34,000 --> 00:26:37,240 Speaker 1: the at the production board play do you invest in 498 00:26:37,240 --> 00:26:41,240 Speaker 1: in some of these companies these technologies, Yeah, we're investors 499 00:26:41,240 --> 00:26:45,639 Speaker 1: in agricultural technology businesses, were also in the process of 500 00:26:45,720 --> 00:26:49,400 Speaker 1: taking the largest agricultural retailer in Latin America called Laboro 501 00:26:49,520 --> 00:26:53,600 Speaker 1: Agro Public via our back vehicles, and we think that's 502 00:26:53,600 --> 00:26:57,320 Speaker 1: a very strategic transaction because Latin America, the acreage to 503 00:26:57,400 --> 00:26:59,879 Speaker 1: produce food in Latin America is almost as large as 504 00:26:59,880 --> 00:27:03,080 Speaker 1: the US, and Latin America is the largest agg exporting 505 00:27:03,119 --> 00:27:06,840 Speaker 1: market in the world, and corn farmers in Brazil are 506 00:27:06,880 --> 00:27:09,520 Speaker 1: getting half the yield of what corn farmers in the 507 00:27:09,560 --> 00:27:12,560 Speaker 1: United States are getting with equivalent soil and equivalent sunlight 508 00:27:12,560 --> 00:27:15,280 Speaker 1: and the water. So by bringing new technology to that 509 00:27:15,400 --> 00:27:18,560 Speaker 1: market and teaching farmers how to better use that technology 510 00:27:18,600 --> 00:27:21,160 Speaker 1: that are used the products and tools that they have, UM, 511 00:27:21,160 --> 00:27:23,480 Speaker 1: we should be able to see a massive increase in productivity. 512 00:27:23,720 --> 00:27:26,280 Speaker 1: Brazil is already estimated to be the largest agg export 513 00:27:26,359 --> 00:27:28,359 Speaker 1: market in the world, ahead of the US in the 514 00:27:28,359 --> 00:27:31,119 Speaker 1: next few years. UM. So we're very excited about Latin 515 00:27:31,119 --> 00:27:34,000 Speaker 1: America and the potential there. It's a key part of 516 00:27:34,000 --> 00:27:38,119 Speaker 1: the economy. It's very well supported by the government and 517 00:27:38,320 --> 00:27:40,240 Speaker 1: UM and we think that that can be a great 518 00:27:40,320 --> 00:27:43,720 Speaker 1: unlock in terms of global calorie availability, which is critically 519 00:27:43,760 --> 00:27:46,320 Speaker 1: needed right now. All Right, David Good stuff. We learned 520 00:27:46,320 --> 00:27:48,679 Speaker 1: a lot there. Keep in touch with us and let 521 00:27:48,720 --> 00:27:50,879 Speaker 1: us know how this is developing. Going to be a 522 00:27:50,920 --> 00:27:53,040 Speaker 1: long obviously is a long term you sure? David Friedberg, 523 00:27:53,080 --> 00:27:56,639 Speaker 1: founder of the Production Board, giving us some thoughts on 524 00:27:56,760 --> 00:27:58,800 Speaker 1: what is a key topic a copy seven, which is 525 00:27:58,840 --> 00:28:02,159 Speaker 1: food insecurity. And then unfortunately the war in Irand is 526 00:28:02,200 --> 00:28:06,159 Speaker 1: exacerbating what was already in Ukraine. Ukraine, thank you, was 527 00:28:06,200 --> 00:28:12,159 Speaker 1: already a very difficult problem on on global scales. I 528 00:28:12,200 --> 00:28:15,760 Speaker 1: don't know, man, you think about this economy. Everybody's kind 529 00:28:15,760 --> 00:28:18,320 Speaker 1: of got a job at once one, they're spending money 530 00:28:18,320 --> 00:28:20,840 Speaker 1: at their retail sales came in today a little bit 531 00:28:20,880 --> 00:28:22,800 Speaker 1: better and expected to gain of one point three percent 532 00:28:22,880 --> 00:28:27,639 Speaker 1: month to month, but consensus was one but but target 533 00:28:28,400 --> 00:28:33,000 Speaker 1: horrible miss on the top and bottom line, cutting their forecasts. Um, 534 00:28:33,119 --> 00:28:36,879 Speaker 1: I don't understand what's going on. Maybe they just missed it. Well, no, 535 00:28:37,080 --> 00:28:41,520 Speaker 1: because they say that at least shoppers their business are 536 00:28:41,560 --> 00:28:44,320 Speaker 1: pulling back. I don't know Walmart had good numbers. Let's 537 00:28:44,360 --> 00:28:47,520 Speaker 1: talk to a professional about this. Uh Aji Solanki, uh 538 00:28:47,720 --> 00:28:50,840 Speaker 1: National Director of Retail Services for the US at Colliers 539 00:28:51,160 --> 00:28:55,240 Speaker 1: that is a Nastack traded company. Uh C I g 540 00:28:55,480 --> 00:28:58,800 Speaker 1: I is the symbol and so help us square the 541 00:28:58,840 --> 00:29:01,960 Speaker 1: circle here. We had some good retail sales numbers, They 542 00:29:02,000 --> 00:29:05,560 Speaker 1: had some good Walmart stuff, but then Target misses it 543 00:29:05,600 --> 00:29:08,160 Speaker 1: a Target specific issue, do you think or is it 544 00:29:08,240 --> 00:29:13,239 Speaker 1: just depending upon what consumer you're looking at. Yeah, I 545 00:29:13,240 --> 00:29:16,840 Speaker 1: would say definitely that. Um it's it's a little confusing 546 00:29:16,920 --> 00:29:19,680 Speaker 1: yet disappointing because we are seeing some strong numbers. So 547 00:29:19,720 --> 00:29:23,200 Speaker 1: we did a bit of a deep dive into Target specifically, 548 00:29:23,760 --> 00:29:27,640 Speaker 1: and this is not a Target only So what what's 549 00:29:27,680 --> 00:29:30,880 Speaker 1: happening here is a couple of things. One, if you 550 00:29:30,880 --> 00:29:34,520 Speaker 1: look at Target, they maintain a very balanced sales mix, 551 00:29:34,640 --> 00:29:37,960 Speaker 1: you know, between food and general merchandise. And if you 552 00:29:38,000 --> 00:29:41,040 Speaker 1: look at their year over year sales growth, it's still 553 00:29:41,040 --> 00:29:45,200 Speaker 1: have a positive three point four per cent. However, they 554 00:29:45,240 --> 00:29:48,240 Speaker 1: are starting to see a slow down as it relates 555 00:29:48,280 --> 00:29:52,840 Speaker 1: to discretionary items. And when you look at discretionary items, 556 00:29:52,880 --> 00:29:56,960 Speaker 1: those impulse by um items, they're going to have, you know, 557 00:29:57,120 --> 00:29:59,800 Speaker 1: a higher margin and therefore they're going to see some 558 00:30:00,000 --> 00:30:06,480 Speaker 1: awesome profit there in addition to discounting the inventory that 559 00:30:06,520 --> 00:30:11,520 Speaker 1: they had and acquired a little too much of. Yeah, 560 00:30:11,560 --> 00:30:15,160 Speaker 1: so we heard from the CEO Target Brian Cornell. He 561 00:30:15,360 --> 00:30:21,160 Speaker 1: said in a statement that um guests shopping behavior increasingly 562 00:30:21,360 --> 00:30:25,680 Speaker 1: is increasingly being impacted by inflation, which is clear rising 563 00:30:25,720 --> 00:30:30,360 Speaker 1: interest rates, got it? And economic uncertainty uncertainty. Why isn't 564 00:30:30,360 --> 00:30:34,080 Speaker 1: that hurting Walmart guests? Or is it hurting guests across 565 00:30:34,200 --> 00:30:36,680 Speaker 1: the industry? And Walmart just did a better job of 566 00:30:37,040 --> 00:30:40,400 Speaker 1: putting out his numbers. You know what it is between 567 00:30:40,400 --> 00:30:43,480 Speaker 1: the Walmart and Targeted some a couple of really interesting facts. 568 00:30:43,600 --> 00:30:47,080 Speaker 1: One is that if you look at targets food sales, 569 00:30:47,080 --> 00:30:49,200 Speaker 1: the food is definitely something that you know, people are 570 00:30:49,200 --> 00:30:51,560 Speaker 1: going to continue to to buy, right, we need to 571 00:30:51,600 --> 00:30:54,360 Speaker 1: eat and stay healthy, etcetera. But if you look at 572 00:30:54,400 --> 00:30:58,520 Speaker 1: Target food sales in terms of historical percentages versus Walmart, 573 00:30:59,000 --> 00:31:02,720 Speaker 1: target food sale represents about twenty whereas Walt Walmart's is 574 00:31:02,800 --> 00:31:07,320 Speaker 1: fifty five events. So when we're in this call it inflationary, um, 575 00:31:07,360 --> 00:31:10,760 Speaker 1: you know, uh, mindset and being cautious we're going to 576 00:31:10,920 --> 00:31:13,680 Speaker 1: spend on food. But I think Walmart's numbers are better 577 00:31:13,760 --> 00:31:17,400 Speaker 1: because they have a higher percentage in terms of food sales. Auntie, 578 00:31:17,800 --> 00:31:20,320 Speaker 1: you know, Matt's got his holiday shopping already done, but 579 00:31:20,400 --> 00:31:23,280 Speaker 1: I haven't even thought about it. So give us a 580 00:31:23,280 --> 00:31:27,760 Speaker 1: sense of how you think holiday sales will be this year. 581 00:31:27,800 --> 00:31:29,920 Speaker 1: What's the expectation that some of the retailers are putting 582 00:31:29,960 --> 00:31:33,640 Speaker 1: out there. Yeah, so what we're seeing right now is 583 00:31:33,880 --> 00:31:36,400 Speaker 1: um in terms of holiday sales, it's really interesting. It's 584 00:31:36,440 --> 00:31:39,080 Speaker 1: going to be UM, you know, we're we're kind of 585 00:31:39,160 --> 00:31:42,600 Speaker 1: right now looking at still an average spend on holiday 586 00:31:42,680 --> 00:31:46,840 Speaker 1: shopping around eight hundred and fifty dollars on gifts, which 587 00:31:46,880 --> 00:31:51,160 Speaker 1: has been the average for the past ten years. Um. 588 00:31:51,240 --> 00:31:54,680 Speaker 1: You know, we're still seeing what we're calling this, you know, 589 00:31:55,000 --> 00:31:59,080 Speaker 1: um home wealth effect, where people are still feeling a 590 00:31:59,120 --> 00:32:01,920 Speaker 1: little good about you know, that home equity that they have, 591 00:32:02,600 --> 00:32:06,360 Speaker 1: and so um, you know, with that, you know, people 592 00:32:06,400 --> 00:32:08,080 Speaker 1: are going to spend a little bit more, so those 593 00:32:08,080 --> 00:32:10,920 Speaker 1: that have you know, you know, our comfort level of 594 00:32:10,960 --> 00:32:14,800 Speaker 1: spending a bit more with higher incomes, we're actually going 595 00:32:14,840 --> 00:32:19,960 Speaker 1: to see a rise in in holiday spent. So we're 596 00:32:20,000 --> 00:32:23,520 Speaker 1: gonna I it's not going to be an extreme boom 597 00:32:23,640 --> 00:32:26,120 Speaker 1: or boost, but we're going to still feel a good 598 00:32:26,160 --> 00:32:29,200 Speaker 1: positive effect through through the next two months in terms 599 00:32:29,240 --> 00:32:32,720 Speaker 1: of holiday spending and gift giving and getting together with families. 600 00:32:32,840 --> 00:32:38,560 Speaker 1: I've noticed a couple of concerning UM shipping news items 601 00:32:38,560 --> 00:32:42,000 Speaker 1: FedEx for example, it's freight units putting workers on furlough 602 00:32:42,040 --> 00:32:45,520 Speaker 1: in some US markets. That adds to the evidence we've 603 00:32:45,560 --> 00:32:50,360 Speaker 1: seen of a cargo slow down UM. That evidence is 604 00:32:50,400 --> 00:32:54,960 Speaker 1: really the shipping rates UM getting weaker and weaker, framing 605 00:32:55,120 --> 00:32:58,160 Speaker 1: a real problem for this industry in three. But what 606 00:32:58,200 --> 00:33:02,400 Speaker 1: does that say about sales? Retail sale US are? You know? 607 00:33:02,520 --> 00:33:04,520 Speaker 1: And I think you know, there's a couple of things 608 00:33:04,520 --> 00:33:06,760 Speaker 1: that a lot of the retailers are still kind of 609 00:33:06,760 --> 00:33:11,640 Speaker 1: going through. As I mentioned earlier, the the additional inventory. 610 00:33:11,800 --> 00:33:14,720 Speaker 1: That inventory is still going through its correction, so there's 611 00:33:14,720 --> 00:33:18,120 Speaker 1: still enough inventory to at least look as though you're 612 00:33:18,160 --> 00:33:21,360 Speaker 1: walking into the stores, you're seeing inventory you're gonna you're 613 00:33:21,400 --> 00:33:23,840 Speaker 1: gonna buy, you're gonna shop, you're gonna spend. It's I 614 00:33:23,840 --> 00:33:27,040 Speaker 1: think it's it's that correction that's occurring that will occur 615 00:33:27,160 --> 00:33:30,760 Speaker 1: through the end of three and there hopefully by that 616 00:33:30,840 --> 00:33:33,800 Speaker 1: point we'll start to see some adjustments as it relates 617 00:33:33,840 --> 00:33:38,160 Speaker 1: to items being you know, UM shifted and sent to 618 00:33:38,360 --> 00:33:41,520 Speaker 1: the US. All right, great stuff. Really appreciate it. That 619 00:33:41,640 --> 00:33:43,720 Speaker 1: kind of bringing into focus kind of what we're seeing 620 00:33:43,760 --> 00:33:47,320 Speaker 1: at there in retail land on J. Slanki, National director 621 00:33:47,400 --> 00:33:51,040 Speaker 1: of Retail Services for the United States at Collier's and 622 00:33:51,120 --> 00:33:53,800 Speaker 1: Collier's International Group. It is a public and traded symbol 623 00:33:53,880 --> 00:33:57,160 Speaker 1: c I g I is a symbol. It's got about 624 00:33:57,200 --> 00:34:00,120 Speaker 1: a four billion dollar market cap. So they're out there 625 00:34:00,160 --> 00:34:02,680 Speaker 1: doing their thing here. So retail sales numbers, you know, 626 00:34:02,720 --> 00:34:05,280 Speaker 1: came in pretty solid today. So it kind of and 627 00:34:05,320 --> 00:34:09,160 Speaker 1: if you have the the I guess the food sales, 628 00:34:09,200 --> 00:34:11,879 Speaker 1: shared sales, that's big that you know, That's what I guess. 629 00:34:11,880 --> 00:34:14,160 Speaker 1: That's the difference between what we saw from Warm and 630 00:34:14,160 --> 00:34:20,600 Speaker 1: what we saw from Target today. You really need to 631 00:34:20,600 --> 00:34:22,640 Speaker 1: get an update on what's going on in the Ukraine. 632 00:34:22,640 --> 00:34:25,200 Speaker 1: It looks like the world, you know, kind of dodged 633 00:34:25,239 --> 00:34:27,680 Speaker 1: the worst case scenario or bad case scenario yesterday with 634 00:34:27,719 --> 00:34:30,960 Speaker 1: it missile falling into Poland. But let's get the latest 635 00:34:31,000 --> 00:34:34,120 Speaker 1: with Mick Mulroy, co founder of the Lobo Institute. He's 636 00:34:34,120 --> 00:34:38,160 Speaker 1: a former Deputy Assistant Secretary of Defense for the Middle 637 00:34:38,160 --> 00:34:39,920 Speaker 1: East at the U s Department of Defense. He was 638 00:34:39,960 --> 00:34:42,840 Speaker 1: at the c i A for like nineteen years. Former 639 00:34:43,000 --> 00:34:46,839 Speaker 1: US Marine Infantry officers, so the guy has done it all. 640 00:34:47,440 --> 00:34:50,000 Speaker 1: Mick again, it kind of looks like the world kind 641 00:34:50,000 --> 00:34:52,320 Speaker 1: of dodged a little bit of a bullet there yesterday. 642 00:34:52,360 --> 00:34:55,439 Speaker 1: It could have been a much worse scenario. But what's 643 00:34:55,520 --> 00:34:58,560 Speaker 1: your latest take on what's kind of evolving over in 644 00:34:58,600 --> 00:35:02,400 Speaker 1: the Ukraine. So good to be with you, and I 645 00:35:02,440 --> 00:35:05,640 Speaker 1: think you're exactly right. We did dodge a bullet, and 646 00:35:05,640 --> 00:35:08,440 Speaker 1: I think that's a testament to taking the time to 647 00:35:08,560 --> 00:35:11,840 Speaker 1: make the assessment, look at the radars and determine exactly 648 00:35:11,920 --> 00:35:13,880 Speaker 1: what happened, And it looks like although it was a 649 00:35:13,960 --> 00:35:17,560 Speaker 1: Russian made missile, it was it was fired from a 650 00:35:17,640 --> 00:35:21,000 Speaker 1: Ukrainian air and missile defense system which may have actually 651 00:35:21,080 --> 00:35:25,239 Speaker 1: hit the incoming missile and then and from that trajectory, 652 00:35:25,280 --> 00:35:28,960 Speaker 1: which is really impossible to determine, it came down into 653 00:35:29,080 --> 00:35:33,480 Speaker 1: Poland uh and caused death. So it's a horrible event, 654 00:35:33,600 --> 00:35:36,200 Speaker 1: certainly for the people who were killed in their families. 655 00:35:36,239 --> 00:35:39,960 Speaker 1: But it did look does now look like it wasn't 656 00:35:40,000 --> 00:35:44,240 Speaker 1: an intended act by Russia, so it wouldn't require Article five, 657 00:35:44,480 --> 00:35:48,200 Speaker 1: which is this uh common defense under NATO. Although even 658 00:35:48,239 --> 00:35:52,440 Speaker 1: if it was you know, um a missile fired by 659 00:35:52,520 --> 00:35:56,640 Speaker 1: Russian troops that accidentally went into Poland, you know, that's 660 00:35:57,000 --> 00:35:59,520 Speaker 1: got to be expected when they're fighting along the border, 661 00:35:59,560 --> 00:36:03,640 Speaker 1: and they are right. Um, you know that doesn't matter 662 00:36:03,680 --> 00:36:05,799 Speaker 1: if it was you know, with intent. I mean, if 663 00:36:05,840 --> 00:36:08,560 Speaker 1: if Vladimir putin wages of war in Ukraine and then 664 00:36:08,600 --> 00:36:12,000 Speaker 1: it starts, and then he starts killing people and Poland 665 00:36:12,160 --> 00:36:16,319 Speaker 1: and Moldova and other neighboring countries, Um, don't we have 666 00:36:16,320 --> 00:36:19,799 Speaker 1: to hold them accountable for that? Well, that's exactly right. 667 00:36:19,880 --> 00:36:22,440 Speaker 1: And I think both the President of Poland and the 668 00:36:22,480 --> 00:36:26,560 Speaker 1: Hope and NATO leaders have said this is directly caused 669 00:36:26,560 --> 00:36:31,040 Speaker 1: by Russia's unlawful and unprovoked invasion of Ukraine, So they 670 00:36:31,040 --> 00:36:34,799 Speaker 1: are the reason for this. They've Ukrainians have had to 671 00:36:35,400 --> 00:36:39,600 Speaker 1: defend themselves against a sustained barrage of missiles targeting civilian 672 00:36:39,640 --> 00:36:42,719 Speaker 1: infrastructure and violation and the law of arm conflict. So 673 00:36:43,080 --> 00:36:46,400 Speaker 1: this is definitely Russia's fault. And this is the consequences 674 00:36:46,600 --> 00:36:50,479 Speaker 1: of firing at targets near the border of Poland. Make 675 00:36:50,760 --> 00:36:54,440 Speaker 1: the likelihood that some missiles, either theirs or the ones 676 00:36:54,480 --> 00:36:56,880 Speaker 1: trying to defend, are going to come down in Poland. 677 00:36:57,440 --> 00:37:00,800 Speaker 1: So the consequences I think obviously it will be different 678 00:37:01,600 --> 00:37:03,920 Speaker 1: since we I think, right now the belief that it 679 00:37:04,000 --> 00:37:09,600 Speaker 1: wasn't intentional, it wasn't Russia, but certainly economic diplomatic consequences 680 00:37:09,640 --> 00:37:12,759 Speaker 1: I still think are in order. But it But as 681 00:37:12,800 --> 00:37:16,279 Speaker 1: you said in the first question, it looks like the 682 00:37:16,360 --> 00:37:21,040 Speaker 1: most significant concern, which was an escalation into a conflict 683 00:37:21,040 --> 00:37:23,920 Speaker 1: Beteenado on Russia, is not the case. Mick. You know, 684 00:37:24,600 --> 00:37:27,279 Speaker 1: this past couple of days just shows all of the risks. 685 00:37:27,080 --> 00:37:28,920 Speaker 1: Are some of the risks that are out there that 686 00:37:28,960 --> 00:37:31,239 Speaker 1: you know. It's not on the strictly the battle fold. 687 00:37:31,280 --> 00:37:33,160 Speaker 1: It can it can spill over it and get even 688 00:37:33,360 --> 00:37:37,239 Speaker 1: deeper and much more broad. Um So the question for 689 00:37:37,280 --> 00:37:39,960 Speaker 1: a lot of folks is how does this end? I mean, 690 00:37:40,080 --> 00:37:42,719 Speaker 1: is it up to the West to try to come 691 00:37:42,760 --> 00:37:45,799 Speaker 1: up with some way to give putin, some way to 692 00:37:45,840 --> 00:37:50,840 Speaker 1: save face and get out of there. So it ultimately 693 00:37:50,960 --> 00:37:53,680 Speaker 1: is up to the Ukrainians as well. They are the 694 00:37:53,680 --> 00:37:55,520 Speaker 1: ones that are fighting the fight. They are the ones 695 00:37:55,560 --> 00:37:59,880 Speaker 1: that are taking all the losses and the consequences essentially 696 00:38:00,000 --> 00:38:03,040 Speaker 1: are supporting them. Right now, the counter offenses that they've 697 00:38:03,080 --> 00:38:06,520 Speaker 1: launched are successful, and it is pretty apparent that Russia 698 00:38:06,560 --> 00:38:09,319 Speaker 1: cannot even keep the gains that they had made, let 699 00:38:09,360 --> 00:38:13,520 Speaker 1: alone getting a new territory. So they're losing, and that's 700 00:38:13,560 --> 00:38:16,720 Speaker 1: a that's a dangerous position to be in because uh, 701 00:38:16,719 --> 00:38:21,720 Speaker 1: it's it's unlikely that uh the president of Russia, President Putin, 702 00:38:21,760 --> 00:38:25,239 Speaker 1: can withstand losing a war and maintaining power. So how 703 00:38:25,239 --> 00:38:28,640 Speaker 1: does it end? I think right now our positions be. 704 00:38:28,680 --> 00:38:35,080 Speaker 1: It ends with Russia leaving all all of Ukrainian territory. Uh, 705 00:38:35,160 --> 00:38:39,160 Speaker 1: They'm agreeing to reparations for the damage they cause and 706 00:38:40,080 --> 00:38:44,160 Speaker 1: that those that have committed these atrocities be held responsible 707 00:38:44,840 --> 00:38:48,040 Speaker 1: international criminal court. So I don't see that happening, but 708 00:38:48,120 --> 00:38:50,720 Speaker 1: I think that will be the position of the Ukrainians 709 00:38:50,920 --> 00:38:55,359 Speaker 1: and hopefully supported by NATO. What is your take on 710 00:38:56,760 --> 00:39:01,680 Speaker 1: UM combatants targeting civilian infrastructure? I mean, we wouldn't have 711 00:39:02,320 --> 00:39:04,760 Speaker 1: I think it's probably a decent argument that we wouldn't 712 00:39:04,760 --> 00:39:08,799 Speaker 1: have one World War two UM when we did if 713 00:39:08,840 --> 00:39:12,840 Speaker 1: we hadn't you know, fire bombed carpet bomb Dresden and 714 00:39:13,200 --> 00:39:16,920 Speaker 1: knocked out UM to Japanese cities with nuclear weapons. It 715 00:39:17,040 --> 00:39:22,800 Speaker 1: seems like, in fact, all major wars UM involve targeting 716 00:39:22,840 --> 00:39:27,880 Speaker 1: civilian infrastructure. So it's weird to say that it's illegal. UM. 717 00:39:28,040 --> 00:39:32,480 Speaker 1: Isn't it something that you know happens in war. So 718 00:39:32,600 --> 00:39:35,239 Speaker 1: it certainly did, and all the examples you just brought 719 00:39:35,360 --> 00:39:37,319 Speaker 1: up are good examples of that. But at the end 720 00:39:37,320 --> 00:39:39,520 Speaker 1: of War War two, we had what we called the 721 00:39:39,560 --> 00:39:43,000 Speaker 1: Geneva and Hague Conventions, and the whole purpose of which 722 00:39:43,320 --> 00:39:46,319 Speaker 1: was to avoid what we saw in World War two 723 00:39:46,680 --> 00:39:52,360 Speaker 1: with this massive deaths of civilians and targeting of infrastructures. 724 00:39:52,360 --> 00:39:56,279 Speaker 1: So that was a international decision, and these are conventions 725 00:39:56,680 --> 00:40:00,120 Speaker 1: that countries signed on too, so we would avoid one 726 00:40:00,120 --> 00:40:03,520 Speaker 1: of the most extreme atrocities we saw in previous wars. 727 00:40:03,520 --> 00:40:06,760 Speaker 1: So currently, I mean, if we went to war against Russia, 728 00:40:07,200 --> 00:40:11,279 Speaker 1: let's just say, um, wouldn't we be smart to target 729 00:40:11,320 --> 00:40:16,600 Speaker 1: their civilian infrastructure? So one could make a, you know, 730 00:40:16,640 --> 00:40:19,719 Speaker 1: the cold dual purpose argument that you have to knock 731 00:40:19,760 --> 00:40:22,760 Speaker 1: off the power because the power obviously has an effect 732 00:40:22,760 --> 00:40:29,200 Speaker 1: on the oppositions military capability. Celiberately targeting civilians themselves is 733 00:40:29,840 --> 00:40:33,759 Speaker 1: obviously war crime and atrocity, and I certainly would never 734 00:40:34,400 --> 00:40:37,840 Speaker 1: uh support that from my own country. Uh. But and 735 00:40:37,960 --> 00:40:41,640 Speaker 1: also it's important to point out that Ukraine was the 736 00:40:41,680 --> 00:40:45,239 Speaker 1: one that was attacked. Russia was the one who did 737 00:40:45,280 --> 00:40:49,760 Speaker 1: the invasion. There, the aggressor it's against all international rules, 738 00:40:49,840 --> 00:40:53,120 Speaker 1: norms and conventions. So they have they have been in 739 00:40:53,280 --> 00:40:56,400 Speaker 1: violation of the law since the day they stepped across 740 00:40:56,440 --> 00:41:00,279 Speaker 1: the the Ukrainian border. Even if they would have done 741 00:41:00,320 --> 00:41:02,560 Speaker 1: the trocities that they have done, they still would have 742 00:41:02,560 --> 00:41:05,680 Speaker 1: been in complete violation of the law on conflict. And Mike, 743 00:41:06,120 --> 00:41:08,800 Speaker 1: what WO does it tell you when Russia announces that 744 00:41:09,040 --> 00:41:11,480 Speaker 1: curse On has now been annexed and then it seems 745 00:41:11,520 --> 00:41:13,640 Speaker 1: like the next week they lose it. Are they really 746 00:41:13,719 --> 00:41:17,560 Speaker 1: in that week of a military position? I think so? 747 00:41:17,800 --> 00:41:20,640 Speaker 1: I mean you would you would think that if they 748 00:41:20,760 --> 00:41:23,680 Speaker 1: if they're going to illegally, of course, but annex something 749 00:41:23,719 --> 00:41:26,239 Speaker 1: that that that they didn't even think they could keep it. 750 00:41:26,400 --> 00:41:31,279 Speaker 1: Just it's just fodder for everybody, uh, not just internationally 751 00:41:31,320 --> 00:41:33,439 Speaker 1: but also in Russia that thinks this war is going 752 00:41:33,480 --> 00:41:36,719 Speaker 1: completely the wrong direction. And I think you're seeing more 753 00:41:36,760 --> 00:41:40,000 Speaker 1: and more and hearing more and more voices in Russia 754 00:41:40,400 --> 00:41:43,000 Speaker 1: for an end to this conflict. Maybe that is what 755 00:41:43,120 --> 00:41:47,120 Speaker 1: causes pot and ultimately decides to withdraw Alright, great stuff, 756 00:41:47,160 --> 00:41:49,200 Speaker 1: make We really appreciate getting some of your time. In 757 00:41:49,200 --> 00:41:52,320 Speaker 1: your perspective, of course, mc mulroy, he's the co founder 758 00:41:52,360 --> 00:41:56,560 Speaker 1: of the Lobo Institute, decades of experience in the US military, 759 00:41:56,360 --> 00:41:58,520 Speaker 1: uh in intelligence at c i A and then of 760 00:41:58,560 --> 00:42:00,680 Speaker 1: course at the Department of the and so just an 761 00:42:00,960 --> 00:42:05,000 Speaker 1: extraordinary background to get access to him. Thanks for listening 762 00:42:05,000 --> 00:42:08,439 Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen 763 00:42:08,520 --> 00:42:12,800 Speaker 1: to interviews with Apple Podcasts or whatever podcast platform you prefer. 764 00:42:13,160 --> 00:42:16,440 Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller nineteen 765 00:42:16,560 --> 00:42:19,239 Speaker 1: seventy three and on Fall Sweeney I'm on Twitter at 766 00:42:19,239 --> 00:42:22,120 Speaker 1: pt Sweeney. Before the podcast. You can always catch us 767 00:42:22,160 --> 00:42:23,560 Speaker 1: worldwide at Bloomberg Radio.