1 00:00:05,120 --> 00:00:08,440 Speaker 1: This is the Bloomberg Surveillance podcast. I'm Tom Keene, along 2 00:00:08,480 --> 00:00:12,320 Speaker 1: with Jonathan Farrell and Lisa Abramowitz joined us each day 3 00:00:12,360 --> 00:00:16,840 Speaker 1: for insight from the best and economics, geopolitics, finance and investment. 4 00:00:17,239 --> 00:00:22,079 Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 5 00:00:22,239 --> 00:00:26,479 Speaker 1: anywhere you get your podcasts, and always I'm Bloomberg dot Com, 6 00:00:26,600 --> 00:00:31,920 Speaker 1: the Bloomberg Terminal and the Bloomberg Business app. This is 7 00:00:31,960 --> 00:00:34,479 Speaker 1: a joy. So lean forward Global Wall Street and for 8 00:00:34,520 --> 00:00:36,680 Speaker 1: those of you are removed from Global All Street, this 9 00:00:36,720 --> 00:00:39,520 Speaker 1: will be a clinic. His name is Steven Eisman. He's 10 00:00:39,520 --> 00:00:43,159 Speaker 1: senior portfolio manager at New Burger Berman and the Icemand 11 00:00:43,159 --> 00:00:45,960 Speaker 1: Group and has a nodded acquaintance with a movie of 12 00:00:46,000 --> 00:00:48,239 Speaker 1: a few years ago. Big short. Thank you so much 13 00:00:48,240 --> 00:00:50,320 Speaker 1: for joining us in studio. It's been like, you know, 14 00:00:50,400 --> 00:00:55,240 Speaker 1: I think it's been three years and and and such, 15 00:00:55,320 --> 00:00:56,680 Speaker 1: and it's good to have you here. And we're gonna 16 00:00:56,680 --> 00:00:59,560 Speaker 1: have Mr Eisman with us for the entire at half hour, 17 00:00:59,720 --> 00:01:03,400 Speaker 1: I to go to what you and I studied. And 18 00:01:03,520 --> 00:01:06,240 Speaker 1: he's always been associated with your Harvard but the fact 19 00:01:06,360 --> 00:01:09,840 Speaker 1: is he wrote his scientific Revolution at Berkeley and that 20 00:01:09,959 --> 00:01:13,760 Speaker 1: as Thomas Coon and the paradigmatic shift. It's a word 21 00:01:13,840 --> 00:01:18,200 Speaker 1: that I think is just hugely misused in investment and financing. 22 00:01:18,280 --> 00:01:22,920 Speaker 1: You're talking about a new paradigm. What is the new paradigm? Well, 23 00:01:23,000 --> 00:01:26,000 Speaker 1: let me just add potential new paradigm. I'm not smart 24 00:01:26,120 --> 00:01:28,360 Speaker 1: enough to know necessarily if it's going to happen, but 25 00:01:28,400 --> 00:01:31,480 Speaker 1: I think it's something people need to think about. You know, 26 00:01:31,480 --> 00:01:37,520 Speaker 1: what's a paradigm. It's something it's basically the assumptions about 27 00:01:37,520 --> 00:01:41,399 Speaker 1: how you think. They're so embedded in your brain that 28 00:01:41,520 --> 00:01:45,240 Speaker 1: it's similar to how you breathe. You don't even think 29 00:01:45,240 --> 00:01:48,080 Speaker 1: about how you breathe. And your paradigm you don't just 30 00:01:48,200 --> 00:01:52,360 Speaker 1: live it, you inhabit it. And paradigms and investing seem 31 00:01:52,440 --> 00:01:55,360 Speaker 1: to last about oh eight to ten years or so. 32 00:01:55,360 --> 00:01:57,560 Speaker 1: So if you go back to the nineties, you know, 33 00:01:57,560 --> 00:02:02,720 Speaker 1: people invested in law conglomerates like ge until that story 34 00:02:02,800 --> 00:02:05,600 Speaker 1: began to fall apart during the recession. You know, then 35 00:02:05,600 --> 00:02:09,519 Speaker 1: they turned to large financial institutions. From two thousand and 36 00:02:09,600 --> 00:02:13,120 Speaker 1: one through early two thousand and eight. They assumed that 37 00:02:13,400 --> 00:02:15,920 Speaker 1: the people who ran those companies were geniuses until they 38 00:02:15,960 --> 00:02:21,160 Speaker 1: realized that they weren't, and then with the FED lowering 39 00:02:21,280 --> 00:02:24,000 Speaker 1: rates to zero and keeping them there, you were essentially 40 00:02:24,160 --> 00:02:28,359 Speaker 1: paid to take risk, and so people invested in growth stocks, 41 00:02:28,440 --> 00:02:31,639 Speaker 1: largely to net technology stocks, and within technology stocks, the 42 00:02:31,720 --> 00:02:34,519 Speaker 1: stock that the stocks that did even the best were 43 00:02:34,560 --> 00:02:39,040 Speaker 1: those with large revenue growth but negative earnings. And that's 44 00:02:39,080 --> 00:02:40,760 Speaker 1: a parent and we've been living in for the last 45 00:02:40,760 --> 00:02:44,360 Speaker 1: ten years. So what could change it? I mean, obviously 46 00:02:44,400 --> 00:02:46,560 Speaker 1: the Feds at some point, and I don't have no 47 00:02:46,639 --> 00:02:49,120 Speaker 1: idea when that point is, will stop raising rates. The 48 00:02:49,280 --> 00:02:52,480 Speaker 1: real operative question is will they cut or will they 49 00:02:52,560 --> 00:02:55,440 Speaker 1: leave them up there? Now Powell keeps saying I'm leaving 50 00:02:55,440 --> 00:02:57,720 Speaker 1: it up there, and the market keeps saying, we don't 51 00:02:57,720 --> 00:03:01,000 Speaker 1: believe you. So let's just assume, for the sake of 52 00:03:01,120 --> 00:03:03,080 Speaker 1: argument that he does cut. Then we'll go back to 53 00:03:03,120 --> 00:03:05,640 Speaker 1: the old paradigm people invest in growth stocks again. But 54 00:03:06,000 --> 00:03:08,680 Speaker 1: assuming you take him at his word, then I think 55 00:03:09,320 --> 00:03:12,440 Speaker 1: the days of just investing in in growth stocks and 56 00:03:12,480 --> 00:03:17,600 Speaker 1: in hyper growth stocks is over. Now, It's not over yet, 57 00:03:17,639 --> 00:03:20,240 Speaker 1: assuming I'm right. I mean, if you go back to 58 00:03:20,280 --> 00:03:23,200 Speaker 1: two thousand and nine, the financials had their last hurrah 59 00:03:23,400 --> 00:03:26,880 Speaker 1: after the world fell apart and the government bailed everybody out, 60 00:03:26,919 --> 00:03:28,880 Speaker 1: two thousand and nine was a very very strong year 61 00:03:28,919 --> 00:03:32,120 Speaker 1: for pretty much every large financial company, and then in 62 00:03:32,120 --> 00:03:34,080 Speaker 1: two thousand and ten it was over, and it was 63 00:03:34,160 --> 00:03:39,280 Speaker 1: over for ten years. So I mean, where do I think? 64 00:03:40,160 --> 00:03:44,000 Speaker 1: I mean, people don't change their paradigms easily. Um, And 65 00:03:44,280 --> 00:03:45,840 Speaker 1: sometimes they have to be head on the head with 66 00:03:45,880 --> 00:03:49,640 Speaker 1: a two by four multiple times before they realize that 67 00:03:49,680 --> 00:03:52,080 Speaker 1: the way they've been thinking for a long period of 68 00:03:52,080 --> 00:03:55,600 Speaker 1: time is no longer right. Um, So you know what's 69 00:03:55,600 --> 00:03:58,000 Speaker 1: going to happen this year? I have no idea. Is this? 70 00:03:58,400 --> 00:04:00,400 Speaker 1: You know, the FED keeps rates high, will this be 71 00:04:00,480 --> 00:04:02,760 Speaker 1: another great year for tech stocks? And then we'll go 72 00:04:02,800 --> 00:04:06,280 Speaker 1: into a new paradigm. I don't know yet by price section, Steve, 73 00:04:06,680 --> 00:04:08,560 Speaker 1: you know that I get a sense from what you're 74 00:04:08,560 --> 00:04:10,360 Speaker 1: saying that you might think that the running we've seen 75 00:04:10,440 --> 00:04:12,880 Speaker 1: you today is somewhat of a last raph. It might be, 76 00:04:13,040 --> 00:04:16,839 Speaker 1: like I said, if the FED keeps rates high for 77 00:04:16,880 --> 00:04:21,159 Speaker 1: a long period of time, then people are gonna you know, 78 00:04:21,320 --> 00:04:23,479 Speaker 1: I'm not sure what the new paradigm is. I'm not 79 00:04:23,600 --> 00:04:27,440 Speaker 1: Einstein literally who created a new paradigm. I'm not that smart. 80 00:04:27,600 --> 00:04:30,600 Speaker 1: I'm not even close to that smart. Like, let me 81 00:04:30,640 --> 00:04:35,800 Speaker 1: emphasize I'm not even close to that smart. But where 82 00:04:35,839 --> 00:04:37,919 Speaker 1: do I think it could go. I mean, maybe it 83 00:04:38,000 --> 00:04:42,040 Speaker 1: just goes to a much more diversified portfolio. Um. Maybe 84 00:04:42,080 --> 00:04:45,480 Speaker 1: it goes a lot more to infrastructure related companies and 85 00:04:45,640 --> 00:04:48,560 Speaker 1: with the United States doesn't start spent me we're beginning to. 86 00:04:48,680 --> 00:04:51,520 Speaker 1: But if we don't improve our infrastructure, all our bridges 87 00:04:51,600 --> 00:04:56,279 Speaker 1: are going to fold down literally. UM. So I'm guessing 88 00:04:56,320 --> 00:04:59,560 Speaker 1: at this point we go to more diversified portfolios. I 89 00:04:59,560 --> 00:05:01,400 Speaker 1: don't think tech will be dead, but it will be 90 00:05:01,440 --> 00:05:05,720 Speaker 1: more focused on companies with actual earnings. Um. People will 91 00:05:05,720 --> 00:05:10,159 Speaker 1: focus on infrastructure companies, They'll be stock picking. That's where 92 00:05:10,200 --> 00:05:11,880 Speaker 1: I think it will go. Call me in a year 93 00:05:12,240 --> 00:05:14,440 Speaker 1: and I'll have a better idea of a different story. 94 00:05:14,480 --> 00:05:15,760 Speaker 1: You can come back in a year. Well, I look 95 00:05:15,800 --> 00:05:19,080 Speaker 1: forward to that start. And it's not just about what 96 00:05:19,120 --> 00:05:21,359 Speaker 1: the FED wants to do, it's what they should have 97 00:05:21,360 --> 00:05:23,560 Speaker 1: shouldn't do based on the incoming information. So, as you 98 00:05:23,680 --> 00:05:26,520 Speaker 1: pointed out, in the last regime, the last paradigm wasn't 99 00:05:26,520 --> 00:05:29,120 Speaker 1: just low rates with low inflation, low growth, and their 100 00:05:29,160 --> 00:05:31,960 Speaker 1: reasons to believe based on what you've seen that the 101 00:05:32,000 --> 00:05:34,919 Speaker 1: inflation regime of the next couple of years will be 102 00:05:35,000 --> 00:05:37,520 Speaker 1: higher stickier than what we've seen in the previous ten 103 00:05:37,600 --> 00:05:40,039 Speaker 1: and the reasons to believe that, oh, I definitely think 104 00:05:40,040 --> 00:05:42,679 Speaker 1: there is um. I mean, one of the major reason 105 00:05:42,720 --> 00:05:44,680 Speaker 1: why inflation has been low and it wasn't the less 106 00:05:44,720 --> 00:05:48,400 Speaker 1: ten years is more like the less twenty five is 107 00:05:48,720 --> 00:05:51,520 Speaker 1: that the supply chain of the United States and all 108 00:05:51,640 --> 00:05:56,200 Speaker 1: developed countries moved out of those countries to Asia China, 109 00:05:56,480 --> 00:06:02,039 Speaker 1: where the labor and the costs were much cheaper. What 110 00:06:02,240 --> 00:06:06,160 Speaker 1: COVID proved to everyone was that while that supply chain 111 00:06:06,240 --> 00:06:10,240 Speaker 1: was cheap, it was also incredibly brittle. And that's been 112 00:06:10,680 --> 00:06:14,240 Speaker 1: This is a two by four multiple times. So companies 113 00:06:14,320 --> 00:06:17,520 Speaker 1: realize they can't have a brutal supply chain because it 114 00:06:17,560 --> 00:06:20,960 Speaker 1: means that if something happens, they'll have no products. So 115 00:06:21,000 --> 00:06:24,039 Speaker 1: you're getting supply chain moving back to the United States 116 00:06:24,080 --> 00:06:27,599 Speaker 1: and other developed countries. That means that you know the 117 00:06:27,680 --> 00:06:31,320 Speaker 1: underlying so you have a more resilient price chain, but 118 00:06:31,440 --> 00:06:34,640 Speaker 1: prices will be higher. You are famous for the big 119 00:06:34,640 --> 00:06:39,039 Speaker 1: short back during the whole mortgage crisis. I was, is 120 00:06:39,040 --> 00:06:45,320 Speaker 1: there another big short type of trade in this paradigm shift. Well, 121 00:06:45,360 --> 00:06:47,559 Speaker 1: it's not. In the financial sector. If you're talking about 122 00:06:47,640 --> 00:06:53,120 Speaker 1: negative the I mean I would give applause to the 123 00:06:53,240 --> 00:06:57,280 Speaker 1: vice Chairman of Supervision, the first one, Daniel Trullo, who 124 00:06:57,279 --> 00:07:03,560 Speaker 1: completely changed the banks, lowering d killing leverage. So whatever happens, 125 00:07:03,640 --> 00:07:05,760 Speaker 1: it's not going to happen in the banks. I mean, 126 00:07:05,760 --> 00:07:09,080 Speaker 1: maybe it happens in private equity, but I don't think 127 00:07:09,560 --> 00:07:11,960 Speaker 1: given that this will probably be just if there is 128 00:07:12,000 --> 00:07:14,600 Speaker 1: a recession, it'll just be a run of the mill recession, 129 00:07:14,680 --> 00:07:19,840 Speaker 1: not a calamity. I don't see a crisis in the 130 00:07:19,840 --> 00:07:22,000 Speaker 1: banks now. Maybe it happens like in the UK and 131 00:07:22,040 --> 00:07:24,119 Speaker 1: the pension funds. I don't know yet. I mean, maybe 132 00:07:24,120 --> 00:07:25,920 Speaker 1: nothing happens and we just have a plane run of 133 00:07:25,920 --> 00:07:27,800 Speaker 1: the mill recession. That's my bet at this point, if 134 00:07:27,840 --> 00:07:29,840 Speaker 1: we have a recession, I want to go to a 135 00:07:29,960 --> 00:07:32,920 Speaker 1: chapter in the Michael Lewis book, The Big Short, which 136 00:07:32,960 --> 00:07:35,400 Speaker 1: is a long quiet. Some would say the long Quiet 137 00:07:35,920 --> 00:07:39,000 Speaker 1: was the artificiality of low, low real rates that we've 138 00:07:39,000 --> 00:07:42,440 Speaker 1: seen for well in excess of ten years. We return 139 00:07:43,000 --> 00:07:46,000 Speaker 1: to a real rate environment. On the paradigm story, we 140 00:07:46,040 --> 00:07:48,520 Speaker 1: can go from Thomas Coon to say someone look not 141 00:07:48,680 --> 00:07:51,160 Speaker 1: seeing teleb who says the gravity has come back into 142 00:07:51,480 --> 00:07:53,600 Speaker 1: our financial physics, and then we go on to you 143 00:07:53,720 --> 00:07:56,920 Speaker 1: that say we have to deal with a new paradigm, 144 00:07:56,960 --> 00:08:00,840 Speaker 1: which to me is potentially but okay, I will, like 145 00:08:00,880 --> 00:08:05,200 Speaker 1: I said, not Einstein, not Einstein, but let's what's potentially 146 00:08:05,280 --> 00:08:08,360 Speaker 1: here as a resurgence of real rates. Do you think 147 00:08:08,400 --> 00:08:10,920 Speaker 1: we're going to see a sustainable real rates that gets 148 00:08:10,960 --> 00:08:13,800 Speaker 1: us back to an environment like two thousand six when 149 00:08:13,840 --> 00:08:18,360 Speaker 1: you started the big short. I mean, look, I first 150 00:08:18,360 --> 00:08:20,720 Speaker 1: of all, I think there's a possibility that inflation goes 151 00:08:20,720 --> 00:08:23,880 Speaker 1: back up. You know you were mentioning before use cars. 152 00:08:23,960 --> 00:08:26,880 Speaker 1: I just sold my use car and at eight five 153 00:08:26,920 --> 00:08:28,760 Speaker 1: thousand miles on it, and I got a price that 154 00:08:28,840 --> 00:08:32,240 Speaker 1: I was shocked by. So I mean, I'll tell you 155 00:08:32,280 --> 00:08:34,600 Speaker 1: one thing that I've been doing lately, which I haven't 156 00:08:34,640 --> 00:08:38,280 Speaker 1: done in fifteen years of I've been You know, our 157 00:08:38,320 --> 00:08:42,360 Speaker 1: groups are actually buying bonds, at least some bonds, and 158 00:08:42,600 --> 00:08:44,959 Speaker 1: when we have cash, we either park it in a 159 00:08:45,000 --> 00:08:48,880 Speaker 1: money market fund that yields over four percent shocking, or 160 00:08:48,960 --> 00:08:53,080 Speaker 1: we even by you know, three months treasuries with the 161 00:08:53,160 --> 00:08:55,520 Speaker 1: yield of four point six percent. I'll say it again, 162 00:08:55,640 --> 00:08:59,199 Speaker 1: four point six percent. So you know, there as long 163 00:08:59,240 --> 00:09:02,600 Speaker 1: as rights stay hi. The old paradigm of what was 164 00:09:02,640 --> 00:09:06,800 Speaker 1: it called Tina. There is nothing, There is no alternatives. 165 00:09:07,000 --> 00:09:09,000 Speaker 1: It's not true that there is norm alternative. I mean 166 00:09:09,840 --> 00:09:12,760 Speaker 1: we tell our clients you can have something in very 167 00:09:12,800 --> 00:09:15,880 Speaker 1: short term duration with a yield of four point five 168 00:09:15,920 --> 00:09:19,160 Speaker 1: percent with zero risk. You know they're happy to park 169 00:09:19,280 --> 00:09:21,679 Speaker 1: some cash. Dan Scaly and Morgan Stanley said the same 170 00:09:21,720 --> 00:09:24,079 Speaker 1: thing this morning. Get paid to white now quite literally. 171 00:09:26,040 --> 00:09:27,600 Speaker 1: So we've had these big moves in the equity market. 172 00:09:27,600 --> 00:09:29,000 Speaker 1: Can we talk about the mix of what you like 173 00:09:29,000 --> 00:09:31,320 Speaker 1: and equities At the moment, the likes of Rio more 174 00:09:31,400 --> 00:09:33,920 Speaker 1: than thirty percent from the lows at the end of October. 175 00:09:33,960 --> 00:09:37,760 Speaker 1: We're starting to see the miners outperformed. We've bought a 176 00:09:37,800 --> 00:09:41,240 Speaker 1: couple of We've bought some minors very recently. I mean, 177 00:09:41,240 --> 00:09:43,560 Speaker 1: it's partially an infrastructure story. And if you look at 178 00:09:43,559 --> 00:09:45,439 Speaker 1: the chart of those stocks, I don't think they've done 179 00:09:45,440 --> 00:09:48,520 Speaker 1: anything in twenty years. So, you know, assuming that the 180 00:09:48,600 --> 00:09:51,800 Speaker 1: resurgence of infrastructure continues to occur, the miners will do 181 00:09:51,840 --> 00:09:55,920 Speaker 1: pretty well here. Do you think that there is a 182 00:09:56,000 --> 00:09:58,360 Speaker 1: bet to really go much more into bonds in cash 183 00:09:58,920 --> 00:10:01,560 Speaker 1: even as you play and some of the old economy 184 00:10:01,600 --> 00:10:03,320 Speaker 1: that's coming to the four again. In other words, can 185 00:10:03,360 --> 00:10:06,760 Speaker 1: you give us a distribution that you're looking for. I mean, look, 186 00:10:06,760 --> 00:10:08,480 Speaker 1: I think you can still invest in tech, but you 187 00:10:08,480 --> 00:10:10,959 Speaker 1: have to be much more selective. We have a much 188 00:10:10,960 --> 00:10:15,320 Speaker 1: more diversified portfolio right now. There's some infrastructure, there are 189 00:10:15,320 --> 00:10:19,079 Speaker 1: a few financials, there's healthcare, there's some utilities, which is 190 00:10:19,120 --> 00:10:23,760 Speaker 1: a story also of infrastructure. So I mean, I just 191 00:10:23,840 --> 00:10:26,600 Speaker 1: like I said before, the days where somebody has of 192 00:10:26,600 --> 00:10:30,960 Speaker 1: their portfolio in tech, I think is might be in 193 00:10:31,000 --> 00:10:34,240 Speaker 1: the past. I want to talk about the short termism 194 00:10:34,280 --> 00:10:36,439 Speaker 1: that's out there. You guys made a battles mentioned in 195 00:10:36,480 --> 00:10:40,240 Speaker 1: the Quiet, the chapter that was a long quiet in 196 00:10:40,320 --> 00:10:42,800 Speaker 1: the Big Short there's a short termism out there. We 197 00:10:42,880 --> 00:10:45,120 Speaker 1: see the last time since we've seen you in here, 198 00:10:45,160 --> 00:10:48,520 Speaker 1: there's the whole meme stop things back thing blah blah blah. 199 00:10:48,880 --> 00:10:52,120 Speaker 1: The answers, how does our audience get back to responsible 200 00:10:52,200 --> 00:10:56,480 Speaker 1: long term investment given how they're buffeted every day, every week, 201 00:10:56,520 --> 00:11:00,040 Speaker 1: every month by the back and forth two by For 202 00:11:00,840 --> 00:11:04,840 Speaker 1: like I said before, people have I mean people have 203 00:11:04,960 --> 00:11:06,320 Speaker 1: to be hit on the head with the two by 204 00:11:06,400 --> 00:11:10,000 Speaker 1: for multiple times before they start to realize that I 205 00:11:10,040 --> 00:11:13,079 Speaker 1: do think the age of speculation of that intensity is 206 00:11:13,120 --> 00:11:15,600 Speaker 1: probably over. I mean, if you look at charts, SPACs 207 00:11:15,800 --> 00:11:20,040 Speaker 1: died the Like I said before, the high revenue growth 208 00:11:20,080 --> 00:11:24,959 Speaker 1: companies with negative earnings got destroyed last year. They were 209 00:11:24,960 --> 00:11:28,640 Speaker 1: down and people are pointing out that they've gone up 210 00:11:28,640 --> 00:11:30,719 Speaker 1: a lot, but they've got up a lot. When you 211 00:11:30,760 --> 00:11:33,560 Speaker 1: go down and then you go up a hundred percent, 212 00:11:33,840 --> 00:11:35,920 Speaker 1: the chart doesn't look that different. You've mentioned that a 213 00:11:35,920 --> 00:11:37,640 Speaker 1: couple of times being hit by a two by four. 214 00:11:37,679 --> 00:11:39,079 Speaker 1: What does that look like in a market that was 215 00:11:39,120 --> 00:11:42,600 Speaker 1: decimated last year that is facing what is looking like 216 00:11:42,720 --> 00:11:45,040 Speaker 1: one of the biggest pain trades in the wrong direction 217 00:11:45,320 --> 00:11:47,520 Speaker 1: towards the old paradigm that we've become familiar with in 218 00:11:47,520 --> 00:11:51,119 Speaker 1: the past decade. I mean, like we're having a resurgence 219 00:11:51,240 --> 00:11:54,319 Speaker 1: right now. You know, if if inflation starts to come 220 00:11:54,360 --> 00:11:56,800 Speaker 1: back and the FED either raises rates more than people 221 00:11:56,840 --> 00:12:00,960 Speaker 1: expect or keeps it there, people's taste for such speculation 222 00:12:01,080 --> 00:12:03,720 Speaker 1: is going to erode. But like I said before, people 223 00:12:03,720 --> 00:12:07,520 Speaker 1: don't give up paradigms easily. It takes time. So you know, 224 00:12:07,640 --> 00:12:11,280 Speaker 1: maybe this is a year of the last Hurrah, assuming 225 00:12:11,360 --> 00:12:14,000 Speaker 1: rates stay high. I don't know. Yet, But something's going 226 00:12:14,040 --> 00:12:16,480 Speaker 1: to happen. I think some people are guilty of becoming 227 00:12:16,480 --> 00:12:19,400 Speaker 1: married to positions. Do you have a favorite position? How 228 00:12:19,400 --> 00:12:21,560 Speaker 1: do you think about that within the portfolio? Do you 229 00:12:21,559 --> 00:12:26,800 Speaker 1: have one? No? I don't um. I'm not married. I'm 230 00:12:26,800 --> 00:12:28,720 Speaker 1: not married to my stock. Get that tramp. How have 231 00:12:28,760 --> 00:12:30,560 Speaker 1: you avoided that? How do you go about doing that? 232 00:12:30,760 --> 00:12:32,679 Speaker 1: I don't think that I should be married to any stock. 233 00:12:32,760 --> 00:12:35,079 Speaker 1: I mean you can invest long term. You know, people 234 00:12:35,120 --> 00:12:37,679 Speaker 1: have invested in tech stocks for a very long time. 235 00:12:38,760 --> 00:12:41,760 Speaker 1: They love them, they're married to them. But I don't 236 00:12:41,800 --> 00:12:45,640 Speaker 1: see being married to the stocks. Steve Iceman of new 237 00:12:45,640 --> 00:12:58,160 Speaker 1: Berger Burma of the Iceman Group joining us right now 238 00:12:58,240 --> 00:13:01,480 Speaker 1: is John Stolfer's chief investment strategy the Oppenheimer Asset Management. John, 239 00:13:01,520 --> 00:13:03,160 Speaker 1: what if I can't shop with you? I know you're 240 00:13:03,200 --> 00:13:06,560 Speaker 1: more constructive than most, especially coming into three and so far, 241 00:13:06,920 --> 00:13:09,679 Speaker 1: so good. Mike Wilson, a margin standing this morning, says 242 00:13:09,720 --> 00:13:12,719 Speaker 1: price is about its disconnected from reality as it's been 243 00:13:12,800 --> 00:13:14,880 Speaker 1: during this band market. What would you say, bank, John, 244 00:13:15,840 --> 00:13:19,679 Speaker 1: I'd say I'd say dark Vader. I disagree with you. Uh, 245 00:13:19,720 --> 00:13:23,239 Speaker 1: you know a length of force be with us? Uh? Effectively? 246 00:13:23,320 --> 00:13:25,320 Speaker 1: I think what we're seeing is that things are actually 247 00:13:25,400 --> 00:13:27,640 Speaker 1: improving around the world, and they at least have just 248 00:13:27,640 --> 00:13:30,719 Speaker 1: just mentioned in terms of Europe the way things are 249 00:13:30,720 --> 00:13:34,520 Speaker 1: looking over there. The better than expected earning so far 250 00:13:35,120 --> 00:13:37,400 Speaker 1: last night looked. I think earnings were of from fourth 251 00:13:37,440 --> 00:13:39,599 Speaker 1: quarter for the SSB five hundred around two and a 252 00:13:39,600 --> 00:13:43,080 Speaker 1: half percent versus expectations I think going into it at 253 00:13:43,120 --> 00:13:45,720 Speaker 1: three and a half were cent or worse. I think 254 00:13:46,000 --> 00:13:50,960 Speaker 1: companies are doing their job to navigate a rough environment overall, 255 00:13:51,640 --> 00:13:54,960 Speaker 1: and we have the Federal Reserve doing the doing the 256 00:13:55,040 --> 00:13:58,520 Speaker 1: job to end the period of free money and put 257 00:13:58,600 --> 00:14:03,040 Speaker 1: us back on a more holistic course that should be 258 00:14:03,040 --> 00:14:08,200 Speaker 1: good or fundamentals overcome momentum and high leverage. John, you're 259 00:14:08,280 --> 00:14:11,480 Speaker 1: very articulate about extending a bullish call out tour. We 260 00:14:11,600 --> 00:14:14,800 Speaker 1: finally got a stulfas market. We certainly have a stulfas 261 00:14:14,880 --> 00:14:18,800 Speaker 1: market around. This is the trading and schuring on the market. 262 00:14:18,840 --> 00:14:21,560 Speaker 1: I thought of you when I saw this observation from 263 00:14:21,600 --> 00:14:25,600 Speaker 1: Ben Laidler of Toro. In the old days, we used 264 00:14:25,680 --> 00:14:29,560 Speaker 1: to hold stocks for years. Now we hold them for months. 265 00:14:29,600 --> 00:14:32,600 Speaker 1: We've gone from a five year old to an average 266 00:14:32,640 --> 00:14:36,440 Speaker 1: ten month hold. How do you do stulfus optimism. If 267 00:14:36,480 --> 00:14:39,480 Speaker 1: people on a ten month basis are pretty close to 268 00:14:39,560 --> 00:14:44,120 Speaker 1: day trading, well, gosh, I think that's that's a great question, Tom. 269 00:14:44,160 --> 00:14:47,760 Speaker 1: I think more than ever before, there really is a 270 00:14:47,840 --> 00:14:52,920 Speaker 1: recognition that there are at the starting from point one, 271 00:14:53,680 --> 00:14:56,000 Speaker 1: you have two different types of investors. You've got the 272 00:14:56,040 --> 00:14:59,040 Speaker 1: short term crowd and you've got the intermediate, long term, 273 00:14:59,080 --> 00:15:03,600 Speaker 1: ground term evidence of fear and greed and longer term 274 00:15:03,680 --> 00:15:08,760 Speaker 1: its need and the realization that investing in innovation in 275 00:15:08,800 --> 00:15:12,800 Speaker 1: corporations that that know how to manage their products and 276 00:15:12,880 --> 00:15:16,920 Speaker 1: their services. Uh, this is the way to go for 277 00:15:17,200 --> 00:15:21,000 Speaker 1: a portion of one's portfolio in terms of meeting the 278 00:15:21,080 --> 00:15:25,320 Speaker 1: needs of whether it's a kid's education, whether it's a retirement, uh, 279 00:15:25,600 --> 00:15:28,240 Speaker 1: what have you. The serious goals and the fun stuff 280 00:15:28,320 --> 00:15:30,760 Speaker 1: is the day trading, you know, I mean not for me. 281 00:15:31,160 --> 00:15:35,480 Speaker 1: I'm an intermediate to longer term investor. I'm a buffet guy. Well. 282 00:15:36,000 --> 00:15:38,040 Speaker 1: I am curious, though, John, at what point you start 283 00:15:38,040 --> 00:15:40,840 Speaker 1: to get worried about the Central banks going much further 284 00:15:41,200 --> 00:15:43,200 Speaker 1: than they previously said they would if you do get 285 00:15:43,200 --> 00:15:45,440 Speaker 1: this re acceleration. It seems like that's the pre eminent 286 00:15:45,480 --> 00:15:49,320 Speaker 1: concern among a growing number of investors right now. I 287 00:15:49,400 --> 00:15:51,880 Speaker 1: would say that is a pre eminent at least among 288 00:15:51,920 --> 00:15:54,680 Speaker 1: the training crowded for sure. And remember the traders are 289 00:15:54,720 --> 00:15:58,520 Speaker 1: closer to equity traders, the dare closer to bodity traders. 290 00:15:59,000 --> 00:16:01,040 Speaker 1: UH from the path in terms of the way they 291 00:16:01,120 --> 00:16:04,760 Speaker 1: position themselves on a day to day, minute demented basis. 292 00:16:05,280 --> 00:16:07,360 Speaker 1: But we have to see the central banks are doing 293 00:16:07,360 --> 00:16:12,640 Speaker 1: their job and are showing remarkable ability to UH to 294 00:16:13,320 --> 00:16:16,560 Speaker 1: essentially if not pivot or pause, and I don't think 295 00:16:16,560 --> 00:16:20,120 Speaker 1: that's needed right now, but to maintain a view that 296 00:16:20,160 --> 00:16:22,960 Speaker 1: they're going to be vigilant against inflation, they're going to 297 00:16:23,040 --> 00:16:25,800 Speaker 1: take action against this. I don't think any central bank 298 00:16:25,920 --> 00:16:28,320 Speaker 1: or around the world wants to be remembered as Arthur 299 00:16:28,360 --> 00:16:31,960 Speaker 1: Burns is remembered. So what's your target for your end 300 00:16:32,000 --> 00:16:33,960 Speaker 1: and what's the parameters, what's sort of the band that 301 00:16:34,040 --> 00:16:36,240 Speaker 1: you see at this point? And given that it is 302 00:16:36,280 --> 00:16:39,200 Speaker 1: a highly uncertain time, and yet there does seem to 303 00:16:39,200 --> 00:16:43,400 Speaker 1: be this growing sentiment of no landing well well, at 304 00:16:43,440 --> 00:16:46,640 Speaker 1: least I've never known a period in forty years almost 305 00:16:46,680 --> 00:16:49,280 Speaker 1: forty years in the market when there has really been 306 00:16:49,880 --> 00:16:53,720 Speaker 1: UH any certainty in the market Uncertainty is part of life, 307 00:16:53,720 --> 00:16:55,880 Speaker 1: and it certainly moves through the market. There's never an 308 00:16:55,880 --> 00:16:59,360 Speaker 1: all clear signal UH sounded. But we'd have to say, 309 00:16:59,400 --> 00:17:02,440 Speaker 1: you know, our target is forty four hundred for the 310 00:17:02,560 --> 00:17:06,359 Speaker 1: SNP this year with based on what we've seen coming 311 00:17:06,359 --> 00:17:08,560 Speaker 1: out of the box or out of the gates or 312 00:17:08,640 --> 00:17:11,359 Speaker 1: to speak at the beginning of the year, a chance 313 00:17:11,440 --> 00:17:13,960 Speaker 1: that we may see that exceeded. Right now, we'll stick 314 00:17:14,000 --> 00:17:17,880 Speaker 1: with thet D. Our main concerns are on the day 315 00:17:17,920 --> 00:17:20,520 Speaker 1: to day basis, you know, are the ability of the 316 00:17:20,600 --> 00:17:24,600 Speaker 1: market to over sell as well as to over buy UH. 317 00:17:24,600 --> 00:17:27,640 Speaker 1: In the near term. You have to curb enthusiasm somewhat 318 00:17:28,240 --> 00:17:31,640 Speaker 1: UH and keep keep a good business mind in terms 319 00:17:31,720 --> 00:17:35,640 Speaker 1: of what you're investing in and UH and your courage 320 00:17:35,840 --> 00:17:38,639 Speaker 1: of your convictions. Ye, John, great to catch you in 321 00:17:38,640 --> 00:17:40,520 Speaker 1: the make Sandy cant you a white at it FS 322 00:17:40,600 --> 00:17:43,280 Speaker 1: six weeks to this year at John Stelfas staff of Oppenheimer. 323 00:17:48,119 --> 00:17:50,480 Speaker 1: Let's get to one of our most successful guests. She 324 00:17:50,760 --> 00:17:54,679 Speaker 1: nailed bonds in two thousand twenty two Priumr associated with 325 00:17:54,720 --> 00:17:57,400 Speaker 1: a ten year yield of TD securities. Pre I want 326 00:17:57,400 --> 00:17:59,800 Speaker 1: to go inside to the two year yield. How do 327 00:17:59,840 --> 00:18:02,760 Speaker 1: you how do you look at the two year yield? 328 00:18:03,040 --> 00:18:05,600 Speaker 1: How do you establish a color around how the two 329 00:18:05,680 --> 00:18:09,800 Speaker 1: year yield may act? Sure, so thanks for having me on. 330 00:18:09,920 --> 00:18:12,080 Speaker 1: I think the two years all about that endpoint of 331 00:18:12,080 --> 00:18:14,520 Speaker 1: the hiking cycle. How long is the Fed going to 332 00:18:14,680 --> 00:18:16,480 Speaker 1: keep it there? And then when are they going to cut? 333 00:18:16,600 --> 00:18:18,520 Speaker 1: I think we should talk about when they're going to cut, 334 00:18:18,560 --> 00:18:21,320 Speaker 1: because inflation is likely to come down at some point 335 00:18:21,320 --> 00:18:23,840 Speaker 1: and we're looking for cuts next year. But I think 336 00:18:23,920 --> 00:18:27,320 Speaker 1: what is the market pricing off that endpoint? That pause, 337 00:18:27,840 --> 00:18:29,480 Speaker 1: and then when do they cut. It's all going to 338 00:18:29,560 --> 00:18:32,000 Speaker 1: come down to inflation. I think inflation and and and 339 00:18:32,080 --> 00:18:33,560 Speaker 1: later on this year. I think it's going to come 340 00:18:33,600 --> 00:18:35,720 Speaker 1: down to the labor market. The labor market is still 341 00:18:35,760 --> 00:18:37,840 Speaker 1: very strong, so I think that inflation print we get 342 00:18:37,880 --> 00:18:41,480 Speaker 1: one CPI tomorrow. You know, if course services X shelter 343 00:18:41,680 --> 00:18:44,760 Speaker 1: remains strong, which is our view, the Fed is not 344 00:18:44,920 --> 00:18:47,560 Speaker 1: stopping yet. I think they're going in our view two 345 00:18:47,720 --> 00:18:50,639 Speaker 1: or I would say there's a decent chance of another 346 00:18:50,680 --> 00:18:53,400 Speaker 1: twenty five and then they pause again. I think it's 347 00:18:53,400 --> 00:18:56,440 Speaker 1: going to depend on how quickly does that service inflation 348 00:18:56,520 --> 00:18:59,160 Speaker 1: come down, which will allow them to start to cut it. 349 00:18:59,200 --> 00:19:00,800 Speaker 1: So I think it's only and we get into that 350 00:19:00,880 --> 00:19:05,080 Speaker 1: to handle two and a half three percent inflation sustained basis, 351 00:19:05,280 --> 00:19:07,879 Speaker 1: can the Fed start to you know, make policy a 352 00:19:07,920 --> 00:19:10,639 Speaker 1: little less restrictive. So we're looking for the two year. Actually, 353 00:19:11,240 --> 00:19:13,280 Speaker 1: I would say the market is actually pretty well well 354 00:19:13,359 --> 00:19:15,919 Speaker 1: priced for that endpoint of the hiking cycle. I do 355 00:19:16,040 --> 00:19:17,960 Speaker 1: think the pause can be a little longer, so a 356 00:19:18,800 --> 00:19:21,440 Speaker 1: little bit higher to U two arrates is what we're 357 00:19:21,440 --> 00:19:23,320 Speaker 1: looking for. Spray were dancing around it a little bit. 358 00:19:23,400 --> 00:19:24,960 Speaker 1: Let's put you on the spark. Do you think we 359 00:19:25,040 --> 00:19:29,560 Speaker 1: are sufficiently restrictive any evidence of that whatsoever? I think 360 00:19:29,600 --> 00:19:31,920 Speaker 1: we are um and I get a lot of pushback 361 00:19:31,960 --> 00:19:34,080 Speaker 1: on that because the data is strong. So number one, 362 00:19:34,080 --> 00:19:36,240 Speaker 1: there are lags, long and variable lags, you know. I 363 00:19:36,240 --> 00:19:39,639 Speaker 1: think we're in that process of lags. The fact that 364 00:19:39,680 --> 00:19:42,639 Speaker 1: the consumer has so much still accumulated savings. Now these 365 00:19:42,640 --> 00:19:45,680 Speaker 1: savings are coming down, but I think that's actually widened 366 00:19:45,680 --> 00:19:48,200 Speaker 1: that lag. Beer I don't think the lags are shorter. 367 00:19:48,280 --> 00:19:51,480 Speaker 1: I know markets priced in, but for the consumer to 368 00:19:51,560 --> 00:19:53,879 Speaker 1: actually start to cut back on spending, and I think 369 00:19:53,920 --> 00:19:56,520 Speaker 1: they are starting to cut back. But the labor market 370 00:19:56,560 --> 00:19:59,480 Speaker 1: is strong, and I still have accumulated savings. When those 371 00:19:59,480 --> 00:20:01,480 Speaker 1: savings on out, in our view, that happens in the 372 00:20:01,480 --> 00:20:04,240 Speaker 1: second half of the year. That's when the consumer starts 373 00:20:04,280 --> 00:20:06,880 Speaker 1: to cut back. So, you know, I think the policy 374 00:20:07,000 --> 00:20:10,199 Speaker 1: is restrictive. Real rates well not of one percent is 375 00:20:10,200 --> 00:20:12,960 Speaker 1: going to have an impact on the consumer um you know. 376 00:20:13,040 --> 00:20:14,760 Speaker 1: I think it just is going to take some time 377 00:20:14,800 --> 00:20:17,560 Speaker 1: where we haven't had a shock to the system. I 378 00:20:17,600 --> 00:20:20,080 Speaker 1: think the last two recessions have been shocked lead, which 379 00:20:20,080 --> 00:20:22,160 Speaker 1: is why the market is just waiting for the data 380 00:20:22,200 --> 00:20:24,240 Speaker 1: to fall apart. I think it's going to be a 381 00:20:24,320 --> 00:20:26,680 Speaker 1: slow grind. You know. It's like that last mile when 382 00:20:26,680 --> 00:20:29,159 Speaker 1: you're running that marathon. It just you slow down. It 383 00:20:29,200 --> 00:20:32,080 Speaker 1: feels really long. I think we're in that moment of 384 00:20:32,119 --> 00:20:35,240 Speaker 1: the market's impatient. So that's why we're moving from you know, 385 00:20:35,320 --> 00:20:38,840 Speaker 1: hard landing, soft landing, no landing. You know, I still 386 00:20:38,960 --> 00:20:42,119 Speaker 1: think that interest rates real interest rates well north of 387 00:20:42,200 --> 00:20:44,800 Speaker 1: that fifty basis point that we think is normal. That 388 00:20:45,040 --> 00:20:47,800 Speaker 1: is restrictive. It just is taking a while for that 389 00:20:47,880 --> 00:20:50,520 Speaker 1: to slow the US economy down. What does restrictive mean 390 00:20:50,560 --> 00:20:53,040 Speaker 1: in terms of the likelihood of a hard landing of 391 00:20:53,040 --> 00:20:56,520 Speaker 1: a recession that a lot of people have written off sure, 392 00:20:56,560 --> 00:20:58,800 Speaker 1: so I think you know what's going to be tricky 393 00:20:59,000 --> 00:21:01,320 Speaker 1: is as the kind of starts to slow down, can 394 00:21:01,359 --> 00:21:03,200 Speaker 1: the FED respond? You know, I don't think we're gonna 395 00:21:03,240 --> 00:21:05,520 Speaker 1: get any fiscal response. In fact, into the dead ceiling, 396 00:21:05,720 --> 00:21:08,720 Speaker 1: we might actually get some spending cuts. What makes us 397 00:21:08,800 --> 00:21:12,879 Speaker 1: more nervous about about a hard landing is policies restrictive. 398 00:21:12,920 --> 00:21:14,960 Speaker 1: The economy starts to slow down, and then we wait 399 00:21:15,000 --> 00:21:16,800 Speaker 1: for the FED to respond. We wait for the fight 400 00:21:16,840 --> 00:21:19,600 Speaker 1: to stop QT to start to cut trade, and we 401 00:21:19,680 --> 00:21:22,160 Speaker 1: think the inflation environment is going to prevent them from 402 00:21:22,200 --> 00:21:25,399 Speaker 1: doing that. And so if policy remains restrictive for longer, 403 00:21:25,840 --> 00:21:28,439 Speaker 1: that soft landing very quickly starts to look like a 404 00:21:28,480 --> 00:21:30,760 Speaker 1: hard landing. You know, every hard landing sort of starts 405 00:21:30,760 --> 00:21:33,720 Speaker 1: looking like a soft landing in the beginning. That's what 406 00:21:33,760 --> 00:21:36,640 Speaker 1: I do worry about. Now. If we're lucky and inflation 407 00:21:36,680 --> 00:21:38,840 Speaker 1: actually does start to come down, I think the FED 408 00:21:38,920 --> 00:21:41,280 Speaker 1: can respond and then we can perhaps get that soft 409 00:21:41,359 --> 00:21:44,400 Speaker 1: landing that it's going to depend on that inflation outlook 410 00:21:44,600 --> 00:21:46,679 Speaker 1: just quickly. Preyer, what does that mean in terms of 411 00:21:46,720 --> 00:21:49,320 Speaker 1: ten uere yields? If there is this feeling of the 412 00:21:49,359 --> 00:21:52,240 Speaker 1: first option where you end up with a hard landing. 413 00:21:52,480 --> 00:21:54,439 Speaker 1: Does that mean that three point seven percent on ten 414 00:21:54,520 --> 00:21:57,160 Speaker 1: year is positive, is attractive right now and that yield 415 00:21:57,160 --> 00:22:01,200 Speaker 1: curveent version could go much much deeper? I do think 416 00:22:01,240 --> 00:22:03,840 Speaker 1: it can. It can go, uh, you know, more deeper. 417 00:22:04,240 --> 00:22:06,960 Speaker 1: I think we're getting to that attractive level. You know, 418 00:22:07,280 --> 00:22:09,480 Speaker 1: is three seventy five the highest we're going to get. 419 00:22:09,640 --> 00:22:12,400 Speaker 1: We could perhaps get closer to four percent. I think 420 00:22:12,480 --> 00:22:15,400 Speaker 1: legging into duration now does start to make sense that 421 00:22:16,040 --> 00:22:18,439 Speaker 1: I would say terminal rate pricing is pretty fair. The 422 00:22:18,560 --> 00:22:20,840 Speaker 1: rate cuts look a little bit early in our view, 423 00:22:20,920 --> 00:22:22,320 Speaker 1: but I think they are going to have to cut 424 00:22:22,440 --> 00:22:24,680 Speaker 1: rates next day. I think starting to leg in three 425 00:22:24,720 --> 00:22:27,880 Speaker 1: seventy add more as as we get closer to four 426 00:22:27,920 --> 00:22:30,760 Speaker 1: percent global rates, watch global rates. I think that can 427 00:22:30,800 --> 00:22:34,600 Speaker 1: maybe push you know, the US tenure closer to four. 428 00:22:35,080 --> 00:22:37,320 Speaker 1: I think you're getting two levels where duration risk is 429 00:22:37,320 --> 00:22:39,960 Speaker 1: going to look more attractive than equity risk, more attractive 430 00:22:40,000 --> 00:22:42,920 Speaker 1: than credit risks even how much uh you know, credit 431 00:22:42,960 --> 00:22:45,399 Speaker 1: spreads have have compressed. That was a green life from 432 00:22:45,440 --> 00:22:47,840 Speaker 1: t D to start bounder ten year premise. R let's 433 00:22:47,840 --> 00:23:00,880 Speaker 1: t D prayer. Thank you. We're to some all this 434 00:23:01,440 --> 00:23:04,399 Speaker 1: to speak of the greater economics and particularly the trans 435 00:23:04,440 --> 00:23:08,760 Speaker 1: Atlantic economics. Megan Green joins US Global Chief Economist Cruel 436 00:23:08,800 --> 00:23:12,320 Speaker 1: Institute with their academics here and there her work with 437 00:23:12,400 --> 00:23:15,359 Speaker 1: The Financial Times. Megan, thank you so much for joining us. 438 00:23:15,359 --> 00:23:17,760 Speaker 1: You wrote in the f T I think early December 439 00:23:18,320 --> 00:23:22,200 Speaker 1: about the recession. Wait, give us an update right now 440 00:23:22,920 --> 00:23:27,879 Speaker 1: on the recession we're all waiting for. Yeah, that's right. 441 00:23:27,920 --> 00:23:30,640 Speaker 1: I mean, this will be the most anticipated recession will 442 00:23:30,640 --> 00:23:33,520 Speaker 1: have ever had if it materializes. And I have to 443 00:23:33,560 --> 00:23:36,879 Speaker 1: say now it looks less likely to materialize, and it 444 00:23:36,920 --> 00:23:39,320 Speaker 1: did two months ago, for example, but I still think 445 00:23:39,359 --> 00:23:41,720 Speaker 1: it would be incredibly weird if we didn't get a 446 00:23:41,800 --> 00:23:46,439 Speaker 1: downturn UM. Given the aggressive rate pace of rate hikes UM, 447 00:23:46,440 --> 00:23:49,159 Speaker 1: the labor market has held up really well UM, and 448 00:23:49,280 --> 00:23:51,879 Speaker 1: I wonder if that's to some degree a result of 449 00:23:51,960 --> 00:23:54,080 Speaker 1: labor hoarding. And we don't really have a great way 450 00:23:54,119 --> 00:23:57,240 Speaker 1: of measuring labor hoarding. It's mostly ANNEC data rather than 451 00:23:57,320 --> 00:24:00,000 Speaker 1: actual data. But I do think that labor hoarding could 452 00:24:00,119 --> 00:24:02,399 Speaker 1: change on a dime. If companies feel like they're earnings 453 00:24:02,440 --> 00:24:05,840 Speaker 1: are starting to turn rates continue to go higher, UM, 454 00:24:05,920 --> 00:24:08,119 Speaker 1: then I think they might figure, well, maybe we should 455 00:24:08,160 --> 00:24:10,200 Speaker 1: lay these people off rather than trying to get through 456 00:24:10,240 --> 00:24:12,640 Speaker 1: this rough period by keeping them on our balance sheet. 457 00:24:12,680 --> 00:24:15,439 Speaker 1: And when the labor market declines, that that's what we 458 00:24:15,560 --> 00:24:20,000 Speaker 1: spark our recession. One part of your academics, Megan, is 459 00:24:20,000 --> 00:24:25,159 Speaker 1: the idea of aggregate versus the modern theory of looking 460 00:24:25,200 --> 00:24:27,639 Speaker 1: at this, looking at that, looking at the itty bitty 461 00:24:27,680 --> 00:24:31,480 Speaker 1: things and not the sum. What I find interesting is 462 00:24:31,520 --> 00:24:34,920 Speaker 1: the parts of America booming Towarsen, Slack and Apollo has 463 00:24:34,920 --> 00:24:38,600 Speaker 1: a chart out this morning on booming air travel over 464 00:24:38,640 --> 00:24:42,160 Speaker 1: the last five six years, and yet other surveys, John 465 00:24:42,160 --> 00:24:46,159 Speaker 1: Farrell mentioning one survey where half of America's flat on 466 00:24:46,200 --> 00:24:50,720 Speaker 1: their backs. Are you aggregating EU, British and American data 467 00:24:50,920 --> 00:24:54,280 Speaker 1: or do you have to break it apart? So I 468 00:24:54,280 --> 00:24:57,639 Speaker 1: think looking at it more granularly is really important in 469 00:24:57,680 --> 00:25:02,200 Speaker 1: the US, in particular, given how weird the economic indicators are. 470 00:25:02,440 --> 00:25:05,000 Speaker 1: Um it is. We're looking at things by sector, and 471 00:25:05,040 --> 00:25:06,760 Speaker 1: I do think that there is a chance that we 472 00:25:06,800 --> 00:25:09,520 Speaker 1: don't get an overall recession in the US, but instead 473 00:25:09,560 --> 00:25:12,159 Speaker 1: we get a series of rolling recessions where you have 474 00:25:12,280 --> 00:25:16,800 Speaker 1: manufacturing and contraction while services are expanding significantly. Then the 475 00:25:16,920 --> 00:25:20,480 Speaker 1: services come off so you get you know, contractions, recessions, 476 00:25:20,480 --> 00:25:23,320 Speaker 1: and individual sectors just not at all at the same time, 477 00:25:23,359 --> 00:25:26,639 Speaker 1: so it doesn't add up into an overall recession for 478 00:25:26,680 --> 00:25:29,040 Speaker 1: the economy. And that's just for the US. I think 479 00:25:29,040 --> 00:25:31,399 Speaker 1: you also need to look at different sectors in Europe 480 00:25:31,400 --> 00:25:34,280 Speaker 1: and the UK, particularly when it comes to energy versus 481 00:25:34,320 --> 00:25:38,280 Speaker 1: non energy, given the relatively big energy shock that Europe 482 00:25:38,280 --> 00:25:41,480 Speaker 1: has experienced over the past year, the idea of rolling recessions, 483 00:25:41,520 --> 00:25:44,080 Speaker 1: what does that mean for inflation, Given there won't be 484 00:25:44,160 --> 00:25:47,920 Speaker 1: one big shock that brings down the acceleration in prices 485 00:25:48,240 --> 00:25:50,359 Speaker 1: that you could still get you know, growth in other 486 00:25:50,440 --> 00:25:55,440 Speaker 1: areas that keep propping up pricing power. So I think 487 00:25:55,480 --> 00:25:58,160 Speaker 1: that means that will inflation, that inflation will be difficult 488 00:25:58,280 --> 00:26:00,399 Speaker 1: to bring down. I always thought that to get from 489 00:26:00,480 --> 00:26:02,760 Speaker 1: ten to six percent inflation was going to be a 490 00:26:02,800 --> 00:26:06,160 Speaker 1: whole lot harder than getting from six to two percent inflation. 491 00:26:06,359 --> 00:26:08,840 Speaker 1: I think that continues to be the case, particularly if 492 00:26:08,880 --> 00:26:11,679 Speaker 1: we have parts of the economy that are remaining buoyant 493 00:26:11,720 --> 00:26:14,600 Speaker 1: and so we're providing demand as the feed is trying 494 00:26:14,640 --> 00:26:16,960 Speaker 1: to lean against demand to bring it back into line 495 00:26:16,960 --> 00:26:20,120 Speaker 1: with supply so that we stopped getting an acceleration in prices, 496 00:26:20,200 --> 00:26:22,479 Speaker 1: So I think it will just mean that inflation is 497 00:26:22,560 --> 00:26:25,760 Speaker 1: more persistent than we had previously thought. I also think 498 00:26:25,760 --> 00:26:28,480 Speaker 1: it's worth thinking about what inflation looks like when the 499 00:26:28,520 --> 00:26:31,920 Speaker 1: dust is finally settled on the pandemic, on the war 500 00:26:32,480 --> 00:26:35,960 Speaker 1: on supply chain disruptions, and I think there's been relatively 501 00:26:36,000 --> 00:26:38,280 Speaker 1: little thinking done on that. But I do think that 502 00:26:38,359 --> 00:26:40,600 Speaker 1: you know, if you believe that we lived in secular 503 00:26:40,680 --> 00:26:44,160 Speaker 1: stagnation and that was driving low inflation, low rate, slow growth, 504 00:26:44,520 --> 00:26:47,000 Speaker 1: and it was based on an excess of global savings, 505 00:26:47,280 --> 00:26:49,160 Speaker 1: we're all going to be spending a lot of money 506 00:26:49,200 --> 00:26:52,680 Speaker 1: on defense, on the green transition um. You know, that 507 00:26:52,760 --> 00:26:56,280 Speaker 1: could fundamentally be moderately inflationary. At the end of the day, 508 00:26:56,680 --> 00:27:00,680 Speaker 1: we could be deglobalizing. I think that's overblown, but on balance, 509 00:27:00,760 --> 00:27:03,199 Speaker 1: that will probably be a bit more inflationary. So when 510 00:27:03,200 --> 00:27:06,679 Speaker 1: the dust is settled, inflation may also be persistently higher 511 00:27:06,760 --> 00:27:08,600 Speaker 1: than what we had before the pandemic. There are a 512 00:27:08,600 --> 00:27:10,359 Speaker 1: lot of different ideas here, and people are trying to 513 00:27:10,359 --> 00:27:12,480 Speaker 1: pass through them. Probably the reason why people aren't talking 514 00:27:12,520 --> 00:27:14,680 Speaker 1: about them more is books it's so difficult to quantify. 515 00:27:14,760 --> 00:27:17,119 Speaker 1: Bill Dudley, formerly of the New York Fed just how 516 00:27:17,200 --> 00:27:19,760 Speaker 1: with an opinion piece talking about perhaps if FED could 517 00:27:19,760 --> 00:27:22,040 Speaker 1: go higher in terms of a terminal rate and keep 518 00:27:22,080 --> 00:27:24,439 Speaker 1: it there for longer, what are you modeling out in 519 00:27:24,600 --> 00:27:28,240 Speaker 1: terms of what you expect versus market expectations. How will 520 00:27:28,320 --> 00:27:31,760 Speaker 1: you know what the sense is given whatever lag effects 521 00:27:31,800 --> 00:27:35,639 Speaker 1: might might already be in the system. Yeah, I wish 522 00:27:35,640 --> 00:27:38,879 Speaker 1: we had some metric for figuring out exactly what the 523 00:27:38,960 --> 00:27:42,600 Speaker 1: lag is for monetary policy feeding through into the real economy. 524 00:27:42,640 --> 00:27:44,720 Speaker 1: We just don't have a great handle on it. But 525 00:27:44,760 --> 00:27:46,440 Speaker 1: I will say that I think the markets have been 526 00:27:46,480 --> 00:27:49,639 Speaker 1: miss pricing the FED for a while now, so I 527 00:27:49,680 --> 00:27:51,919 Speaker 1: think that FED rates could get a bit higher than 528 00:27:51,960 --> 00:27:53,840 Speaker 1: the markets are pricing. They could go a bit higher 529 00:27:53,880 --> 00:27:56,560 Speaker 1: than even the FED is pricing, and the markets are 530 00:27:56,600 --> 00:27:59,120 Speaker 1: still pricing and cuts this year. I think that's unrealistic. 531 00:27:59,160 --> 00:28:02,080 Speaker 1: I think the federal rates high through this year and 532 00:28:02,119 --> 00:28:05,040 Speaker 1: maybe start to cut next year. It depends entirely, of course, 533 00:28:05,119 --> 00:28:07,400 Speaker 1: on on what the economy is looking like, whether we're 534 00:28:07,400 --> 00:28:10,520 Speaker 1: in recession going into recession. I don't think we'll be 535 00:28:10,560 --> 00:28:12,760 Speaker 1: going into a recession in the first half of this year, 536 00:28:12,800 --> 00:28:14,879 Speaker 1: so I think it will take a while. Thanks partly 537 00:28:14,920 --> 00:28:18,119 Speaker 1: to the huge cash buffer that companies and consumers have 538 00:28:18,480 --> 00:28:21,360 Speaker 1: off the back of stimulus measures when the pandemic hits, 539 00:28:21,440 --> 00:28:23,880 Speaker 1: So you know, I think that could be pushed out 540 00:28:23,880 --> 00:28:26,200 Speaker 1: even further. That could be pushed out into the beginning 541 00:28:26,280 --> 00:28:28,080 Speaker 1: of next year. So I think the FED will hike 542 00:28:28,119 --> 00:28:30,679 Speaker 1: more and keep rates higher than the markets are pricing. 543 00:28:30,800 --> 00:28:33,080 Speaker 1: And Megan, do your focus on the United Kingdom. How 544 00:28:33,080 --> 00:28:36,679 Speaker 1: many degrees of freedom is Governor Bailey lost? He's declaring 545 00:28:36,800 --> 00:28:40,080 Speaker 1: victory was almost Churchilli and I thought, there is you know, 546 00:28:40,120 --> 00:28:44,040 Speaker 1: on the last meeting as well, how constrained as Governor 547 00:28:44,080 --> 00:28:47,320 Speaker 1: Bailey and working with the oddities of Rexit and the 548 00:28:47,400 --> 00:28:51,960 Speaker 1: United Kingdom. Well, Brexit is clearly causing a lot of 549 00:28:52,040 --> 00:28:54,800 Speaker 1: uncertainty in the UK economy, and I think that's probably 550 00:28:54,800 --> 00:28:58,080 Speaker 1: been a drag on business investment, which really leveled off 551 00:28:58,160 --> 00:29:02,480 Speaker 1: after the twixteen referend um and and hasn't bounced back since. 552 00:29:02,560 --> 00:29:05,760 Speaker 1: And that's a drag on productivity growth. Um that you 553 00:29:05,800 --> 00:29:08,120 Speaker 1: can have wage growth and it doesn't have to be 554 00:29:08,160 --> 00:29:10,680 Speaker 1: inflationary as long as you have productivity growth. But what 555 00:29:10,800 --> 00:29:13,400 Speaker 1: we have in the UK is really high wage growth, 556 00:29:13,480 --> 00:29:16,960 Speaker 1: much higher than in the US, with much lower productivity growth, 557 00:29:17,000 --> 00:29:20,800 Speaker 1: so there is a risk of that being persistently inflationary 558 00:29:20,880 --> 00:29:22,720 Speaker 1: and that's the challenge at the Bank of England really 559 00:29:22,760 --> 00:29:25,000 Speaker 1: has to grapple with. Now, Megan, thanks for the brief. 560 00:29:25,040 --> 00:29:27,800 Speaker 1: Look for your next writings in the Financial Times. Megan 561 00:29:27,880 --> 00:29:36,160 Speaker 1: Green is with Kroll Institute. What a highlight for us 562 00:29:36,200 --> 00:29:38,960 Speaker 1: to begin the year looking at the risks that Eurasia 563 00:29:39,000 --> 00:29:42,440 Speaker 1: Group sees. It's really a wonderful informative way for us 564 00:29:42,480 --> 00:29:44,520 Speaker 1: to kick off the year. And we do that with 565 00:29:44,640 --> 00:29:48,000 Speaker 1: Ian Bremer, who I believe did not have a risk 566 00:29:48,840 --> 00:29:52,480 Speaker 1: like this in his power of crisis. Dr Bremer joins 567 00:29:52,560 --> 00:29:56,440 Speaker 1: us this morning. Of course, the force at Eurasia Group, Ian, 568 00:29:56,600 --> 00:29:59,440 Speaker 1: this is incredibly difficult. You and I have talked about 569 00:29:59,440 --> 00:30:03,080 Speaker 1: this of the years. There's early Air to Wan, there's 570 00:30:03,160 --> 00:30:06,480 Speaker 1: Middle Air to One, and now there's Air to Wan crushed. 571 00:30:06,560 --> 00:30:10,320 Speaker 1: I saw on an internal feed on here on Friday 572 00:30:10,680 --> 00:30:14,120 Speaker 1: Mr Air to Wan and various leaders dressed in black, 573 00:30:14,600 --> 00:30:17,680 Speaker 1: and the only image I've seen equivalent to it was 574 00:30:17,760 --> 00:30:23,080 Speaker 1: Rudy Giuliani and Mayor Bloomberg after two thousand one, How 575 00:30:23,120 --> 00:30:25,720 Speaker 1: does Mr Air to Juan and the people of Turkey, 576 00:30:25,920 --> 00:30:33,160 Speaker 1: Regroup of thirty thousand dead and southern central Turkey. You can't. 577 00:30:33,640 --> 00:30:38,200 Speaker 1: It's it's staggering hardship. Um. And with thousands and thousands 578 00:30:38,200 --> 00:30:43,520 Speaker 1: of bodies still trapped UM and the survivor stories of course, 579 00:30:43,560 --> 00:30:47,040 Speaker 1: everyone at this point feels like a miracle. UM. But 580 00:30:47,560 --> 00:30:51,040 Speaker 1: the devastation being felt by Or to Wan and of 581 00:30:51,080 --> 00:30:54,360 Speaker 1: course across the border with much worse infrastructure as well 582 00:30:54,400 --> 00:30:58,400 Speaker 1: in Syria, it's really it's hard to fathom. It's hard 583 00:30:58,400 --> 00:31:02,160 Speaker 1: to talk about. Of course, with on your show, we're 584 00:31:02,200 --> 00:31:05,720 Speaker 1: also talking about elections that are coming up in Turkey 585 00:31:05,760 --> 00:31:09,440 Speaker 1: in May. Uh. And the fact is that Turkey has 586 00:31:09,720 --> 00:31:13,920 Speaker 1: limited democratic institutions. UH. This allows Or to want to 587 00:31:13,960 --> 00:31:17,360 Speaker 1: have a lot more control over what his people see 588 00:31:17,440 --> 00:31:20,920 Speaker 1: over the media, as well as how well the opposition 589 00:31:21,080 --> 00:31:24,800 Speaker 1: can compete against him. And the reality of this devastation 590 00:31:25,040 --> 00:31:28,840 Speaker 1: also means that the opposition has had to wait in 591 00:31:29,400 --> 00:31:33,200 Speaker 1: coming up with their own uh you know, the consolidated 592 00:31:33,240 --> 00:31:36,680 Speaker 1: candidate opposition candidates, so they're not able to run their 593 00:31:36,680 --> 00:31:39,720 Speaker 1: campaign because everyone, of course is now having to focus 594 00:31:39,760 --> 00:31:43,320 Speaker 1: on this horrible, horrible tragedy. So I mean, as much 595 00:31:43,360 --> 00:31:46,560 Speaker 1: as it pains me to say this, the reality is 596 00:31:46,600 --> 00:31:50,280 Speaker 1: that Urtawan comes out of this crisis a little bit 597 00:31:50,320 --> 00:31:55,400 Speaker 1: more likely to be reelected. Does he re embrace ian 598 00:31:56,200 --> 00:31:59,680 Speaker 1: a view to the west in NATO? Does he look 599 00:32:00,040 --> 00:32:04,080 Speaker 1: earth with the very complex Black Sea politics with Mr Putin? 600 00:32:04,720 --> 00:32:07,280 Speaker 1: Or does he look south? Does he always wanted to 601 00:32:07,400 --> 00:32:12,520 Speaker 1: be an international voice in the levant? Well, let's first 602 00:32:12,520 --> 00:32:16,480 Speaker 1: of all recognize that even before this earthquake, Urdawan was 603 00:32:16,600 --> 00:32:22,680 Speaker 1: perhaps one of the most effective international interlocutors between Putin 604 00:32:22,880 --> 00:32:27,440 Speaker 1: and Zelenski. He helped facilitate the Black Sea food deal, 605 00:32:27,840 --> 00:32:30,240 Speaker 1: the only piece of good news really that's come out 606 00:32:30,240 --> 00:32:33,520 Speaker 1: of this war over the last year, So that engagement 607 00:32:33,520 --> 00:32:36,960 Speaker 1: has been helpful in the Americans appreciate it. On top 608 00:32:37,040 --> 00:32:41,320 Speaker 1: of that, of course, with this crisis, you have countries 609 00:32:41,440 --> 00:32:45,400 Speaker 1: all over the world providing humanitarian support, the Fins and 610 00:32:45,440 --> 00:32:48,800 Speaker 1: the Swedes, which will make it easier for Urdawan to 611 00:32:48,920 --> 00:32:52,440 Speaker 1: get off of his high horse and allow uh that 612 00:32:52,800 --> 00:32:58,600 Speaker 1: their NATO enlargement applications to proceed after elections. The Armenians, 613 00:32:59,240 --> 00:33:03,160 Speaker 1: despite their historic grievances of a genocide committed against them 614 00:33:03,160 --> 00:33:06,640 Speaker 1: by Turkey, are providing humanitarian support and they're doing that 615 00:33:06,720 --> 00:33:10,600 Speaker 1: even as the blockade continues against the autonomous Region of 616 00:33:10,920 --> 00:33:15,120 Speaker 1: Toabak that will make Turkey more likely to facilitate a 617 00:33:15,200 --> 00:33:19,520 Speaker 1: peace agreement there um. So I do think that Urawa 618 00:33:19,720 --> 00:33:24,200 Speaker 1: comes out of this uh more of a statesman, more 619 00:33:24,200 --> 00:33:28,360 Speaker 1: willing to be engaged with the Americans, with the Europeans, 620 00:33:28,400 --> 00:33:30,360 Speaker 1: and I suspect, by the way, that those American F 621 00:33:30,520 --> 00:33:34,680 Speaker 1: sixteens will get cleared by Biden um in the months 622 00:33:34,760 --> 00:33:38,040 Speaker 1: after the elections as well. Meanwhile, shifting a bit more 623 00:33:38,160 --> 00:33:40,560 Speaker 1: to the east end, when we talk about the potential risks, 624 00:33:40,880 --> 00:33:43,920 Speaker 1: we have to talk about the UFOs and the the plane, 625 00:33:43,960 --> 00:33:46,560 Speaker 1: the balloons that have been shot down above the United 626 00:33:46,560 --> 00:33:50,200 Speaker 1: States airspace. What are the contours of a new Cold 627 00:33:50,200 --> 00:33:52,360 Speaker 1: war between the US and China that a lot of 628 00:33:52,360 --> 00:33:54,800 Speaker 1: people are trying to game out at this point, well 629 00:33:54,800 --> 00:33:56,960 Speaker 1: when we're not in a new Cold war, and the 630 00:33:57,040 --> 00:34:00,800 Speaker 1: Biden and She have both said consistently that is the 631 00:34:00,840 --> 00:34:04,120 Speaker 1: reality of today's politics and they want to avoid it. 632 00:34:04,160 --> 00:34:07,200 Speaker 1: That continues to be true with what's happened over the 633 00:34:07,280 --> 00:34:12,719 Speaker 1: last week. Let's be clear, the American administration believes that 634 00:34:12,800 --> 00:34:16,759 Speaker 1: the purpose of this balloon surveillance program is a backup, 635 00:34:17,200 --> 00:34:21,400 Speaker 1: a backup by the Chinese in case in a conflict 636 00:34:21,719 --> 00:34:26,480 Speaker 1: with the United States, they lose their satellite capabilities, which 637 00:34:26,480 --> 00:34:31,120 Speaker 1: are far more capable in engaging in surveillance than any balloons. 638 00:34:31,200 --> 00:34:34,280 Speaker 1: In other words, if there were a military crisis over Taiwan, 639 00:34:34,800 --> 00:34:38,520 Speaker 1: how would the Chinese be able to continue to assess um, 640 00:34:38,560 --> 00:34:41,360 Speaker 1: you know, sort of intelligence around the world, including principally 641 00:34:41,440 --> 00:34:44,080 Speaker 1: for the United States. So the the U. S Government 642 00:34:44,280 --> 00:34:48,520 Speaker 1: at no point believed that these balloons were reflected a 643 00:34:48,640 --> 00:34:53,160 Speaker 1: significant additional intelligence threat to the United States at all. 644 00:34:53,200 --> 00:34:55,480 Speaker 1: And that's one of the reasons why before this was 645 00:34:55,560 --> 00:34:59,319 Speaker 1: made known publicly, before this became a headline, Lincoln was 646 00:34:59,320 --> 00:35:01,759 Speaker 1: still going to try apple to China and meet with 647 00:35:01,840 --> 00:35:05,560 Speaker 1: Chiji and Ping, and the Americans had literally zero intention 648 00:35:05,600 --> 00:35:09,080 Speaker 1: of shooting anything down. But of course, once it got 649 00:35:09,120 --> 00:35:12,440 Speaker 1: in the headlines, and once you saw you know, everyone 650 00:35:12,560 --> 00:35:14,640 Speaker 1: standing up and saying we've got to be tougher against 651 00:35:14,640 --> 00:35:17,440 Speaker 1: the Chinese, then Biden had to pull off the trip. 652 00:35:17,760 --> 00:35:21,000 Speaker 1: Then Biden had to shoot down um the balloon, And 653 00:35:21,080 --> 00:35:23,800 Speaker 1: of course that leads to more pressure on both sides 654 00:35:23,840 --> 00:35:26,600 Speaker 1: of this relationship. And that's exactly I wanted to go. 655 00:35:26,960 --> 00:35:30,080 Speaker 1: Do you feel like the heads of both states, right, 656 00:35:30,160 --> 00:35:35,120 Speaker 1: both President Biden and Jijan Ping would like to ease relations, 657 00:35:35,239 --> 00:35:38,480 Speaker 1: and yet the populations, a sort of nationalistic tone that 658 00:35:38,520 --> 00:35:41,439 Speaker 1: a lot of politicians have drummed up in both economies 659 00:35:41,719 --> 00:35:44,719 Speaker 1: are making it difficult for them to do so. I'm 660 00:35:44,719 --> 00:35:47,800 Speaker 1: not sure how much it's the populations at large, either 661 00:35:47,920 --> 00:35:51,560 Speaker 1: in China, not a democracy, or in the United States, 662 00:35:51,800 --> 00:35:54,439 Speaker 1: where we're talking mostly about Congress, but it is both 663 00:35:54,480 --> 00:35:58,560 Speaker 1: sides of Congress democratic and Republican um. And there's no 664 00:35:58,680 --> 00:36:01,680 Speaker 1: question that you remember when Nancy Pelosi was making her 665 00:36:01,719 --> 00:36:05,239 Speaker 1: trip to Taiwan, Biden didn't want her to go and 666 00:36:05,320 --> 00:36:09,719 Speaker 1: privately was sending members of his cabinet to tell Pelosi, 667 00:36:09,800 --> 00:36:12,120 Speaker 1: we'd rather you not go on this trip. But once 668 00:36:12,200 --> 00:36:15,520 Speaker 1: that got linked to the Financial Times and to other media, 669 00:36:15,840 --> 00:36:17,800 Speaker 1: then Biden had to get on board. So we're seeing 670 00:36:17,800 --> 00:36:21,200 Speaker 1: this over and over again. McCarthy's probably gonna make his 671 00:36:21,280 --> 00:36:23,239 Speaker 1: trip to Taiwan. I was gonna make it a lot 672 00:36:23,280 --> 00:36:26,319 Speaker 1: harder for the Americans to maintain this policy. So I 673 00:36:26,360 --> 00:36:28,799 Speaker 1: do think both Biden and she wanted as they put 674 00:36:29,160 --> 00:36:31,920 Speaker 1: a floor under the relationship. But that's very different from 675 00:36:32,120 --> 00:36:35,400 Speaker 1: the governments. Dr Bremer, to use your Eurasia context, that 676 00:36:35,480 --> 00:36:39,960 Speaker 1: you have. It is a spectacular note from the US 677 00:36:40,120 --> 00:36:44,840 Speaker 1: Embassy and Consulates in Russia. It is dated twelve February 678 00:36:44,920 --> 00:36:48,319 Speaker 1: two thousand and twenty three, and they're basically saying US 679 00:36:48,400 --> 00:36:51,840 Speaker 1: citizens get out of Russia. But what I find fascinating 680 00:36:51,880 --> 00:36:56,800 Speaker 1: in it is the basic idea of quote, the unprovoked 681 00:36:57,120 --> 00:37:01,480 Speaker 1: full scale invasion of Ukraine. Do you, when you're you 682 00:37:01,640 --> 00:37:07,560 Speaker 1: Great Eurasia Group analysts expect a full scale invasion of 683 00:37:07,760 --> 00:37:12,879 Speaker 1: Ukraine by Russia? Do you mean beyond what they've already done, 684 00:37:13,520 --> 00:37:16,480 Speaker 1: beyond what they've already done, something new, as the U. 685 00:37:16,600 --> 00:37:20,920 Speaker 1: S Embassy alludes to in Moscow. You know, Look, I 686 00:37:21,400 --> 00:37:24,080 Speaker 1: think that what we have seen is that the Russians, 687 00:37:24,239 --> 00:37:27,680 Speaker 1: We've had three hundred plus thousand troops go into Ukraine. 688 00:37:28,040 --> 00:37:31,600 Speaker 1: They tried to remove Zelenski, they tried to take Kiv. 689 00:37:31,840 --> 00:37:35,800 Speaker 1: I think that still is the ultimate intention of Putin, 690 00:37:36,080 --> 00:37:38,879 Speaker 1: but he does not have the troops to affect that 691 00:37:38,960 --> 00:37:42,279 Speaker 1: outcome in the near term. In the near term, um, 692 00:37:42,360 --> 00:37:45,840 Speaker 1: they certainly want to have increased defensives to be able 693 00:37:45,880 --> 00:37:48,400 Speaker 1: to take the territories that they have announced that they've annexed. 694 00:37:48,440 --> 00:37:50,839 Speaker 1: First time in my life I've ever seen an annexation 695 00:37:50,880 --> 00:37:54,400 Speaker 1: announced where the country doing the illegal annexation doesn't actually 696 00:37:54,440 --> 00:37:57,560 Speaker 1: have control the territories on the ground. That that is 697 00:37:57,600 --> 00:38:00,520 Speaker 1: where we are focused right now. The question really is 698 00:38:00,640 --> 00:38:04,239 Speaker 1: beyond that, are we going to see broader Russian in 699 00:38:04,520 --> 00:38:08,680 Speaker 1: you know, asymmetric attacks against NATO. We've seen some of 700 00:38:08,719 --> 00:38:11,879 Speaker 1: that increased attact the UK and Italy in the past 701 00:38:11,880 --> 00:38:15,279 Speaker 1: couple of weeks. We're out of time. Thank you so 702 00:38:15,360 --> 00:38:17,320 Speaker 1: much for the brief Ian Bremmer there on a number 703 00:38:17,600 --> 00:38:21,880 Speaker 1: of topics. Subscribe to the Bloomberg Surveillance podcast on Apple, 704 00:38:22,080 --> 00:38:26,320 Speaker 1: Spotify and anywhere else you get your podcasts. Listen live 705 00:38:26,440 --> 00:38:30,759 Speaker 1: every weekday starting at seven am Eastern. I'm Bloomberg dot Com, 706 00:38:30,840 --> 00:38:34,360 Speaker 1: the I Heart Radio app, tune In, and the Bloomberg 707 00:38:34,360 --> 00:38:38,400 Speaker 1: Business app. You can watch us live. I'm Bloomberg Television 708 00:38:38,520 --> 00:38:42,759 Speaker 1: and always on the Bloomberg terminal. Thanks for listening. I'm 709 00:38:42,800 --> 00:38:45,400 Speaker 1: Tom Keane and this is Bloomberg