1 00:00:00,840 --> 00:00:04,000 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 2 00:00:04,040 --> 00:00:05,240 Speaker 1: my co host Matt Miller. 3 00:00:05,640 --> 00:00:09,600 Speaker 2: Every business day we bring you interviews from CEOs, market pros, 4 00:00:09,720 --> 00:00:13,640 Speaker 2: and Bloomberg experts, along with essential market moving news. 5 00:00:14,160 --> 00:00:17,279 Speaker 1: I'm the Bloomberg Markets Podcast on Apple Podcasts or wherever 6 00:00:17,400 --> 00:00:20,520 Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast. 7 00:00:21,120 --> 00:00:24,360 Speaker 1: All right, let's get returned to Gleitt alsteinch Isy, Israel 8 00:00:24,400 --> 00:00:27,440 Speaker 1: economy and a government reporter for Bloomberg News. She joins 9 00:00:27,520 --> 00:00:30,120 Speaker 1: us from Tel Aviv and Gleat. I think the message 10 00:00:30,120 --> 00:00:34,160 Speaker 1: there has been pretty consistent, a message of support by 11 00:00:34,360 --> 00:00:38,440 Speaker 1: the US, the US people for the people of Israel. 12 00:00:39,560 --> 00:00:43,120 Speaker 1: What's the feeling in Israel these days as to maybe 13 00:00:43,360 --> 00:00:44,680 Speaker 1: next steps. 14 00:00:46,720 --> 00:00:49,600 Speaker 3: Yeah, so, first of all, just on the feeling and 15 00:00:49,640 --> 00:00:52,520 Speaker 3: on the sentiment here and as well, so I think 16 00:00:52,560 --> 00:00:55,720 Speaker 3: President Biden's support is very well noted. Also in the public. 17 00:00:56,400 --> 00:00:58,880 Speaker 3: It is being talked about, it is being discussed, and 18 00:00:59,040 --> 00:01:02,160 Speaker 3: people are I would actually say that generally speaking, the 19 00:01:02,160 --> 00:01:06,880 Speaker 3: public here is very much moved by his speech last 20 00:01:06,880 --> 00:01:08,839 Speaker 3: week and also by the fact that he has taken 21 00:01:08,840 --> 00:01:14,120 Speaker 3: the time to speak to Israelis in various press conferences 22 00:01:14,160 --> 00:01:18,040 Speaker 3: and media briefing is I think roughly three times today. 23 00:01:18,959 --> 00:01:23,560 Speaker 3: Apart from that, we're hearing that Israel and we have 24 00:01:23,600 --> 00:01:27,360 Speaker 3: an official Prime minister, a spokesperson who says this to 25 00:01:27,400 --> 00:01:31,320 Speaker 3: Bloomberg today on the record. They're saying that even after 26 00:01:31,800 --> 00:01:35,440 Speaker 3: everything that happened in the hospital yesterday, the Gaza explosion 27 00:01:35,760 --> 00:01:39,160 Speaker 3: in the hospital that Israel says it was not involved 28 00:01:39,160 --> 00:01:43,440 Speaker 3: in in any way, they they still want to move 29 00:01:43,480 --> 00:01:47,960 Speaker 3: forward with the original plan, so to say, and dismantle 30 00:01:48,000 --> 00:01:54,120 Speaker 3: Hamas in Gaza. And since this cannot be accomplished according 31 00:01:54,120 --> 00:01:57,200 Speaker 3: to you know, any expert you would speak to without 32 00:01:57,400 --> 00:02:00,960 Speaker 3: some sort of ground maneuver, then is that this is 33 00:02:01,040 --> 00:02:04,880 Speaker 3: still coming up. We don't know when and how exactly. 34 00:02:05,560 --> 00:02:12,760 Speaker 3: It is noteworthy to say that although the general concept 35 00:02:12,760 --> 00:02:15,920 Speaker 3: of a ground maneuver has been pretty much established and 36 00:02:16,040 --> 00:02:20,360 Speaker 3: is very you know, anticipated by everyone, some questions like 37 00:02:20,520 --> 00:02:23,640 Speaker 3: what would be the magnitude of this maneuver, what would 38 00:02:23,639 --> 00:02:25,960 Speaker 3: be the goals, when would it stop, you know, what 39 00:02:26,000 --> 00:02:30,079 Speaker 3: would be the exit point? These are still open questions 40 00:02:29,639 --> 00:02:32,799 Speaker 3: that are being debated. And I think this is connected 41 00:02:32,800 --> 00:02:36,560 Speaker 3: in a way to President Biden's visit here today. You know, 42 00:02:36,720 --> 00:02:40,359 Speaker 3: questions like kids Israel going to reconquer the Gaza Strip, 43 00:02:40,560 --> 00:02:43,680 Speaker 3: which is something that the US is said to be 44 00:02:43,840 --> 00:02:47,080 Speaker 3: very opposed to. And questions of that sort are still 45 00:02:47,120 --> 00:02:49,600 Speaker 3: open and are still you know, being answered and will 46 00:02:49,639 --> 00:02:53,040 Speaker 3: be answered over the next few days and weeks, maybe 47 00:02:53,080 --> 00:02:53,600 Speaker 3: even monthly. 48 00:02:53,680 --> 00:02:58,360 Speaker 2: Assume gleat, what do you expect a ground invasion to 49 00:02:58,800 --> 00:02:59,760 Speaker 2: actually commence? 50 00:03:00,200 --> 00:03:00,440 Speaker 4: Uh? 51 00:03:00,560 --> 00:03:04,000 Speaker 2: Is it fair to say probably not while the US 52 00:03:04,120 --> 00:03:06,000 Speaker 2: president is on the ground in Israel. 53 00:03:07,520 --> 00:03:12,760 Speaker 3: Yeah, that is a safe to say that. However, President 54 00:03:12,840 --> 00:03:16,040 Speaker 3: Biden is due to leave here very very soon. This 55 00:03:16,120 --> 00:03:19,960 Speaker 3: is very important and like I think you both mentioned 56 00:03:19,960 --> 00:03:24,040 Speaker 3: the historical visit of of the US president visiting Israel 57 00:03:24,200 --> 00:03:27,560 Speaker 3: in wartime, this has never happened before. And and yet 58 00:03:27,639 --> 00:03:32,399 Speaker 3: he's about to leave Israel sometimes very soon. I think 59 00:03:32,400 --> 00:03:35,600 Speaker 3: he's done with all his meetings here and and all briefings. 60 00:03:36,240 --> 00:03:40,720 Speaker 3: So we are getting some some talk and reports about 61 00:03:40,880 --> 00:03:44,480 Speaker 3: other leaders coming through Israel. I don't think this has 62 00:03:44,520 --> 00:03:50,040 Speaker 3: been totally confirmed yet, but talk of British Prime Minister 63 00:03:50,600 --> 00:03:52,960 Speaker 3: Rishi Sunak, that is all that is also said to 64 00:03:52,960 --> 00:03:57,080 Speaker 3: be on his way here. Maybe French President Emanuel mccon 65 00:03:57,600 --> 00:04:02,800 Speaker 3: also on his way here. So so basically until all 66 00:04:03,240 --> 00:04:08,600 Speaker 3: leaders have left Israel, a ground invasion is not expected. 67 00:04:08,640 --> 00:04:11,400 Speaker 1: Now, Okay, Glee, thank you so much once again for 68 00:04:11,440 --> 00:04:14,000 Speaker 1: sharing some time with us. Galit Alstein, who really appreciate 69 00:04:14,040 --> 00:04:17,880 Speaker 1: your reporting. Cheesy Israel economy and government reporter with Bloomberg 70 00:04:17,880 --> 00:04:19,279 Speaker 1: News joining us live from Tel Aviv. 71 00:04:20,240 --> 00:04:23,680 Speaker 5: You're listening to the Team Ken's Are Live program Bloomberg 72 00:04:23,720 --> 00:04:27,080 Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot Com, 73 00:04:27,160 --> 00:04:30,320 Speaker 5: the iHeartRadio app and the Bloomberg Business app, or listen 74 00:04:30,360 --> 00:04:32,599 Speaker 5: on demand wherever you get your podcasts. 75 00:04:34,640 --> 00:04:36,720 Speaker 1: Morgan Stanley out with some numbers, as John was just 76 00:04:36,760 --> 00:04:39,680 Speaker 1: reporting stockdown about six percent. Just the latest and long 77 00:04:39,760 --> 00:04:43,640 Speaker 1: line over the last several days of the big commercial banks, 78 00:04:43,640 --> 00:04:45,600 Speaker 1: the big investment banks reporting numbers, and we want to 79 00:04:45,600 --> 00:04:48,440 Speaker 1: talk banks. One of our go to voices is Chris Whalen. 80 00:04:48,520 --> 00:04:50,960 Speaker 1: He's a chairman of Whalen Global Advisors. 81 00:04:51,160 --> 00:04:53,080 Speaker 6: Chris, thanks so much for taking the time to chat 82 00:04:53,120 --> 00:04:53,440 Speaker 6: with us. 83 00:04:53,640 --> 00:04:56,360 Speaker 1: Morgan Stanley doesn't have the big commercial bank that benefits 84 00:04:56,400 --> 00:04:59,120 Speaker 1: from net interest income, but boy, we've seen some of 85 00:04:59,160 --> 00:05:02,520 Speaker 1: the big commercial banks like JP Morgan, Lake City really 86 00:05:02,640 --> 00:05:04,880 Speaker 1: racking up the net interest income. What are some of 87 00:05:04,880 --> 00:05:07,240 Speaker 1: the takeaways you've had over the last several days from 88 00:05:07,240 --> 00:05:08,080 Speaker 1: some of these big banks. 89 00:05:09,480 --> 00:05:11,960 Speaker 7: Well, that's the narrative, Matthew. But I would say if 90 00:05:11,960 --> 00:05:14,040 Speaker 7: you look at the numbers, you would have to say 91 00:05:14,040 --> 00:05:18,839 Speaker 7: that net interesting incomes flat for the industry. You know, 92 00:05:18,880 --> 00:05:23,040 Speaker 7: Morgan Stanley, Goldman, Sachs, see other brokerage firms. In other words, 93 00:05:23,040 --> 00:05:26,279 Speaker 7: they have a broker dealer, it's their biggest business, have 94 00:05:26,360 --> 00:05:29,200 Speaker 7: to pay market rates. So they've seen their cost of 95 00:05:29,240 --> 00:05:32,880 Speaker 7: funds rise much faster than the commercial banks. On the 96 00:05:32,920 --> 00:05:35,080 Speaker 7: other hand, they don't have a marked to market problem 97 00:05:35,480 --> 00:05:38,400 Speaker 7: because they tend to keep their assets very short, so 98 00:05:38,480 --> 00:05:43,320 Speaker 7: you'll notice that they're reported, you know, adjusted accumulated other 99 00:05:43,720 --> 00:05:47,799 Speaker 7: comprehensive income is much much lower than the big banks. 100 00:05:48,120 --> 00:05:50,760 Speaker 7: So they don't hold assets, say trade assets, and that's 101 00:05:50,800 --> 00:05:53,560 Speaker 7: the big difference. But cost of funds is there. It's 102 00:05:53,560 --> 00:05:56,680 Speaker 7: probably the biggest pain point. Low volumes is the second 103 00:05:56,720 --> 00:05:59,000 Speaker 7: payment point at this point. 104 00:06:00,040 --> 00:06:02,880 Speaker 2: You know, I look at I always look Chris at 105 00:06:03,839 --> 00:06:07,200 Speaker 2: these banks and any companies really versus peers on a 106 00:06:07,240 --> 00:06:12,440 Speaker 2: five year basis, just because just because the Bloomberg defaults 107 00:06:12,440 --> 00:06:14,279 Speaker 2: to that, and I've been doing it for twenty five 108 00:06:14,360 --> 00:06:17,320 Speaker 2: years but Morgan Stanley is still the big winner among 109 00:06:17,360 --> 00:06:18,520 Speaker 2: the big Wall Street banks. 110 00:06:18,560 --> 00:06:20,240 Speaker 6: I mean with total return. 111 00:06:20,400 --> 00:06:24,279 Speaker 2: They're up almost ninety percent, compared to Goldman's axes in 112 00:06:24,320 --> 00:06:27,800 Speaker 2: second place about fifty percent, and everybody else below it. 113 00:06:27,880 --> 00:06:31,799 Speaker 2: So this bank is still I would say, the cream 114 00:06:31,839 --> 00:06:32,960 Speaker 2: of the crop on wall Stree. 115 00:06:32,960 --> 00:06:33,679 Speaker 8: Would you agree? 116 00:06:34,800 --> 00:06:35,000 Speaker 5: Yes? 117 00:06:35,080 --> 00:06:39,080 Speaker 7: In the US Morgan Stanley is clearly the winner. Mister 118 00:06:39,160 --> 00:06:42,039 Speaker 7: Gorman realized that he had to pay for a lot 119 00:06:42,040 --> 00:06:44,960 Speaker 7: of businesses that at the time looked expensive, but when 120 00:06:45,000 --> 00:06:46,800 Speaker 7: you look back today, you could say he made a 121 00:06:46,800 --> 00:06:50,159 Speaker 7: good trade. There's no other assets to buy. There's no 122 00:06:50,320 --> 00:06:53,960 Speaker 7: more significant asset managers than a Goldman or any other 123 00:06:54,000 --> 00:06:56,840 Speaker 7: bank could really buy. You could buy Schwab, but it's 124 00:06:56,880 --> 00:07:00,679 Speaker 7: too expensive at three and a half times book go lower. 125 00:07:00,839 --> 00:07:03,159 Speaker 7: But my point is is that in the US Morgan 126 00:07:03,240 --> 00:07:07,400 Speaker 7: Stanley's clearly the most diversified business with three legs of 127 00:07:07,440 --> 00:07:11,840 Speaker 7: the stool, asset management bank, investment bank right, and then 128 00:07:11,840 --> 00:07:13,080 Speaker 7: in Europe it's UBS. 129 00:07:14,000 --> 00:07:16,160 Speaker 1: So one of the questions I have, Chris, is you 130 00:07:16,200 --> 00:07:18,360 Speaker 1: mentioned just UBS, and I used to work at Credit Swiss, 131 00:07:18,400 --> 00:07:18,600 Speaker 1: so I have. 132 00:07:18,600 --> 00:07:20,200 Speaker 6: A little bit of an interest. 133 00:07:21,360 --> 00:07:25,120 Speaker 1: Yeah, But the question is can the European banks, and 134 00:07:25,280 --> 00:07:27,160 Speaker 1: we'll hear their earnings next week. Well, any of the 135 00:07:27,200 --> 00:07:31,080 Speaker 1: big European banks, can they ever consider themselves global players? 136 00:07:31,120 --> 00:07:34,000 Speaker 1: Or if they just seated that business to the JP Morgan's, 137 00:07:34,000 --> 00:07:35,240 Speaker 1: the Goldman's and Morgan Stanleys. 138 00:07:36,560 --> 00:07:39,120 Speaker 7: It's hard for them because in Europe you don't have 139 00:07:39,160 --> 00:07:42,480 Speaker 7: a middle market business. Look at Deutsche Bank. They don't 140 00:07:42,480 --> 00:07:46,360 Speaker 7: have that core business that comes with deposits that really 141 00:07:46,440 --> 00:07:50,280 Speaker 7: underpins the US banks. So they try and be global banks. 142 00:07:50,560 --> 00:07:53,880 Speaker 7: They do private banking, they do investment banking, but there's 143 00:07:53,960 --> 00:07:57,640 Speaker 7: no core. Now Credit Swiss was a little different, as 144 00:07:57,640 --> 00:08:00,280 Speaker 7: you know, because they had a big US mortgage business 145 00:08:00,080 --> 00:08:03,200 Speaker 7: US and UPS is discovering that they can't sell it, 146 00:08:03,280 --> 00:08:07,119 Speaker 7: by the way, so that's fascinating. They owned the rump 147 00:08:07,160 --> 00:08:09,920 Speaker 7: of the private label mortgage business from the two thousand 148 00:08:09,920 --> 00:08:12,480 Speaker 7: and eight crisis. They have the biggest service or it's 149 00:08:12,480 --> 00:08:14,560 Speaker 7: only about one hundred billion dollars to ay you went, 150 00:08:14,640 --> 00:08:17,720 Speaker 7: but still they can't sell it. I mean even Apollo 151 00:08:17,760 --> 00:08:21,040 Speaker 7: would buy it, So that tells you something. And you know, 152 00:08:22,080 --> 00:08:25,920 Speaker 7: UPS is clearly the WI sometimes there's the biggest retail bank, 153 00:08:25,960 --> 00:08:28,120 Speaker 7: but I would not put them in the same category 154 00:08:28,120 --> 00:08:28,840 Speaker 7: as ups. 155 00:08:30,040 --> 00:08:32,680 Speaker 2: Bringing it back to the US we had in March, 156 00:08:33,160 --> 00:08:36,079 Speaker 2: you know, something almost broke, or maybe it broke, and 157 00:08:36,120 --> 00:08:39,920 Speaker 2: then the FED was quick to fix it. In terms 158 00:08:39,920 --> 00:08:43,280 Speaker 2: of banks hold to maturity portfolios, yesterday we had Bank 159 00:08:43,320 --> 00:08:47,520 Speaker 2: America reporting kind of downplaying their holding maturity portfolio. But 160 00:08:47,640 --> 00:08:53,120 Speaker 2: all of the big banks are stuck with treasuries you know, 161 00:08:53,200 --> 00:08:57,000 Speaker 2: that are underwater. Basically, how does that shake out, you think, 162 00:08:57,080 --> 00:09:00,360 Speaker 2: especially if the FED continues raising rates, or if the market, 163 00:09:00,440 --> 00:09:03,520 Speaker 2: if the bond vigilantes continue raising rates. 164 00:09:05,240 --> 00:09:08,240 Speaker 7: Basically, if you use Bank America as an example, they 165 00:09:08,280 --> 00:09:11,840 Speaker 7: have typically kept a lot of their loan production and 166 00:09:11,880 --> 00:09:14,840 Speaker 7: that's always been there ever since the crisis. They got 167 00:09:14,840 --> 00:09:18,120 Speaker 7: out of correspondent lending, but they have a big branch network, 168 00:09:18,280 --> 00:09:19,880 Speaker 7: so they ride a lot of mortgages and they would 169 00:09:19,960 --> 00:09:22,120 Speaker 7: keep them. I have a three. I have friends who 170 00:09:22,200 --> 00:09:24,960 Speaker 7: have two and a halfs from Bank America. So my 171 00:09:25,080 --> 00:09:27,200 Speaker 7: point is is that they could have sold those loans 172 00:09:27,200 --> 00:09:30,319 Speaker 7: for one oh four when they were first created, right, 173 00:09:30,520 --> 00:09:33,080 Speaker 7: but they kept them. So now it's a drag on 174 00:09:33,120 --> 00:09:35,840 Speaker 7: earnings because as their cost of funds goes up, the 175 00:09:35,920 --> 00:09:38,160 Speaker 7: twos and the two and a halfs and the threes 176 00:09:38,559 --> 00:09:41,120 Speaker 7: aren't going anywhere because they're not going to prepay. Matthew, 177 00:09:41,679 --> 00:09:43,800 Speaker 7: you know what I mean. There's a wonderful chart on 178 00:09:43,840 --> 00:09:46,959 Speaker 7: the Bloomberg that shows the duration index for Giny May 179 00:09:47,800 --> 00:09:51,199 Speaker 7: Securities and it shows the Powell panic in twenty nineteen 180 00:09:51,480 --> 00:09:54,800 Speaker 7: when they started pushing durations down from you know, five 181 00:09:54,960 --> 00:09:57,840 Speaker 7: down to two in one year, which we would have 182 00:09:57,840 --> 00:10:00,920 Speaker 7: thought was impossible. By the way, the during COVID they 183 00:10:00,960 --> 00:10:04,320 Speaker 7: pushed the duration further down, the one for the entire 184 00:10:04,400 --> 00:10:07,640 Speaker 7: gentimin cupplex. Think about that. Yeah, and now of course 185 00:10:07,679 --> 00:10:09,840 Speaker 7: it's comed back up. But that's why Silicon Bell at 186 00:10:09,880 --> 00:10:12,040 Speaker 7: Bank failed, right, exactly simple. 187 00:10:12,760 --> 00:10:15,120 Speaker 1: All right, Chris, always good to check in with. You 188 00:10:15,160 --> 00:10:17,640 Speaker 1: get your thoughts on the global banking space. A lot 189 00:10:17,640 --> 00:10:19,959 Speaker 1: of big banks reporting the numbers. Want to stay ahead 190 00:10:19,960 --> 00:10:24,000 Speaker 1: of that, Chris Whalen, He's a chairman Whalen Global Advisors. 191 00:10:24,880 --> 00:10:28,000 Speaker 5: You're listening to the tape. Can's our live program Bloomberg 192 00:10:28,040 --> 00:10:31,640 Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the 193 00:10:31,720 --> 00:10:34,959 Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 194 00:10:35,000 --> 00:10:37,800 Speaker 5: You can also listen live on Amazon Alexa from our 195 00:10:37,800 --> 00:10:42,920 Speaker 5: flagship New York station. Just say Alexa Play Bloomberg eleven thirty. 196 00:10:43,880 --> 00:10:46,199 Speaker 1: Matt Miller Paul Sweny live here in our Bloomberg Interactive 197 00:10:46,200 --> 00:10:50,280 Speaker 1: Bookers studio. Some pending potential m and a in the 198 00:10:50,360 --> 00:10:54,480 Speaker 1: hotel business. Wyndham Hotels called Choice Hotels Internationals takeover offer 199 00:10:54,760 --> 00:10:58,280 Speaker 1: quote underwhelming. Rejecting a proposal that would create a budget 200 00:10:58,360 --> 00:11:01,240 Speaker 1: hotel behemoth, Choice is offering to pay ninety dollars to 201 00:11:01,280 --> 00:11:03,600 Speaker 1: sharing cash and stock and a deal valued at nine 202 00:11:03,600 --> 00:11:06,320 Speaker 1: point eight billion dollars including the assumption of debt. That's 203 00:11:06,320 --> 00:11:09,200 Speaker 1: according to a statement Tuesday. The deal price is thirty 204 00:11:09,200 --> 00:11:12,040 Speaker 1: percent more than Wyndam's closing stock price on Monday. Joining 205 00:11:12,080 --> 00:11:16,040 Speaker 1: us today is Patrick Patios, CEO of Choice Hotels. He's 206 00:11:16,080 --> 00:11:18,520 Speaker 1: also a former US Navy officer, so of course we 207 00:11:18,600 --> 00:11:21,280 Speaker 1: thank him for service. But in my opinion, the highlight 208 00:11:21,320 --> 00:11:24,280 Speaker 1: of his resume is that he graduated from Duke University 209 00:11:24,400 --> 00:11:26,120 Speaker 1: met so he gets a special. 210 00:11:25,880 --> 00:11:26,520 Speaker 6: Pat on the back. 211 00:11:26,640 --> 00:11:29,320 Speaker 1: Patrick, thanks for joining us here. Talk to us about 212 00:11:29,360 --> 00:11:34,240 Speaker 1: the status of your pending acquisition offer for Windom. Where 213 00:11:34,240 --> 00:11:35,600 Speaker 1: does it stand right now? 214 00:11:37,880 --> 00:11:39,040 Speaker 9: Be with you Matt as well. 215 00:11:39,880 --> 00:11:42,880 Speaker 10: We have essentially gotten to a point we after six 216 00:11:42,920 --> 00:11:46,800 Speaker 10: months of dialogue where it made sense for us to 217 00:11:46,840 --> 00:11:52,000 Speaker 10: bring our proposal public because we believe it's very shareholder friendly. 218 00:11:52,120 --> 00:11:54,480 Speaker 10: We think it's very good for our franchisees and for 219 00:11:54,559 --> 00:11:57,120 Speaker 10: their franchisees, and it's pro competitive. 220 00:11:57,480 --> 00:11:59,200 Speaker 9: So we put our offer on the table. 221 00:11:59,720 --> 00:12:04,200 Speaker 10: They essentially decided about three weeks ago to disengage, and 222 00:12:04,320 --> 00:12:06,920 Speaker 10: it made sense for us to bring this offer to 223 00:12:07,480 --> 00:12:09,680 Speaker 10: the shareholders and the franchisees, and it gives us an 224 00:12:09,720 --> 00:12:10,560 Speaker 10: opportunity now. 225 00:12:10,400 --> 00:12:12,800 Speaker 9: To talk about it. If you look at their shareholders, 226 00:12:12,840 --> 00:12:16,480 Speaker 9: we're really offering them to pay them a multiple and 227 00:12:16,559 --> 00:12:19,040 Speaker 9: earnings multiple that they've never really achieved on their own. 228 00:12:19,080 --> 00:12:21,760 Speaker 9: Except for a very short spike during the COVID period, 229 00:12:22,160 --> 00:12:25,880 Speaker 9: we normally trade about two to three times higher from 230 00:12:25,880 --> 00:12:29,000 Speaker 9: a multiple perspective, So their shareholders are getting a significant 231 00:12:29,000 --> 00:12:33,000 Speaker 9: premium and they're getting to participate in a really significant 232 00:12:33,000 --> 00:12:35,719 Speaker 9: opportunity on the upside for the combined company. So that's 233 00:12:35,960 --> 00:12:38,320 Speaker 9: that's where we are today right now, Paul and Matt. 234 00:12:38,360 --> 00:12:41,720 Speaker 10: We really are hoping the other side, the Windom team 235 00:12:41,760 --> 00:12:43,959 Speaker 10: will engage with us again to really drive what I 236 00:12:43,960 --> 00:12:46,720 Speaker 10: think would be a truly value creating opportunity for everybody. 237 00:12:47,520 --> 00:12:51,120 Speaker 2: What's the business that you're most interested in in terms 238 00:12:51,160 --> 00:12:55,720 Speaker 2: of hotels, is it you know, economy, one night stays, 239 00:12:55,920 --> 00:12:57,679 Speaker 2: is it extended stays? 240 00:12:57,960 --> 00:13:00,199 Speaker 6: Is it you know? What do you need to add. 241 00:13:01,920 --> 00:13:04,560 Speaker 2: To your portfolio to bring your business to where you 242 00:13:04,600 --> 00:13:04,960 Speaker 2: want it? 243 00:13:05,840 --> 00:13:07,800 Speaker 10: Well, I think if you look at the hotel space 244 00:13:07,840 --> 00:13:10,240 Speaker 10: and the travel sector in general, there are a lot 245 00:13:10,280 --> 00:13:13,400 Speaker 10: of large players now that weren't here five ten years ago. 246 00:13:13,480 --> 00:13:13,839 Speaker 5: So you have. 247 00:13:13,840 --> 00:13:16,559 Speaker 10: Airbnb, you have vrbo, you have a lot of what 248 00:13:16,600 --> 00:13:20,120 Speaker 10: I call alternative lodging options. And so to compete in 249 00:13:20,160 --> 00:13:23,040 Speaker 10: that environment, you need to be able to provide your 250 00:13:23,040 --> 00:13:24,000 Speaker 10: franchisees with. 251 00:13:24,000 --> 00:13:25,720 Speaker 9: The tools they need to be successful. 252 00:13:26,040 --> 00:13:28,600 Speaker 10: And what we're seeing for our franchisees and for theirs 253 00:13:28,640 --> 00:13:31,160 Speaker 10: as well, is all their costs are going up. Labor 254 00:13:31,200 --> 00:13:36,360 Speaker 10: costs are going up, insurance costs, property taxes, their debt service. 255 00:13:36,640 --> 00:13:38,959 Speaker 9: So what we're able to provide, and we've shown this 256 00:13:39,440 --> 00:13:41,680 Speaker 9: is the ability to lower their operating costs. 257 00:13:41,720 --> 00:13:44,040 Speaker 10: The number one thing I hear from our franchisees is 258 00:13:44,320 --> 00:13:47,959 Speaker 10: bring us more direct bookings, lower our operating costs, and 259 00:13:48,040 --> 00:13:51,360 Speaker 10: make your loyalty program that much bigger. So by doing 260 00:13:51,360 --> 00:13:54,000 Speaker 10: a transaction like this, and we've shown this with our 261 00:13:54,000 --> 00:13:56,680 Speaker 10: recent acquisition of Radison. We have a real opportunity to 262 00:13:56,720 --> 00:14:00,400 Speaker 10: improve the unit economics for each one of our franchisees, and. 263 00:14:00,320 --> 00:14:02,760 Speaker 9: That's why they're excited about an opportunity like this. 264 00:14:03,480 --> 00:14:07,280 Speaker 1: So from the from the perspective of getting some type 265 00:14:07,280 --> 00:14:09,079 Speaker 1: of deal done with wind and what are the real 266 00:14:09,080 --> 00:14:12,640 Speaker 1: sticking points? From the other side, is it simply price. 267 00:14:12,559 --> 00:14:14,920 Speaker 6: Or what else is the headwind? 268 00:14:15,480 --> 00:14:16,360 Speaker 9: Well, it's interesting. 269 00:14:16,440 --> 00:14:19,280 Speaker 10: One of their arguments is that they believe our stock 270 00:14:19,360 --> 00:14:22,560 Speaker 10: is overvalued. And what's interesting is we decided to do 271 00:14:22,640 --> 00:14:25,840 Speaker 10: something very unusual. On the fifth of September. We offered 272 00:14:25,840 --> 00:14:27,880 Speaker 10: to let them come in and look at our books 273 00:14:28,160 --> 00:14:30,440 Speaker 10: and they said great, They sent us over a list, 274 00:14:30,480 --> 00:14:32,880 Speaker 10: we sent it back, and then they never availed themselves 275 00:14:32,880 --> 00:14:35,240 Speaker 10: with that opportunity. So we really wanted to be able 276 00:14:35,320 --> 00:14:38,760 Speaker 10: to show them the value of our business and have 277 00:14:38,880 --> 00:14:41,520 Speaker 10: them understand that by being part of the combined company, 278 00:14:41,520 --> 00:14:44,560 Speaker 10: their shareholders would win, and they never really availed themselves 279 00:14:44,560 --> 00:14:47,120 Speaker 10: of that opportunity. The second thing they bring up is 280 00:14:47,240 --> 00:14:50,000 Speaker 10: execution risk, and that's become a bit of a go 281 00:14:50,040 --> 00:14:52,120 Speaker 10: to for companies that don't want to do deals. 282 00:14:53,000 --> 00:14:54,400 Speaker 9: It's not based in the facts. 283 00:14:54,440 --> 00:14:56,800 Speaker 10: We've been well advised around what it will take to 284 00:14:56,800 --> 00:14:59,120 Speaker 10: get a deal like this done, and we think there's 285 00:14:59,160 --> 00:15:01,080 Speaker 10: a real opportunity for the two of us to work 286 00:15:01,080 --> 00:15:03,520 Speaker 10: together to make that happen. And when you hear from 287 00:15:03,520 --> 00:15:06,800 Speaker 10: our franchisees about how excited they are about our ability 288 00:15:06,800 --> 00:15:10,040 Speaker 10: to improve their operating performance, it's really a win win 289 00:15:10,120 --> 00:15:10,760 Speaker 10: for everybody. 290 00:15:11,680 --> 00:15:15,200 Speaker 1: Is there a path to restarting these discussions here, what 291 00:15:15,240 --> 00:15:18,160 Speaker 1: are next steps for you? 292 00:15:18,360 --> 00:15:20,400 Speaker 6: Or have you really kind of put this on the 293 00:15:20,440 --> 00:15:20,960 Speaker 6: back burner. 294 00:15:21,880 --> 00:15:21,920 Speaker 11: No. 295 00:15:22,120 --> 00:15:26,800 Speaker 10: Absolutely, we're pretty determined to re engage. We really want 296 00:15:27,360 --> 00:15:29,440 Speaker 10: to make that happen. We think it's the right thing 297 00:15:29,520 --> 00:15:33,080 Speaker 10: for everybody, for the franchisees, the shareholders, the associates, and 298 00:15:33,360 --> 00:15:34,560 Speaker 10: the guests that are out there. 299 00:15:34,720 --> 00:15:38,440 Speaker 9: It really provides a nice premiere hotel. 300 00:15:38,120 --> 00:15:42,200 Speaker 10: Platform for that value driven leisure and business traveler that 301 00:15:42,280 --> 00:15:44,720 Speaker 10: doesn't exist today, and we think together we can create 302 00:15:44,720 --> 00:15:47,560 Speaker 10: something pretty exciting. So we're simply asking the other side 303 00:15:47,560 --> 00:15:50,280 Speaker 10: to re engage with us and let's move the ball forward. 304 00:15:51,080 --> 00:15:54,240 Speaker 2: Let's get back to the price earnings comparison you were 305 00:15:54,320 --> 00:15:56,560 Speaker 2: making earlier. I've pulled up a chart just to look 306 00:15:56,600 --> 00:16:01,800 Speaker 2: at what investors are willing to pay for Wyndham hotels 307 00:16:01,840 --> 00:16:07,280 Speaker 2: earnings right now for current earnings, it's twenty one point eight, 308 00:16:07,320 --> 00:16:10,520 Speaker 2: so call it twenty two, and it's been around that 309 00:16:10,720 --> 00:16:13,720 Speaker 2: level taking out the covid era spike for the last 310 00:16:13,720 --> 00:16:17,040 Speaker 2: ten years. If you look at how much investors are 311 00:16:17,040 --> 00:16:21,560 Speaker 2: willing to pay for forward earnings, we're looking at seventeen 312 00:16:21,600 --> 00:16:25,160 Speaker 2: point two right now, and it's pretty much hovered between 313 00:16:25,280 --> 00:16:31,040 Speaker 2: you know, sixteen and twenty for the past few years, 314 00:16:31,040 --> 00:16:33,880 Speaker 2: and before that it was much much lower. What are 315 00:16:33,960 --> 00:16:38,560 Speaker 2: you talking about offering for earnings either now or estimated earnings? 316 00:16:39,240 --> 00:16:42,040 Speaker 10: So what we're really looking at in this transaction is 317 00:16:42,360 --> 00:16:46,120 Speaker 10: taking their business and applying our multiple, which as I 318 00:16:46,240 --> 00:16:49,160 Speaker 10: mentioned before, is two to three times bigger than theirs. 319 00:16:49,400 --> 00:16:51,600 Speaker 10: There's a reason for that. The reason is we have 320 00:16:51,640 --> 00:16:55,200 Speaker 10: a higher growth story than they have had traditionally, and 321 00:16:55,240 --> 00:16:57,920 Speaker 10: we think by combining the two companies, there's an ability 322 00:16:57,920 --> 00:17:01,080 Speaker 10: to unlock value in their brand that as a standalone 323 00:17:01,120 --> 00:17:02,320 Speaker 10: company they're unable. 324 00:17:02,000 --> 00:17:02,720 Speaker 9: To do today. 325 00:17:02,880 --> 00:17:05,880 Speaker 10: So we really feel like having that larger scale allows 326 00:17:05,960 --> 00:17:09,600 Speaker 10: us to really open up value, create more brand equity, 327 00:17:09,800 --> 00:17:12,080 Speaker 10: and drive the growth in their brands in addition to 328 00:17:12,119 --> 00:17:15,520 Speaker 10: our own, and it really accelerates the growth for everybody. 329 00:17:15,280 --> 00:17:17,600 Speaker 1: Patrick, instead of M and A, could it see could 330 00:17:17,600 --> 00:17:20,800 Speaker 1: you see a partnership similar to MGM Mariot. 331 00:17:21,920 --> 00:17:24,159 Speaker 10: So that would be something like the combination of the 332 00:17:24,160 --> 00:17:29,520 Speaker 10: loyalty programs. There's always relationships. We have them today with 333 00:17:29,640 --> 00:17:32,479 Speaker 10: certain travel partners where we have our rewards program that 334 00:17:32,520 --> 00:17:35,879 Speaker 10: links up that provides an opportunity for companies to work together. 335 00:17:36,160 --> 00:17:38,800 Speaker 10: I think on a transaction like this, it really makes 336 00:17:38,840 --> 00:17:41,879 Speaker 10: sense to do the full embrace and really bring the 337 00:17:41,920 --> 00:17:44,960 Speaker 10: full value that we can bring to their shareholders and 338 00:17:45,200 --> 00:17:47,520 Speaker 10: our own as well as the both of our franchise 339 00:17:47,520 --> 00:17:50,480 Speaker 10: e basis. So something like that is a little bit 340 00:17:50,520 --> 00:17:53,080 Speaker 10: of a small cheese when you can have the big opportunity, 341 00:17:53,280 --> 00:17:55,240 Speaker 10: I think it makes the most sense to go forward 342 00:17:55,240 --> 00:17:57,440 Speaker 10: with a full embrace and combine the two businesses. 343 00:17:57,680 --> 00:17:59,840 Speaker 1: All right, Patrick, thank you so much for joining us. 344 00:18:00,400 --> 00:18:04,480 Speaker 1: Patrick Patience, he's the CEO of Choice Hotels that simber 345 00:18:04,600 --> 00:18:07,960 Speaker 1: is C tickers c HH to put into your Bloomberg terminal. 346 00:18:08,040 --> 00:18:10,560 Speaker 1: Get a sense there. And again they would like to 347 00:18:10,560 --> 00:18:15,640 Speaker 1: pursue this acquisition of Wyndham, but Wyndham has officially rejected 348 00:18:16,119 --> 00:18:19,240 Speaker 1: the acquisition. Again a nine point eight billion dollar takeover bid. 349 00:18:19,280 --> 00:18:23,280 Speaker 5: There you're listening to the team Ken's our live program 350 00:18:23,359 --> 00:18:27,320 Speaker 5: Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, 351 00:18:27,440 --> 00:18:30,560 Speaker 5: the iHeartRadio app, and the Bloomberg Business App, or listen 352 00:18:30,640 --> 00:18:32,760 Speaker 5: on demand wherever you get your podcasts. 353 00:18:35,440 --> 00:18:38,080 Speaker 1: Nathan Dean joins the senior policy analyst focusing on the 354 00:18:38,160 --> 00:18:41,640 Speaker 1: US government for Bloomberg Intelligence's down in Washington, DC. Nathan 355 00:18:42,040 --> 00:18:45,199 Speaker 1: talk to us about like the practical impact if we 356 00:18:45,359 --> 00:18:48,439 Speaker 1: have a shutdown next month of the US government. That 357 00:18:48,520 --> 00:18:51,240 Speaker 1: means stuff doesn't just get done, nobody gets paid. 358 00:18:52,000 --> 00:18:52,840 Speaker 6: What's the feeling done? 359 00:18:53,080 --> 00:18:55,720 Speaker 2: Save us money? Right, Nathan? Because I sit around in 360 00:18:55,720 --> 00:18:58,880 Speaker 2: my car listening to Bloomberg Radio and get so angry 361 00:18:58,920 --> 00:19:01,879 Speaker 2: about the death sits and the debt picture, and I 362 00:19:01,920 --> 00:19:04,399 Speaker 2: think man might as well just shut down the government. 363 00:19:04,440 --> 00:19:07,040 Speaker 2: But that actually is not less expensive, is it? 364 00:19:08,080 --> 00:19:08,320 Speaker 5: Yeah? 365 00:19:08,480 --> 00:19:08,920 Speaker 8: Exactly? 366 00:19:08,920 --> 00:19:11,639 Speaker 12: You know, during the best base case scenario is are 367 00:19:11,680 --> 00:19:13,280 Speaker 12: obviously the base case to go off of is what 368 00:19:13,320 --> 00:19:14,800 Speaker 12: happened under the Trump administration. 369 00:19:15,040 --> 00:19:16,600 Speaker 8: We had a thirty five days shutdown. 370 00:19:16,880 --> 00:19:19,560 Speaker 12: You know, you've lost about eleven billion dollars in economic 371 00:19:19,640 --> 00:19:22,920 Speaker 12: activity the country or sorry, when the government went it reopened, 372 00:19:22,920 --> 00:19:25,080 Speaker 12: was able to regenerate around eight billion over that, so 373 00:19:25,119 --> 00:19:25,679 Speaker 12: but we were. 374 00:19:25,600 --> 00:19:27,400 Speaker 8: Still down three billion. 375 00:19:27,480 --> 00:19:29,360 Speaker 12: And see, that's the problem is is that when they 376 00:19:29,400 --> 00:19:32,520 Speaker 12: say let's just shut the government down, everybody will save money. No, No, 377 00:19:32,720 --> 00:19:35,959 Speaker 12: the government still operates. It's the portions of the government 378 00:19:36,000 --> 00:19:39,119 Speaker 12: that are considered non essential that shut down. But ultimately 379 00:19:39,160 --> 00:19:41,560 Speaker 12: those payers are those workers are always paid back when 380 00:19:41,600 --> 00:19:42,760 Speaker 12: the government reopens. 381 00:19:43,119 --> 00:19:43,320 Speaker 8: You know. 382 00:19:43,480 --> 00:19:46,080 Speaker 12: So markets tend to think of shutdowns almost like a 383 00:19:46,480 --> 00:19:48,680 Speaker 12: you know, when it actually happens, we're not quite sure 384 00:19:48,720 --> 00:19:49,520 Speaker 12: what's happening. 385 00:19:49,760 --> 00:19:51,520 Speaker 8: There's some inks for a couple of days. 386 00:19:51,640 --> 00:19:54,520 Speaker 12: But then once they realize that the economic impact is 387 00:19:54,640 --> 00:19:57,960 Speaker 12: just you know, it's bad but not like groundbreaking, then 388 00:19:58,000 --> 00:19:58,679 Speaker 12: markets tend to. 389 00:19:58,640 --> 00:20:00,600 Speaker 8: Actually move up towards the end of a shutdown or 390 00:20:00,680 --> 00:20:01,760 Speaker 8: just act normally. 391 00:20:02,600 --> 00:20:05,479 Speaker 1: Nathan, we don't have a speaker, we've got this of 392 00:20:05,520 --> 00:20:09,560 Speaker 1: the House, we've got this looming government shutdown. What's the 393 00:20:09,600 --> 00:20:12,240 Speaker 1: feeling when you talk to your contacts down there in 394 00:20:12,320 --> 00:20:14,720 Speaker 1: DC about how this is all going to play out? 395 00:20:14,720 --> 00:20:16,160 Speaker 6: Because, I mean, the feeling. 396 00:20:15,800 --> 00:20:18,879 Speaker 1: Here from New York is it's why should we expect 397 00:20:18,880 --> 00:20:20,320 Speaker 1: anything other than a shutdown? 398 00:20:21,320 --> 00:20:24,360 Speaker 12: So to answer your question, nobody knows. I mean, there's 399 00:20:24,400 --> 00:20:27,440 Speaker 12: this general consensus that you know, this idea that Jim 400 00:20:27,520 --> 00:20:30,120 Speaker 12: Jordan's going to lose the second ballot, which should start 401 00:20:30,160 --> 00:20:33,160 Speaker 12: in about five minutes. You know, there's this idea of 402 00:20:33,560 --> 00:20:37,040 Speaker 12: Patrick McHenry the speaker pro tempt gaining additional power so 403 00:20:37,080 --> 00:20:39,320 Speaker 12: that he can over the next thirty days deal with 404 00:20:39,440 --> 00:20:42,000 Speaker 12: Ukraine and Israel AID and so forth like that. Nobody 405 00:20:42,000 --> 00:20:43,520 Speaker 12: knows how that's going to play out. But what we 406 00:20:43,640 --> 00:20:46,680 Speaker 12: do know is think about the catalysts that are coming up. 407 00:20:46,720 --> 00:20:50,080 Speaker 12: So you've got Israel Ukraine AID, you know, general support 408 00:20:50,119 --> 00:20:52,159 Speaker 12: for that. Obviously the Ukraine is a little bit different, 409 00:20:52,160 --> 00:20:55,440 Speaker 12: but general support. You've got this shutdown in overmus seventeenth. 410 00:20:55,720 --> 00:20:58,840 Speaker 12: If Jim Jordan becomes the speaker, well, if he proceeds 411 00:20:58,880 --> 00:21:01,400 Speaker 12: with his plan, the Bloomberg News was reporting about that 412 00:21:01,600 --> 00:21:03,880 Speaker 12: he wants to kick the can down to April. Shutdown 413 00:21:03,880 --> 00:21:06,600 Speaker 12: thread is low. If they can't get the Republicans united 414 00:21:06,640 --> 00:21:09,120 Speaker 12: around that, the shutdown thread is really high. But when 415 00:21:09,119 --> 00:21:12,240 Speaker 12: it comes to the shutdown, the real concern for markets 416 00:21:12,320 --> 00:21:14,560 Speaker 12: is that if you go into let's say past thirty 417 00:21:14,600 --> 00:21:17,160 Speaker 12: five days and this goes in the twenty twenty four, 418 00:21:17,520 --> 00:21:20,760 Speaker 12: not only do you have to worry about the economic impact. 419 00:21:20,960 --> 00:21:23,080 Speaker 12: You also have to worry about things like snap benefits 420 00:21:23,400 --> 00:21:25,600 Speaker 12: running out, and if you have exposure to grocery stores 421 00:21:25,880 --> 00:21:28,360 Speaker 12: come twenty twenty four, that may be something to keep 422 00:21:28,359 --> 00:21:30,920 Speaker 12: in the back of your mind. But ultimately these things 423 00:21:31,160 --> 00:21:34,680 Speaker 12: always end up being solved by bardie partisan deals. It's 424 00:21:34,760 --> 00:21:37,240 Speaker 12: just the political roadblocks and the political games that you 425 00:21:37,280 --> 00:21:37,480 Speaker 12: have to. 426 00:21:37,480 --> 00:21:39,560 Speaker 8: Run through to get to that bipartisan deal. 427 00:21:41,960 --> 00:21:45,959 Speaker 2: So I aid to Ukraine and Israel or front and center. 428 00:21:46,520 --> 00:21:53,480 Speaker 2: What about things like safe banking and salt tax deductions? 429 00:21:53,840 --> 00:21:56,919 Speaker 2: Has everyone lost sight of those things? You know? 430 00:21:57,000 --> 00:21:59,640 Speaker 12: I'm great, Yeah, he asked that question because every day 431 00:21:59,640 --> 00:22:02,480 Speaker 12: we don't have a speaker, odds of bills like safe 432 00:22:02,480 --> 00:22:06,200 Speaker 12: banking or crypto or data privacy amongst children I'm sorry, David, 433 00:22:06,200 --> 00:22:08,880 Speaker 12: privacy for children technology companies. 434 00:22:09,320 --> 00:22:10,080 Speaker 8: Every day that we. 435 00:22:10,040 --> 00:22:12,680 Speaker 12: Don't have a speaker, the odds of those bills passing 436 00:22:12,760 --> 00:22:16,200 Speaker 12: decreases because what happens is you're not spending time actually 437 00:22:16,280 --> 00:22:18,640 Speaker 12: working on those bills, and nobody in Congress is paying 438 00:22:18,640 --> 00:22:19,200 Speaker 12: attention to. 439 00:22:19,160 --> 00:22:19,800 Speaker 8: Them at the moment. 440 00:22:20,000 --> 00:22:22,800 Speaker 12: You need, folks that aren't you accustomed to these issues, 441 00:22:23,080 --> 00:22:26,399 Speaker 12: just start debate, start discussion, having hearings, votes, et cetera. 442 00:22:26,800 --> 00:22:30,200 Speaker 12: And so if this speaker issue or debate dysfunction, whatever 443 00:22:30,240 --> 00:22:32,639 Speaker 12: you call it, continues to bleed through the rest of 444 00:22:32,680 --> 00:22:35,240 Speaker 12: the fall, then we get into twenty twenty four and 445 00:22:35,359 --> 00:22:38,480 Speaker 12: something like safe banking. Well, you know, if people aren't 446 00:22:38,480 --> 00:22:40,480 Speaker 12: paying attention to it, pretty soon they're going to pay 447 00:22:40,480 --> 00:22:42,200 Speaker 12: attention to the elections and they're not. 448 00:22:42,160 --> 00:22:43,520 Speaker 8: Even going to care about these bills. 449 00:22:43,560 --> 00:22:45,399 Speaker 12: So, you know, we have a lot of bills that 450 00:22:45,480 --> 00:22:47,280 Speaker 12: we are tracking out there that are like tied to 451 00:22:47,320 --> 00:22:50,959 Speaker 12: a specific portfolio or industry, and every single day that 452 00:22:51,000 --> 00:22:55,359 Speaker 12: this dysfunction continues, the odds of those bills passing decreases. 453 00:22:54,920 --> 00:22:55,520 Speaker 8: Just a little bit. 454 00:22:55,560 --> 00:23:00,120 Speaker 2: But as we approach the election, I would guess sall 455 00:23:00,240 --> 00:23:04,159 Speaker 2: deductions are going to come into sharper focus because it 456 00:23:04,359 --> 00:23:10,440 Speaker 2: started to become an issue. You know, the Republicans raised 457 00:23:10,600 --> 00:23:13,360 Speaker 2: taxes on us, and that doesn't look good when they're 458 00:23:13,400 --> 00:23:16,520 Speaker 2: running for reelection. So now I'm starting to hear from 459 00:23:16,560 --> 00:23:18,960 Speaker 2: both sides support for raising the cap. 460 00:23:21,320 --> 00:23:23,760 Speaker 12: Support from both sides, most likely in New Jersey or 461 00:23:23,760 --> 00:23:28,560 Speaker 12: New York or California if you taught somebody you know which, 462 00:23:28,600 --> 00:23:29,879 Speaker 12: don't get me wrong, for those of you in New 463 00:23:29,960 --> 00:23:30,560 Speaker 12: York and New Jersey. 464 00:23:30,640 --> 00:23:31,960 Speaker 8: I really hope this works out for you. 465 00:23:32,000 --> 00:23:35,119 Speaker 12: But you know, really though, the more important thing to 466 00:23:35,119 --> 00:23:37,840 Speaker 12: say here is that, you know, Democrats have been using 467 00:23:38,040 --> 00:23:40,720 Speaker 12: salt as a way to attack the Republicans and adds. 468 00:23:40,720 --> 00:23:43,399 Speaker 12: Bloomberg News had an article about that earlier this week. 469 00:23:43,800 --> 00:23:47,200 Speaker 12: And you know, the challenge for the salt deduction advocates, 470 00:23:47,200 --> 00:23:48,480 Speaker 12: of the ones who don't want to get rid of 471 00:23:48,480 --> 00:23:50,080 Speaker 12: the cap is how do you pay for it? Because 472 00:23:50,359 --> 00:23:53,159 Speaker 12: it's an easy thing for somebody from the state of 473 00:23:53,160 --> 00:23:57,479 Speaker 12: like Tennessee or Colorado for example, to say, you know, look, 474 00:23:57,880 --> 00:23:59,760 Speaker 12: if we give this to the folks in New York 475 00:23:59,760 --> 00:24:01,920 Speaker 12: and New Jersey, you know, how do we pay for it? 476 00:24:01,960 --> 00:24:04,840 Speaker 12: And that's just a big challenge, you know. Certainly, I 477 00:24:04,880 --> 00:24:07,920 Speaker 12: think the salt Deduction Caucus, you know, their their their 478 00:24:07,960 --> 00:24:10,119 Speaker 12: matra is we just want to nibble of salt, a 479 00:24:10,119 --> 00:24:10,800 Speaker 12: piece of salt. 480 00:24:10,800 --> 00:24:11,640 Speaker 8: We don't want it back. 481 00:24:11,880 --> 00:24:13,600 Speaker 12: They're certainly going to try hard, and I think there 482 00:24:13,600 --> 00:24:15,960 Speaker 12: are some, you know, real chances that they can get there. 483 00:24:16,320 --> 00:24:19,119 Speaker 12: But again, they're really not going to negotiate this until 484 00:24:19,160 --> 00:24:19,919 Speaker 12: after the election. 485 00:24:20,119 --> 00:24:22,240 Speaker 8: This is the year. Twenty twenty four is the year 486 00:24:22,280 --> 00:24:24,200 Speaker 8: for bringing out these ideas. 487 00:24:24,240 --> 00:24:26,920 Speaker 12: Trying to get people comfortable positions and so forth like that, 488 00:24:27,320 --> 00:24:29,840 Speaker 12: and then after the elections you have a real strong, 489 00:24:29,960 --> 00:24:31,920 Speaker 12: you know, impetus to do something. 490 00:24:31,960 --> 00:24:32,120 Speaker 13: Then. 491 00:24:32,680 --> 00:24:35,640 Speaker 1: So, Nathan, we're just kind of having the big big 492 00:24:35,680 --> 00:24:37,760 Speaker 1: banks report their earnings and we've heard a lot of 493 00:24:37,760 --> 00:24:40,480 Speaker 1: the you know, the executives you know, talk about some 494 00:24:40,520 --> 00:24:45,520 Speaker 1: of the higher capital requirements, debt requirements and things like that. 495 00:24:44,560 --> 00:24:48,400 Speaker 6: That kind of stuff. Is that still coming from Washington? 496 00:24:49,119 --> 00:24:52,840 Speaker 8: Yeah? Absolutely so. Brian moynan from Bank of America just. 497 00:24:52,760 --> 00:24:55,399 Speaker 12: Did an interview with David Weston yesterday about this, and 498 00:24:55,440 --> 00:24:57,760 Speaker 12: you talked about what was known as the Basel three endgame. No, 499 00:24:57,840 --> 00:25:00,280 Speaker 12: this is a proposal that's out there and this would 500 00:25:00,320 --> 00:25:02,240 Speaker 12: raise for capital requirements for the biggest banks. 501 00:25:02,280 --> 00:25:03,800 Speaker 8: So the JP Morgan's though so. 502 00:25:03,680 --> 00:25:08,080 Speaker 12: Forth by about nineteen percent. You know, there is some angst, 503 00:25:08,119 --> 00:25:10,439 Speaker 12: I would think, or at least I would say, not 504 00:25:10,640 --> 00:25:14,800 Speaker 12: just amongst you know, Republicans, but also some moderate Democrats. 505 00:25:14,840 --> 00:25:17,520 Speaker 12: But what's the impact here on mortgage lending, what's the 506 00:25:17,560 --> 00:25:20,399 Speaker 12: impact on the economy, because you know, in this times 507 00:25:20,400 --> 00:25:22,840 Speaker 12: of economic uncertainty, is this really the time that we 508 00:25:22,920 --> 00:25:26,760 Speaker 12: want to drive capital requirements higher? You know, mister Moynihan 509 00:25:26,840 --> 00:25:28,520 Speaker 12: even said, look, if you're going to raise capital on 510 00:25:28,600 --> 00:25:30,640 Speaker 12: us that nineteen percent, we could probably deal with it. 511 00:25:30,880 --> 00:25:32,280 Speaker 12: But a lot of lending is going to go to 512 00:25:32,320 --> 00:25:34,720 Speaker 12: non bank financials like hedge funds and stuff for like that. 513 00:25:34,720 --> 00:25:37,960 Speaker 12: That's counterintuitive to what regulators want to do. So we've 514 00:25:38,000 --> 00:25:41,679 Speaker 12: seen the Federal Reserve somewhat on the defensive defensive about this. 515 00:25:42,280 --> 00:25:43,880 Speaker 12: I think they're still going to move forward and try 516 00:25:43,920 --> 00:25:46,760 Speaker 12: and finalize this year. It's a three year implementation. After that, 517 00:25:47,040 --> 00:25:49,280 Speaker 12: the comment deadline is November thirtieth, so we won't see 518 00:25:49,280 --> 00:25:52,760 Speaker 12: any action from the FEN until after that. Federalization is 519 00:25:52,760 --> 00:25:54,320 Speaker 12: probably going to be about a year from now, but 520 00:25:54,960 --> 00:25:57,320 Speaker 12: certainly tweaks could be on the horizon here because I 521 00:25:57,359 --> 00:25:59,520 Speaker 12: think the Fed is getting a little bit different response, 522 00:26:00,359 --> 00:26:02,080 Speaker 12: not only just from the industry but some of those 523 00:26:02,160 --> 00:26:04,800 Speaker 12: moderate lawmakers as they had originally intended. 524 00:26:04,840 --> 00:26:07,320 Speaker 1: Well, Nathan, that's kind of already happened. The whole growth 525 00:26:07,400 --> 00:26:10,480 Speaker 1: of the private credit business, which is just booming, is 526 00:26:10,520 --> 00:26:12,880 Speaker 1: a you know, many folks feel like as a direct 527 00:26:12,920 --> 00:26:16,480 Speaker 1: result of the regulations instituted after the Great Financial Crisis. 528 00:26:17,119 --> 00:26:20,040 Speaker 12: Yeah, absolutely, I mean, the Financial Stability Oversight Council which 529 00:26:20,119 --> 00:26:23,840 Speaker 12: is a superbody, regulatory body almost called the super Friends, 530 00:26:23,960 --> 00:26:26,600 Speaker 12: led by Treasury. You know, they've been looking at this 531 00:26:26,680 --> 00:26:28,639 Speaker 12: for a while now, but they really haven't done anything. 532 00:26:28,680 --> 00:26:30,959 Speaker 12: I mean, there's been lots of studies and guidances and 533 00:26:30,960 --> 00:26:33,719 Speaker 12: so forth like that. There's some discussion about, you know, 534 00:26:33,840 --> 00:26:36,560 Speaker 12: changing some Trump era guidance to make it easier to 535 00:26:36,640 --> 00:26:38,000 Speaker 12: declare one of these non banks. 536 00:26:38,040 --> 00:26:40,560 Speaker 8: What is known systemically is important. If they were to 537 00:26:40,600 --> 00:26:40,960 Speaker 8: pick on. 538 00:26:40,920 --> 00:26:44,439 Speaker 12: Blackrock, for example, they could hit Blackrock with capital requirements. 539 00:26:44,800 --> 00:26:47,520 Speaker 12: But in the same breath, Treasury Secretary Janet Yon has 540 00:26:47,560 --> 00:26:50,399 Speaker 12: always said, I don't want to target Blackrock, but maybe 541 00:26:50,400 --> 00:26:52,720 Speaker 12: the activities of Blackrock. And again I'm just picking on 542 00:26:52,760 --> 00:26:55,840 Speaker 12: Blackrock here, So you know, I think this signals to 543 00:26:55,920 --> 00:26:57,879 Speaker 12: us is that the FSOC really doesn't know what it 544 00:26:57,920 --> 00:26:59,560 Speaker 12: wants to do. And oh, by the way, we have 545 00:26:59,560 --> 00:27:02,120 Speaker 12: an election in twenty twenty four, so if the Republicans 546 00:27:02,160 --> 00:27:05,239 Speaker 12: win the White House, all this work essentially stops. So 547 00:27:05,480 --> 00:27:08,240 Speaker 12: when it comes to the regulation of the non bank sector, 548 00:27:08,560 --> 00:27:10,480 Speaker 12: you know, twenty twenty four is going to be another 549 00:27:10,560 --> 00:27:13,560 Speaker 12: year of studying and analyzing and so forth like that. 550 00:27:13,920 --> 00:27:17,199 Speaker 12: If BIND wins reelection, then you're gonna start seeing a 551 00:27:17,200 --> 00:27:20,160 Speaker 12: little bit more of maybe if you're a black Rock, 552 00:27:20,280 --> 00:27:21,920 Speaker 12: or if you're Vanguard, or if you're. 553 00:27:21,760 --> 00:27:24,320 Speaker 8: Just you know, what is considered systemically important. 554 00:27:24,480 --> 00:27:26,280 Speaker 12: Yeah, then you're going to get a look at and 555 00:27:26,320 --> 00:27:28,479 Speaker 12: see maybe there's a different regulatory regime for you. 556 00:27:28,560 --> 00:27:29,840 Speaker 6: All right, good stuff, Nathan Dean. 557 00:27:29,920 --> 00:27:32,040 Speaker 1: I don't know why Nathan just doesn't go across the street, 558 00:27:32,200 --> 00:27:34,640 Speaker 1: go to Copitol Hill and just tell these people get 559 00:27:34,640 --> 00:27:37,640 Speaker 1: something done. I mean, he's smart, he's reasonable. I'd listen 560 00:27:37,680 --> 00:27:40,360 Speaker 1: to him, Nathan Dean. I mean, senior policy analysts does 561 00:27:40,359 --> 00:27:41,240 Speaker 1: the US government stuff. 562 00:27:41,240 --> 00:27:43,560 Speaker 6: I don't know. Bloomberg Intelligence, smart guy, reasonable. 563 00:27:44,400 --> 00:27:47,480 Speaker 5: You're listening to the tape Can's are live program Bloomberg 564 00:27:47,600 --> 00:27:51,199 Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the 565 00:27:51,240 --> 00:27:54,480 Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 566 00:27:54,520 --> 00:27:57,320 Speaker 5: You can also listen live on Amazon Alexa from our 567 00:27:57,359 --> 00:28:01,720 Speaker 5: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 568 00:28:03,600 --> 00:28:06,080 Speaker 1: I Met Kumar joins the c a CIO of Parent 569 00:28:06,320 --> 00:28:09,280 Speaker 1: Handsome Values to talk about these markets. I mean, thanks 570 00:28:09,280 --> 00:28:11,600 Speaker 1: so much for taking the time. Just first of all, 571 00:28:11,640 --> 00:28:13,520 Speaker 1: just tell us how you guys at your shop. How 572 00:28:13,520 --> 00:28:15,520 Speaker 1: do you guys approach the market. 573 00:28:16,960 --> 00:28:18,920 Speaker 13: We tend to have thank you for first, Paul for 574 00:28:18,960 --> 00:28:21,480 Speaker 13: having me on the show. We tend to have a 575 00:28:21,560 --> 00:28:24,800 Speaker 13: very long term view in terms of the stocks that 576 00:28:24,800 --> 00:28:28,520 Speaker 13: we look at. We are very equity focused, so typically 577 00:28:28,680 --> 00:28:32,320 Speaker 13: you know, five percent year view on individual stocks and 578 00:28:32,359 --> 00:28:35,159 Speaker 13: their growth out look at et cetera. And obviously when we 579 00:28:35,200 --> 00:28:38,400 Speaker 13: go through a mudical cycles, joint appeard given the cycles 580 00:28:38,400 --> 00:28:39,640 Speaker 13: of getting shorter and shorter. 581 00:28:40,920 --> 00:28:45,000 Speaker 1: All right, So there's so many cross currents for investors 582 00:28:45,000 --> 00:28:47,120 Speaker 1: to kind of deal with these days, whether it's earnings 583 00:28:47,120 --> 00:28:49,520 Speaker 1: that we're just dealing with earnings, whether it's the geopolitical 584 00:28:49,560 --> 00:28:54,240 Speaker 1: issues across the globe, rising interest rates, kind of what's 585 00:28:54,280 --> 00:28:55,760 Speaker 1: your call right here? 586 00:28:55,960 --> 00:28:57,800 Speaker 6: What do you? How are you guys? How have you 587 00:28:57,800 --> 00:28:58,760 Speaker 6: positioned your portfolio? 588 00:29:00,160 --> 00:29:03,760 Speaker 13: So, look, when we when we look out next five years, 589 00:29:03,760 --> 00:29:06,760 Speaker 13: there's a few factors to look at. I mean, what 590 00:29:06,880 --> 00:29:09,600 Speaker 13: is the peak industry where it's going to be And 591 00:29:09,640 --> 00:29:12,640 Speaker 13: that's partly a factor in the cost of capital and 592 00:29:12,720 --> 00:29:16,440 Speaker 13: valuations that we look at the stocks. And let's say, 593 00:29:16,480 --> 00:29:18,320 Speaker 13: if we are hired for longer, which is one of 594 00:29:18,320 --> 00:29:23,800 Speaker 13: the more reasonably accepted case, are we in stocks that 595 00:29:23,840 --> 00:29:28,240 Speaker 13: can justify that kind of cost of capital and can 596 00:29:28,240 --> 00:29:31,680 Speaker 13: compensate with cash flow and other things. Those those things 597 00:29:31,720 --> 00:29:34,640 Speaker 13: we look at. Geopolitical issues, of course, I mean, are 598 00:29:34,920 --> 00:29:37,400 Speaker 13: have been a factor, and there's always I cannot have 599 00:29:37,480 --> 00:29:39,800 Speaker 13: been a one manager for seven years at Threading. I've 600 00:29:39,800 --> 00:29:42,560 Speaker 13: never remembered a time where there was not much uncertainty, 601 00:29:42,560 --> 00:29:46,720 Speaker 13: whether it was US presidential elections or you know, US 602 00:29:46,800 --> 00:29:51,840 Speaker 13: banks facing problems one after the other, and this time 603 00:29:51,960 --> 00:29:54,920 Speaker 13: is no different. But I guess what a five year 604 00:29:54,960 --> 00:29:58,000 Speaker 13: outlook allows us to do is look past some of 605 00:29:58,040 --> 00:30:02,080 Speaker 13: the short term noise and focus on solid business models 606 00:30:02,080 --> 00:30:07,040 Speaker 13: and companies that have a true economic advantage and a 607 00:30:07,040 --> 00:30:10,760 Speaker 13: business model advantage over the others. So in that context, 608 00:30:10,800 --> 00:30:13,479 Speaker 13: if we look out five to ten years, obviously cloud 609 00:30:13,480 --> 00:30:16,120 Speaker 13: and internet is going to be, you know, a very 610 00:30:16,640 --> 00:30:19,400 Speaker 13: lasting theme. I mean, the next three dollars of growth 611 00:30:19,440 --> 00:30:21,520 Speaker 13: is we're going to come from there, and software and 612 00:30:21,520 --> 00:30:24,520 Speaker 13: semiconductors are kind of not in bold, So we are 613 00:30:24,840 --> 00:30:28,120 Speaker 13: obviously very focused on both those segments, and then also 614 00:30:28,360 --> 00:30:33,840 Speaker 13: on biotechnology and life sciences slash devices, where basically we'll 615 00:30:33,880 --> 00:30:37,120 Speaker 13: be solving lots of healthcare problems with the help of 616 00:30:37,800 --> 00:30:41,320 Speaker 13: compute actually because a lot of the biotech and device 617 00:30:41,400 --> 00:30:46,360 Speaker 13: research has been augmented with the application of you know, 618 00:30:46,680 --> 00:30:48,240 Speaker 13: advances in a cloud. 619 00:30:48,600 --> 00:30:50,360 Speaker 6: That's where I wanted to go. That's where I wanted 620 00:30:50,400 --> 00:30:50,600 Speaker 6: to go. 621 00:30:50,680 --> 00:30:54,400 Speaker 1: It seems like, you know, earlier this year AI was 622 00:30:54,600 --> 00:30:57,920 Speaker 1: just all the rage. Now maybe the focuses on Ozebic 623 00:30:58,000 --> 00:31:00,520 Speaker 1: or something like that. I don't know, But how do 624 00:31:00,680 --> 00:31:04,160 Speaker 1: you guys think about AI and how does that kind. 625 00:31:04,040 --> 00:31:06,000 Speaker 6: Of influence where you go? How do you how do 626 00:31:06,040 --> 00:31:07,080 Speaker 6: you play AI? 627 00:31:09,040 --> 00:31:11,840 Speaker 13: So look, AI as a theme for the next five 628 00:31:11,840 --> 00:31:14,760 Speaker 13: to ten years is going to be around, and simply 629 00:31:14,800 --> 00:31:18,600 Speaker 13: because of the ease of access. I mean, if you 630 00:31:18,640 --> 00:31:22,520 Speaker 13: wanted to I mean, if you flash back to two thousand, 631 00:31:22,520 --> 00:31:24,479 Speaker 13: if you want to do a new startup where you 632 00:31:24,520 --> 00:31:26,800 Speaker 13: buy a bunch of computers and servers and you know, 633 00:31:26,880 --> 00:31:30,440 Speaker 13: and they become obsolete every year. Fast forward now, if 634 00:31:30,480 --> 00:31:32,680 Speaker 13: you want to start up startup, I mean, you just 635 00:31:32,720 --> 00:31:36,960 Speaker 13: rent something on Amazon Cloud or Microsoft as you're Google, right, 636 00:31:37,040 --> 00:31:40,320 Speaker 13: and it's no different for AI as well. I mean 637 00:31:40,320 --> 00:31:43,120 Speaker 13: you can basically run your AI workloads on each of 638 00:31:43,120 --> 00:31:47,000 Speaker 13: these cloud servers. So the most you know, obvious and 639 00:31:47,040 --> 00:31:50,960 Speaker 13: the first order beneficiaries are obviously the hardware suppliers who 640 00:31:51,240 --> 00:31:54,160 Speaker 13: supply the semiconduct of chips to these, and then and 641 00:31:54,240 --> 00:31:57,880 Speaker 13: then the service providers themselves, so the hyperscalers and the 642 00:31:57,880 --> 00:32:02,080 Speaker 13: cloud service providers the ones. But really what we're looking 643 00:32:02,080 --> 00:32:05,840 Speaker 13: at is what problems are these AI use cases solving. 644 00:32:06,480 --> 00:32:09,040 Speaker 13: And obviously, you know, GPT has been one of the 645 00:32:09,040 --> 00:32:12,320 Speaker 13: most obvious ones we've heard about in the last one 646 00:32:12,400 --> 00:32:16,160 Speaker 13: year especially, But there's a lot of lateral and vertical 647 00:32:16,160 --> 00:32:20,240 Speaker 13: applications for AI. Like I said, in healthcare, a lot 648 00:32:20,280 --> 00:32:23,400 Speaker 13: of the wet lab data, which is be a primary 649 00:32:23,480 --> 00:32:26,760 Speaker 13: focus of biaritic research, I mean a lot of a 650 00:32:26,760 --> 00:32:32,280 Speaker 13: lot of the data can serve towards sort of you know, 651 00:32:32,760 --> 00:32:36,320 Speaker 13: a driven models, which can tell you the impact of 652 00:32:36,360 --> 00:32:40,240 Speaker 13: a receptor or a drug on its target. 653 00:32:40,480 --> 00:32:45,800 Speaker 2: I mean you you have a truly international resume. You 654 00:32:45,920 --> 00:32:48,840 Speaker 2: started your studies at the Indian Institute of Technology. You've 655 00:32:48,840 --> 00:32:51,000 Speaker 2: worked at Swiss Reading, Columbia, thread Needle, You've been a 656 00:32:51,080 --> 00:32:53,360 Speaker 2: visiting lecturer at the London Business School, and I hear 657 00:32:53,400 --> 00:32:57,239 Speaker 2: you're in Florida right now. Are there regions that you 658 00:32:57,480 --> 00:33:01,280 Speaker 2: like better than the others? The US, you know, still 659 00:33:01,280 --> 00:33:03,080 Speaker 2: the leader when it comes to the kind of investing 660 00:33:03,120 --> 00:33:05,880 Speaker 2: you're interested in. Are there other places where you find 661 00:33:05,880 --> 00:33:06,640 Speaker 2: good value? 662 00:33:07,760 --> 00:33:10,600 Speaker 13: Well, for me, the US Obviously I love a few 663 00:33:10,600 --> 00:33:12,880 Speaker 13: of the other international areas as well, but for me, 664 00:33:12,960 --> 00:33:15,360 Speaker 13: the US is kind of paramount because I mean, look, 665 00:33:15,880 --> 00:33:19,680 Speaker 13: when it comes to technology and biotechnology, there is no 666 00:33:19,880 --> 00:33:23,160 Speaker 13: close second to the United States and the kind of 667 00:33:23,240 --> 00:33:27,840 Speaker 13: talent and resource and university research still we have. I mean, 668 00:33:27,880 --> 00:33:30,520 Speaker 13: as part of our philanthropy, we are also involved with 669 00:33:30,560 --> 00:33:33,320 Speaker 13: a lot of the universities in early stage research. But 670 00:33:33,360 --> 00:33:40,080 Speaker 13: when it comes to anything from cancer to semiconductors to AI, 671 00:33:41,000 --> 00:33:44,160 Speaker 13: all the bleeding companies are based here in the US, 672 00:33:44,720 --> 00:33:48,080 Speaker 13: and all the breakthrough research is happening here. So at 673 00:33:48,160 --> 00:33:52,280 Speaker 13: least I know that there's other countries where you can 674 00:33:52,520 --> 00:33:55,880 Speaker 13: claim the next centuries theirs, but I don't see the 675 00:33:55,920 --> 00:33:57,920 Speaker 13: next decade going anywhere from the State. 676 00:33:58,200 --> 00:33:59,760 Speaker 1: All right, I mean, thanks so much, Jeh for taking 677 00:33:59,760 --> 00:34:02,480 Speaker 1: the time. We really appreciate getting some of your thoughts 678 00:34:02,480 --> 00:34:05,800 Speaker 1: on mid Kumar. He's the CIO. The firm is called 679 00:34:05,800 --> 00:34:09,600 Speaker 1: Parham hence Values LLC. So given us thoughts on the 680 00:34:09,640 --> 00:34:13,600 Speaker 1: markets focusing on technology and biotechnology. 681 00:34:12,800 --> 00:34:16,400 Speaker 5: You're listening to the tape can't live program Bloomberg Markets 682 00:34:16,440 --> 00:34:19,839 Speaker 5: weekdays at ten am Eastern on Bloomberg Radio, the tune 683 00:34:19,880 --> 00:34:22,839 Speaker 5: in app, Bloomberg dot Com, and the Bloomberg Business App. 684 00:34:22,880 --> 00:34:25,680 Speaker 5: You can also listen live on Amazon Alexa from our 685 00:34:25,719 --> 00:34:30,760 Speaker 5: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 686 00:34:31,520 --> 00:34:33,680 Speaker 1: President Biden, we saw Lader today, we heard him speak. 687 00:34:34,360 --> 00:34:35,279 Speaker 6: He was in Israel. 688 00:34:35,320 --> 00:34:39,400 Speaker 1: Believe he wheels up on the way back. But obviously 689 00:34:39,400 --> 00:34:42,799 Speaker 1: the big issue, just really during this visit was the 690 00:34:42,840 --> 00:34:46,840 Speaker 1: hospital explosion in Gaza and how that is going to 691 00:34:46,880 --> 00:34:49,440 Speaker 1: impact the whole situation. Bobby Ghost joins, as he's the 692 00:34:49,520 --> 00:34:52,440 Speaker 1: editor with Bloomberg Opinion, we appreciate getting a few more 693 00:34:52,440 --> 00:34:54,360 Speaker 1: minutes of his time. He joins us here in our 694 00:34:54,360 --> 00:34:57,520 Speaker 1: Bloomberg Interactive Brokers studio. So, Bobby, the explosion we saw 695 00:34:57,640 --> 00:35:00,960 Speaker 1: at the hospital doesn't make things any easier over there, 696 00:35:01,040 --> 00:35:01,279 Speaker 1: does it. 697 00:35:01,800 --> 00:35:02,759 Speaker 6: How do you think about that? 698 00:35:02,840 --> 00:35:04,920 Speaker 4: No, it made things a lot harder for President Biden. 699 00:35:05,120 --> 00:35:07,600 Speaker 4: He was meant, in addition to traveling to Israel, he 700 00:35:07,680 --> 00:35:10,640 Speaker 4: was meant to have a summit with the President of 701 00:35:10,680 --> 00:35:14,000 Speaker 4: Egypt and the King of Jordan, two very very important 702 00:35:14,080 --> 00:35:16,840 Speaker 4: neighbors of Israel, and people who would have to be 703 00:35:17,480 --> 00:35:22,040 Speaker 4: part of the solution here, and they basically canceled on him, 704 00:35:22,200 --> 00:35:26,520 Speaker 4: canceled on the President of the United States, which I can't, 705 00:35:26,600 --> 00:35:28,720 Speaker 4: off the top of my head think of another occasion 706 00:35:28,760 --> 00:35:34,319 Speaker 4: when that's happened. Because they joined a rush to immediately 707 00:35:34,320 --> 00:35:39,560 Speaker 4: blame the explosion on Israel. The assumption was that it 708 00:35:39,640 --> 00:35:44,040 Speaker 4: was an Israeli missile that blew up that hospital. Now overnight, 709 00:35:44,520 --> 00:35:51,520 Speaker 4: we've had other people look into this, the US, the Pentagon. 710 00:35:52,920 --> 00:35:53,960 Speaker 4: It was a huge explode. 711 00:35:54,040 --> 00:35:57,640 Speaker 2: You think of the maass missiles or whatever other splinter group. 712 00:35:57,680 --> 00:35:59,960 Speaker 2: This was as kind of small and not quite power 713 00:36:00,360 --> 00:36:02,040 Speaker 2: enough to destroy an entire hospital. 714 00:36:02,080 --> 00:36:04,880 Speaker 4: It depends on what they fall on, and it depends 715 00:36:05,360 --> 00:36:07,880 Speaker 4: what they're carrying when they fall. So a missile is 716 00:36:07,960 --> 00:36:11,920 Speaker 4: loaded with fuel. If it falls before that fuel has 717 00:36:11,960 --> 00:36:15,400 Speaker 4: been expended, then that fuel will will create a big fireball. 718 00:36:15,480 --> 00:36:18,440 Speaker 4: And if it lands on something else that is flammable, 719 00:36:18,880 --> 00:36:21,520 Speaker 4: like a casual weapons, that will also create a fireball. 720 00:36:21,840 --> 00:36:23,560 Speaker 4: I am not suggesting for a moment, I know the 721 00:36:23,600 --> 00:36:27,560 Speaker 4: answer to the question whose rocket made the damage, but 722 00:36:27,840 --> 00:36:30,799 Speaker 4: there is now room for doubt. And the President upon 723 00:36:30,960 --> 00:36:34,600 Speaker 4: arrival in Israel, one of the first things he said 724 00:36:35,080 --> 00:36:37,719 Speaker 4: was that Israel didn't do it, and he's based he 725 00:36:37,840 --> 00:36:40,279 Speaker 4: was asked and he says he's basing that on the 726 00:36:40,320 --> 00:36:43,840 Speaker 4: intelligence he was shown from the Defense Department. So American 727 00:36:43,880 --> 00:36:46,680 Speaker 4: intelligence has looked at this, Israeli intelligence has looked at this. 728 00:36:46,920 --> 00:36:50,160 Speaker 4: They are claiming at this point it's only a claim. 729 00:36:50,400 --> 00:36:53,960 Speaker 4: They are claiming that a missile fired by slamming Chihad, 730 00:36:54,000 --> 00:36:59,640 Speaker 4: which is, if you like Hamas's younger cousin, that a 731 00:36:59,640 --> 00:37:03,560 Speaker 4: miss that a rocket that they have set off in 732 00:37:03,600 --> 00:37:07,640 Speaker 4: the direction of Israel misfired and landed on this hospital 733 00:37:08,000 --> 00:37:09,240 Speaker 4: and created this fireball. 734 00:37:09,640 --> 00:37:12,680 Speaker 2: I want to ask about. So he gave a really 735 00:37:12,719 --> 00:37:14,799 Speaker 2: impassioned speech this morning, and I want to get your 736 00:37:14,800 --> 00:37:18,480 Speaker 2: take on that, because I thought it was incredibly well done, 737 00:37:19,200 --> 00:37:22,279 Speaker 2: certainly well written and well delivered speech, and he made 738 00:37:22,280 --> 00:37:24,799 Speaker 2: some important points. On the other hand, he's made some 739 00:37:24,840 --> 00:37:29,600 Speaker 2: missteps over the past few days. He said that or 740 00:37:29,640 --> 00:37:32,960 Speaker 2: implied that there were confirmed pictures of beheaded babies, right, 741 00:37:33,600 --> 00:37:37,400 Speaker 2: which led to a real concern, a fair concern I 742 00:37:37,400 --> 00:37:40,840 Speaker 2: think about misinformation coming from the Israeli side. Now he 743 00:37:40,920 --> 00:37:43,560 Speaker 2: says that the other team did it, which is I 744 00:37:43,560 --> 00:37:46,480 Speaker 2: think a really poor choice of phrase, right, as if 745 00:37:46,520 --> 00:37:52,480 Speaker 2: these are two teams, and considering what he said earlier, 746 00:37:52,680 --> 00:37:56,680 Speaker 2: it seems like he's willing to take Israeli propaganda and 747 00:37:56,840 --> 00:37:59,880 Speaker 2: just continue to spread it. What do you think of. 748 00:38:00,239 --> 00:38:03,359 Speaker 4: That, Well, he does have a history of shooting from 749 00:38:03,360 --> 00:38:05,840 Speaker 4: the hip, and then the White House later has to 750 00:38:06,360 --> 00:38:09,279 Speaker 4: sort of take back what he said. We're seeing that 751 00:38:09,360 --> 00:38:12,680 Speaker 4: happen again in real time. I agree with you the 752 00:38:13,440 --> 00:38:18,080 Speaker 4: choice of the word the other team seems terribly inappropriate. 753 00:38:18,120 --> 00:38:23,000 Speaker 4: I prefer my folksy rhetoric from Dan rather than the 754 00:38:23,040 --> 00:38:28,080 Speaker 4: President of the United States. But in the instance about 755 00:38:28,120 --> 00:38:33,160 Speaker 4: the about the explosion in the in the hospital, he's 756 00:38:33,320 --> 00:38:36,520 Speaker 4: not He doesn't seem to be shooting off the hip there. 757 00:38:36,560 --> 00:38:39,640 Speaker 4: He's saying that this is specific intelligence shown to him, 758 00:38:39,640 --> 00:38:42,960 Speaker 4: not by the Israelis, by the Pentagon, the Pentagon, by 759 00:38:43,000 --> 00:38:46,160 Speaker 4: the Defense Department, Which makes this slightly different that the 760 00:38:46,640 --> 00:38:49,000 Speaker 4: sort of off the cuff statement he made about the babies, 761 00:38:49,360 --> 00:38:53,200 Speaker 4: that that was a very very ill conceived thing for 762 00:38:53,280 --> 00:38:57,360 Speaker 4: a man who, let's not forget, prides himself at being 763 00:38:58,120 --> 00:39:01,359 Speaker 4: a world statesman, prides himself at having been in the 764 00:39:01,360 --> 00:39:03,880 Speaker 4: weeds of foreign policy for four decades. 765 00:39:04,880 --> 00:39:08,640 Speaker 2: About standing with Goldenmeyer, you know, I thought was pretty impressive. 766 00:39:09,320 --> 00:39:11,040 Speaker 2: Call back to nineteen seventy three, what did you think 767 00:39:11,080 --> 00:39:11,800 Speaker 2: about the speech? 768 00:39:12,239 --> 00:39:15,560 Speaker 4: I like the speech. I thought it was, as you say, passionate, 769 00:39:16,600 --> 00:39:19,920 Speaker 4: well written, and well delivered. But I don't think anybody 770 00:39:19,960 --> 00:39:22,000 Speaker 4: in Israel was in any doubt that the President of 771 00:39:22,040 --> 00:39:25,560 Speaker 4: the United States was behind them. I mean, we can 772 00:39:25,600 --> 00:39:28,520 Speaker 4: discuss whether it's worth him saying it one more time, 773 00:39:28,960 --> 00:39:31,200 Speaker 4: and whether it carries more impact if he says it 774 00:39:31,239 --> 00:39:34,600 Speaker 4: in Jerusalem rather than says it from the Oval Office. 775 00:39:34,760 --> 00:39:38,560 Speaker 4: Perhaps it does. But there's another constituency, another audience in 776 00:39:38,600 --> 00:39:40,920 Speaker 4: the Middle East that he needed to speak to, an 777 00:39:40,920 --> 00:39:45,520 Speaker 4: audience that is sort of enraged at the moment, that 778 00:39:45,800 --> 00:39:48,200 Speaker 4: for whom that speech would have gone down like a 779 00:39:48,280 --> 00:39:54,279 Speaker 4: lead balloon. Again, I say, the King of Jordan, the 780 00:39:54,320 --> 00:39:58,799 Speaker 4: President of Egypt, recipients of enormous amounts of American aid, 781 00:39:59,280 --> 00:40:03,279 Speaker 4: two of the most important non NATO allies of the 782 00:40:03,360 --> 00:40:06,400 Speaker 4: United States, blowing off the President of the United States. 783 00:40:07,120 --> 00:40:08,760 Speaker 4: That's very, very bad news. 784 00:40:08,920 --> 00:40:13,000 Speaker 1: So how should we take this? How should how should 785 00:40:13,040 --> 00:40:16,240 Speaker 1: the President take it? I mean, I agree it sounds 786 00:40:16,520 --> 00:40:18,880 Speaker 1: I don't remember that ever happening. So what does that 787 00:40:18,960 --> 00:40:19,600 Speaker 1: really tell you? 788 00:40:20,120 --> 00:40:20,760 Speaker 8: Well, that tells. 789 00:40:20,960 --> 00:40:23,680 Speaker 4: That tells me that you know that the the the 790 00:40:23,760 --> 00:40:28,000 Speaker 4: Arab Street, the mythical sometimes mythical Arab street, this case, 791 00:40:28,040 --> 00:40:31,320 Speaker 4: real is is mad as hell, and even their rulers, 792 00:40:31,400 --> 00:40:36,320 Speaker 4: not necessarily elected rulers, are frightened off going against the street, 793 00:40:37,320 --> 00:40:39,880 Speaker 4: no matter how much evidence the United States and Israel 794 00:40:39,920 --> 00:40:43,560 Speaker 4: put forward. I can't imagine the King of Jordan or 795 00:40:43,640 --> 00:40:47,279 Speaker 4: the President of Egypt standing before cameras and saying, oh, 796 00:40:47,360 --> 00:40:49,879 Speaker 4: we got it wrong, sorry, folks, it was it was 797 00:40:49,960 --> 00:40:52,319 Speaker 4: our own It was it was amasso islamping you had 798 00:40:52,360 --> 00:40:54,959 Speaker 4: that did this. It was not the Israelis. I don't 799 00:40:54,960 --> 00:40:57,920 Speaker 4: think that they will run against the opinion of their people, 800 00:40:58,000 --> 00:41:00,839 Speaker 4: even when that opinion is wrong. Now, what Biden has 801 00:41:00,880 --> 00:41:04,719 Speaker 4: done since that opening, those opening remarks, he's done the 802 00:41:04,800 --> 00:41:07,480 Speaker 4: right things. He's he's sort of lent into this idea 803 00:41:07,960 --> 00:41:12,440 Speaker 4: of forcing the Israelis to allow humanitarian aid to get 804 00:41:12,520 --> 00:41:16,439 Speaker 4: to Gaza. That was very, very important. Now, that would 805 00:41:16,440 --> 00:41:18,200 Speaker 4: have been much more striking if he had made that 806 00:41:18,239 --> 00:41:22,759 Speaker 4: announcement with the with King Abdullah and President CEC standing 807 00:41:22,800 --> 00:41:25,600 Speaker 4: on either side of him. Okay, that photo op didn't happen, 808 00:41:26,000 --> 00:41:29,480 Speaker 4: But if he can continue to hold Israelis to this, 809 00:41:29,800 --> 00:41:33,480 Speaker 4: allowing humanitarian supplies, making a greater effort not to hit 810 00:41:33,800 --> 00:41:37,320 Speaker 4: civilian targets, maybe holding back on that ground offensive that 811 00:41:37,360 --> 00:41:40,040 Speaker 4: they've been preparing for. Then his trip will not have 812 00:41:40,080 --> 00:41:41,280 Speaker 4: been entirely wasted. 813 00:41:41,920 --> 00:41:45,759 Speaker 2: I wonder what you know when I see these I 814 00:41:45,800 --> 00:41:53,160 Speaker 2: can understand the tragedies of any helpless woman or children 815 00:41:53,600 --> 00:41:56,880 Speaker 2: or men for that matter, you know, being killed civilians 816 00:41:56,920 --> 00:41:59,640 Speaker 2: being killed in acts of terrorism or acts of war. 817 00:42:00,239 --> 00:42:04,920 Speaker 2: But I I have to question when I see the 818 00:42:05,000 --> 00:42:08,200 Speaker 2: protests against Israel in the Middle East and here on 819 00:42:08,239 --> 00:42:13,120 Speaker 2: college campuses, whether or not these people saw what Hamas 820 00:42:13,200 --> 00:42:16,080 Speaker 2: did last Saturday. I mean, the President repeated it, and 821 00:42:16,120 --> 00:42:20,600 Speaker 2: it shouldn't be forgotten. They came out and killed in 822 00:42:20,880 --> 00:42:24,759 Speaker 2: very brutal ways, kids dancing at a peace festival, you know, 823 00:42:24,840 --> 00:42:26,840 Speaker 2: went into a kibbutz. They killed parents in front of 824 00:42:26,840 --> 00:42:29,439 Speaker 2: their children. They killed children in front of parents. They 825 00:42:29,480 --> 00:42:32,080 Speaker 2: there are reports of rape and as the President did say, 826 00:42:32,120 --> 00:42:34,720 Speaker 2: the headings and you know, burning people alive. 827 00:42:34,840 --> 00:42:36,319 Speaker 8: Did did Did no one see this? 828 00:42:36,800 --> 00:42:36,880 Speaker 5: No? 829 00:42:37,000 --> 00:42:37,319 Speaker 4: They did? 830 00:42:37,440 --> 00:42:41,560 Speaker 2: And how actually justify protesting against you know, the retaliation 831 00:42:41,640 --> 00:42:42,200 Speaker 2: for that act. 832 00:42:42,280 --> 00:42:45,319 Speaker 4: I wrote a piece about this on Monday. I wondered, 833 00:42:45,400 --> 00:42:47,960 Speaker 4: I think I lost Monday, that sorry, Monday before this, 834 00:42:48,280 --> 00:42:51,120 Speaker 4: right loast Monday. Uh, making this exact point that that 835 00:42:51,160 --> 00:42:55,840 Speaker 4: Hamas in those early days after that that terrorist attack, 836 00:42:56,280 --> 00:43:00,279 Speaker 4: had lost the international war of images. That you know, 837 00:43:00,320 --> 00:43:04,120 Speaker 4: that nobody could could any longer pretend that Hamas was 838 00:43:04,600 --> 00:43:09,560 Speaker 4: a legitimate resistance group, that this was terrorism, pure and simple, 839 00:43:09,880 --> 00:43:12,240 Speaker 4: and the people who did this were terrorists, pure and simple. 840 00:43:12,440 --> 00:43:16,080 Speaker 4: And I have to say that for a New York minute, 841 00:43:16,760 --> 00:43:21,480 Speaker 4: it really did shock the Arab world, and there was 842 00:43:21,880 --> 00:43:24,719 Speaker 4: it's hard to think back even to a few days 843 00:43:24,760 --> 00:43:27,279 Speaker 4: back because so much has happened since then, but there 844 00:43:27,440 --> 00:43:29,880 Speaker 4: was a moment of pause, a sharp intake of breath. 845 00:43:30,320 --> 00:43:32,400 Speaker 4: If you've covered the Middle East as long as I have, 846 00:43:33,000 --> 00:43:37,400 Speaker 4: it was a really really important moment, and then it passed. 847 00:43:37,680 --> 00:43:39,480 Speaker 4: This is the nature of war. It's the nature of 848 00:43:39,520 --> 00:43:41,359 Speaker 4: war of images just as much as is the nature 849 00:43:41,360 --> 00:43:41,839 Speaker 4: of war. 850 00:43:42,000 --> 00:43:43,400 Speaker 9: Twenty four hour news cycle. 851 00:43:43,280 --> 00:43:46,879 Speaker 4: And in a fog, this sort of thing will happen 852 00:43:47,000 --> 00:43:49,200 Speaker 4: over and over again. There will be a fresh image 853 00:43:49,360 --> 00:43:52,920 Speaker 4: that'll grab attention, then that attention will sort of go away. 854 00:43:52,960 --> 00:43:56,439 Speaker 4: Another fresh image and that'll grab attention. Right now, all 855 00:43:56,480 --> 00:43:59,320 Speaker 4: the images are coming out of Gaza, and that's where 856 00:44:00,320 --> 00:44:03,200 Speaker 4: attention and anger is focused. 857 00:44:03,640 --> 00:44:06,520 Speaker 1: And the next one's presumably what happened when we do, 858 00:44:06,640 --> 00:44:10,360 Speaker 1: in fact get a Israeli movement, whether they attack, go 859 00:44:10,400 --> 00:44:13,000 Speaker 1: and send in troops, that's when we'll get those images 860 00:44:13,000 --> 00:44:14,560 Speaker 1: as well. Bobby, thank you so much once again for 861 00:44:14,640 --> 00:44:15,000 Speaker 1: joining us. 862 00:44:15,000 --> 00:44:15,320 Speaker 6: Bobby Go. 863 00:44:15,440 --> 00:44:18,879 Speaker 1: She's the editor of Bloomberg Opinion. Just we're really appreciatting 864 00:44:18,880 --> 00:44:21,640 Speaker 1: some of his time here. Again, his columns, I highly 865 00:44:21,640 --> 00:44:23,960 Speaker 1: recommend them. Get set an alert like I did on 866 00:44:24,000 --> 00:44:26,600 Speaker 1: the Bloomberg terminal, then you won't miss them. You go 867 00:44:26,640 --> 00:44:29,279 Speaker 1: to Bloomberg dot com slash Opinion, and that's where you 868 00:44:29,280 --> 00:44:32,720 Speaker 1: get the good work of our opinion columns for Bloomberg Opinion. 869 00:44:33,440 --> 00:44:36,640 Speaker 1: Just outstanding work across the board. I can't say enough 870 00:44:36,800 --> 00:44:38,920 Speaker 1: about our Bloomberg Opinion Folks. 871 00:44:38,960 --> 00:44:40,760 Speaker 6: There, you're listening to the tape. 872 00:44:40,880 --> 00:44:44,239 Speaker 5: Can's our live program Bloomberg Markets weekdays at ten am 873 00:44:44,280 --> 00:44:48,080 Speaker 5: Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, 874 00:44:48,120 --> 00:44:50,840 Speaker 5: and the Bloomberg Business App. You can also listen live 875 00:44:50,920 --> 00:44:54,120 Speaker 5: on Amazon Alexa from our flagship New York station, Just 876 00:44:54,160 --> 00:44:59,120 Speaker 5: Say Alexa play Bloomberg eleven thirty well. 877 00:44:58,960 --> 00:45:03,440 Speaker 1: We started the morning with the President Biden in Israel 878 00:45:03,760 --> 00:45:08,760 Speaker 1: and making his comments there after meetings with Israeli leaders 879 00:45:08,760 --> 00:45:12,080 Speaker 1: and once again talking about the solidarity between the US 880 00:45:12,480 --> 00:45:15,399 Speaker 1: and Israel. Of course, the backdrop of that was news 881 00:45:15,480 --> 00:45:19,400 Speaker 1: of that terrible explosion at the hospital in Gaza, and 882 00:45:19,440 --> 00:45:21,040 Speaker 1: we want to kind of bring all this together, and 883 00:45:21,120 --> 00:45:23,840 Speaker 1: we do that with Mick Maulroy, co founder of the 884 00:45:23,840 --> 00:45:27,239 Speaker 1: Lobo Institute. He's a senior fellow at the Middle East Institute, 885 00:45:27,280 --> 00:45:30,040 Speaker 1: former Assistant Secretary of Defense for the Middle East at 886 00:45:30,040 --> 00:45:33,800 Speaker 1: the USTA Department of Defense. He was in paramilitary operations 887 00:45:33,800 --> 00:45:38,080 Speaker 1: officer at CIA, former US Marine, so just tremendous experience 888 00:45:38,080 --> 00:45:40,839 Speaker 1: in that part of the world. Mick, let's start with 889 00:45:40,880 --> 00:45:44,560 Speaker 1: that explosion at the hospital. There's I guess a little 890 00:45:44,560 --> 00:45:48,520 Speaker 1: bit confusion as to who is responsible based upon the 891 00:45:48,560 --> 00:45:50,759 Speaker 1: information you've seen, based upon the people you've talked to, 892 00:45:51,520 --> 00:45:53,920 Speaker 1: how do you think that played out and who kind 893 00:45:53,960 --> 00:45:54,680 Speaker 1: of instigated that. 894 00:45:56,680 --> 00:45:59,279 Speaker 11: So, yes, there certainly was confusion. A moss came out 895 00:45:59,600 --> 00:46:02,600 Speaker 11: quickly and blamed it on the IDF. The IDF, I 896 00:46:02,600 --> 00:46:06,040 Speaker 11: think rightfully spent time to look at it and determine, 897 00:46:06,160 --> 00:46:09,680 Speaker 11: at least from their perspective what happened, and they indicated 898 00:46:10,440 --> 00:46:13,320 Speaker 11: after that that it looked like it was a pig 899 00:46:13,520 --> 00:46:18,279 Speaker 11: So the Palestinian Islamic Shihad rocket that malfunction and hit 900 00:46:18,320 --> 00:46:20,880 Speaker 11: the side of the building. And now the United States 901 00:46:20,920 --> 00:46:23,600 Speaker 11: has come out and what I expected, because they have 902 00:46:24,160 --> 00:46:26,600 Speaker 11: so many intelligence assets in the regions, that they could 903 00:46:27,040 --> 00:46:29,440 Speaker 11: do that and look at that for their own perspective 904 00:46:29,480 --> 00:46:31,760 Speaker 11: and come up with their own conclusions. And they concluded 905 00:46:32,080 --> 00:46:36,120 Speaker 11: that it was in fact, not the IDF, but an 906 00:46:36,320 --> 00:46:40,719 Speaker 11: errant rocket that either was lined up incorrectly and hit 907 00:46:40,760 --> 00:46:44,040 Speaker 11: the side of the hospital or the engine on it 908 00:46:44,640 --> 00:46:46,960 Speaker 11: failed and it hit the hospital with a lot of 909 00:46:46,960 --> 00:46:49,240 Speaker 11: its rocket fuel still in it, which is what caused 910 00:46:50,320 --> 00:46:51,440 Speaker 11: a lot of the casualties. 911 00:46:51,520 --> 00:46:55,080 Speaker 1: Unfortunately, Yeah, okay, is there do you believe we will 912 00:46:55,080 --> 00:46:58,560 Speaker 1: ever really know definitively who fired that rocket? 913 00:47:00,760 --> 00:47:03,480 Speaker 11: So I believe with the information that would be available 914 00:47:03,560 --> 00:47:09,600 Speaker 11: to the US intelligence community, both imagery signals intelligence about 915 00:47:09,719 --> 00:47:13,600 Speaker 11: talking on the ground prior to the Ladge, I think 916 00:47:13,640 --> 00:47:16,520 Speaker 11: we have a pretty good idea. Obviously I can't see 917 00:47:16,520 --> 00:47:18,719 Speaker 11: that information, but I think if the US came to 918 00:47:18,760 --> 00:47:21,759 Speaker 11: that conclusion, they have a pretty definitive idea that that 919 00:47:22,000 --> 00:47:26,799 Speaker 11: was in fact a pig pij excuse me, rocket all right. 920 00:47:26,880 --> 00:47:30,520 Speaker 1: So I guess another big part of this story or 921 00:47:30,719 --> 00:47:33,360 Speaker 1: the president's trip to Israel, is that the part of 922 00:47:33,360 --> 00:47:34,960 Speaker 1: his trip where he was going to beet with Arab 923 00:47:35,040 --> 00:47:38,440 Speaker 1: leaders in Jordan canceled really kind of at the last moment. 924 00:47:38,480 --> 00:47:42,239 Speaker 1: And how significant is that from your perspective make in 925 00:47:42,320 --> 00:47:44,959 Speaker 1: terms of the present's ability to try to promote some 926 00:47:45,040 --> 00:47:46,600 Speaker 1: type of peaceful movement forward. 927 00:47:48,560 --> 00:47:51,239 Speaker 11: So it's very unfortunate, especially since it turns out it 928 00:47:51,280 --> 00:47:54,560 Speaker 11: wasn't a strike by the idea, not that a lot 929 00:47:54,600 --> 00:47:58,680 Speaker 11: of these leaders would acknowledge that even though we determined it. 930 00:47:59,000 --> 00:48:01,120 Speaker 11: Because it's going to take dialogue. We're in the middle 931 00:48:01,160 --> 00:48:05,960 Speaker 11: of trying to establish a humanitarian corridor, humanitarian pause, get 932 00:48:06,000 --> 00:48:10,080 Speaker 11: foot into Gaza. That requires dialogues at a very high level, 933 00:48:10,120 --> 00:48:13,360 Speaker 11: and of course any potential in the future for a 934 00:48:13,440 --> 00:48:17,200 Speaker 11: cessation of hostilities is going to require dialogue. So it's 935 00:48:17,239 --> 00:48:20,840 Speaker 11: certainly not helpful. We do have ongoing diplomatic missions in 936 00:48:20,880 --> 00:48:23,759 Speaker 11: all these countries, so the dialogue can continue, but having 937 00:48:23,760 --> 00:48:27,200 Speaker 11: the president in the region, I think this was a 938 00:48:27,200 --> 00:48:28,359 Speaker 11: big missed opportunity. 939 00:48:28,640 --> 00:48:28,879 Speaker 8: Yep. 940 00:48:30,000 --> 00:48:32,320 Speaker 1: So we still have the images and the news reports 941 00:48:32,560 --> 00:48:37,120 Speaker 1: mix of the of Israel mounting its resources, its materiel 942 00:48:37,560 --> 00:48:40,760 Speaker 1: and resources on the border. So I guess the question 943 00:48:40,800 --> 00:48:43,359 Speaker 1: for a lot of folks is just when will they 944 00:48:44,120 --> 00:48:47,040 Speaker 1: go into the Gaza Strip? How would they go into 945 00:48:47,040 --> 00:48:50,000 Speaker 1: the Gaza Strip? Maybe what's their strategy at this stage? 946 00:48:50,480 --> 00:48:51,560 Speaker 6: What do you think will happen? 947 00:48:53,680 --> 00:48:58,200 Speaker 11: So it is unclear what is taking this time, why 948 00:48:58,280 --> 00:49:01,080 Speaker 11: the pause so to speak, because they've been prepared and 949 00:49:01,120 --> 00:49:04,319 Speaker 11: prepped in an assembly area ready to go in for 950 00:49:04,640 --> 00:49:07,040 Speaker 11: quite some time. It may be that they're really trying 951 00:49:07,040 --> 00:49:09,680 Speaker 11: to gather more intelligence. It may be that there is 952 00:49:09,840 --> 00:49:13,480 Speaker 11: hostage negotiations which you've seen reported today in which you're 953 00:49:13,480 --> 00:49:16,560 Speaker 11: trying to get them out prior to and of course 954 00:49:16,680 --> 00:49:19,160 Speaker 11: they got to they have to realize they being the IDF, 955 00:49:19,200 --> 00:49:22,440 Speaker 11: that Hamas wants them to do this. It was planned 956 00:49:22,480 --> 00:49:26,200 Speaker 11: probably at the same time they planned the attack into Israel. 957 00:49:26,280 --> 00:49:30,040 Speaker 11: So they're assessing all of that when they go in. 958 00:49:30,320 --> 00:49:32,040 Speaker 11: If they go in, I think they're going to go 959 00:49:32,120 --> 00:49:38,239 Speaker 11: in very hard from the north, from the Eres border checkpoints, 960 00:49:38,520 --> 00:49:41,160 Speaker 11: because that is where you can get in funnel all 961 00:49:41,200 --> 00:49:45,240 Speaker 11: of these armored personnel carriers and tanks into that area 962 00:49:45,320 --> 00:49:47,160 Speaker 11: and then when they hit Gaza City, it's going to 963 00:49:47,160 --> 00:49:51,600 Speaker 11: be extraordinarily violent and destructive, and that's why it's a 964 00:49:51,600 --> 00:49:54,040 Speaker 11: good thing that a lot of civilians have already left 965 00:49:54,160 --> 00:49:55,360 Speaker 11: the northern part of Goza. 966 00:49:55,800 --> 00:50:00,080 Speaker 1: And I guess just as well, with President Biden in 967 00:50:00,200 --> 00:50:04,520 Speaker 1: Israel today, there's reports that perhaps leaders from other Western countries, 968 00:50:04,800 --> 00:50:10,160 Speaker 1: the UK, mister Sunak and Macron of France, they're considering 969 00:50:10,239 --> 00:50:11,839 Speaker 1: going to Israel as well. 970 00:50:11,880 --> 00:50:13,959 Speaker 6: I presumably, if you're you. 971 00:50:13,840 --> 00:50:17,480 Speaker 1: Know, you would not launch a campaign with such folks 972 00:50:17,520 --> 00:50:18,160 Speaker 1: in country. 973 00:50:20,120 --> 00:50:23,400 Speaker 11: So I think that's a fair assumption. It's obviously dangerous 974 00:50:23,480 --> 00:50:25,880 Speaker 11: enough for these heads of states to go into a 975 00:50:25,920 --> 00:50:29,640 Speaker 11: conflict area, especially one where rockets and missiles are essentially 976 00:50:29,680 --> 00:50:33,759 Speaker 11: free firing. But I do think going there and delivering 977 00:50:33,800 --> 00:50:37,279 Speaker 11: a message that is consistent, you know, probably discussed in 978 00:50:37,360 --> 00:50:41,000 Speaker 11: advance between the US, UK and France is very helpful 979 00:50:41,000 --> 00:50:44,479 Speaker 11: when it's very really reassuring to Israel, and it does 980 00:50:44,520 --> 00:50:46,799 Speaker 11: show a ran for example, that they need to stay 981 00:50:46,800 --> 00:50:49,239 Speaker 11: out of this, and so I imagine those messages are 982 00:50:49,280 --> 00:50:52,120 Speaker 11: just being repeated. But I agree with you it's unlikely, 983 00:50:52,200 --> 00:50:55,360 Speaker 11: although not impossible, that they could launch this ground invasion 984 00:50:55,680 --> 00:50:57,680 Speaker 11: during a time when they when one of these heads 985 00:50:57,680 --> 00:51:00,440 Speaker 11: of states is in Tel AVIVI you. 986 00:51:00,400 --> 00:51:03,799 Speaker 6: Know two aircraft carrier groups. I don't care who you 987 00:51:03,840 --> 00:51:04,839 Speaker 6: are or where you are. 988 00:51:05,080 --> 00:51:08,200 Speaker 1: That gets your attention here. Are you surprised that there 989 00:51:08,719 --> 00:51:11,160 Speaker 1: a second carrier group went into the region there? 990 00:51:12,880 --> 00:51:16,600 Speaker 11: Somewhat surprised, but I agree it definitely should get ran 991 00:51:16,880 --> 00:51:19,560 Speaker 11: Hezbolah and any other group that wants to join this 992 00:51:19,640 --> 00:51:23,840 Speaker 11: as attention. These are two of the most advanced aircraft 993 00:51:23,840 --> 00:51:27,520 Speaker 11: carriers in the world. Combined, there's about sixteen squadrons of 994 00:51:27,520 --> 00:51:30,680 Speaker 11: fighters and support aircraft. There's I don't know four or 995 00:51:30,760 --> 00:51:35,440 Speaker 11: five destroyers which all have shift ashore artillery, and then 996 00:51:35,480 --> 00:51:39,280 Speaker 11: there's cruisers and there's a marine expeditionary unit en route 997 00:51:39,320 --> 00:51:41,680 Speaker 11: to the area. So this is an incredible amount of 998 00:51:41,760 --> 00:51:45,279 Speaker 11: both airpower, seapower, and potentially even ground powder. I think 999 00:51:45,320 --> 00:51:47,960 Speaker 11: that's very unlikely to be used in this region to 1000 00:51:48,000 --> 00:51:50,280 Speaker 11: set a very strong message of deterrence. 1001 00:51:51,160 --> 00:51:53,239 Speaker 1: Mick, just about thirty seconds left. Do you have any 1002 00:51:53,320 --> 00:51:57,680 Speaker 1: updated sourcing on what's happening in Ukraine that unfortunately that 1003 00:51:57,719 --> 00:52:00,359 Speaker 1: has from the Ukraine's perspective, taken kind of a back 1004 00:52:00,360 --> 00:52:01,000 Speaker 1: burner here. 1005 00:52:02,680 --> 00:52:05,000 Speaker 11: Yes, it has, so we've seen what looks like the 1006 00:52:05,160 --> 00:52:08,560 Speaker 11: entry of the attackers, which is a long range artillery 1007 00:52:09,719 --> 00:52:12,840 Speaker 11: weapon that we gave to the Ukrainians, one that was 1008 00:52:12,880 --> 00:52:16,760 Speaker 11: somewhat controversial, but one that also gives them the ability 1009 00:52:16,800 --> 00:52:19,759 Speaker 11: to hit any Russian positions from their front lines now. 1010 00:52:19,800 --> 00:52:24,479 Speaker 11: So any Russian military capacity in Ukraine right now can 1011 00:52:24,520 --> 00:52:26,600 Speaker 11: be hit with these munitions that can be fired out 1012 00:52:26,640 --> 00:52:29,680 Speaker 11: of the high marks. So that's the most significant update. 1013 00:52:29,920 --> 00:52:33,440 Speaker 11: The Ukrainians are making slow gains and they are striking 1014 00:52:33,560 --> 00:52:36,160 Speaker 11: in the rear in Crimea, and I think those are 1015 00:52:36,160 --> 00:52:40,560 Speaker 11: both important in the controlled areas also, so this is 1016 00:52:40,600 --> 00:52:44,279 Speaker 11: an important step. They do need to get the resupplied, 1017 00:52:44,560 --> 00:52:46,760 Speaker 11: and they do need to support to pass in Congress 1018 00:52:47,400 --> 00:52:49,120 Speaker 11: to be able to go forward and really make some 1019 00:52:49,200 --> 00:52:50,400 Speaker 11: gains in this counter offensive. 1020 00:52:50,920 --> 00:52:52,680 Speaker 1: All right, Mick, thanks so much for joining us. We 1021 00:52:52,680 --> 00:52:55,880 Speaker 1: always appreciate getting some of your time. Give us the 1022 00:52:55,920 --> 00:52:59,920 Speaker 1: benefit of your great experience in all things geopolitics. Mick mulright, 1023 00:53:00,040 --> 00:53:03,440 Speaker 1: he's a co founder of the Lobo Institute, and you 1024 00:53:03,480 --> 00:53:05,960 Speaker 1: know has just have tremendous experience in that part of 1025 00:53:06,000 --> 00:53:08,160 Speaker 1: the world and in these types of situations. 1026 00:53:08,200 --> 00:53:12,960 Speaker 2: Look, thanks for listening to the Bloomberg Markets podcasts. You 1027 00:53:13,000 --> 00:53:16,319 Speaker 2: can subscribe and listen to interviews at Apple Podcasts or 1028 00:53:16,560 --> 00:53:20,279 Speaker 2: whatever podcast platform you prefer. I'm Matt Miller. I'm on 1029 00:53:20,320 --> 00:53:22,879 Speaker 2: Twitter at Matt Miller nineteen seventy three. 1030 00:53:23,320 --> 00:53:24,160 Speaker 6: And I'm Faul Sweeney. 1031 00:53:24,239 --> 00:53:26,840 Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you 1032 00:53:26,880 --> 00:53:30,239 Speaker 1: can always catch us worldwide at Bloomberg Radio