WEBVTT - Bloomberg Surveillance TV: March 26, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.240 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.920 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.320 Terminal and the Bloomberg Business app. Jenny and Manuel of 0:00:37.400 --> 0:00:39.680 evercret I I right in this The phrase it is 0:00:39.720 --> 0:00:43.000 different this time is being heard everywhere, especially since the 0:00:43.040 --> 0:00:45.480 FED has promised the cut raids from a position where 0:00:45.479 --> 0:00:48.360 the economy is not slowing. We do think that Friday's 0:00:48.360 --> 0:00:51.320 core PC number could surprise to the upside and a 0:00:51.320 --> 0:00:54.480 cut would get quickly priced out and the market would 0:00:54.520 --> 0:00:57.880 respond with stock weakness. Judian and place to say with 0:00:57.960 --> 0:01:00.319 us for more. Julian, good morning, good morning to see 0:01:00.360 --> 0:01:03.040 you said in the exuberance zone. Can you describe what 0:01:03.080 --> 0:01:05.240 that zone is irrational or not? 0:01:05.760 --> 0:01:08.920 It is not irrational, okay, because I think when we 0:01:09.080 --> 0:01:12.119 as investors think about history. We have to go back 0:01:12.160 --> 0:01:17.480 to the time where, frankly, having run money during that time, 0:01:17.680 --> 0:01:21.360 you knew there was irrationality. In year two thousand that 0:01:21.480 --> 0:01:24.240 was twenty eight times earnings. We are at twenty three 0:01:24.319 --> 0:01:25.080 times earnings. 0:01:25.120 --> 0:01:27.120 Now. The S and P and rview. 0:01:26.880 --> 0:01:29.080 Would have to get a lot closer to six thousand 0:01:29.520 --> 0:01:33.600 to get to irrational. However, we are seeing signs of 0:01:35.080 --> 0:01:40.839 the wall of warri having given completely dissolved, very barrant 0:01:40.959 --> 0:01:44.679 behavior in the options markets. Betting on stocks doubling in 0:01:44.720 --> 0:01:48.680 the course of three or four days, incredible betting on 0:01:49.400 --> 0:01:53.280 the Nasdaq rallying a further thirty three percent out to 0:01:53.400 --> 0:01:57.480 June after already rallying thirty percent since the October low. 0:01:57.800 --> 0:01:58.720 All of these. 0:01:58.480 --> 0:02:04.120 Signs you see short interest being a decade lows. All 0:02:04.240 --> 0:02:07.400 these things say that there is a feeling that the 0:02:07.400 --> 0:02:10.880 market isn't invincible. And when you think about the narrative 0:02:11.000 --> 0:02:13.919 of the last several months where we walk back from 0:02:14.080 --> 0:02:18.480 six rate cuts to three rate cuts without the market 0:02:18.919 --> 0:02:21.799 you know, pausing for even a moment, Yeah, you can 0:02:21.919 --> 0:02:25.360 understand why we're there. We think that the reaction to 0:02:25.480 --> 0:02:27.359 hotter inflation may be different. 0:02:27.160 --> 0:02:28.760 You know, what the comeback might be. Just because you 0:02:28.800 --> 0:02:32.280 found someone playing blackjack doesn't mean we're in Las Vegas, right, 0:02:32.440 --> 0:02:34.720 You know, you can always find something like that. You 0:02:35.200 --> 0:02:37.640 find it, you can find the gambling going on somewhere. 0:02:37.720 --> 0:02:39.880 That stuff always exists. What's new about this? 0:02:40.880 --> 0:02:45.359 So what's new about this is that this phenomenon known 0:02:45.400 --> 0:02:49.079 as zero daised expiration options really in a lot of 0:02:49.120 --> 0:02:52.240 ways is the equivalent of what we saw back in 0:02:52.280 --> 0:02:53.400 the late nineteen nineties. 0:02:53.440 --> 0:02:54.919 It was called day trading then. 0:02:55.240 --> 0:02:58.760 Obviously it's called high frequency quantitative trading now. 0:02:59.200 --> 0:03:02.080 But the speculation that. 0:03:02.000 --> 0:03:06.000 You can really cause to happen every single day, and 0:03:06.040 --> 0:03:09.560 we saw it in this earning season, this last earning season, 0:03:09.560 --> 0:03:11.680 and we're likely to see it again this earning season, 0:03:12.080 --> 0:03:15.280 where you have these stocks that have enormous gaps to 0:03:15.360 --> 0:03:20.640 the upside and the downside because of the exuberance that 0:03:20.800 --> 0:03:22.960 really has no precedent in the options market. 0:03:23.000 --> 0:03:25.360 Which race is a question where is the reality check? 0:03:25.480 --> 0:03:26.480 Where is the gut check? 0:03:26.600 --> 0:03:27.079 You say it. 0:03:27.040 --> 0:03:29.520 Comes from in some ways the inflation data, It comes 0:03:29.520 --> 0:03:33.160 from FED expectations, it comes from the bond market. What's 0:03:33.200 --> 0:03:35.480 the trigger though, at a time where the market is 0:03:35.560 --> 0:03:38.520 hearing what the FED is saying, and then some they're 0:03:38.560 --> 0:03:40.560 hearing the rosiest picture that the Fed's going to let 0:03:40.600 --> 0:03:43.560 inflation come down very slowly, but that they will get 0:03:43.560 --> 0:03:44.280 an under control. 0:03:44.520 --> 0:03:47.920 So, when you have momentum of this kind of strength, 0:03:47.920 --> 0:03:51.040 and we have to acknowledge that this is among the 0:03:51.040 --> 0:03:55.040 most record scenting periods of momentum that we've seen, there 0:03:55.120 --> 0:03:57.680 tends not to be a discrete trigger. 0:03:57.720 --> 0:03:59.160 The one thing we would point to. 0:03:59.480 --> 0:04:01.960 Is when you think about it, actually the month of 0:04:02.000 --> 0:04:05.680 April is sort of an outlier in that what you 0:04:05.800 --> 0:04:09.080 tend to see is sort of momentum reversals, and what 0:04:09.120 --> 0:04:11.560 we've looked at over the month of March is some 0:04:11.640 --> 0:04:14.240 of these momentum names have stalled. 0:04:14.440 --> 0:04:16.520 They haven't reversed, they've stalled. 0:04:16.800 --> 0:04:20.920 But when you are trying to feed that sort of exuberance, 0:04:21.560 --> 0:04:24.320 stalling is something that we take note of. And again 0:04:24.680 --> 0:04:28.160 with this tendency, turning the page to the second quarter, 0:04:28.560 --> 0:04:31.560 there is a potential in our view of momentum really 0:04:31.600 --> 0:04:32.560 taking a backseat. 0:04:32.680 --> 0:04:35.480 How do some of the retail investors, the traders that 0:04:35.640 --> 0:04:39.039 use these options contracts that you were talking about fit 0:04:39.120 --> 0:04:41.720 into the picture of how this will develop. Do you 0:04:41.760 --> 0:04:44.000 think that they increase the fragility of markets, or do 0:04:44.040 --> 0:04:46.840 you think that essentially they're just a feature of the 0:04:46.839 --> 0:04:47.520 moment we're in. 0:04:47.960 --> 0:04:51.880 Well, no, actually, and we said this when zero disted 0:04:51.960 --> 0:04:55.680 expiration options first became quote unquote a thing that we 0:04:55.800 --> 0:04:59.760 felt very highly convicted that it would suppress volatility because 0:05:00.120 --> 0:05:03.080 think about it, the casino is open from nine point 0:05:03.080 --> 0:05:05.720 thirty to four and then you cast your chips in 0:05:05.960 --> 0:05:09.720 and there's no overnight risk, okay. And actually, as a 0:05:09.720 --> 0:05:13.680 professional investor, that gives you opportunities that you might not 0:05:13.839 --> 0:05:17.000 normally have because when you're pushing the action on a 0:05:17.080 --> 0:05:19.520 day to day basis in this way and you get 0:05:19.560 --> 0:05:22.760 these gap moves. If you're a disciplined buyer and seller 0:05:22.800 --> 0:05:25.840 of stocks, you get these opportunities to add. 0:05:25.640 --> 0:05:28.400 To positions, to trim positions. 0:05:28.040 --> 0:05:32.640 That actually increase the alpha and make this it really 0:05:33.240 --> 0:05:37.360 The environment that we're in of stock selection is also 0:05:37.560 --> 0:05:40.200 unlike anything we've seen, But a lot of this is 0:05:40.320 --> 0:05:43.480 driven by this constant exuberance that we see on the 0:05:43.520 --> 0:05:44.159 part of the public. 0:05:44.200 --> 0:05:46.279 Can you talk to us about opportunities right now? Then 0:05:46.440 --> 0:05:47.039 what are they? 0:05:47.640 --> 0:05:51.520 So we continue to think that there's a likelihood of 0:05:51.560 --> 0:05:55.599 the economy slowing in the second half and into twenty 0:05:55.680 --> 0:05:58.240 twenty five. And when you think about it, some of 0:05:58.320 --> 0:06:01.840 these more defensive sectors that actually tend to do well 0:06:02.360 --> 0:06:05.960 in the period from the last hike to the first 0:06:06.000 --> 0:06:11.680 cut it have lagged. They've had idiosyncratic issues. Healthcare, consumer 0:06:11.760 --> 0:06:15.200 staples really sort of working off the GLP one phenomenon. 0:06:15.480 --> 0:06:18.880 We think there's a lot of value there. And there's 0:06:18.920 --> 0:06:23.440 also this entire subset of names whose valuations haven't moved 0:06:23.440 --> 0:06:26.320 out in the way the index has that still have 0:06:26.440 --> 0:06:27.240 strong earnings. 0:06:27.360 --> 0:06:28.279 It's a cross sector. 0:06:28.360 --> 0:06:30.159 Now, can we get to healthcare on place? You put 0:06:30.160 --> 0:06:31.799 it out, what am I buying? Going to buy healthcare? 0:06:31.960 --> 0:06:34.760 Is it just the JLP well semantic story and some 0:06:34.800 --> 0:06:36.600 people might point to that as a zuber and well 0:06:36.600 --> 0:06:37.560 am I buying well? 0:06:37.640 --> 0:06:41.480 So that's what held the rest of the sector back 0:06:41.480 --> 0:06:44.080 for the majority of last year. But when you look 0:06:44.160 --> 0:06:48.359 at it right, there's this whole notion that we've started 0:06:48.360 --> 0:06:52.400 to CM and a activity come back because financing conditions 0:06:52.640 --> 0:06:56.440 have remained as favorable as they have and that really 0:06:56.480 --> 0:06:59.919 points to, you know, the future. In terms of biotech, 0:07:00.560 --> 0:07:04.560 small cap biotech has done pretty well this year. We 0:07:04.680 --> 0:07:08.080 think there's a broadening, and of course, in this environment 0:07:08.920 --> 0:07:13.600 where the likelihood is that you know it with a 0:07:13.720 --> 0:07:17.800 yield on some of these names four or five six percent, 0:07:19.000 --> 0:07:21.560 bar belling into some of the safer names, cash flow 0:07:21.640 --> 0:07:23.280 generators makes sense to us as well. 0:07:23.320 --> 0:07:25.720 Interesting, Julian, thank you. It's good to see you as always. 0:07:25.720 --> 0:07:28.400 Thank you saying Jenny and Monnuwether of Evercore in the 0:07:28.400 --> 0:07:42.960 Exuberance Zone. Israel Prime Minister Benjamin Nettania, who's office canceling 0:07:43.000 --> 0:07:46.480 a planned visit by senior aide to Washington. The decision 0:07:46.520 --> 0:07:49.760 coming after the US abstained from voting a UN resolution 0:07:49.880 --> 0:07:52.720 demanding an immediate cease far in Gaza. One of the 0:07:52.720 --> 0:07:55.360 eighth scheduled to visit the US was Ron Dermer. These 0:07:55.360 --> 0:07:59.280 Arareel Strategic Affairs Minister. He joined us now from Jerusalem. Minister, 0:07:59.320 --> 0:08:01.880 wonderful to catch with you once again, Sir. I want 0:08:01.920 --> 0:08:04.760 to begin our conversation if we can, with a quote 0:08:04.760 --> 0:08:08.280 from John Kirby, the spokesperson for the UST National Security Council, 0:08:08.360 --> 0:08:10.360 and Minister. This is what he had to say. There's 0:08:10.400 --> 0:08:12.400 no reason for this to be seen as some sort 0:08:12.440 --> 0:08:16.280 of escalation. Nothing has changed about our policy. Nothing. We 0:08:16.360 --> 0:08:18.920 still want to see a ceasefire, we still want to 0:08:18.920 --> 0:08:21.560 get hostages out. Minister, Can we just begin with that 0:08:21.600 --> 0:08:24.280 line coming from the administration, What exactly do you believe 0:08:24.360 --> 0:08:27.600 has changed as they turn around and say nothing has. 0:08:29.040 --> 0:08:31.840 Well, I believe there are policy that has been pretty consistent, John, 0:08:31.920 --> 0:08:33.960 since the beginning of the war about six months ago, 0:08:34.920 --> 0:08:37.160 was to not accept the cease fire. That would be 0:08:37.760 --> 0:08:40.720 unconditional and it would have to be connected to an 0:08:40.760 --> 0:08:45.160 agreement to release hostages. Unfortunately, in this text there was passed. 0:08:45.720 --> 0:08:48.400 Those two issues were separated for the first time. In fact, 0:08:48.400 --> 0:08:51.240 five days before there was a resolution that the United 0:08:51.280 --> 0:08:55.200 States put forward that was vetoed by a China and Russia. 0:08:55.240 --> 0:08:57.040 And one of the reasons why they vetoed it is 0:08:57.080 --> 0:08:59.080 because it connected those two issues. And if you look 0:08:59.120 --> 0:09:01.520 at the text, and everyone can go see it on 0:09:01.559 --> 0:09:04.480 the UN website, and you look at the resolution five 0:09:04.559 --> 0:09:07.720 days ago and you look at the resolution that passed yesterday, 0:09:07.800 --> 0:09:10.679 you'll see a huge difference. And unfortunately, that's a change 0:09:10.679 --> 0:09:11.520 in US policy. 0:09:11.559 --> 0:09:11.679 Now. 0:09:11.720 --> 0:09:14.680 I'm glad to hear that John Kirby said, it's not 0:09:14.720 --> 0:09:17.240 a change in US policy, and I hope that they 0:09:17.280 --> 0:09:20.160 will continue to connect those two issues. But that's not 0:09:20.240 --> 0:09:23.719 the text of the resolution, and that's why Tamas celebrated 0:09:23.720 --> 0:09:25.000 the resolution and welcomed it. 0:09:25.320 --> 0:09:26.720 That's why Iran welcomed it. 0:09:26.800 --> 0:09:30.439 Believe me, any resolution by the UN Security Council that 0:09:30.559 --> 0:09:33.280 Kamas welcomes is not a good resolution for Israel. 0:09:33.320 --> 0:09:35.640 A minister, you would you to travel yesterday evening. Could 0:09:35.640 --> 0:09:37.559 you share with us what you said to the administration 0:09:37.679 --> 0:09:39.480 directly after that decision? 0:09:41.400 --> 0:09:42.400 Well, I spoke to them. 0:09:42.440 --> 0:09:44.480 I haven't spoken to them after that decision. I spoke 0:09:44.480 --> 0:09:46.920 to them before that decision. When we first learned about 0:09:46.960 --> 0:09:49.840 which direction this was going. I did on I think 0:09:49.840 --> 0:09:53.560 it was Sunday night, and when I heard what was happening, 0:09:53.640 --> 0:09:56.000 I said, look, you're going to have it's the wrong 0:09:56.080 --> 0:09:58.880 message at the wrong time. I explained to you, why 0:09:59.040 --> 0:10:01.839 was the wrong message because it's not connecting the issue 0:10:01.840 --> 0:10:03.800 of a ceasefire with the return of the hostages. 0:10:03.840 --> 0:10:05.640 And why is it such bad timing. 0:10:05.800 --> 0:10:09.679 Because we had negotiators in Doha trying to get an 0:10:09.679 --> 0:10:14.880 agreement to release hostages. And it's not surprising that Hamas 0:10:14.920 --> 0:10:17.400 decided to reject the latest proposal that was put forward 0:10:17.400 --> 0:10:20.840 by the Americans, because why should they not reject it? 0:10:20.840 --> 0:10:22.720 They think they're going to get a ceasefire without giving 0:10:22.800 --> 0:10:25.360 up the hostages, because that's what the resolution said. And 0:10:25.400 --> 0:10:28.080 I understand and I appreciate that the United States has 0:10:28.120 --> 0:10:31.240 said that's not our policy, but that's not the text 0:10:31.240 --> 0:10:31.960 of the resolution. 0:10:32.120 --> 0:10:32.920 And that's the problem. 0:10:33.000 --> 0:10:35.640 I told them before if this would be the case, 0:10:35.679 --> 0:10:38.000 I would find it very difficult to believe that the 0:10:38.000 --> 0:10:41.280 Prime Minister would send a delegation to Washington. Why because 0:10:41.320 --> 0:10:44.440 the purpose of us going to Washington was to discuss 0:10:44.480 --> 0:10:47.400 and to actually listen to American ideas of how we 0:10:47.400 --> 0:10:50.120 should go into Rafa the other ideas that they said 0:10:50.160 --> 0:10:53.480 they had without a major military operation in Rafa. What 0:10:53.679 --> 0:10:56.240 message John is going to send to hamas that the 0:10:56.320 --> 0:11:00.200 day after that the Americans separate these two issues. Hey, 0:11:00.200 --> 0:11:02.079 you know what, you could have a ceasefire without a 0:11:02.120 --> 0:11:05.199 hostage negotiations, and then the United States is presenting its 0:11:05.200 --> 0:11:07.640 proposal how we should not go into Rafa. 0:11:08.160 --> 0:11:09.200 That's a real big problem. 0:11:09.240 --> 0:11:11.360 And that's why the Prime Minister made the right decision, 0:11:12.120 --> 0:11:14.560 made the right decision to stop the delegation which I 0:11:14.640 --> 0:11:16.520 was leading to go to Washington. 0:11:16.600 --> 0:11:19.400 Okay, so this trip was suspended. Is there any plans 0:11:19.440 --> 0:11:21.720 for you to come to Washington then in the future. 0:11:23.200 --> 0:11:23.560 I don't know. 0:11:23.559 --> 0:11:25.680 We'll have to discuss it with the US administration. We 0:11:25.720 --> 0:11:29.120 haven't had those discussions yet. I think the context here 0:11:29.520 --> 0:11:33.200 was particularly problematic. Obviously, the US has ideas, and I'm 0:11:33.240 --> 0:11:34.800 sure they'll share it with us. I don't know if 0:11:34.800 --> 0:11:37.320 it'll be in a delegation in Washington's people coming here 0:11:37.800 --> 0:11:40.000 us speaking over the phone, but they have ideas that 0:11:40.040 --> 0:11:42.200 they won't want to present to us. The President asked 0:11:42.480 --> 0:11:45.440 the Prime Minister of Israel to send the delegation so 0:11:45.480 --> 0:11:48.360 that we can hear their ideas. We have our Defense 0:11:48.440 --> 0:11:52.400 minister in Washington now. I'm sure he's discussing. 0:11:51.960 --> 0:11:52.480 This with them. 0:11:52.840 --> 0:11:56.600 But I think that timing was particularly problematic because of 0:11:56.640 --> 0:12:00.600 the message that this UN Security Council resolution was sending. 0:12:00.679 --> 0:12:03.560 It was a very very bad message, both for the 0:12:03.600 --> 0:12:07.040 hostage negotiations and also we have to be very clear 0:12:07.120 --> 0:12:09.760 with Hamas. We have to be very clear that we're 0:12:09.760 --> 0:12:11.720 going to fight this war until the end. And the 0:12:11.800 --> 0:12:14.719 last thing we want them to believe that the international 0:12:14.800 --> 0:12:18.160 pressure on Israel will get us to simply not finish 0:12:18.200 --> 0:12:21.240 the war. That's not going to happen now. I don't 0:12:22.040 --> 0:12:24.560 decide what the United States will do or won't do. 0:12:24.640 --> 0:12:27.199 They're a sovereign government, they'll have to make their own decisions. 0:12:27.360 --> 0:12:30.080 But Israel has to make clear to Hamas did we 0:12:30.120 --> 0:12:32.520 intend to fight this fight till the very end, and 0:12:32.640 --> 0:12:35.760 hopefully that pressure they're understanding that we're going to fight 0:12:35.840 --> 0:12:37.959 this to the end will enable us to get to 0:12:38.000 --> 0:12:38.760 a hostage deal. 0:12:38.960 --> 0:12:41.760 Well, these really defense minister, as you say, is in Washington. 0:12:42.240 --> 0:12:46.080 We have Benjamin Ettiaho, the Prime Minister, approving a Rafa operation. 0:12:46.679 --> 0:12:49.080 But the Israeli Defense minister said he had a good 0:12:49.120 --> 0:12:52.880 meeting with officials in Washington. Did anyone convince anyone on 0:12:52.920 --> 0:12:54.280 other side to change? 0:12:55.720 --> 0:12:58.320 Well, look, we've been in discussions with the US administration 0:12:58.440 --> 0:13:01.679 for a long time. The initial US policy was essentially 0:13:02.080 --> 0:13:05.679 not that they're against an operation in Rafa full stop. 0:13:06.120 --> 0:13:09.800 What they said initially was that Israel has to make 0:13:09.840 --> 0:13:12.640 efforts to get the civilians out of harms way and 0:13:12.679 --> 0:13:15.200 to ensure that humanitarian assistants can get to them. And 0:13:15.240 --> 0:13:17.800 guess what, we agree, and we've been working on a 0:13:17.840 --> 0:13:20.080 plan to get the civilians out of harms way and 0:13:20.120 --> 0:13:22.920 to get ramp up humanitarian assistance to them. So this 0:13:23.000 --> 0:13:25.800 is something where the two governments should be able to 0:13:25.840 --> 0:13:28.000 get to common ground and should be able to get on. 0:13:27.960 --> 0:13:28.480 The same page. 0:13:28.520 --> 0:13:30.679 Now, if the position of the United States is there 0:13:30.720 --> 0:13:34.000 should not be a major military operation in Gaza, then 0:13:34.040 --> 0:13:35.680 we're not going to be on the same page because 0:13:35.679 --> 0:13:39.440 we have to go in to Rafa, we have to 0:13:39.480 --> 0:13:41.240 finish the job. We have to take care of these 0:13:41.280 --> 0:13:44.280 four battalions. We can lead, leave twenty percent or twenty 0:13:44.320 --> 0:13:46.679 five percent of the Hamas force in Gaza so they 0:13:46.679 --> 0:13:51.479 can simply reorganize and comeback. And Israel's major military operations 0:13:51.520 --> 0:13:55.120 actually have enabled us to do much smaller operations and 0:13:55.200 --> 0:13:57.920 achieve great success. Look at what happened in Shifa Hospital. 0:13:57.920 --> 0:14:00.000 I don't know if you're following that, in the northern 0:14:00.040 --> 0:14:01.000 part of the Gaza strip. 0:14:01.360 --> 0:14:02.680 We were there a few months. 0:14:02.440 --> 0:14:05.120 Ago and we did a major operation just now. We 0:14:05.240 --> 0:14:08.400 went back last week and we have done one of 0:14:08.400 --> 0:14:12.240 the most successful operations in Shifa Hospital in our history. 0:14:12.320 --> 0:14:15.840 Nearly two hundred terrorists were killed there, over eight hundred 0:14:15.880 --> 0:14:20.240 terrorists were captured, and there have been zero civilian casualties. 0:14:20.280 --> 0:14:23.000 In fact, there have been more Israeli soldiers too who 0:14:23.000 --> 0:14:26.760 have died in that operation. Than civilian casualties. Why can't 0:14:26.760 --> 0:14:28.160 we do that? And I think this is a very 0:14:28.160 --> 0:14:31.200 important point for your viewers to understand, because once you 0:14:31.280 --> 0:14:35.400 do the major military operations, once you crush these battalions 0:14:35.440 --> 0:14:37.480 and defeat them, Israel has to. 0:14:37.440 --> 0:14:40.280 Come in with a much smaller force, much more. 0:14:40.160 --> 0:14:44.320 Careful military operations, and achieved great success. That's why it's 0:14:44.360 --> 0:14:46.120 so important for us to go to Rafah and to 0:14:46.160 --> 0:14:46.800 finish the job. 0:14:46.920 --> 0:14:49.440 You keep saying, fight this until the end. People have 0:14:49.480 --> 0:14:53.080 already talked about when you have people living in dire situations, 0:14:53.240 --> 0:15:00.080 people who've seen their loved ones being killed, that breeds extremist. 0:14:59.000 --> 0:14:59.720 Type of behavior. 0:15:00.040 --> 0:15:02.840 You're already seeing that in certain places that even if 0:15:02.880 --> 0:15:05.200 you kill Hamas, something else will come in its place 0:15:05.280 --> 0:15:08.280 because there isn't leadership and there isn't a sense of 0:15:08.280 --> 0:15:11.240 what the future is. How do you counter those types 0:15:11.280 --> 0:15:13.840 of discussions? How do you say there is an end 0:15:14.040 --> 0:15:14.960 that you have in sight? 0:15:16.280 --> 0:15:18.360 Well, first of all, understand what we're trying to achieve. 0:15:18.520 --> 0:15:23.360 We're trying to destroy Kamas's military in Gaza. They're not 0:15:23.560 --> 0:15:27.760 a terror organization in Gaza. They're a military terror organization 0:15:27.800 --> 0:15:29.760 in Gaza, and we have to crush their military and 0:15:29.800 --> 0:15:32.560 it's divided up into battalions, and we're doing that I 0:15:32.640 --> 0:15:34.800 think very well. But what you just said about it 0:15:34.840 --> 0:15:37.360 breeds extremism. I'd ask you, do you think that the 0:15:37.400 --> 0:15:40.600 action of the United States against the Nazis in Germany? 0:15:40.640 --> 0:15:43.120 Do you think that bred extremism among Germans? Do you 0:15:43.120 --> 0:15:43.520 think the. 0:15:43.480 --> 0:15:46.680 Actions of the United States in Japan bred extremism? I mean, 0:15:46.840 --> 0:15:49.400 you were smart enough to first of all finish the 0:15:49.480 --> 0:15:53.160 job and win the war, and you demanded unconditional surrender 0:15:53.200 --> 0:15:55.640 to achieve it, and then you were smart enough to 0:15:55.640 --> 0:15:58.800 be magnanimous in victory and provide a different path for 0:15:58.880 --> 0:16:01.520 the future. Have to finish the job is what if 0:16:01.560 --> 0:16:05.160 you not finish the job, the situation will actually be worse. 0:16:05.760 --> 0:16:08.360 You have to finish the job, defeat them, and then 0:16:08.400 --> 0:16:10.440 you can talk about a day after. Then we can 0:16:10.520 --> 0:16:12.920 talk about how we can expand peace in the region, 0:16:13.200 --> 0:16:15.280 what we should do in the long term prospects of 0:16:15.320 --> 0:16:17.480 Israelis and Paal sittings. But there will be no day 0:16:17.520 --> 0:16:19.400 after Hamas if Ramas is still there. 0:16:19.600 --> 0:16:21.000 That's why we have to finish the job. 0:16:21.120 --> 0:16:23.320 I guess that one of the key questions that has 0:16:23.360 --> 0:16:25.280 been kind of hanging over this is we don't have 0:16:25.320 --> 0:16:28.640 a clear sense of how you provide that type of 0:16:28.680 --> 0:16:31.720 structure in any way when you don't have that being 0:16:31.760 --> 0:16:34.040 provided with respect to who's going to be the leader, 0:16:34.120 --> 0:16:36.240 with respect to who's going to provide the financing, with 0:16:36.280 --> 0:16:38.240 respect to even whether there'll be two states and what 0:16:38.280 --> 0:16:40.200 that will look like with a certain land in the 0:16:40.200 --> 0:16:42.880 West Bank being seized. So how do you address those 0:16:42.960 --> 0:16:45.360 kinds of questions that do need to be put into 0:16:45.440 --> 0:16:47.920 place before you finish the job. 0:16:48.680 --> 0:16:50.240 I don't believe they have to be put in place 0:16:50.240 --> 0:16:51.200 before you finish the job. 0:16:51.200 --> 0:16:52.840 In fact, I think just the opposite. 0:16:53.040 --> 0:16:54.880 I think if you try to put the that in 0:16:54.920 --> 0:16:57.600 place now, you can actually undermine the effort to get 0:16:57.600 --> 0:17:01.120 to a real good day after plan afterwards, because first 0:17:01.280 --> 0:17:05.120 everybody has to understand that Hamas and Gaza is finished. 0:17:05.480 --> 0:17:08.240 Until they understand that, no one will step forward. So 0:17:08.320 --> 0:17:10.000 you're going to actually have a plan that's going to 0:17:10.040 --> 0:17:13.000 be stillborn the second you win. That's the time when 0:17:13.040 --> 0:17:16.480 the international community, obviously led by the United States, Israel, 0:17:16.520 --> 0:17:18.720 Ara partners in the region, have to come in and say, Okay, 0:17:18.720 --> 0:17:21.320 what do we do now? Now Hamas is defeated, in Gaza. 0:17:21.760 --> 0:17:24.159 What is the next step to think that anyone is 0:17:24.200 --> 0:17:27.760 going to emerge now when you have four terrorist battalions 0:17:28.000 --> 0:17:31.480 of Hamas and Gaza, maybe around fifteen thousand terrorists fighting there, 0:17:31.480 --> 0:17:34.240 and that somebody is going to step forward kidding themselves. 0:17:34.359 --> 0:17:36.040 We saw what happened in the northern part of the 0:17:36.080 --> 0:17:38.600 Gaza strip when we try to work with local actors. 0:17:38.760 --> 0:17:41.600 Hamas took them out and executed them. That's what's going 0:17:41.680 --> 0:17:44.040 to happen until we finish the job. That's why I 0:17:44.080 --> 0:17:46.760 think it is in the interest of all countries who 0:17:46.880 --> 0:17:49.320 not only are interested in israel security, but interested in 0:17:49.320 --> 0:17:51.960 a better future for the Palestinians to get Israel to 0:17:51.960 --> 0:17:54.440 finish the job as quickly as possible so we can 0:17:54.480 --> 0:17:56.679 move on to a day after. And the truth is, 0:17:57.119 --> 0:17:59.480 we have real partners in the region for that day after. 0:17:59.520 --> 0:18:00.919 I think the are a partner. 0:18:01.080 --> 0:18:03.440 I think the Amarades are a partner. I think they 0:18:03.480 --> 0:18:07.040 are starting and they've worked to deradicalize their own societies. 0:18:07.320 --> 0:18:09.280 I think we need to look for them into their 0:18:09.400 --> 0:18:11.680 leadership to see what we can do in a day after, 0:18:11.760 --> 0:18:14.679 and then we can talk about all of those political issues. 0:18:14.680 --> 0:18:16.960 But first we have to get to a day after. 0:18:17.040 --> 0:18:19.240 We have to finish the job. You cannot leave that 0:18:19.400 --> 0:18:22.480 force in Gaza. It would be like, as one Israeli 0:18:22.520 --> 0:18:25.199 minister said, Minister against He said, it would be like 0:18:26.200 --> 0:18:29.199 fighting eighty percent of a fire, leaving twenty percent of 0:18:29.200 --> 0:18:30.880 the fire and simply hoping that it's. 0:18:30.680 --> 0:18:32.320 Not going to come back. Of course it'll come back. 0:18:32.400 --> 0:18:34.719 We have to douse these flames and then we can 0:18:34.760 --> 0:18:35.680 talk about the day after. 0:18:35.880 --> 0:18:37.640 Minista, I know we only have a few minutes left 0:18:37.640 --> 0:18:39.360 with you. I had a few direct questions to work 0:18:39.400 --> 0:18:41.600 through with you, if I may. The Vice President of 0:18:41.600 --> 0:18:44.040 the United States spoke over the weekend. Here's a quote 0:18:44.040 --> 0:18:46.960 from her. Any major military operation in Rafa would be 0:18:46.960 --> 0:18:50.320 a huge mistake. I'm not trying to understand from your 0:18:50.359 --> 0:18:52.360 site why you think that's not a mistake. I'm trying 0:18:52.359 --> 0:18:55.040 to understand now what the consequences would be if you 0:18:55.119 --> 0:18:57.840 cross that perceived red line. Now, have they communicated what 0:18:57.840 --> 0:19:01.399 the consequences would be for Israel and the relationship between 0:19:01.440 --> 0:19:04.119 you and the United States? Have you heard anything whatsoever? 0:19:05.680 --> 0:19:08.239 No, they haven't communicated that with this, But I can 0:19:08.280 --> 0:19:10.159 tell you, John, what the consequences will be if we 0:19:10.200 --> 0:19:12.520 don't go in and finish the job. It'll be that 0:19:12.560 --> 0:19:15.760 October seventh will happen again and again and again. People 0:19:15.760 --> 0:19:17.840 in the United States have to understand that the people 0:19:17.840 --> 0:19:20.800 of Israel see what happened on October seventh as an extent, 0:19:21.000 --> 0:19:23.080