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Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside
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Speaker 2: Jess Metton and Paul Sweeney your life here in our
Speaker 2: Bloomberg Interactive Brooker's studio. It is day for I guess
Speaker 2: of the truce or just the cessation or halt? I
Speaker 2: guess in hostilities between Israel and hamas and some hostage
Speaker 2: exchanges are taking place. That's the good news, and question
Speaker 2: happens is what happens now? Wendy Schiller, professor at Brown University,
Speaker 2: joins us. Wendy, I, you know the reporting I'm seeing
Speaker 2: is that President Biden had you know, had been pushing
Speaker 2: for and continues to push for this pause in fighting,
Speaker 2: maybe get some more hostages out. Where do you think
Speaker 2: we are right now? Where's the administration right now on
Speaker 2: its policy with Israel and Hamasen.
Speaker 3: I think the Administration maintains its support for Israel in
Speaker 3: the sense of defending itself, but they also recognize not
Speaker 3: only the loss of life of civilians in Gaza, but
Speaker 3: that the international community is not on this side of
Speaker 3: this issue.
Speaker 4: And as the.
Speaker 3: Casualties mount in Gaza, you know, the United States will
Speaker 3: then have to defend Israel's action without having really a
Speaker 3: lot of control over what Israel does, which is a
Speaker 3: fairly precarious position for President Biden to be in and
Speaker 3: for the United States to be in. You don't want
Speaker 3: to waiver on your support, but you don't want to
Speaker 3: have to be the apologist or the explainer for another
Speaker 3: country's military offensive. So this is the big question mark,
Speaker 3: how do you describe it?
Speaker 4: Do you keep saying that.
Speaker 3: Israel's defending itself or is there a point at which
Speaker 3: you say, well, we believe Israel's gone far enough. I
Speaker 3: don't see Biden never saying that, but that's what he's
Speaker 3: going to have to do in private conversations.
Speaker 4: With a lot of European leaders.
Speaker 5: Where does Congress stand when it comes to foreign aid?
Speaker 3: Where talking about where Congress stands is almost impossible these days, right,
Speaker 3: because we have Democrats and Republicans. Democrats controlling the Senate,
Speaker 3: Republicans pseudo controlling the House, but really internally divided on
Speaker 3: this very question jes of foreign aid. And you have
Speaker 3: a very large contingent of the Republican majority that does
Speaker 3: not want to give money, especially to Ukraine, but now
Speaker 3: sort of thinks, okay, maybe not even Israel.
Speaker 4: Why are we.
Speaker 3: Giving billions of dollars of taxpayer money to foreign nations
Speaker 3: for conflicts we can't control? And as that grows within
Speaker 3: the Republican caucus, it will get more and more difficult
Speaker 3: for Speaker Johnson to get any kind of foreign aid
Speaker 3: bill through the House.
Speaker 2: When do you assert any reason to believe that the
Speaker 2: Biden administration and the State Department are not on the
Speaker 2: same page as it relates to our policy towards Israel
Speaker 2: and what's happening there.
Speaker 3: In the end of the day, Biden is the commander
Speaker 3: in chief and the President of the United States who
Speaker 3: runs the cabinet. So the State Department may have internal disagreements,
Speaker 3: but I don't think there's an anti question that the
Speaker 3: Secretary of State is on the same page as Biden.
Speaker 4: Whether the Secretary of State is trying to move Biden
Speaker 4: in one way or the other, you know, we're not sure.
Speaker 3: But in the end of the day, the State Department
Speaker 3: still reports to the President of the United States. Even
Speaker 3: civil servants still report to the commander in chief and
Speaker 3: the executive So there can't be a lot of public disconnect.
Speaker 4: And if there is, that's going to be a job
Speaker 4: in the Sect State to clean up. For President Biden.
Speaker 5: What would be the next immediate steps when it comes
Speaker 5: to Israel trying to prolong its truce with Tomas.
Speaker 4: Well, this is a big question mark.
Speaker 3: You know, what is the strategic position of Israel in
Speaker 3: terms of security?
Speaker 4: You know, can they afford to prolong the cease fire.
Speaker 4: Yes they can.
Speaker 3: If they are getting ten fifteen hostages released every day
Speaker 3: every other day, they can justify that cease fire to
Speaker 3: their own people. Remember, they still have a lot of
Speaker 3: explaining to do about how security was so lapsed.
Speaker 4: That they allowed this attack to happen. Now, when I
Speaker 4: say allow, I'm not saying.
Speaker 3: That they know invited them in, but nonetheless irresponsible for
Speaker 3: national security. And they still have to explain that they
Speaker 3: haven't had any chance to do that because they've been
Speaker 3: on the offensive. But if the ceasefire continues to hold,
Speaker 3: then I think the Israeli people will say, how did
Speaker 3: this happen in the first place, and what are you
Speaker 3: doing to keep us safe now? And that's constant pressure
Speaker 3: on the Israeli government to continue its offensive in Gaza.
Speaker 2: Well, I think probably one of the challenge, or one
Speaker 2: of the questions that I don't have an answer for,
Speaker 2: is that if the is Real government, how do I
Speaker 2: define mission accomplished? You can't get rid of a terrorist
Speaker 2: organization per se, and that's kind of the end goal
Speaker 2: they've set up here. So they're kind of in a
Speaker 2: box here. How do you think they try to play that?
Speaker 3: Well, Paul, I mean I think if you're of a
Speaker 3: certain age, you remember George W. Bush standing on Air
Speaker 3: Force carrier, I believe his carrier saying, you know, we're done,
Speaker 3: and we were a long way, right, at least ten
Speaker 3: to fifteen years away, I from being done in Iraq.
Speaker 4: So I think that is a fundamental question.
Speaker 3: I think the idea of what is a status quo
Speaker 3: that will allow Israel to defend itself consistently?
Speaker 4: What is the security status quo?
Speaker 3: And you know, eradicating I'm assle with something that's who said,
Speaker 3: It's unclear how long that's in yon, who lasts after
Speaker 3: this immediate military engagement is over, he may be replaced.
Speaker 3: And the question is what is justifiable in terms of
Speaker 3: Israeli security? And that's going to be a question that
Speaker 3: Biden will have to continue to answer and the Israeli
Speaker 3: government will have to tell the world, you know, what
Speaker 3: is enough?
Speaker 4: And you're right, it is very difficult to quote unquote
Speaker 4: eradicate an organization.
Speaker 3: That was duly elected in Gaza has been the government
Speaker 3: in Gaza, and it's almost impossible to weed out.
Speaker 4: Without you know, very very large civilian casualties.
Speaker 5: Walk us through what's going on in the House as
Speaker 5: it was voting to limit those funds to Iran.
Speaker 3: Yeah, so the funds for Iran is really a messaging
Speaker 3: failure by the Biden administration and a messaging win for
Speaker 3: the GOP. This is Iranian money that they made by
Speaker 3: selling fuel on the international market, and it was sort
Speaker 3: of kept aside. They couldn't have it's like you know,
Speaker 3: South Korea had it, other people had it. It's and
Speaker 3: we are allowing it to be released back to Iran. However,
Speaker 3: the Biden administration has put a stop on the vast
Speaker 3: majority of that money and will not allow it to
Speaker 3: be released until there's no visible evidence of Iranian encouragement
Speaker 3: of hamas R Hesblah in the Middle East.
Speaker 4: So that could be a long way and a long
Speaker 4: time for Iran to wait for that money.
Speaker 3: But the Biden administration has gotten caught on that messaging
Speaker 3: because of the deal they made theoretically for the release
Speaker 3: of American hostages in Iran. So this is the problem
Speaker 3: governments have when they make deals to negotiate for hostages.
Speaker 3: This is what Israel is doing right now, what America
Speaker 3: is doing, and the problem is Iran is actively funding,
Speaker 3: as far as we know, a lot of terrorist organizations
Speaker 3: which could pose a security threat to the United States.
Speaker 4: So it puts the Bide administration in a very difficult position.
Speaker 2: When you mentioned the speaker, Johnson's in a familiarly a
Speaker 2: familiarly difficult situation and trying to get everybody together to move,
Speaker 2: particularly in a Republican Party here to move in one
Speaker 2: direction as it relates to some of these foreign policy issues.
Speaker 2: Any reason to believe that he can in fact succeed
Speaker 2: where maybe his prep predecessors did not, and that includes
Speaker 2: aid for Israel and Ukraine.
Speaker 3: I think, Paul there's a very short window for him
Speaker 3: to succeed, literally till the end of the year, or
Speaker 3: as we might say, till the Iowa primary. You know,
Speaker 3: when Trump if Trump, When if Trump wins his first primary,
Speaker 3: he becomes the spokesperson for the Republican Party, and there
Speaker 3: is no voice louder than Donald Trump's, particularly when he'll
Speaker 3: start to win the primary, and then Johnson has almost.
Speaker 4: No maneuvering room.
Speaker 3: And you can imagine that Trump will be adamant against
Speaker 3: spending money except perhaps to help Israel, depends on their calculations.
Speaker 3: But that's going to make things so much more difficult.
Speaker 3: It'll be twenty twenty four, it'll be technically an election year.
Speaker 3: Primary season gears up. Even though most people have to
Speaker 3: register to run in a primary by the end of
Speaker 3: this year, there are some loopholes in a lot of states.
Speaker 3: So members of Congress, particularly Republicans, will be watching what
Speaker 3: Trump says, not as much what Johnson says, and I
Speaker 3: just think his maneuvering room almost goes to zero.
Speaker 2: So, Wendy, do you think that the GOP the Republican
Speaker 2: Party is ready to support and back another run by
Speaker 2: President Bush? I mean President Trump.
Speaker 3: I think talking about the Republican Party as a model
Speaker 3: with the group is a difficult thing to do right
Speaker 3: now as we are seeing cracks in.
Speaker 4: The Democratic Party, so very difficult to know.
Speaker 3: I think there is excitement brewing among the wing of
Speaker 3: the party that doesn't want to see Trump, either because
Speaker 3: they don't like Trump's or they think Trump will lose
Speaker 3: for Nikki Haley, and the jockeying right now is DeSantis Haley.
Speaker 3: DeSantis is really getting his endorsements in line in Iowa.
Speaker 3: And if he can make a strong enough showing against
Speaker 3: Trump and better than Haley, then I think he's back
Speaker 3: in the conversation and I think if you have viability
Speaker 3: with either of those two candidates, then I think it's
Speaker 3: not quite as certain that Trump ends up being the nominee.
Speaker 2: All Right, Wendy, thank you so much for joining us.
Speaker 2: Really appreciate it. Wendy Schiller, she's a professor at Brown University,
Speaker 2: and we can talk to Professor Schiller about a wide
Speaker 2: range of political and geopolitical issues as well. So a
Speaker 2: lot going on in the market light and a lot
Speaker 2: just it's going to take place early over the next
Speaker 2: several weeks.
Speaker 6: You're listening to the Team Ken's are Live program Bloomberg
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot com,
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Speaker 2: All right, s and P five hundred. It's up almost
Speaker 2: nineteen percent year to date.
Speaker 5: It's up about ten one alone is it's up over
Speaker 5: eight percent.
Speaker 2: Exactly, It's and so but a lot of people I
Speaker 2: just don't feel like there's that conviction behind it. And
Speaker 2: I think maybe it's just because it's not you know,
Speaker 2: you back out the magnificent seven and then it's like,
Speaker 2: all right, we're five to six percent. So I'm just
Speaker 2: not sure we go here, particularly as we think about
Speaker 2: twenty twenty four. But our next guest, I know she
Speaker 2: has an opinion. Katie Kaminski. She's a chief research strategist
Speaker 2: at Alpha Simplex. Katie, thanks so much for joining us here.
Speaker 2: I mean, what do you make of what we've seen
Speaker 2: in the equity markets this year and how does that
Speaker 2: set you up for your twenty twenty four outlook.
Speaker 7: Oh that's a good question. I mean, I think the
Speaker 7: biggest shock we've seen is just that divergence. I mean,
Speaker 7: you look at the numbers and they look good, but
Speaker 7: the truth is the average company hasn't done as well,
Speaker 7: and so I think people are nervous about this excitement
Speaker 7: that we're having this relief rally. But at the same
Speaker 7: time they're saying, why is cooler data or weakness actually
Speaker 7: a good sign? I think we have a lot of
Speaker 7: things we have to digest right now.
Speaker 5: Well, Katie, you're not only a strategist, you're also a
Speaker 5: co portfolio manager, So I want to hear how are
Speaker 5: you advising clients to position going into yurine and what
Speaker 5: do they buy, what do they sell going into next year?
Speaker 7: Well, I think the biggest thing we've focused on is
Speaker 7: fixed income, and that's where we've come to this inflection point,
Speaker 7: and I think we have to figure out are we
Speaker 7: going to get those cuts or are we going to
Speaker 7: have to wait longer for them. So I think investors
Speaker 7: have to really think about what the potential impact of
Speaker 7: opportunities for fixed income is the next year, and then
Speaker 7: also consider how does this tighter policy continue to percolate
Speaker 7: through the equity markets and where does that create opportunities
Speaker 7: and where does that create problems for in places based
Speaker 7: on just sort of that duration exposure that might be
Speaker 7: more prolonged than we like.
Speaker 2: So, Katie, do you think we've seen peak rates back
Speaker 2: in late October?
Speaker 7: That is the billion dollars?
Speaker 2: Do be honest when you're the one to.
Speaker 5: Tell us, well, you know what's interesting?
Speaker 4: Yeah?
Speaker 7: So sorry, yeah, No, what's interesting is we're really at
Speaker 7: that inflection point because I've been looking at the trends
Speaker 7: and fixed income and we started off with the inverted curve.
Speaker 7: We moved to a disinversion this year. The next phase
Speaker 7: is naturally a steeper yield curve. The question is do
Speaker 7: we have a steeper yield curve because of some difficult
Speaker 7: situation where we actually have higher rates for longer or
Speaker 7: do we get cuts. And I think that's where I'm
Speaker 7: I'm not sure yet to be honest, but I do
Speaker 7: think we need to have a steep yield curve at
Speaker 7: some point.
Speaker 5: How do you view the direction of the economy and
Speaker 5: also consumer spending because there's so much still kind of
Speaker 5: gloom out there, well, the consumer pulling back. I mean,
Speaker 5: if you look at those third quarter GDP numbers, we'll
Speaker 5: get another revision on that later this week. I mean
Speaker 5: that was close to five percent growth. You look at
Speaker 5: the Atlanta FED numbers, obviously those are coming down around
Speaker 5: two percent for the fourth quarter. But just on the
Speaker 5: back of this record online sales for Black Friday, I mean,
Speaker 5: should we really be concerned about consumer spending?
Speaker 7: Well, this has been a continual question as well, is
Speaker 7: that consumers are just being much more resilient than people
Speaker 7: have it expected. And I think that's why this narrative
Speaker 7: of when do we cut rates? When are we done
Speaker 7: has been so hard because there hasn't been a clear
Speaker 7: sign that we're ready to cut anytime soon. Because consumers
Speaker 7: continue to be resilient, and you know, the recent data
Speaker 7: this week has really already showed that that you know,
Speaker 7: it's not clear, Katie.
Speaker 2: I guess the one on one of the trades that
Speaker 2: we read about a lot to shear was you know,
Speaker 2: the hedge funds short treasuries. Do you think that's still
Speaker 2: the case or they kind of covered that here?
Speaker 7: I think, I mean, okay, this is a great question.
Speaker 7: I love this question because I'm a quant and when
Speaker 7: I look at the signals right now, what is alarming
Speaker 7: to me is long term signals are still short in
Speaker 7: fixed income given the moves that we've seen until recently,
Speaker 7: shorter term signals are moving more on the long side.
Speaker 7: So we're seeing this sort of mixed view on fixed income.
Speaker 7: So that inflection point that so I do think because
Speaker 7: of that, there are going to be some investors who
Speaker 7: still think this may not be over yet, and so
Speaker 7: I think that's mixed, but there's definitely less of them
Speaker 7: than there were before.
Speaker 5: What about in the commodities market? What is energy telling
Speaker 5: us about the direction of the economy.
Speaker 7: This is really one of my favorite questions because we
Speaker 7: have really been pointing to the energy moves earlier in
Speaker 7: the fall, when we started to see energy prices surging again.
Speaker 7: But look what happened recently. Energy is now a short signal,
Speaker 7: and that's been one of the more recent developments, and
Speaker 7: that tells us that we didn't really have enough legs
Speaker 7: and that energy move to cause some serious issues for inflation,
Speaker 7: which is a positive sign, i'd say for this inflation
Speaker 7: narrative of raising rates is a little bit more likely
Speaker 7: to be over soon, which I think is good for
Speaker 7: the consumer. It's good for this getting to target, and
Speaker 7: you know, it's something to continue watching. But definitely it
Speaker 7: had moved to a point where we were watching it,
Speaker 7: but now it's come back and now it's short. Are
Speaker 7: the signals for energy?
Speaker 2: You're interesting?
Speaker 5: All right?
Speaker 2: So in a treasury remark, well, why can't I just
Speaker 2: go buy a two year treasury and get my close
Speaker 2: to five percent and just kind of call it a
Speaker 2: couple of years.
Speaker 7: Here, Well, the problem is you're going to have to
Speaker 7: roll that over, right, So.
Speaker 2: Two years A lot can happen in two years.
Speaker 7: Yeah, that's true. And so I think where the challenge
Speaker 7: is is that if you look at where the curve
Speaker 7: is today, we still don't have that duration premium there.
Speaker 7: So if you buy longer term debt and we do
Speaker 7: have an environment where yields continue to be higher, that
Speaker 7: might be negative MPV in relative terms, and I think
Speaker 7: that's where I think you have to think about what
Speaker 7: is going to happen for cuts is going to dictate
Speaker 7: when we get to that and that steeper curve or
Speaker 7: a more normal yield curve. So yeah, the two year
Speaker 7: looks still very good, and I think that's why people
Speaker 7: are buying it right now, and that's why yields have
Speaker 7: been going down because people think this opportunity might not last.
Speaker 7: So maybe it's time to buy treasuries because you want
Speaker 7: to lock in those rates.
Speaker 5: I only have about forty five seconds left. But what's
Speaker 5: the top question that you hear from your clients?
Speaker 7: Oh, I think the biggest question is are we done?
Speaker 7: Our interest rate's going to go down?
Speaker 6: And when?
Speaker 7: And tell me now, because I think everybody really wants
Speaker 7: that for many reasons, because we're used to lower rates.
Speaker 7: But we have been very strong this year saying higher
Speaker 7: for longer, and to be honest, most of the year
Speaker 7: we've been correct. So I would generally have been telling
Speaker 7: them to be patient and that to expect that higher
Speaker 7: rates could last longer than you'd like.
Speaker 2: Kittie, thank you so much for joining us. Really appreciate
Speaker 2: getting some of your time today, Katie Kaminski. She is
Speaker 2: the chief research strategist at Alpha Simplex. We're up there,
Speaker 2: and I think someone Cambridge, Massachusetts or something in a
Speaker 2: couple of decent schools up there, so I understand, So
Speaker 2: we appreciate getting a few minutes for a time.
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Speaker 2: Chess men, Paul Sweeney here in our Bloomberg and Art
Speaker 2: at Brokers Studio in our HQ here in New York City.
Speaker 2: Good news on the geopolitical front. I think it's good news.
Speaker 2: Cutter says Israel Hamas agree to extend truce for two days.
Speaker 2: Let's get some color on this developing story. Bobby Ghost
Speaker 2: joins us. He's Bloomberg Opinion. He knows this part of
Speaker 2: the world very very well. Lots of experience. Bobby, I
Speaker 2: take this as good news. How do you take this?
Speaker 8: No, Yeah, it's good news. It's good news for the
Speaker 8: families of the hostages that are going to be released.
Speaker 8: We don't know the exact number, but good news for them.
Speaker 8: It gives them hope. It's good news for the Palestinians
Speaker 8: who live in Gaza because it gives them two more
Speaker 8: days without the sky falling on their heads. It's good
Speaker 8: news for President Biden, who has articulated several times that
Speaker 8: he wanted the truth to be extended. It's good news
Speaker 8: for all of those constituencies. For Benjamin Ettnia, who the
Speaker 8: Prime Minister of Israel. The question was always going to
Speaker 8: be the balancing of all this pressure from within and
Speaker 8: without to extend the truth with the military calculation, And
Speaker 8: the military calculation was, you know, if you extend, does
Speaker 8: that give Hamas more time to re arm itself, to
Speaker 8: regroup its fighters and become a danger. Do you lose momentum?
Speaker 8: Do you lose the optics? So he's clearly decided that
Speaker 8: two days is adequate at least for now.
Speaker 5: What are the next immediate steps to see whether or
Speaker 5: not this truth could be extended for even longer beyond
Speaker 5: those two days?
Speaker 8: Well, again those calculations. He's going to be the NETNA
Speaker 8: who's going to be informed by his generals about what
Speaker 8: their best assessment is. And I think we will see
Speaker 8: extensions on one day, two days at a time, not
Speaker 8: for a a week long or even a month long.
Speaker 2: So how do you think the generals, how do you
Speaker 2: think the generals and the military folks are defining success
Speaker 2: on a daily basis. It kind of reminds me a
Speaker 2: little bit of Vietnam when it was his body count.
Speaker 8: Well, if that was the case, and the body count
Speaker 8: is overwhelmingly on the Palestinian side, we don't know very
Speaker 8: much of Israel's military casualties injured or or killed. We
Speaker 8: have a pretty good idea of how many Palestinians are dying.
Speaker 8: There's been some reports from Israeli military that they believe
Speaker 8: that between one thousand and two thousand Hamas fighters have
Speaker 8: been killed. That's out of a grand total of you know,
Speaker 8: many more thousands of Palestinians. So again, these numbers kind
Speaker 8: of they're fairly small numbers because by Israel's assessment, Hamas
Speaker 8: has thirty thousand fighters, and if they're only killed, say
Speaker 8: two thousand, shows there's a long way to go.
Speaker 5: Will additional aid be able to be distributed there based
Speaker 5: on those two days truth being extended, Yes.
Speaker 8: That's to be expected that that border crossing in Rafa
Speaker 8: south of Gaza into Egypt, that will be very busy,
Speaker 8: lots of aid going in. I mean, the scale of
Speaker 8: what the people in Gaza needs is off the chart.
Speaker 8: So even several hundred trucks a day is not going
Speaker 8: to cover it, but better that than nothing. So, you know,
Speaker 8: again for that reason too, this is good news within
Speaker 8: reason for the Palestinian people in Gaza.
Speaker 2: Or do you think the United States State Department feels
Speaker 2: isn't a good outcome? Like what do you think the
Speaker 2: United States State Department and is kind of hoping for
Speaker 2: rooting for trying to get our policy there.
Speaker 8: Well, so it's not so much the State Department. This
Speaker 8: policy has been run out of the White House. We've
Speaker 8: had there's been reports of quite a lot of disappointment
Speaker 8: and anger in the State Department that White House is
Speaker 8: running this without regard to the State Department's advice. So
Speaker 8: this is President Biden taking the lead essentially, and what
Speaker 8: he wants to see is, you know, hamas greatly greatly diminished,
Speaker 8: but quickly so that the sort of daily reports of
Speaker 8: human casualties, of civilian casualties, innocent people being killed, that
Speaker 8: can end. So he would like to see this result quickly,
Speaker 8: but this is not playing out on his timeline, is
Speaker 8: playing out on the timeline of Hamas and Israel, and
Speaker 8: so he can put pressure on Israel, and clearly to
Speaker 8: some degree has succeeded with this truce being extended. But
Speaker 8: there's only so much that even the President of the
Speaker 8: United States can do.
Speaker 5: From your purview, and I'm sure it's difficult to gauge,
Speaker 5: but what do you think is the timetable for how
Speaker 5: long this conflict could continue to go on for?
Speaker 8: It's really hard to tell. The question is whether or
Speaker 8: not Israel changes its goals. The original goal that netanyahuo
Speaker 8: articulated is that Hamas must be essentially eliminated. That's as
Speaker 8: I said, thirty thousand fighters that that will require weeks, months,
Speaker 8: years to pull off. But if the goal is changed,
Speaker 8: and if it's you know, a new kind of target,
Speaker 8: which is that Hamas is greatly reduced or Hamas gives
Speaker 8: up control of Gaza, still very high bar to get over,
Speaker 8: but at least then you can you can speculate about
Speaker 8: a timeline right now, the end state is so vague
Speaker 8: that it's impossible to say how long this might take.
Speaker 2: You know, I kind of think that I haven't seen
Speaker 2: on then, you know, the cable news networks many images
Speaker 2: of rockets landing in Israel. Is that because I'm just
Speaker 2: not paying attention or have they been reduced? And does
Speaker 2: that indicate that maybe Israel is in fact impacting the
Speaker 2: bility of Hamas to wage war.
Speaker 8: There have been fewer rocket attacks, no question, volleys of
Speaker 8: them every now and again, but certainly not with the
Speaker 8: intensity that we saw on and after the seventh of
Speaker 8: October the first few days. You know, those rockets have
Speaker 8: to be smuggled in. Some of them are the sort
Speaker 8: of lower tech ones are manufactured within Gaza. You know,
Speaker 8: since October seven terrorist attack, Israel has been minding those
Speaker 8: borders more carefully, and the destruction in Gaza City has
Speaker 8: greatly sort of reduced the arms caches and Hamas's ability
Speaker 8: to build new rockets. So yeah, but Israel's concern will
Speaker 8: be that if the truce continues, then Hamas will have
Speaker 8: the ability to bring in more rockets and build more
Speaker 8: rockets and start firing those off again.
Speaker 5: So during the truth is truth, isn't there a concern
Speaker 5: also that potentially, if you're thinking about Hamas, would they
Speaker 5: be able to potentially bring in reinforcements or are there
Speaker 5: any sort of stipulation on what they were able to
Speaker 5: do during the two day period.
Speaker 8: But they don't really need reisforcements from the outside, and
Speaker 8: smuggling in human beings in the middle of a war
Speaker 8: situation can be quite tricky, especially when you know that
Speaker 8: Israel and Egypt presumably are on a high state of
Speaker 8: alert watching for any movement of large groups of people
Speaker 8: in that direction. And you know, the Hamas, unlike let's
Speaker 8: say is SIS and some other terrorist groups that we're
Speaker 8: familiar with, tends to depend on its own on Palestinians
Speaker 8: to form the bulk of its fighting force. It gets
Speaker 8: weapons from Iran, it gets money from Iran and other
Speaker 8: sources internationally. But for actual manpower, it has plenty of
Speaker 8: manpower within Gaza. But the concern would be weapons. Are
Speaker 8: they able to smuggle weapons either by sea or through
Speaker 8: those tunnels that we've been reading about for years and years. Again,
Speaker 8: you'd hope that particularly the Egyptians would be on a
Speaker 8: high alert and prevent that from happening. But it's been
Speaker 8: known to happen in the past, where even in the
Speaker 8: middle of a conflict situation with Israel, Hamas has shown
Speaker 8: the ability of smuggling in or building new weapons.
Speaker 2: All right, So we're, you know, fifty days plus into this.
Speaker 2: How united is the Israeli population to what's happening these days?
Speaker 2: Is that wavered at all? Do we have any reporting?
Speaker 8: Well, it's wavered on the political spectrum. So the vast
Speaker 8: majority to go buy the polls. The vast majority of
Speaker 8: Israeli's want Benjamin Netania who gone. They want him to
Speaker 8: pay the price for his failings as a leader which
Speaker 8: led to the October seven attack. On the other hand,
Speaker 8: there seems to be still quite a lot of support
Speaker 8: for the military operation. It was an incredibly traumatic event
Speaker 8: for the Israeli the terrorist attack, and they do want
Speaker 8: to see uh, they do want to make sure that
Speaker 8: that day, that the horrors of that day are never
Speaker 8: visited on them again. So they would like to see
Speaker 8: their military succeed, But they don't want to see their
Speaker 8: military having to occupy Gaza for an extended period of time.
Speaker 8: So quite a mixed bag there's a lot of support
Speaker 8: for the military, but no very little support for Netanya
Speaker 8: who himself.
Speaker 2: So you think Nenya who stays in power as long
Speaker 2: as there are you know, active operations.
Speaker 8: Well, he's counting on that. That's for sure, that that
Speaker 8: his people won't want to change horses in the middle
Speaker 8: in red stream. But there are calls for his resignation
Speaker 8: that are coming from some prominent voices, including farmer military leaders,
Speaker 8: from our intelligence chiefs, former prime ministers. If that pressure
Speaker 8: keeps building, then he'll have to He'll all.
Speaker 2: Right, a lot of a lot of moving parts there, certainly,
Speaker 2: Bobby Gosh, thank you so much for joining us. Goash's
Speaker 2: a calmness for Bloomberg Opinion. Joining us live here in
Speaker 2: our studios here in New York City.
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Speaker 2: George legend On was shreet in my opinion he's chairman
Speaker 2: of Sanders Mars Harris. But he's been doing this a
Speaker 2: long time. I'm not calling George old here. I'm saying
Speaker 2: he's been on Wall Street a long time. He began
Speaker 2: his career as a stockbroker at E. F. Hutton, one
Speaker 2: of my favorite. If you don't know what that is,
Speaker 2: go google it or go to YouTube and see the commercials.
Speaker 2: But I interviewed with him way back in the day.
Speaker 2: I'm talking eighty eight or eighty nine when he was
Speaker 2: at Bach. Did not get the just that did not
Speaker 2: derail my career, I went on. But he's not chairman
Speaker 2: of Sanders Mars. George, thanks so much for taking the time.
Speaker 2: We shake getting a few minutes of your time here.
Speaker 2: I want to take advantage of your perspective, your experience, George.
Speaker 2: I mean, we've had a crazy two to three years
Speaker 2: here in these markets, what with a pandemic and whatnot.
Speaker 2: When you sit back and maybe talk to your biggest clients,
Speaker 2: what are you telling them these days?
Speaker 9: Well, I appreciate being called a legend, because a legend
Speaker 9: is basically synonymous. It has been and I apologize for
Speaker 9: your not getting the job or or or credential beat
Speaker 9: looking back. UH is very educational and instructive. It's not
Speaker 9: terribly predictive.
Speaker 3: Though.
Speaker 9: One of the wonderful things about the investment world, financial world,
Speaker 9: for everybody is that it's ever changing. It's it's ever dynamic,
Speaker 9: it's it's sort of like a kaleidoscope. And what was
Speaker 9: in the past or or the things that creates circumstances
Speaker 9: a year ago, five years ago, three years ago, doesn't
Speaker 9: really matter. So the interaction of finance, emotion, world affairs,
Speaker 9: economic affairs that creates Wall Street or investment is very
Speaker 9: different going ahead than it's ever that it's ever been
Speaker 9: in the past, and I think that that is particularly
Speaker 9: exciting today. Most pundits believe that the market, at least
Speaker 9: over the shorter term, is over extended. It's rallied a
Speaker 9: lot in November, and they think, well, it's time for
Speaker 9: a pullback. It's too extended. But again, I think that
Speaker 9: that's historic or a retrospective reasoning rather than a good
Speaker 9: view of what lies ahead for us.
Speaker 5: From your purview, how do you view the American consumer
Speaker 5: and the resiliency there when you still have so many
Speaker 5: people questioning the strength but yet we're still continuing to
Speaker 5: see especially with these latest sales numbers for Black Friday
Speaker 5: as well as Cyber Monday, that American consumers continue to spend.
Speaker 9: The American consumer, actually, probably consumers and the households worldwide
Speaker 9: are really what drive economies and drive growth and productivity.
Speaker 9: We tend, I think, to look to the FED, to
Speaker 9: look to the government, to look to the leaders of
Speaker 9: the EU to either create prosperity or to create recessions
Speaker 9: or economic contraction. That's not right. It's really the individual
Speaker 9: and collective energy gusto of the household that that creates
Speaker 9: what lies ahead, and the US case of recent weeks,
Speaker 9: and I think going forward, uh, what lies ahead is
Speaker 9: people want to do better. People are invigorated, people will
Speaker 9: spend because they'll work, and they're they're earning good money
Speaker 9: and actually now a better money in real terms than
Speaker 9: they have for several years. So I think the pessimists,
Speaker 9: uh yeah, may may may be blinded to what really
Speaker 9: drives the economies. It's not the FED, it's it's individuals.
Speaker 9: It's households.
Speaker 2: George, and you're I'm just looking through some of your
Speaker 2: notes here you have it. I think a really out
Speaker 2: of consensus call here buy regional bank stocks, why do
Speaker 2: you say that there's definitely a lot of concern out there?
Speaker 4: All right?
Speaker 9: First the disclaimer, our company owns a regional bank, so
Speaker 9: I've got to build in bias. Start with that. Step
Speaker 9: away from it. There are a very few regional banks
Speaker 9: that are in somewhat compromised positions. Republic National Bank, Silicone
Speaker 9: Valley Bank were really wealth management firms that lent excessively
Speaker 9: as a way to attract clients to their wealth management platform.
Speaker 9: I understand their rationale, but it was poorly done. There
Speaker 9: are some number of regional banks that have lent too
Speaker 9: much money to commercial real estate enterprises of one sort
Speaker 9: or another, and they are apt to be squeezed. But
Speaker 9: of the over four thousand banks in the United States,
Speaker 9: there are very few that are in that predicament. Broadly speaking,
Speaker 9: community bankers are very very cautious. They're conservative, they're very
Speaker 9: aware of the regulatory oversight is placed on them, and
Speaker 9: the stocks are extremely inexpensive now for a half or
Speaker 9: a quarter of what they did a year or two ago.
Speaker 9: So I think that the pessimism regarding regional banks should
Speaker 9: have been or should be limited to a very small number,
Speaker 9: and the rest are screamingly cheap, with strong growth prospects
Speaker 9: ahead of them, and in many cases a generous dividend yields.
Speaker 5: We only have about a minute left, But what's the
Speaker 5: top question that you hear from your clients.
Speaker 9: The biggest question that our customers have is should I
Speaker 9: be involved in equities or are they simply too risky
Speaker 9: in a world where I can get a five percent
Speaker 9: return on the five year treasury. Our answer to that
Speaker 9: is on both the five year treasury yielding four and
Speaker 9: a half percent is more have to appreciate and throw
Speaker 9: off a positive real return. But people who turn their
Speaker 9: back on equities are blind to the fact that American
Speaker 9: business can prosper in this type of interest rate climate
Speaker 9: and grow at a very substantial rate.
Speaker 2: Hey, George, thanks so much for joining us. Really a
Speaker 2: treat to get a few minutes of your time. George
Speaker 2: Ball he is a chairman of Sanders, Mars and Harris.
Speaker 2: And if you want to find out about a couple
Speaker 2: of really really high quality investment bank workers firms and
Speaker 2: back in the day, go Google Base Company and EF
Speaker 2: Hutt and some of two of the best names out there.
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