WEBVTT - Taking Cover 0:00:03.800 --> 0:00:06.760 Welcome to Bloomberg Opinion Listeners. I'm Vonnie Quinn this week. 0:00:07.000 --> 0:00:10.119 Endorsements often can be very important, but the stuff of 0:00:10.240 --> 0:00:14.120 narratives actually tends to matter more. Jonathan Bernstein on primary 0:00:14.120 --> 0:00:17.800 season and there's typically a limit to what even a 0:00:17.880 --> 0:00:21.720 vulnerable state will tolerate. Hal Brown's on whether Russia's war 0:00:21.800 --> 0:00:24.319 on Ukraine has become a proxy war between the US 0:00:24.360 --> 0:00:28.159 and its allies and Russia. Later, Clara Fererra Marquez on 0:00:28.160 --> 0:00:31.560 the strange side of the Marcos family, returning to Manila's 0:00:31.600 --> 0:00:36.120 presidential palace. First though, a conversation about the monumental shift 0:00:36.159 --> 0:00:39.519 we're seeing in markets with near Casar so near. Is 0:00:39.560 --> 0:00:43.239 this market rational? I think it is. This looks to 0:00:43.280 --> 0:00:45.879 me like a classic repricing. And what I mean by 0:00:45.880 --> 0:00:48.960 that is, I think the market is looking at the 0:00:49.040 --> 0:00:51.800 price tax on the stocks that it has had for 0:00:51.840 --> 0:00:55.800 a while, and it's just revisiting whether these prices make sense. 0:00:56.200 --> 0:00:58.280 And I think for some of these stacks, clearly these 0:00:58.280 --> 0:01:00.760 prices did not make sense. And the reason I say 0:01:00.840 --> 0:01:03.800 that is because two things. One is when you look 0:01:03.800 --> 0:01:06.600 at the declines, they're not across the board. This is 0:01:06.720 --> 0:01:11.759 largely a large company, mostly growth phenomenon. When you look 0:01:11.800 --> 0:01:13.600 at the stocks that are getting hit the hardest is 0:01:13.640 --> 0:01:16.560 generally the stocks that are more expensive on the valuation basis, 0:01:17.080 --> 0:01:20.160 and also it's separate from that also the stocks that 0:01:20.200 --> 0:01:23.560 have the least amount of profitability, So the lower quality, 0:01:23.640 --> 0:01:26.600 high valuation stocks are getting hit the most. That started 0:01:26.600 --> 0:01:29.039 about a year ago. More recently this has spread even 0:01:29.040 --> 0:01:31.679 to the high quality name So so you're seeing names 0:01:31.720 --> 0:01:35.760 like Facebook, Amazon, Netflix. These are hugely profitable companies, but 0:01:35.880 --> 0:01:38.600 also very expensive companies, and I think the market is 0:01:38.640 --> 0:01:41.200 just saying these prices are inappropriate and they need to 0:01:41.240 --> 0:01:45.039 come down. We're not seeing the same thing with companies 0:01:45.040 --> 0:01:47.440 that are cheaper. The value segment of the market has 0:01:47.480 --> 0:01:50.040 done pretty well. It's down too, but it's not down 0:01:50.080 --> 0:01:53.080 anywhere near where the growth names are. And all of 0:01:53.120 --> 0:01:56.480 this has happened in a relatively orderly fashion. There's a 0:01:56.520 --> 0:01:58.800 lot of liquidity in the market, people can buy and sell, 0:01:59.160 --> 0:02:01.840 so I think this is just a repricing. So that's 0:02:01.840 --> 0:02:04.000 where I have a little bit of trouble because there 0:02:04.040 --> 0:02:06.160 are a lot of comparisons to the dot com bubble, 0:02:06.200 --> 0:02:08.400 for example, But is that fair because it seems to 0:02:08.440 --> 0:02:11.120 me like this isn't really an emperor has no clothes 0:02:11.160 --> 0:02:13.680 scenario like it was in two thousands. Some of these companies, 0:02:13.680 --> 0:02:16.920 as you say, are very profitable. That's right, and I 0:02:16.960 --> 0:02:20.240 think the comparison is fair insofar as this is the 0:02:20.280 --> 0:02:23.400 first time that anything like this since the late nineties 0:02:23.440 --> 0:02:25.920 have happened. From there, I think it does start to 0:02:25.960 --> 0:02:29.320 break down on a number of dimensions. One is that 0:02:29.520 --> 0:02:32.799 you know, these valuations I don't think, by any objective measure, 0:02:32.840 --> 0:02:35.919 were anywhere near as expensive as the dot com pete. 0:02:36.000 --> 0:02:38.639 So from that perspective, I don't know that they're comfortable. 0:02:38.720 --> 0:02:41.160 But as you say, Vanny, the second thing is that 0:02:41.360 --> 0:02:43.519 it was a mixed bag. I mean, yes, you did 0:02:43.520 --> 0:02:46.200 have companies this time that didn't make any money that 0:02:46.280 --> 0:02:48.919 we're just trading on growth and expectations and so on. 0:02:49.400 --> 0:02:54.040 But the larger segment of that cohort, the Apples, the Microsoft, 0:02:54.160 --> 0:02:57.080 the Google, the facebooks of the world. These are hugely 0:02:57.160 --> 0:02:59.920 profitable companies. They just happen to be expensive, but they 0:03:00.040 --> 0:03:02.639 weren't going away. So I don't think you're gonna have 0:03:02.680 --> 0:03:04.520 a situation where there's going to be a wipe out. 0:03:04.560 --> 0:03:07.200 They're just gonna trade at lower multiple. So can these 0:03:07.280 --> 0:03:10.160 high growth stocks take this kind of beating and still 0:03:10.240 --> 0:03:13.240 be considered high growth. I think what remains to be 0:03:13.320 --> 0:03:17.120 seen is to what extent their financing is going to 0:03:17.160 --> 0:03:20.239 impact their growth. If some of these companies that hadn't 0:03:20.320 --> 0:03:24.240 yet gotten the profitability or some of the coronavirus lockdown 0:03:24.280 --> 0:03:26.000 sort of era of stocks, you know, these zooms of 0:03:26.040 --> 0:03:28.640 the Peltons of the world, thrown to the extent that 0:03:28.680 --> 0:03:31.920 they needed financing in order to get to their growth potential, 0:03:32.160 --> 0:03:34.040 this could be a threat to them because you know 0:03:34.080 --> 0:03:36.160 a lot of investors have basically taken their money and 0:03:36.200 --> 0:03:39.080 gone home. For the bigger companies that are already established, 0:03:39.080 --> 0:03:41.360 it's hard to see how revaluing them is going to 0:03:41.400 --> 0:03:44.160 have any impact on her growth. I think ultimately what's 0:03:44.160 --> 0:03:46.320 going to be harder for them is that this is 0:03:46.360 --> 0:03:48.920 what investors are telling these companies that we just no 0:03:48.960 --> 0:03:53.040 longer believe that you Amazon, you Facebook, or whoever can 0:03:53.120 --> 0:03:55.160 grow at the growth that they put up during the 0:03:55.200 --> 0:03:58.040 two thousand tents and in the last decade, and so 0:03:58.240 --> 0:04:00.800 you know, that's lower growth necessary really means that they 0:04:00.800 --> 0:04:04.560 deserve lower multiple. It's so interesting because it feels like 0:04:04.600 --> 0:04:06.240 we've been waiting for this for many years. I mean, 0:04:06.240 --> 0:04:09.400 it's been a thirteen year bullmarket one at the very least, 0:04:09.440 --> 0:04:11.960 if not more than that. And you have to wonder 0:04:12.040 --> 0:04:14.200 if it is just because of the FED turning, or 0:04:14.240 --> 0:04:15.840 if this was just a moment waiting to happen and 0:04:15.920 --> 0:04:18.720 it's a convenient moment now. It's interesting to think about 0:04:18.720 --> 0:04:21.359 the timing of it. I've been thinking about what we 0:04:21.400 --> 0:04:23.839 can attribute this to, and I think ultimately the honest 0:04:23.880 --> 0:04:26.640 answer is, we just don't know why these things happen 0:04:26.720 --> 0:04:30.000 when they when they happen. This could have happened any 0:04:30.040 --> 0:04:32.600 time in the last three or four years, if I'm 0:04:32.600 --> 0:04:35.080 being generous. But I think my my best guest as 0:04:35.080 --> 0:04:38.560 to wife's happening now is that is simply when when 0:04:38.680 --> 0:04:41.480 clouds gather, I think investors pay more attention to price 0:04:41.520 --> 0:04:44.039 and profits, and they don't when they're bullish. And I 0:04:44.080 --> 0:04:45.800 think right now, there's just a lot of things to 0:04:45.839 --> 0:04:48.400 worry about, and that's what they appear to be doing. Now. 0:04:49.000 --> 0:04:52.200 At what point will these market declines impact the Fed's 0:04:52.279 --> 0:04:54.960 decision making In the sense that multiples are coming in 0:04:55.040 --> 0:04:58.520 that's probably a healthy thing to some degree, But does 0:04:58.560 --> 0:05:01.159 there come a point which this off market drop is 0:05:01.200 --> 0:05:04.479 one factor that the FED takes more seriously. I don't 0:05:04.600 --> 0:05:10.320 think so. Um. Well, in a couple of ways. One is, 0:05:10.560 --> 0:05:16.040 I think we we often analogize this moment to previous 0:05:16.080 --> 0:05:21.200 moments when the FED is stepped in dot com, financial crisis, pandemic, um. 0:05:21.240 --> 0:05:24.159 But the difference between now and those moments is in 0:05:24.240 --> 0:05:27.400 those moments, they didn't have to tackle inflation. Now that 0:05:27.440 --> 0:05:29.919 they're sitting on an inflation rate that's that's you know, 0:05:29.960 --> 0:05:32.040 that's the highest that spin in four decades, going back 0:05:32.080 --> 0:05:35.240 to the scary late nineteen seventies early nineteen eighties. Um, 0:05:35.320 --> 0:05:38.159 they don't really have a choice, I don't think, and 0:05:38.279 --> 0:05:40.599 I think I believe them when they say that they're 0:05:40.600 --> 0:05:42.599 taking this very seriously and they're going to get this 0:05:42.680 --> 0:05:45.359 inflation down. And I think what that basically means is 0:05:45.400 --> 0:05:47.960 that the FED put is off the table. Investors don't 0:05:47.960 --> 0:05:49.880 look to us for help. If you want to overpay 0:05:49.920 --> 0:05:52.640 for companies, you're gonna have to take the repricing, which 0:05:52.680 --> 0:05:54.760 is what they're doing now. So I don't think that 0:05:54.800 --> 0:05:57.320 the FED is going to come to their rescue. So 0:05:57.440 --> 0:06:00.240 near do we have? Economy hasn't quite marrid the bittle 0:06:00.240 --> 0:06:03.200 markets over the last decade, and that's an understatement. But 0:06:03.320 --> 0:06:07.360 now do the capital markets help engender a recession? Does 0:06:07.360 --> 0:06:10.799 it become the case that the capital markets do mirror 0:06:10.839 --> 0:06:14.400 the real economy eventually? Well, you know, it's interesting to 0:06:14.440 --> 0:06:16.800 think about because you know, just as there was a 0:06:16.800 --> 0:06:20.479 bifurcation between the market and economy during the darkest days 0:06:20.480 --> 0:06:22.560 of the pandemic, it looks like it's going the other 0:06:22.600 --> 0:06:25.159 way now. So, if anything, I think you might continue 0:06:25.200 --> 0:06:27.320 to have a bifurcation between the economy and the market, 0:06:27.320 --> 0:06:29.839 but in the opposite direction. I think people might wonder 0:06:29.960 --> 0:06:33.240 why the market doing so poorly if the economy is 0:06:33.279 --> 0:06:37.039 still relatively healthy, And I think the answer is that 0:06:37.200 --> 0:06:39.480 they just don't track each other very well, and that 0:06:39.600 --> 0:06:41.520 you should never look to the market as a proxy 0:06:41.560 --> 0:06:43.960 for what the economy is doing. Near case are there, 0:06:44.200 --> 0:06:46.480 don't forget listeners, do get in touch via Twitter at 0:06:46.560 --> 0:06:49.520 Vonney Quinn or email v Quinn at Bloomberg dot net. 0:06:49.720 --> 0:06:54.080 Opinions and commons always welcome. We have incrementally more data 0:06:54.120 --> 0:06:57.360 now on primary voting behavior following Nebraska and West Virginia 0:06:57.440 --> 0:07:01.200 this week, and the Pennsylvania primary, among other takes place Tuesday. 0:07:01.480 --> 0:07:04.440 We're joined by Jonathan Bernstein, What did we learn from 0:07:04.640 --> 0:07:07.119 the primaries this week in terms of what a Trump 0:07:07.160 --> 0:07:10.360 endorsement means? Jonathan, Well, after Trump got off to a 0:07:10.400 --> 0:07:13.560 good start in May in Ohio and the Senate campaign there, 0:07:13.800 --> 0:07:17.280 he had a mixed record. This Tuesday. In West Virginia, 0:07:17.360 --> 0:07:20.120 there were two incumbent members of the House running against 0:07:20.160 --> 0:07:22.840 each other because of reapportion in West Virginia lost the 0:07:22.880 --> 0:07:26.240 seat and so that tossed two of their Republican members 0:07:26.240 --> 0:07:28.480 of the House against each other, and the one that 0:07:28.880 --> 0:07:32.480 Trump endorsed one pretty comfortably. On the other hand, in 0:07:32.560 --> 0:07:37.440 Nebraska and the gubernatorial race there, Trump's candidate lost by 0:07:37.480 --> 0:07:41.760 several percentage points exactly. Now, the thing is that you 0:07:41.760 --> 0:07:45.200 can do sort of the win loss ratio, you know, 0:07:45.320 --> 0:07:48.960 but it's complicated, right. We don't know how the candidate 0:07:49.000 --> 0:07:51.880 would have done if there was no Trump at all. Um. 0:07:51.920 --> 0:07:55.280 This was a candidate who was a very strong Trump 0:07:55.360 --> 0:07:59.880 supporter for Trump's entire political career, but also had been 0:07:59.880 --> 0:08:05.560 accused credibly of groping several women. Um. So you know, 0:08:05.880 --> 0:08:08.880 if he has no Trump endorsement, does he does he 0:08:08.920 --> 0:08:13.160 campaign at all? Does he do better? Um? Does he 0:08:13.280 --> 0:08:15.960 do worse? You know? What what. It's very hard when 0:08:16.000 --> 0:08:20.280 political scientists study primary campaigns. It's extremely difficult to figure 0:08:20.280 --> 0:08:22.920 out some sort of baseline because you can't judge how 0:08:23.040 --> 0:08:26.080 much any particular factor influence the outcome if you can't 0:08:26.080 --> 0:08:28.360 come up with the baseline, if that hadn't happened then. 0:08:28.800 --> 0:08:31.280 And the other thing about Nebraska is that the Republican 0:08:31.360 --> 0:08:35.280 establishment there one, so their endorsement was not Trump's endorsement, 0:08:35.320 --> 0:08:38.240 and so you have to wonder, what about statewide Republican 0:08:38.400 --> 0:08:41.240 go op institutions? Yeah, And you know, the thing is 0:08:41.320 --> 0:08:45.640 that it's not that these are moderate Republicans who won 0:08:45.720 --> 0:08:49.480 that race, just like Ohio, you know, we had JD. Vance, 0:08:49.679 --> 0:08:54.240 Trump's candidate one, but the radical candidates who were seeking 0:08:54.280 --> 0:08:59.360 Trump's endorsement trying to imitate Trump, took about sixty of 0:08:59.360 --> 0:09:02.440 the vote. Who you classify how And so you know, 0:09:02.480 --> 0:09:05.079 on the one hand, it's not as if Trump snaps 0:09:05.080 --> 0:09:08.280 his fingers and all the Republican voters say, oh, that's 0:09:08.280 --> 0:09:10.880 what we want. But on the other hand, it's a 0:09:11.000 --> 0:09:15.240 very radical party. Whether you attribute that to Trump, which 0:09:15.280 --> 0:09:17.680 is true in part, or say this is something that 0:09:17.720 --> 0:09:20.640 precedes Trump and only got sort of more so as 0:09:20.640 --> 0:09:22.960 a result of him, but also has a lot to 0:09:22.960 --> 0:09:26.880 do with Republican align media. Well, you know, it's complicated, 0:09:27.000 --> 0:09:29.240 it is, and that brings us right back to Pennsylvania 0:09:29.280 --> 0:09:32.080 where it's becoming really interesting. In the last week of 0:09:32.120 --> 0:09:34.080 the race, it had been a race between Dr Oz 0:09:34.200 --> 0:09:37.120 and former Bridgewater CEO David McCormack, who obviously was spending 0:09:37.120 --> 0:09:39.440 a fortune a version of his own as well, emulating 0:09:39.440 --> 0:09:42.320 the then Young Can playbook. But suddenly we have Cathy 0:09:42.400 --> 0:09:45.079 Barnett getting two endorsements, one from the Club for Growth 0:09:45.160 --> 0:09:47.920 and one from the Susan Bianthony Elis Candidate Fund pack. 0:09:48.920 --> 0:09:51.079 She would be the first Republican black woman elected to 0:09:51.120 --> 0:09:53.520 the US and she is on message right now when 0:09:53.559 --> 0:09:58.280 it comes to the dominant issue, which is abortion. What happens, Jonathan, Well, 0:09:58.320 --> 0:09:59.880 you know, one of the things that it tells you 0:10:00.080 --> 0:10:03.480 is that in these multi candidate primaries they can be 0:10:03.559 --> 0:10:06.760 very unstable. So you have here a situation where two 0:10:06.800 --> 0:10:11.760 candidates Trump backing Doctor Oz, the TV celebrity doctor. We're 0:10:11.800 --> 0:10:14.720 going at each other with a lot of money on TV, 0:10:14.800 --> 0:10:18.040 attacking each other, and so a third candidate appears to 0:10:18.080 --> 0:10:19.679 have benefited. Now we don't know how it's going to 0:10:19.720 --> 0:10:22.760 turn out. The latest polls seem to show pretty close 0:10:22.760 --> 0:10:25.679 to a three way tie. But we've seen that happen 0:10:25.760 --> 0:10:29.680 before in elections, where two candidates who have tons of 0:10:29.720 --> 0:10:33.040 money attack each other at the third candidate benefits. In 0:10:33.040 --> 0:10:36.280 this case, those endorsements came out after she had already 0:10:36.320 --> 0:10:39.120 moved up in the polls, spending very very little money 0:10:39.160 --> 0:10:42.360 of her own or anybody on her behalf, while tons 0:10:42.360 --> 0:10:44.120 of money is coming in for the other two candidates. 0:10:44.600 --> 0:10:45.920 And then we should just point out that on the 0:10:45.960 --> 0:10:48.400 Democratic side of things, it's gotten a little clearer. John 0:10:48.440 --> 0:10:51.000 Fetterman seems to be the shorefire when even though he 0:10:51.000 --> 0:10:53.679 has his own problematic past pointing a shotgun and an 0:10:53.760 --> 0:10:57.120 unarmed black jogger back into but he seems to be 0:10:57.400 --> 0:11:01.600 the candidate that they've chosen that has the best against Republicans. 0:11:01.640 --> 0:11:04.040 That seems to be the case according to all the 0:11:04.120 --> 0:11:06.480 polling right now. That Venoman who's the lieutenant governor of 0:11:06.480 --> 0:11:09.480 the state. So he had run for Senate when he 0:11:09.600 --> 0:11:13.360 was a small town mediumtown mayor six years ago and 0:11:13.480 --> 0:11:16.400 got nowhere. The party was not interested in him. But 0:11:16.559 --> 0:11:19.960 once he proved himself as a statewide winner, the Lieutenant 0:11:19.960 --> 0:11:23.080 governor that gave him the statewide publicity and contacts and 0:11:23.360 --> 0:11:28.480 party support to apparently pull away from the other two candidates. Jonathan, 0:11:28.520 --> 0:11:31.000 what does that say about Joe Manin's position in terms 0:11:31.000 --> 0:11:33.920 of legislation? Is the candidate that he endorsed lost in 0:11:33.960 --> 0:11:37.080 West Virginia. Should the Democrats hed this as a lesson somehow? 0:11:38.000 --> 0:11:40.800 I don't think. I mean, yeah, I don't think it 0:11:40.800 --> 0:11:44.440 really tells us anything. Mansion's position is strong in the 0:11:44.480 --> 0:11:49.640 Senate because he's the fiftieth vote um and it doesn't matter. 0:11:50.480 --> 0:11:56.559 What we know about Mansion is that Democrats can't primary him, 0:11:56.679 --> 0:11:59.840 they have very little overage over him, and I don't 0:12:00.120 --> 0:12:02.680 that it really matters how popular he is in Less Virginia. 0:12:02.800 --> 0:12:05.880 What really matters is that no Democrat other than Joe 0:12:05.880 --> 0:12:08.480 Manchin has any chance of holding that seat in the future, 0:12:08.760 --> 0:12:11.160 and so Democrats basically have to accept he is who 0:12:11.160 --> 0:12:13.160 he is. They get a lot of votes out of 0:12:13.200 --> 0:12:17.040 him on things like judges and Executive branch confirmation, and 0:12:17.160 --> 0:12:21.240 on some legislative issues, and the ones that they don't get, 0:12:21.280 --> 0:12:23.679 there's really no other place for them to go. I 0:12:23.720 --> 0:12:25.760 have a question about the narrative at the moment, as 0:12:25.800 --> 0:12:28.840 well as obviously and for obvious reasons, started to center 0:12:28.880 --> 0:12:33.040 around abortion and women's rights. Is that what sways primaries, 0:12:33.880 --> 0:12:37.040 You know it can. Primaries are not general elections. What 0:12:37.360 --> 0:12:41.360 often matters in primaries is how candidates differentiate from each other. 0:12:41.679 --> 0:12:44.160 If you're a primary voter, you're a little bit involved 0:12:44.200 --> 0:12:46.240 because many people don't vote in primaries at all, So 0:12:46.280 --> 0:12:49.320 you're paying some attention, but you probably don't know a 0:12:49.400 --> 0:12:54.240 huge amount about these candidates, especially in places where there's five, six, 0:12:54.320 --> 0:12:56.320 seven candidates on the ballot, which is the case in 0:12:56.320 --> 0:12:59.000 many of these places, and so you're looking for something, 0:12:59.160 --> 0:13:02.000 somebody that stands out for some reason. That's why endorsements 0:13:02.000 --> 0:13:05.440 often can be very important. Money spent is far more 0:13:05.480 --> 0:13:09.600 important in primary elections than general elections, but the stuff 0:13:09.600 --> 0:13:12.640 of narratives actually tends to matter more. So, you know, 0:13:12.720 --> 0:13:15.040 the idea that these two candidates in Pennsylvania and the 0:13:15.080 --> 0:13:18.720 Senate campaign are bashing each other, that's something that Republicans 0:13:18.720 --> 0:13:22.559 were paying attention probably notice. Whereas in a general election, 0:13:23.320 --> 0:13:26.800 you're eventually going to find your party most of the time. 0:13:26.840 --> 0:13:31.000 But since there's no sort of place that you start 0:13:31.080 --> 0:13:33.200 from in a primary campaign, if you're a voter. You're 0:13:33.240 --> 0:13:35.840 looking for some reason to vote for a candidate, and 0:13:36.120 --> 0:13:40.280 therefore issues endorsements, money, a good ads, stuff like that 0:13:40.320 --> 0:13:42.640 really can make more of a difference than it would 0:13:42.640 --> 0:13:45.760 in a general election. Are you watching anything else come Tuesday, Jonathan, 0:13:45.800 --> 0:13:50.079 or is it really just Pennsylvania? The Idaho juvenatorial which 0:13:50.360 --> 0:13:53.160 Trump endorsed the lieutenant governor who's going to lose to 0:13:53.200 --> 0:13:57.000 the incumbent governor apparently, which didn't seem like the kind 0:13:57.040 --> 0:14:00.240 of endorsement to make if you're trying to maximize your 0:14:00.600 --> 0:14:06.400 reputation for influencing daughters. But I'm not that that's very 0:14:06.440 --> 0:14:09.040 hard to know whether Trump is rational about stuff. Say, 0:14:09.200 --> 0:14:12.440 I'm not sure that that's the calculation that's being made here. Yeah, 0:14:13.240 --> 0:14:15.600 he tends to be impulsive, and it's very hard to 0:14:15.640 --> 0:14:19.160 figure out, well exactly it could be says somebody knew 0:14:19.200 --> 0:14:21.360 how to flatter him, or he saw somebody on Fox 0:14:21.400 --> 0:14:23.720 News in the right moment and that's why he made this. 0:14:24.400 --> 0:14:28.800 Jonathan Bernstein, There, don't forget to reach out with thoughts, suggestions, opinions. 0:14:28.920 --> 0:14:31.240 I'm at Bonnie Quinn on Twitter or email v Quinn 0:14:31.280 --> 0:14:34.480 at Bloomberg dot net. We're also available as a podcast. 0:14:34.640 --> 0:14:37.960 Just look us up on Apple or Spotify. Russia's war 0:14:38.040 --> 0:14:42.320 on Ukraine grinds on, prompting new questions, including whether the 0:14:42.320 --> 0:14:44.960 war is turning into a proxy war between the US 0:14:45.000 --> 0:14:47.520 and its allies and Russia. Let's get straight to hal 0:14:47.560 --> 0:14:50.640 Brand's columnist and also professor of global affairs at Johns 0:14:50.640 --> 0:14:54.680 Hopkins University. So, how at what point does an intervention 0:14:55.040 --> 0:14:58.040 or aid or whatever you would have called this, at 0:14:58.040 --> 0:15:00.800 what point does it turn into a proxy war? Proxy 0:15:00.840 --> 0:15:04.600 war is an invention where most of the fighting and 0:15:04.640 --> 0:15:07.840 frankly the dying is done by a third party. And 0:15:07.920 --> 0:15:12.200 so if the United States were to use Ukrainian forces 0:15:12.280 --> 0:15:15.920 to inflict damage on the Russian military, for instance, without 0:15:16.080 --> 0:15:20.080 directly fighting Russian military itself, that would be an example 0:15:20.160 --> 0:15:23.200 of a proxy war. Was this a proxy war? From 0:15:23.240 --> 0:15:25.960 the beginning? I think the initial idea was to try 0:15:25.960 --> 0:15:28.880 to help Ukraine maintain as much of its sovereignty and 0:15:28.920 --> 0:15:32.120 independence as possible. What became clear, though, was that the 0:15:32.200 --> 0:15:35.960 Ukrainian resistance was very acceptive, that the Russian military was 0:15:36.080 --> 0:15:39.160 vulnerable and over extended, and that the United States and 0:15:39.280 --> 0:15:42.160 allies US had a chance to inflict a pretty severe 0:15:42.240 --> 0:15:46.840 cost on the Russians simply by helping the Ukrainians fight better. 0:15:46.880 --> 0:15:49.680 And I think that's really the genesis of the situation 0:15:49.680 --> 0:15:53.200 where we are today, where the Pentagon, it's essentially acknowledged 0:15:53.240 --> 0:15:55.320 that what we're doing is trying to use the Ukraine 0:15:55.360 --> 0:15:58.880 War to weaken Russia's capabilities over time. Right, And so 0:15:59.080 --> 0:16:02.360 you wrote inspiracy of silence is necessary for any kind 0:16:02.360 --> 0:16:04.960 of proxy war. But the U S isn't being particularly 0:16:05.000 --> 0:16:08.520 silent about this war. Does that make it more ethical? 0:16:08.600 --> 0:16:10.920 Let's say, I don't know that it's a question of ethics. 0:16:11.000 --> 0:16:12.960 I think it's a it's a question of prudence. And 0:16:13.040 --> 0:16:15.800 so the reason it's important to stay quiet about a 0:16:15.840 --> 0:16:18.600 proxy war is that there's typically a limit to what 0:16:18.960 --> 0:16:22.520 even a vulnerable state will tolerate, and they're more likely 0:16:22.560 --> 0:16:25.560 to tolerate having a proxy war waged against them if 0:16:25.560 --> 0:16:28.520 their face isn't being rubbed in it by the other side. 0:16:28.520 --> 0:16:30.960 And I think this is why it's damaging to have 0:16:31.360 --> 0:16:33.960 leaks about the role that U S Intelligence may or 0:16:34.000 --> 0:16:37.400 may not be playing in certain Ukrainian military operations, because 0:16:37.400 --> 0:16:40.160 it makes the fact of the U S proxy war 0:16:40.200 --> 0:16:44.680 in Ukraine harder to ignore, and it potentially ratchets up 0:16:44.800 --> 0:16:48.480 the humiliation Plutin may feel if the damage he's suffering there. 0:16:49.840 --> 0:16:51.440 We can look to examples from the past that have 0:16:51.480 --> 0:16:54.360 been obvious proxy war is this is, I think, a 0:16:54.440 --> 0:16:57.240 different kind of proxy war. It certainly didn't start out, 0:16:57.280 --> 0:16:59.960 as you said, as a proxy war. It's just because 0:17:00.080 --> 0:17:02.000 one over time, and that's a little bit the problem 0:17:02.080 --> 0:17:06.159 that motivation can change over time. So what's the escalation 0:17:06.440 --> 0:17:09.959 from here, Well, we don't know yet. There are Russian 0:17:10.040 --> 0:17:13.600 escalation options, and so if Putin really wanted to try 0:17:13.600 --> 0:17:17.880 to put a stop to NATO countries arming and responding Ukraine, 0:17:18.000 --> 0:17:21.240 he could, for instance, target those countries and militarily he 0:17:21.280 --> 0:17:24.440 could try to ramp up the effort to interdict supplies 0:17:24.440 --> 0:17:27.479 coming into Ukraine across its land borders. He could do 0:17:27.520 --> 0:17:30.840 even something more drastic. He could use chemical weapons or 0:17:30.840 --> 0:17:33.920 battlefield nuclear weapons, try to turn the conflict in his favor, 0:17:33.960 --> 0:17:37.120 resolve it on his terms. You know, we don't know 0:17:37.200 --> 0:17:39.960 whether people do so or not. I think the situation 0:17:40.000 --> 0:17:44.240 could become more dangerous though, if he realizes that Russian 0:17:44.280 --> 0:17:46.639 forces are on the verge of losing in Ukraine and 0:17:46.680 --> 0:17:49.840 worries that I will defeat in Ukraine could potentially spell 0:17:49.920 --> 0:17:53.160 the end of his regime. How is the average American 0:17:53.240 --> 0:17:56.399 citizens supposed to feel about this proxy war? I mean, 0:17:56.440 --> 0:17:58.600 on the one hand, there's a lot of support for it. 0:17:58.920 --> 0:18:01.359 Give us some kind of matrix for how we should 0:18:01.720 --> 0:18:04.479 weigh the war. Americans seem to be pretty happy with 0:18:04.560 --> 0:18:06.760 the way that the war is going, which is not 0:18:06.800 --> 0:18:09.119 to say, of course, that they approve of the destruction 0:18:09.200 --> 0:18:13.320 of Ukraine. But the US military and economic aid Ukraine 0:18:13.400 --> 0:18:16.240 is popular on a bipartisan basis, both in Congress and 0:18:16.240 --> 0:18:19.680 in the population, which indicates to me he's that Americans 0:18:19.680 --> 0:18:23.240 see Russia as a military and geopolitical threat. They don't 0:18:23.320 --> 0:18:26.080 like the fact that a big, aggressive autoxicy is beating 0:18:26.119 --> 0:18:28.680 up on a smaller democracy next door, and so they 0:18:28.720 --> 0:18:31.840 favor giving Ukraine the help it needs to defend itself. 0:18:31.920 --> 0:18:34.119 Whether they see it as a proxy war simply a 0:18:34.200 --> 0:18:37.600 case of defending a vulnerable democracy or helping that democracy 0:18:37.640 --> 0:18:40.800 to spend itself, I can't really say, but the overall 0:18:40.840 --> 0:18:43.840 policy has quite a great deal of approval. How what's 0:18:43.840 --> 0:18:47.040 the danger that Putin turns elsewhere next? I mean, he 0:18:47.080 --> 0:18:51.080 obviously has puppet regimes in several former Soviet territories and states. 0:18:51.400 --> 0:18:54.000 But at some point he could try something new and 0:18:54.040 --> 0:18:57.359 pick a new former Soviet state to invade. Does the 0:18:57.440 --> 0:19:00.679 US then get involved there wouldn't have a handful at 0:19:00.720 --> 0:19:03.720 the moment. He may want to stir up trouble in 0:19:03.880 --> 0:19:07.359 Moldova or take a poke at the Baltic States or 0:19:07.400 --> 0:19:09.680 something like that, but it's going to be pretty difficult 0:19:09.880 --> 0:19:12.320 as long as his army is so fully committed and 0:19:12.359 --> 0:19:15.600 it's staring so poorly in Ukraine. And so I think 0:19:15.640 --> 0:19:18.760 the danger is less one that Putin decides to launch 0:19:18.800 --> 0:19:24.560 another war elsewhere than this war escalates, perhaps in dangerous ways. 0:19:24.560 --> 0:19:26.920 And so that's the scenario that I would worry more about. 0:19:27.840 --> 0:19:30.560 And then I guess, you know, final question that needs 0:19:30.560 --> 0:19:33.480 to be examined, as our proxy war is successful. How 0:19:33.520 --> 0:19:36.560 has the US waged a successful proxy war in the past. 0:19:36.800 --> 0:19:39.040 Some of them succeeds, some of them fail. It really 0:19:39.040 --> 0:19:42.840 depends on the setting. The United States failed utterly to 0:19:42.920 --> 0:19:47.000 overthrow Fidel Castro's regime via proxy invasion at the Bay 0:19:47.000 --> 0:19:50.360 of Pigs in nineteen sixty one, it succeeded beyond its 0:19:50.359 --> 0:19:55.160 wildest expectations and helping the Afghan Jahadem pushed the Soviets 0:19:55.160 --> 0:19:58.280 out of Afghanistan in the nineteen eighties. There's no hard 0:19:58.280 --> 0:20:01.760 and fast rule that says the UH some fail and 0:20:01.920 --> 0:20:05.240 some succeeds. It typically depends on the strength of the 0:20:05.280 --> 0:20:09.160 forces involved, their level of commitment, how well supported they are, 0:20:09.200 --> 0:20:11.520 and so there's a lot of contingency and these sorts 0:20:11.520 --> 0:20:14.639 of things. We leave those questions there for now, our 0:20:14.720 --> 0:20:17.280 thanks to hal Brand's. By the way, do get in touch. 0:20:17.480 --> 0:20:20.639 Comments and opinions are always welcome. Find me at Vonnie 0:20:20.680 --> 0:20:23.800 Quinn on Twitter or email v Quinn at Bloomberg dot net. 0:20:23.920 --> 0:20:26.879 We're also available as a podcast. Find us on Apple 0:20:27.000 --> 0:20:30.480 or Spotify. Now to the Philippines. Thirty six years after 0:20:30.520 --> 0:20:34.320 Dictator Ferdinand Marcos fled to Hawaii a mad a People's Revolution, 0:20:34.840 --> 0:20:37.880 his son was elected president of the nearly one ten 0:20:38.040 --> 0:20:42.119 million people strong Philippines with nearly sixty percent of the vote. 0:20:42.440 --> 0:20:45.680 Happy to have Clara Ferreira Marquez join us now from Singapore, 0:20:46.200 --> 0:20:49.920 quite the extraordinary turn of events, Clara explained to us 0:20:49.960 --> 0:20:54.280 the context for this election. The selection is coming at 0:20:54.280 --> 0:20:58.040 the end of the really Loan campaigned by the Marcus 0:20:58.080 --> 0:21:02.000 family to reinstate the name, to rehabilitate the name and 0:21:02.080 --> 0:21:04.800 to put a Marcos back in the malcan in the 0:21:04.840 --> 0:21:09.159 presidential palace. And it's been an extraordinary success. The ingredients 0:21:09.160 --> 0:21:12.840 of it have been, to a large extent, nostalgia social media, 0:21:13.480 --> 0:21:17.080 the fact that for many Filipinos the fruits of democracy 0:21:17.119 --> 0:21:19.800 have not really filtered down. You know, for many of them, 0:21:19.840 --> 0:21:23.000