WEBVTT - Bloomberg Surveillance TV: January 14, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.400 with Lisa Bromwitz and a Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:37.159 Bloomberg Terminal and the Bloomberg Business App. Joining us now, 0:00:37.240 --> 0:00:40.519 Emily Ryblands of John Hancock. Emily, good morning. We have 0:00:40.600 --> 0:00:43.879 been whibsored from headline to headline, from data point to 0:00:43.960 --> 0:00:44.480 data point. 0:00:44.560 --> 0:00:45.520 Is this one any different? 0:00:45.720 --> 0:00:47.760 I mean, it's just remarkable. And one of the things 0:00:47.760 --> 0:00:49.440 that we've been watching closely. 0:00:49.120 --> 0:00:50.560 Is the moves in the US dollar. 0:00:50.760 --> 0:00:52.360 One of the things that we think is started to 0:00:52.360 --> 0:00:55.680 constrain equity markets so far this year, as you've seen 0:00:55.720 --> 0:00:58.600 the significant strengthening in the US dollar, you think about 0:00:58.680 --> 0:01:02.160 large cap equities which or just carrying the crown of leadership. 0:01:02.600 --> 0:01:05.800 Last year, forty percent of their revenues are derived from abroad. 0:01:05.880 --> 0:01:08.280 So that could be a significant. 0:01:07.520 --> 0:01:10.039 Issue for large cap stocks this year. So I think 0:01:10.080 --> 0:01:13.120 this morning you're seeing a bit of a modest pullback 0:01:13.120 --> 0:01:15.480 in the dollar and that's probably helping risk outs as 0:01:15.720 --> 0:01:16.200 a little bit. 0:01:16.280 --> 0:01:19.360 Mike Wilson Molkan Stanley said, right, strife beta and what 0:01:19.360 --> 0:01:22.199 you're seeing in foreign exchange strife's dispersion, are you starting 0:01:22.200 --> 0:01:23.920 to see that beneath the surface on the S and. 0:01:23.920 --> 0:01:26.119 P we're seeing a little bit of a broadening out 0:01:26.160 --> 0:01:29.360 in market leadership. Leadership is a tough word, I guess right. 0:01:29.200 --> 0:01:31.240 Now where we're seeing some pressure. 0:01:30.680 --> 0:01:33.440 On markets, But what we typically see in these environments 0:01:33.480 --> 0:01:37.520 where bond yields are backing up inflationary pressures or potential 0:01:37.600 --> 0:01:38.759 inflationary pressures. 0:01:38.800 --> 0:01:40.119 To your point our. 0:01:40.040 --> 0:01:42.840 Building is things like value stocks start to do a 0:01:42.840 --> 0:01:43.360 bit better. 0:01:43.480 --> 0:01:44.640 Small caps get hurt. 0:01:44.680 --> 0:01:47.880 Of course, they have the highest levels of indebtedent indebtedness 0:01:47.920 --> 0:01:49.880 which can be an issue when the cost of capital 0:01:50.000 --> 0:01:53.840 is elevated. But I think value equities, in particular areas 0:01:53.920 --> 0:01:58.640 like energy, utilities, infrastructure related assets, those are lower beta 0:01:58.680 --> 0:02:02.280 than more defensive business is they have dividends and they 0:02:02.320 --> 0:02:05.600 have some element of inflation protection here that we think 0:02:05.720 --> 0:02:08.440 might be a creative to investors into this year if 0:02:08.440 --> 0:02:12.280 we see maybe another twenty twenty two type playbook. 0:02:12.760 --> 0:02:14.880 This is a confusing moment. This is a confusing for 0:02:14.880 --> 0:02:15.359 all of us. 0:02:15.440 --> 0:02:16.000 It's hard to. 0:02:15.960 --> 0:02:18.440 Really understand where the load star is at a time 0:02:18.480 --> 0:02:21.440 where there's so many different narratives that go completely contrary 0:02:21.440 --> 0:02:23.160 to each other. I want to go back to six 0:02:23.240 --> 0:02:26.160 am this morning when we got nfib A small business 0:02:26.160 --> 0:02:28.760 optimism which came in at the highest rate going back 0:02:28.800 --> 0:02:31.240 to twenty and eighteen to one hundred and five, really 0:02:31.280 --> 0:02:34.720 superseding expectations. Do you want to be more levered to 0:02:34.760 --> 0:02:39.160 a growth story or more levered to a conservative portfolio, 0:02:39.160 --> 0:02:43.320 one that is more protective and levered to maybe downside risk. 0:02:43.440 --> 0:02:44.320 Right now, we. 0:02:44.280 --> 0:02:47.679 Would say a more conservative portfolio right now. What we're 0:02:47.720 --> 0:02:51.480 seeing right now is the biggest catchup in history between 0:02:51.639 --> 0:02:54.520 soft data and hard data. So the hard data had 0:02:54.520 --> 0:02:56.640 been coming in well, things like the labor market. 0:02:56.680 --> 0:02:59.040 Of course, we added two hundred and fifty thousand new 0:02:59.120 --> 0:03:00.200 jobs last month. 0:03:00.280 --> 0:03:02.360 But when we look at this, soft data had really 0:03:02.400 --> 0:03:05.040 been struggling, and then boom, you get the results of 0:03:05.080 --> 0:03:07.880 the election, and you have this massive amount of optimism 0:03:07.919 --> 0:03:11.079 and sentiment just pervading the markets. So we want to 0:03:11.120 --> 0:03:13.840 be mindful of here of watching this kind of mini 0:03:13.960 --> 0:03:18.160 bump in reacceleration and animal spirits and sort of in 0:03:18.200 --> 0:03:21.040 the way that business owners and people are feeling in general. 0:03:21.120 --> 0:03:23.760 Of course, there's a huge divergence between Republicans that are 0:03:23.760 --> 0:03:26.440 responding to those surveys and Democrats that are responding to 0:03:26.480 --> 0:03:28.840 those surveys, so we want to be mindful of that. 0:03:29.280 --> 0:03:32.080 We may be seeing a modest reacceleration. 0:03:31.680 --> 0:03:34.280 In the economy, but the challenges. 0:03:33.720 --> 0:03:35.440 And you guys have talked a lot about this on 0:03:35.480 --> 0:03:39.080 the show, is kind of the self limiting dynamic of 0:03:39.120 --> 0:03:41.520 this backup and treasure yields that we're seeing on this 0:03:41.640 --> 0:03:45.760 potential reacceleration and growth. Borrowing costs are high, mortgage rates 0:03:45.760 --> 0:03:50.000 are above seven percent, Mortgage applications are plunging, inventories are up. 0:03:50.280 --> 0:03:52.840 Housing is the economic. 0:03:52.400 --> 0:03:54.760 Cycle, and if we start to see the shelter component 0:03:54.800 --> 0:03:58.880 of CPI decelerating, that could speak volumes to the process 0:03:59.280 --> 0:03:59.960 asset dynamic. 0:04:00.280 --> 0:04:02.480 But this story has been one that's consistent over the 0:04:02.520 --> 0:04:05.200 past couple of years, and it's been a frozen housing 0:04:05.280 --> 0:04:07.960 market and that's only led to higher prices because everything 0:04:07.960 --> 0:04:10.760 else is doing okay and there hasn't been enough supply. 0:04:11.320 --> 0:04:13.560 How much conviction do you have in this call of 0:04:13.560 --> 0:04:17.520 a slowdown to go headlong into longer term treasuries at 0:04:17.560 --> 0:04:19.760 a time where other people are saying, you know, you 0:04:19.839 --> 0:04:20.440 might want to wait. 0:04:20.360 --> 0:04:20.800 A little bit. 0:04:20.880 --> 0:04:24.120 Well, it's not headlong, so we still haven't been overweight duration. 0:04:24.279 --> 0:04:26.680 We've just suggested that investors that are sitting at the 0:04:26.680 --> 0:04:29.520 short end of the curve leg into the intermediate part 0:04:29.560 --> 0:04:32.200 of the curve with a benchmark level of duration, and 0:04:32.279 --> 0:04:34.039 right now the way the yeal curve is slow, if 0:04:34.080 --> 0:04:36.560 we now have the potential for rolldown as well, with 0:04:36.640 --> 0:04:39.320 the short end of the curve actually being significantly lower 0:04:39.640 --> 0:04:41.400 than the long end of the curve. I think what's 0:04:41.480 --> 0:04:45.720 notable about the housing market is you're seeing inventories up 0:04:45.760 --> 0:04:48.320 about thirty percent year over year, and a lot of 0:04:48.320 --> 0:04:51.400 that's concentrated in the hot spots. Like remember when everybody 0:04:51.480 --> 0:04:54.599 left Manhattan during the pandemic, or the West Coast and 0:04:54.640 --> 0:04:57.360 they went to Austin, and they went to Nashville, by 0:04:57.360 --> 0:04:59.360 the way, Great Cities, they went to Colorado. 0:05:00.000 --> 0:05:01.080 So what's happening now. 0:05:01.000 --> 0:05:03.599 Is Manhattan based companies are saying you have a job 0:05:03.640 --> 0:05:04.120 in New York. 0:05:04.160 --> 0:05:06.080 Gu's where you have to go New York. 0:05:06.440 --> 0:05:09.440 So you're starting to see all that built up inventory 0:05:09.520 --> 0:05:12.159 come back online in some of those areas as people 0:05:12.240 --> 0:05:13.600 migrate back to the major city. 0:05:13.720 --> 0:05:15.520 Family do have a call on how high you think 0:05:15.560 --> 0:05:17.920 we could see the ten years. People are debating whether 0:05:18.000 --> 0:05:21.080 or not we actually will hit and consustain five percent. 0:05:21.520 --> 0:05:24.520 Yeah, so five percent, I think is about the area 0:05:24.760 --> 0:05:28.279 where you kind of see that self limiting mechanism creep in. 0:05:28.400 --> 0:05:31.920 We're watching bond yields of course overseas, which you're going 0:05:31.960 --> 0:05:34.560 to see sort of an element of tracking there. And 0:05:34.640 --> 0:05:37.560 if all these overseas markets also have a harder time 0:05:37.600 --> 0:05:40.839 adjusting higher rates, you could see some downward pressure on 0:05:40.920 --> 0:05:42.960 treasury yields from there. But let's just do do we 0:05:42.960 --> 0:05:44.560 want to do a little bond math. I know it's 0:05:44.600 --> 0:05:45.919 really early in the morning. 0:05:45.960 --> 0:05:48.719 Lisave, like, so think about say. 0:05:48.600 --> 0:05:50.719 Yields went back up to five and a half percent, 0:05:51.200 --> 0:05:53.719 You're still not seeing a negative return on the aggregate 0:05:53.760 --> 0:05:54.800 bond index. 0:05:54.560 --> 0:05:56.279 Because the yield is there. 0:05:56.560 --> 0:05:58.720 We're looking at yields that are above five percent on 0:05:58.839 --> 0:06:01.200 high quality bonds right now. You might have to get 0:06:01.240 --> 0:06:04.120 paid to wait on the duration front. If yields sort 0:06:04.160 --> 0:06:07.480 of chop around from here. But think about what equity 0:06:07.520 --> 0:06:10.080 markets might do in an environment where we're at a 0:06:10.120 --> 0:06:12.400 five and a half percent treasury. I don't think they 0:06:12.400 --> 0:06:14.719 would like it. So I think the fact that you're 0:06:14.800 --> 0:06:17.000 flat on bonds you might want to take that. 0:06:17.040 --> 0:06:18.920 I'm not sure what Lisa's started, but Kevin Gordon, the 0:06:18.960 --> 0:06:21.520 Schwab has ridden in and said it's Bob Arra bonds 0:06:21.560 --> 0:06:23.560 are ready back and ready awesome. 0:06:23.720 --> 0:06:24.120 I love it. 0:06:24.120 --> 0:06:25.480 I'm not sure that's catching on either. 0:06:25.520 --> 0:06:26.000 More of this. 0:06:26.080 --> 0:06:28.240 I got another message as well on the Bloomberg terminal. 0:06:28.440 --> 0:06:31.520 Turn her Bloomberg off and tell it to start her vacation. Now, 0:06:32.120 --> 0:06:33.040 what's this vacation? 0:06:33.120 --> 0:06:35.719 Hey, hey, I know you really want me to go 0:06:35.760 --> 0:06:38.479 on vacation. I'll happily lease. Thank you so much, it's 0:06:38.480 --> 0:06:39.400 been really real. 0:06:39.360 --> 0:06:51.560 Emily, appreciate your time's going to see you. Just turned 0:06:51.560 --> 0:06:54.520 to the rush of Ukraine Warresident elect Donald Trump continuing 0:06:54.560 --> 0:06:57.600 his push to increase defense spending. The German chancellor I'll 0:06:57.600 --> 0:07:01.159 have Sheltz, rejecting Trump's demands. That night, Allies increased defense 0:07:01.200 --> 0:07:05.520 spending to five from two percent of GDP joining US now. 0:07:05.720 --> 0:07:10.360 Armin Papager, CEO of RAEMATAU, a German defense and engineering group. 0:07:10.440 --> 0:07:11.800 I'm in good morning, it's going to see you in 0:07:11.800 --> 0:07:12.200 New York. 0:07:12.240 --> 0:07:12.800 Good morning. 0:07:12.840 --> 0:07:14.960 It's got to start with a very serious topic and 0:07:15.160 --> 0:07:17.200 from there the topics get even more serious. But let's 0:07:17.240 --> 0:07:19.960 start with you first of all, said personally, according to 0:07:20.160 --> 0:07:23.680 multiple US and Western officials, the Russian government plan to 0:07:23.720 --> 0:07:25.720 assassinate you. This has been in the news over a 0:07:25.760 --> 0:07:28.160 number of months. Now, can we start with that and 0:07:28.240 --> 0:07:31.000 taught you about how things are going personally? When were 0:07:31.080 --> 0:07:32.920 you told about that and by who? 0:07:33.880 --> 0:07:38.080 It's about one year ago and the information we've got 0:07:38.400 --> 0:07:43.320 from the US from FBI, and I'm very happy about 0:07:43.360 --> 0:07:47.000 that that they very early gave us that information. German 0:07:47.000 --> 0:07:50.480 government took that information and the protection level now is 0:07:50.600 --> 0:07:53.440 very high. I have the same protection level than the chancellor. 0:07:53.760 --> 0:07:56.280 Wow, you have the same security protections as the chancellor. 0:07:56.280 --> 0:07:58.320 I'll f Sholtz and you feel secure. 0:07:58.680 --> 0:07:59.520 I feel secure. 0:08:00.080 --> 0:08:01.640 So the reason why you wanted to stay in the 0:08:01.720 --> 0:08:03.480 job even though that threat was hanging over you. 0:08:04.160 --> 0:08:06.400 I love that job. We have to work. We have 0:08:06.520 --> 0:08:08.920 to to work for freedom and we have to work 0:08:08.960 --> 0:08:12.040 for democracy, and nobody can stop. 0:08:11.840 --> 0:08:15.880 Us, including Russia. Let's talk about the challenge that comes 0:08:15.920 --> 0:08:18.440 from Russia now and the push from the incoming president 0:08:18.960 --> 0:08:21.440 to push defense spending perhaps as high as five percent 0:08:21.520 --> 0:08:23.240 is GDP, and we know it's been a struggle for 0:08:23.280 --> 0:08:25.560 many NATAL members to get to two percent over the 0:08:25.640 --> 0:08:28.280 last number of years. Do you think that's doable to 0:08:28.320 --> 0:08:29.640 get to five percent of GDP? 0:08:30.600 --> 0:08:33.640 I think five percent. It's a big value. Five percent, 0:08:33.880 --> 0:08:36.880 and I believe that if we first of all get 0:08:36.880 --> 0:08:39.120 to three percent, it would be it would be great 0:08:39.160 --> 0:08:43.040 because over the last twenty five years, the Europeans did 0:08:43.080 --> 0:08:46.240 not invest in US money in security. I understand one 0:08:46.280 --> 0:08:49.760 hundred percent President Trump, He's right that Europe has to 0:08:49.800 --> 0:08:52.400 spend more into the Western security and we have to 0:08:52.440 --> 0:08:53.440 do it well. 0:08:53.440 --> 0:08:55.720 My reporting over the summer was actually they were looking 0:08:55.760 --> 0:08:58.320 at three percent, so potentially this falls down to anywhere 0:08:58.320 --> 0:09:01.480 from three to five. Germany, though, is only spending two percent. 0:09:01.559 --> 0:09:03.319 Do you think they can spend more on defense? 0:09:03.800 --> 0:09:06.480 I think they can, and they think they have to 0:09:06.520 --> 0:09:09.079 do because at the end of the day, Germany is 0:09:09.120 --> 0:09:12.920 the biggest economic in Europe and they have to help 0:09:13.000 --> 0:09:14.360 her to make Europe safe. 0:09:14.760 --> 0:09:17.200 We just heard from Mark Rutta last month talking about 0:09:17.200 --> 0:09:20.359 it's time for Europe to shift to a wartime mindset. 0:09:20.559 --> 0:09:24.280 For decades, Europe decided to curb their defense spending and 0:09:24.360 --> 0:09:29.319 really outsource their defense to United States. That failed, obviously 0:09:29.400 --> 0:09:32.840 when Russia invaded Ukraine. Do you think Europe is still 0:09:32.920 --> 0:09:35.160 unprepared for the war that's on their doorstep. 0:09:35.880 --> 0:09:38.640 We prepare ourselves and if you see what we do 0:09:38.679 --> 0:09:42.600 in rymetal is we invested over the last two years 0:09:42.760 --> 0:09:47.080 more than seven billion to build up the capacities and 0:09:47.120 --> 0:09:50.120 that's very important. And in between, I am able to 0:09:50.160 --> 0:09:52.800 produce one point one million's artillery rounds, which is more 0:09:52.840 --> 0:09:55.040 than the US is doing at the moment. So I 0:09:55.080 --> 0:09:57.439 think we prepare ourselves, but we have to do more. 0:09:57.600 --> 0:10:01.760 You also have production facilities inside Ukraine? Yes, how quickly 0:10:01.800 --> 0:10:05.359 will we be able to get ammunition production going inside. 0:10:04.960 --> 0:10:06.680 The country in twelve months time? 0:10:06.920 --> 0:10:09.400 In twelve months time, there is potential that in twelve 0:10:09.400 --> 0:10:12.160 months time, according to President elect, this war could be over. 0:10:12.600 --> 0:10:16.360 Do you first see a scenario where Puchin will agree 0:10:16.800 --> 0:10:19.240 to some sort of ceasefire in Ukraine? 0:10:19.800 --> 0:10:23.280 Nobody knows that, and as you know, President Trump said 0:10:23.320 --> 0:10:25.960 he's able to do it very fast. We will see 0:10:26.000 --> 0:10:29.440 if that really will happen. But even if that will happen, 0:10:29.520 --> 0:10:32.959 we need a lot more defense goods because at the moment, 0:10:33.000 --> 0:10:36.120 as you know, the stocks are empty, especially for ammunitions. 0:10:36.120 --> 0:10:39.440 But although the tanks, we have not enough tanks, we 0:10:39.559 --> 0:10:41.360 cannot protect ourselves. 0:10:41.760 --> 0:10:45.320 What about the incoming administration in terms of communication, you 0:10:45.400 --> 0:10:48.720 are really the massive player in Europe, almost the only 0:10:48.760 --> 0:10:51.200 game in town when it comes to the European defense 0:10:51.240 --> 0:10:55.280 industrial complex. Are you talking to the incoming Trump administration? 0:10:55.800 --> 0:10:58.720 We start to talk to that and I will talk 0:10:58.880 --> 0:11:02.720 very very early with a Trump administration because we have 0:11:02.800 --> 0:11:05.120 to do it. And the reason is that I also 0:11:05.160 --> 0:11:07.760 have a lot of investments here in US, and I 0:11:07.840 --> 0:11:11.040 invested some months ago more than one billion to buy 0:11:11.040 --> 0:11:14.880 a company here because I believe in the transatlantic relationship. 0:11:15.480 --> 0:11:18.520 Do you think that you can partner with this incoming administration? 0:11:18.640 --> 0:11:21.480 And how was the communication in partnership with the buy 0:11:21.520 --> 0:11:22.240 An administration. 0:11:22.760 --> 0:11:25.040 It was good. But at the end of the day, 0:11:25.160 --> 0:11:28.040 we as a company, we must be politically, let me say, 0:11:28.080 --> 0:11:30.520 a little bit independent, and we have to work with 0:11:30.559 --> 0:11:34.200 all governments and that's very important. And I believe that 0:11:34.240 --> 0:11:37.720 we really can work with the Trump administration because I 0:11:37.800 --> 0:11:40.800 believe that he is right and the pressure that he 0:11:40.880 --> 0:11:43.280 is creating at the moment is good for Europe. 0:11:44.000 --> 0:11:47.680 He's right with respect to spending more on defense, but 0:11:47.880 --> 0:11:50.760 is he right about the US retracting some of its 0:11:50.760 --> 0:11:54.040 spending on Ukraine and really leaving it to the European 0:11:54.160 --> 0:11:56.160 Union to finance the efforts there. 0:11:56.559 --> 0:11:59.160 I believe that we have we have to help Ukraine. 0:11:59.600 --> 0:12:03.240 If Ukraine will fall, we will have a big problem 0:12:03.240 --> 0:12:05.839 in Europe. If we have a big problem in Europe, 0:12:05.880 --> 0:12:10.600 because I believe that Putin will not stop with the 0:12:10.720 --> 0:12:14.959 Ukrainian on the Ukrainian border, So what about the Baltics, 0:12:15.360 --> 0:12:19.640 what about Georgia, what about Moldavia and all the other things? 0:12:20.400 --> 0:12:24.720 And I believe that it'd be look very, very helpful 0:12:24.760 --> 0:12:27.560 if the US and Europe is working together in this area, 0:12:27.600 --> 0:12:30.920 and at the moment Europe needs us because the resources 0:12:30.920 --> 0:12:32.199 are not good enough in Europe. 0:12:32.280 --> 0:12:32.920 Do you think there is. 0:12:32.920 --> 0:12:37.080 A political will in Europe to offset any decrease in 0:12:37.160 --> 0:12:41.000 financing from the United States At a time of political turmoil, 0:12:41.040 --> 0:12:44.520 where there's even upset in leadership in Germany and real 0:12:44.600 --> 0:12:47.520 questions around how much the public wants to keep financing this. 0:12:48.400 --> 0:12:50.760 I believe that the new government in Germany, and as 0:12:50.800 --> 0:12:54.640 you know, we have election in seven eight weeks, that 0:12:54.679 --> 0:12:57.880 the new government will create a very strong contact to 0:12:58.040 --> 0:13:02.480 the Trump administration, and I believe that they want to 0:13:02.559 --> 0:13:05.199 work out a good plan and to make a deal together. 0:13:05.400 --> 0:13:08.800 Europe and the US has to make a deal for security. 0:13:09.080 --> 0:13:11.600 You talked about how you're investing in the United States, 0:13:11.960 --> 0:13:14.480 and I'm wondering how important it is to get a 0:13:14.480 --> 0:13:18.239 foothold in the US to get around any potential tariffs 0:13:18.320 --> 0:13:20.640 or other types of issues that come down the pike. 0:13:21.280 --> 0:13:24.960 Very important, very important. I understand all the issues that 0:13:25.000 --> 0:13:27.200 the US has, and I said, Okay, we want to 0:13:27.200 --> 0:13:30.200 make money, and President Trump wants to make deals, and 0:13:30.240 --> 0:13:33.520 he's right about that, and we have to take care 0:13:33.559 --> 0:13:35.800 about that. That's the reason that we are investing also 0:13:35.840 --> 0:13:36.319 in the US. 0:13:36.400 --> 0:13:39.560 Are you also ratcheting back certain businesses in Europe that 0:13:39.640 --> 0:13:41.280 you think are going to be more exposed. 0:13:41.760 --> 0:13:44.240 We grow at the moment forty percent per year, so 0:13:44.280 --> 0:13:46.840 we can grow in Europe and we have to grow 0:13:46.840 --> 0:13:47.319 in the US. 0:13:47.800 --> 0:13:49.640 The President wants to make Dale's. Do you want to 0:13:49.640 --> 0:13:52.040 make Dale's? Do you think we need some consolidation in 0:13:52.120 --> 0:13:53.319 European defense. 0:13:53.400 --> 0:13:56.160 Yes, it's I think it's possible and I think it's 0:13:56.200 --> 0:13:59.840 important to do it. As always said, Europe needs also 0:14:01.360 --> 0:14:04.440 a bigger, bigger machine in defense, and what I believe 0:14:04.559 --> 0:14:07.920 is we need a company which makes forty billion per year. 0:14:08.360 --> 0:14:10.000 We are at the moment only on the level of 0:14:10.040 --> 0:14:12.080 ten billion, but we will grow over the next years 0:14:12.080 --> 0:14:15.880 to twenty billion, maybe more. And the backlock is a 0:14:15.960 --> 0:14:19.040 very good one. So I believe that consolidation is very important. 0:14:19.040 --> 0:14:22.200 You can grow organically to twenty s Yes, acquisitions, have 0:14:22.280 --> 0:14:23.080 you got any in mind? 0:14:23.920 --> 0:14:27.000 Yes, we have a lot of You have a lot 0:14:27.040 --> 0:14:30.240 in mind because, as you said, over the last two 0:14:30.320 --> 0:14:34.840 years we bought the lot Lock Performance here in the 0:14:34.920 --> 0:14:38.800 US and the Spanish company. We invested two point two 0:14:38.800 --> 0:14:41.480 billion in that, and we want to invest more and 0:14:41.600 --> 0:14:42.600 we have more firepower. 0:14:42.600 --> 0:14:43.640 Have you spoken to Bia. 0:14:45.080 --> 0:14:47.280 We always speak with PAE, But i'm. 0:14:47.120 --> 0:14:48.680 About a possible acquisition. 0:14:49.080 --> 0:14:51.800 No, we didn't speak about to merge or other things. 0:14:51.840 --> 0:14:52.760 Would you be open to that? 0:14:54.400 --> 0:14:56.240 At the moment, there is no discussion, but. 0:14:56.240 --> 0:14:57.080 Would you be open to it? 0:14:57.080 --> 0:15:00.119 Would that make sense? I'm always open if it makes sense. 0:15:00.040 --> 0:15:00.960 And does it make sense? 0:15:01.920 --> 0:15:04.000 I'm not sure, but we have to analyze that. 0:15:04.480 --> 0:15:06.720 I want to go back to how John really started 0:15:06.760 --> 0:15:09.520 this topic, the fact that your life was put at risk. 0:15:09.560 --> 0:15:11.840 You're basically on a Russian hit list, but it goes 0:15:11.920 --> 0:15:16.040 beyond that. Dmitry Peskov last year said your company is 0:15:16.080 --> 0:15:19.760 called a legitimate target. How is a company are you 0:15:19.880 --> 0:15:23.680 responding to Russia's hybrid warfare on the continent. 0:15:24.480 --> 0:15:26.840 First of all, we have a very very good cyber center. 0:15:26.880 --> 0:15:29.400 That's the most important thing. That cyber attexts will not 0:15:29.480 --> 0:15:32.040 come in. And the second point is we are not 0:15:32.120 --> 0:15:34.000 in war at the moment. I have not the air 0:15:34.040 --> 0:15:39.640 defense and missiles around my factories. But if there is 0:15:39.680 --> 0:15:43.120 a higher potential that something will grow up, then we 0:15:43.360 --> 0:15:45.840 have to do that. For sure. We will protect our 0:15:45.920 --> 0:15:47.600 factories and we have to do it right. 0:15:47.640 --> 0:15:52.160 And you feel like the German government is a partner 0:15:52.200 --> 0:15:52.720 with you in this. 0:15:53.040 --> 0:15:57.000 Absolutely, absolutely, we are absolutely fighting shoulder on shoulder. 0:15:57.360 --> 0:16:00.760 And when it comes to this assassinization attempt on your life, 0:16:00.800 --> 0:16:02.960 do you believe it came from Vladimir Putin himself? 0:16:03.840 --> 0:16:07.040 I don't know. I don't know, and I at the 0:16:07.120 --> 0:16:10.560 end of the day, the information, as I told you, 0:16:10.640 --> 0:16:14.320 came from secret services, and we have to take care 0:16:14.400 --> 0:16:17.560 about that, and the government in Germany takes care about it. 0:16:17.680 --> 0:16:20.640 Not only the German government, also government if I travel 0:16:20.680 --> 0:16:23.400 to other countries, although that governments take care about that. 0:16:23.920 --> 0:16:25.160 I'm very grateful about that. 0:16:25.440 --> 0:16:27.360 You've been very gracious with your time, sir, and we 0:16:27.400 --> 0:16:29.600 appreciate it this morning. Thank you very much, thank you, 0:16:29.720 --> 0:16:43.840 thank you. I'm in Pampaca, the Ramata cup, Sonia masking 0:16:43.880 --> 0:16:46.480 a ubs Chiant just Nata how Parsida's question Sonic and 0:16:46.520 --> 0:16:50.080 mornech Co. So how good news is that papia from Molitzagog. 0:16:50.720 --> 0:16:51.720 It is very good news. 0:16:51.760 --> 0:16:55.840 But to be clear, we do actually expect in the ubs, 0:16:55.840 --> 0:16:57.840 and we have been saying this for a while, we 0:16:57.920 --> 0:17:01.840 do expect inflation to be porarily a little sticky in 0:17:01.960 --> 0:17:05.600 Q one of this year and then to continue to disslerate. 0:17:05.160 --> 0:17:07.239 What is it about Q ones because we did this 0:17:07.280 --> 0:17:09.400 in Q one of last year. What is it about 0:17:09.440 --> 0:17:10.040 the first quarter? 0:17:10.480 --> 0:17:13.359 It's the seasonals and frankly, since COVID, really some of 0:17:13.359 --> 0:17:15.679 these seasonals have been just off and we see it 0:17:15.680 --> 0:17:17.280 in the labor data and we see it in the 0:17:17.280 --> 0:17:18.119 inflation data. 0:17:18.720 --> 0:17:21.920 So how much do you see an actual disinflation that's 0:17:21.960 --> 0:17:25.080 taking hold because the numbers have been very noisy. PPI 0:17:25.240 --> 0:17:27.919 tends to be something that people look through as not 0:17:27.960 --> 0:17:30.360 necessarily indicative of what's going to come out with CPI. 0:17:30.840 --> 0:17:33.480 What do other data really say when you take a 0:17:33.520 --> 0:17:34.200 look at them. 0:17:34.200 --> 0:17:35.040 You're exactly right. 0:17:35.080 --> 0:17:37.440 So the PPI is actually more relevant for the PCEE, 0:17:38.359 --> 0:17:41.040 which is in turn quite relevant for the Federal Reserve. 0:17:41.119 --> 0:17:43.360 Right the Federal Reserve has said many times that they 0:17:43.800 --> 0:17:47.160 really see the core trend and inflation as the core 0:17:47.240 --> 0:17:50.360 PCEE trend over time, but the CPI is very important. 0:17:50.359 --> 0:17:53.520 That's what the consumer piece at the register, so to speak. 0:17:54.040 --> 0:17:56.680 And for the CPI, we do see still an upside 0:17:56.760 --> 0:18:00.280 for the release this week tomorrow, and that is coming 0:18:00.320 --> 0:18:04.040 primarily from just like here, we saw an optic in 0:18:04.240 --> 0:18:07.200 energy goods prices. We see that also in the piece 0:18:07.280 --> 0:18:09.440 in the CPI tomorrow as well. 0:18:09.600 --> 0:18:11.720 What's fascinating to me is that people are trying to 0:18:11.720 --> 0:18:14.720 wrap their head around the ramifications of the strong dollar. 0:18:15.040 --> 0:18:17.920 And we've been talking about it with respect to corporate earnings, 0:18:17.920 --> 0:18:20.159 We've been talking about it with respect to demand for 0:18:20.359 --> 0:18:24.080 US assets. There's also a question of the disinflationary impact 0:18:24.160 --> 0:18:27.520 of that when exports and imports in particular have been 0:18:27.560 --> 0:18:30.800 increasing quite significantly. How much is that a piece of 0:18:30.840 --> 0:18:33.200 what we're seeing, particularly in data like PPI. 0:18:33.680 --> 0:18:37.679 Absolutely, But however, historically it's taken quite some time for 0:18:37.760 --> 0:18:41.320 the strong dollar to translate into prices in the United States, 0:18:42.040 --> 0:18:45.239 and so here we would only really see it so 0:18:45.440 --> 0:18:49.160 quickly if we saw truly good evidence of a ramp 0:18:49.240 --> 0:18:53.400 up in you know, in imports ahead of anticipated tariffs. 0:18:53.560 --> 0:18:56.439 We don't really see much conclusive data on the ground 0:18:57.119 --> 0:18:59.639 on that front to definitively say that this has had 0:18:59.680 --> 0:19:00.000 a name. 0:19:00.520 --> 0:19:04.080