WEBVTT - Powell Reiterates Desire to Hold Rates 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.760 --> 0:00:13.080 This is Bloomberg business Week Daily reporting from the magazine 0:00:13.080 --> 0:00:17.640 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.720 --> 0:00:20.360 and trends shaping today's complex economy. 0:00:20.560 --> 0:00:24.600 Plus global business, finance and tech news as it happens. 0:00:24.840 --> 0:00:29.080 The Bloomberg Business Week Daily Podcast with Carol Masser and 0:00:29.160 --> 0:00:31.760 Tim Stenebeck on Bloomberg Radio. 0:00:32.040 --> 0:00:32.640 While fetchair. 0:00:32.680 --> 0:00:34.760 J Powell, as you know up on Capitol Hill today, 0:00:34.800 --> 0:00:38.000 remarks before the House Financial Services Committee, saying it's too 0:00:38.000 --> 0:00:40.159 early to know the economic impact of the tensions in 0:00:40.159 --> 0:00:42.519 the Middle East, saying the Fed would look at the 0:00:42.560 --> 0:00:45.559 overall situations if oil price is surge. Also, the economy 0:00:45.600 --> 0:00:47.800 is slowing this year and immigration is one reason. And 0:00:47.880 --> 0:00:52.520 of course he talked about tariffs, Tariffs and inflation, and inflation. 0:00:52.960 --> 0:00:55.520 Policy changes continue to evolve and their effects on the 0:00:55.520 --> 0:00:58.920 economy remain uncertain. The effects of tariffs will depend, among 0:00:58.920 --> 0:01:02.280 other things, on their ultimate level. Expectations of that level 0:01:02.320 --> 0:01:05.080 and thus of the related economic effects reached a peak 0:01:05.200 --> 0:01:09.000 in April and have since declined. Even so, increases in 0:01:09.080 --> 0:01:12.440 tariffs this year are likely to push up price prices 0:01:12.480 --> 0:01:13.920 and way on economic activity. 0:01:14.440 --> 0:01:17.399 The FED chair, saying he expects meaningful tariff effects in June, July, 0:01:17.480 --> 0:01:19.039 and August. He also said that he doesn't think the 0:01:19.040 --> 0:01:22.320 FED needs to rush to interest rates with the economy strong. 0:01:22.360 --> 0:01:24.800 So a lot of ground covered, and we wanted to 0:01:24.840 --> 0:01:27.199 cover it all as well with two of Bloomberg's finest 0:01:27.280 --> 0:01:30.600 down in our Washington DC bureau Michael McKee, Bloomberg News 0:01:30.640 --> 0:01:33.920 International Economics and Policy correspondent. In here in our Bloomberg 0:01:33.959 --> 0:01:36.800 Business Week studio, we've got Alex Steele. She's going to 0:01:36.840 --> 0:01:39.080 talk oil in the energy markets and tie it into 0:01:39.120 --> 0:01:41.959 the macro environment. Mike, First question, do you, I think 0:01:42.000 --> 0:01:44.880 a lot of people remember just less than a week 0:01:44.920 --> 0:01:48.400 ago hearing from FED Chair j Powell in the press conference. 0:01:48.440 --> 0:01:52.320 How would you characterize any differences or distinctions between what 0:01:52.360 --> 0:01:55.240 we heard today versus what we heard from him last week. 0:01:56.680 --> 0:01:59.120 Oh? I think Tim, that basically what you were hearing 0:01:59.200 --> 0:02:04.480 is an echo chain. Today his prepared remarks were almost 0:02:04.520 --> 0:02:07.560 word for word the same as the statement he gave 0:02:07.600 --> 0:02:10.600 at the beginning of the press conference last week. It's 0:02:10.720 --> 0:02:13.480 the sort of hippocratic oath of the FED. First, do 0:02:13.639 --> 0:02:17.480 no harm to the markets, don't move anything, and that 0:02:17.639 --> 0:02:18.160 was his goal. 0:02:18.200 --> 0:02:18.560 Today. 0:02:18.880 --> 0:02:21.680 He just underlined what the FED has been saying all along, 0:02:21.800 --> 0:02:24.080 that they're going to have to wait for more information 0:02:24.720 --> 0:02:27.600 on the impact of tariffs and the impact of other 0:02:27.680 --> 0:02:31.720 fiscal policies from the administration before they know what they 0:02:32.040 --> 0:02:35.079 will have to do. He did say that if we 0:02:35.120 --> 0:02:39.600 see inflation go down continue to go down, and if 0:02:39.639 --> 0:02:42.720 we see unemployment go up, those could be two reasons 0:02:42.800 --> 0:02:44.760 to cut interest rates, but he didn't put a time 0:02:44.840 --> 0:02:47.640 frame on it and sort of leaned against the idea 0:02:47.680 --> 0:02:50.679 that they could do anything in July. So we walk 0:02:50.720 --> 0:02:53.959 away from this with pretty much the same view that 0:02:54.080 --> 0:02:56.320 we had going into it, that the FED is not 0:02:56.440 --> 0:02:57.160 in any hurry. 0:02:57.480 --> 0:03:00.440 All right, So let's talk about oil because p certainly 0:03:00.440 --> 0:03:03.919 asked about oil. Alex We've seen oil plunging what for 0:03:03.960 --> 0:03:06.680 a second straight day on what seems to be easing 0:03:07.080 --> 0:03:09.160 tensions in the Middle East. We just had a guest 0:03:09.200 --> 0:03:13.920 on not really guessed. She's family dina Esfandieri, and she said, 0:03:14.360 --> 0:03:16.760 you know, there's not a lot different that there is 0:03:16.800 --> 0:03:19.600 still a lot of risk out there in the Middle East. 0:03:19.880 --> 0:03:22.240 Why are oil markets just kind of backing off what 0:03:22.320 --> 0:03:22.799 you read on it? 0:03:22.880 --> 0:03:25.120 Yeah, Also, oil prices are now lower than they were 0:03:25.200 --> 0:03:28.920 before Israel's attack on Iran on the thirteenth of June. 0:03:29.040 --> 0:03:31.360 It just means that there's more supply than demand. I mean, 0:03:31.400 --> 0:03:33.040 that's the thing, is that the oil markets can be 0:03:33.160 --> 0:03:36.320 very different than the broader geopolitical risk market because it's 0:03:36.320 --> 0:03:38.600 pure supply and demand. In order to have a kind 0:03:38.640 --> 0:03:42.000 of supply shock, you also need strong demand. And if 0:03:42.040 --> 0:03:44.880 you don't have that kind of increasing rising demand, you're 0:03:44.920 --> 0:03:46.600 not going to have the same kind of supply shock. 0:03:46.880 --> 0:03:48.920 And two parts of that one is that China was 0:03:48.920 --> 0:03:51.920 stockpiling before this, so they got a lot of oil anyway, 0:03:52.080 --> 0:03:54.080 and China is the one that buys Moran, by the way, 0:03:54.120 --> 0:03:56.960 so they would feel the shock. Apparently this is riis 0:03:57.000 --> 0:04:00.280 Dad was reporting this earlier today that there are ships 0:04:00.360 --> 0:04:03.840 that with Iranian oil is waiting off of Chinese ports, 0:04:03.880 --> 0:04:08.040 So it's there product market maybe a little different. Supplies 0:04:08.080 --> 0:04:11.000 there are a little bit lower, but they have refineries 0:04:11.000 --> 0:04:12.560 if they can run, and it'll be okay. 0:04:12.600 --> 0:04:13.160 That's why. 0:04:13.360 --> 0:04:15.880 So Alex does the conversation now shift about the way 0:04:15.920 --> 0:04:18.640 that oil is an economic indicator in terms of how 0:04:18.720 --> 0:04:22.880 demand for it around the world is kind of indicating 0:04:23.080 --> 0:04:24.640 the health of the economy asking me. 0:04:24.680 --> 0:04:25.719 A macroarconomic question. 0:04:26.600 --> 0:04:31.479 Key, then, but it's about oil, So I go to 0:04:31.520 --> 0:04:32.360 alex oil. 0:04:32.800 --> 0:04:34.480 Does it reflect macroeconomics? 0:04:34.640 --> 0:04:36.200 Yeah, because you know, we when we think about the 0:04:36.240 --> 0:04:38.680 narrative with oil over the last week or twelve days, 0:04:38.680 --> 0:04:40.880 it's been about okay, tensions in the Middle East. This 0:04:40.920 --> 0:04:45.400 is why we've seen prices go up in more peaceful times. 0:04:45.400 --> 0:04:47.120 When we look at oil prices, we look at it 0:04:47.160 --> 0:04:50.840 for clues about demand outside of the United States, demand 0:04:50.880 --> 0:04:53.279 inside of the United States, and what that says about 0:04:53.320 --> 0:04:54.560 the macroeconomic environment. 0:04:54.560 --> 0:04:58.080 I'm laughing because when we're looking at demand concerns and 0:04:58.120 --> 0:05:01.080 lower oil prices, then we hibit and talk about the 0:05:01.080 --> 0:05:01.839 supply picture. 0:05:01.920 --> 0:05:03.000 So it's like you. 0:05:02.960 --> 0:05:03.920 Can't get one for one. 0:05:04.000 --> 0:05:06.520 So then if you're taking a look at the macroeconomic environment, 0:05:06.520 --> 0:05:08.840 I would also say, oh, but take a look at supply. 0:05:09.040 --> 0:05:10.960 We're still pretty well supplied OPAC plus. 0:05:11.000 --> 0:05:13.440 Really Saudi Arabia is trying to add oil back into 0:05:13.440 --> 0:05:15.040 the market. You could make an argument that are run 0:05:15.320 --> 0:05:17.960 any supply outage you may see would provide space for 0:05:18.040 --> 0:05:20.679 Saudi Arabia to do that. So if you have forty 0:05:20.680 --> 0:05:22.680 dollars oil is at telling you that the global economy 0:05:22.720 --> 0:05:24.960 is falling off a cliff. Not necessarily. There are other 0:05:25.040 --> 0:05:27.320 factors that are a play that are supplying. 0:05:27.520 --> 0:05:29.800 All right, So Mike, the volley goes to you. 0:05:29.880 --> 0:05:32.200 As Alex said, all right, macroeconomic when it comes to 0:05:32.200 --> 0:05:35.159 oil prices, pitch your Jpal definitely asked about it in 0:05:35.240 --> 0:05:37.920 terms of concerns if we've got higher oil prices, how 0:05:37.920 --> 0:05:42.719 that feeds into higher inflation, woes and worries. Jpeal seemed 0:05:42.720 --> 0:05:45.120 to be like, unless this sticks around for a while, 0:05:45.160 --> 0:05:46.440 it's not really an issue. 0:05:47.240 --> 0:05:49.280 Yeah, that's the way the FED looks at it now. 0:05:49.320 --> 0:05:52.040 They went through the original sin of Arthur Burns cutting 0:05:52.080 --> 0:05:55.440 interest rates when oil prices went up during the original 0:05:56.080 --> 0:06:01.159 oil crisis in nineteen seventy three, and at that time 0:06:01.760 --> 0:06:04.799 what ended up happening, of course, is the great inflation 0:06:04.960 --> 0:06:07.159 that we saw, and the FED doesn't want to do 0:06:07.200 --> 0:06:09.680 that again. They've learned that you don't cut rates to 0:06:09.760 --> 0:06:14.240 deal with a supply problem like that. Instead, they would 0:06:14.320 --> 0:06:17.480 wait and see what the impact on the overall economy is. 0:06:17.640 --> 0:06:20.280 And for it to have an impact on the overall economy, 0:06:20.640 --> 0:06:22.640 it would take some time. It would have to get 0:06:22.680 --> 0:06:25.719 into other things besides just the gasoline in your tank, 0:06:26.040 --> 0:06:31.400 get into petrochemicals, get into paint, get into pharmaceuticals, all 0:06:31.400 --> 0:06:35.640 the things that at some point use petroleum. So right 0:06:35.640 --> 0:06:37.880 now there doesn't seem to be any reason to worry 0:06:37.880 --> 0:06:41.599 about it, particularly now that prices are going down. But 0:06:42.160 --> 0:06:44.919 the FED chair made it clear that that's not something 0:06:44.960 --> 0:06:47.960 that's a major concern for them. And also, over the years, 0:06:48.920 --> 0:06:54.440 petroleum prices have become a much smaller impact on what 0:06:54.560 --> 0:06:58.480 the US spends because we've gotten so much more energy efficient, 0:06:58.880 --> 0:07:01.920 so it would even take low longer for to have 0:07:01.960 --> 0:07:04.799 some sort of effect than it did back in the seventies. 0:07:04.960 --> 0:07:06.560 I love that you went there because that was going 0:07:06.600 --> 0:07:08.400 to be my follow up, Alex come back in in 0:07:08.480 --> 0:07:11.560 terms of oil, are we going to ever see? Could 0:07:11.560 --> 0:07:13.840 we see one hundred dollars a barrel oil? 0:07:13.920 --> 0:07:14.000 Like? 0:07:14.480 --> 0:07:15.000 The way the. 0:07:14.960 --> 0:07:17.040 World is moving And even though we maybe have an 0:07:17.040 --> 0:07:21.920 administration that isn't so embracing evs and alternative energy like, 0:07:22.200 --> 0:07:25.240 has that kind of horse left the stable internally? 0:07:25.280 --> 0:07:25.440 Think? 0:07:25.520 --> 0:07:25.600 So? 0:07:25.920 --> 0:07:27.960 I mean, I think what the read through is that 0:07:27.960 --> 0:07:31.160 you're going to see more oil volatility, not necessarily oil 0:07:31.440 --> 0:07:33.440 price spikes that we may have seen in the last 0:07:33.440 --> 0:07:35.920 save fifteen twenty years, and a big part of that 0:07:36.000 --> 0:07:37.920 has to do with US shale. So we look at 0:07:37.920 --> 0:07:39.960 that as the reserve. Right, we had so much oil, 0:07:40.040 --> 0:07:42.320 it's all good. The problem though, is that a lot 0:07:42.360 --> 0:07:45.360 of the really good stuff has already been drilled. So 0:07:45.400 --> 0:07:47.280 the stuff you're getting is a little gas year, So 0:07:47.360 --> 0:07:49.880 less oil, more gas, and it's getting harder, maybe more 0:07:49.880 --> 0:07:50.720 expensive to drill. 0:07:50.800 --> 0:07:52.560 It doesn't mean that like shales toast. 0:07:52.680 --> 0:07:54.160 It just means that might not have the same kind 0:07:54.160 --> 0:07:56.760 of growth rate that we're used to. So you take, 0:07:57.080 --> 0:07:59.760 you know, you change the world for shale. You have 0:07:59.760 --> 0:08:02.680 says on Russian oil, ven A soil and oil TVD. 0:08:02.800 --> 0:08:04.960 What happens with iron? Yeah, sure, you could definitely get that. 0:08:05.440 --> 0:08:07.520 The question is do we stay there? And that, I 0:08:07.560 --> 0:08:09.800 think is the question that may not happen. 0:08:09.960 --> 0:08:12.360 So what are what are the economics of exploration here 0:08:12.360 --> 0:08:14.520 in the US right now? In an environment where the 0:08:14.520 --> 0:08:17.720 President wants to have so called energy independence in the 0:08:17.840 --> 0:08:21.920 United States and also wants to see companies drill, baby, drill. 0:08:22.200 --> 0:08:24.840 So I love that he tweeted to Secretary Right because 0:08:24.840 --> 0:08:27.280 when I have interviewed Secretary Right about oil, he's like dude, 0:08:27.400 --> 0:08:29.160 I'm not an oil guy and the energy guy. And 0:08:29.200 --> 0:08:31.960 then he's like not taking that mantle. Well, Mike McKee 0:08:31.960 --> 0:08:34.000 and I did a piece on this for Wall Street Week. 0:08:34.000 --> 0:08:35.480 It was a two fur and it was just about 0:08:35.920 --> 0:08:37.840 this very issue. 0:08:38.080 --> 0:08:38.720 What was the question? 0:08:38.800 --> 0:08:43.040 The economic I love it, the economics for oil exploration 0:08:43.120 --> 0:08:45.400 in an environment such as this. If oil prices aren't 0:08:45.400 --> 0:08:47.880 necessarily out one hundred dollars a barrow like Carrol's asking, 0:08:48.240 --> 0:08:50.760 then is the incentive actually there for American companies to 0:08:50.800 --> 0:08:52.439 do this expensive process? 0:08:52.480 --> 0:08:55.400 Forty they're definitely loose some money. They're shutting stuff in fifty. 0:08:55.520 --> 0:08:58.360 They're recalculating what they're spending, how they're spending it. Maybe 0:08:58.360 --> 0:09:00.440 on the margins, maybe they're drilling, but they're not completing 0:09:00.480 --> 0:09:03.080 their wealth. They're keeping that oil on the ground. Sixties 0:09:03.080 --> 0:09:05.559 they're fine. They can cover everything. Seventies their goal, and 0:09:05.600 --> 0:09:06.640 they're going going going. 0:09:07.679 --> 0:09:09.520 Get her a role on land man. That's what I'm 0:09:09.520 --> 0:09:09.880 going to say. 0:09:09.880 --> 0:09:12.400 You can forget the question. She can forget the question. 0:09:12.400 --> 0:09:15.560 Anytime she responds like that, I'm on back in because 0:09:15.679 --> 0:09:18.280 as we do talk about inflation, I mean, what's the 0:09:18.280 --> 0:09:21.520 bigger concerns when it comes to inflation remaining sticky here 0:09:21.559 --> 0:09:23.120 in the United States, What is it that we really 0:09:23.200 --> 0:09:24.600 have to worry about at this point If it's not 0:09:24.640 --> 0:09:27.640 really maybe higher oil prices or energy prices, what is it. 0:09:28.960 --> 0:09:31.079 Well, it's been changing, actually, Caro. 0:09:31.120 --> 0:09:34.400 All Over the time, we were watching housing as a 0:09:34.520 --> 0:09:38.200 very sticky point of inflation, but house prices are starting 0:09:38.200 --> 0:09:40.240 to come down now. We saw a decline in the 0:09:40.559 --> 0:09:46.200 case Shiller numbers today. Overall, the housing market weakening, in 0:09:46.360 --> 0:09:49.560 large part because Fed interest rates are keeping people from 0:09:49.600 --> 0:09:53.800 taking out mortgages. So we look beyond that, and what 0:09:53.800 --> 0:09:55.800 you're really going to be looking at is the kind 0:09:55.840 --> 0:09:59.439 of things that the President is talking about tariffing consumer 0:09:59.520 --> 0:10:03.960 goods like clothing, which actually fell in price the last 0:10:04.000 --> 0:10:07.520 couple of months. So we're still looking for the things 0:10:07.520 --> 0:10:11.520 that are going to be sticky in inflation, but they 0:10:11.559 --> 0:10:14.040 seem to be changing even as we speak. 0:10:14.160 --> 0:10:15.640 So that's another reason for the. 0:10:15.600 --> 0:10:18.720 Fed to step back and try to figure out which 0:10:18.760 --> 0:10:22.360 categories and why prices are staying up or going up. 0:10:22.880 --> 0:10:27.120 Mike Any addressing from the Federal Reserve Chair about the 0:10:27.160 --> 0:10:30.160 potential for a rate cut in July. Given since he 0:10:30.280 --> 0:10:32.880 spoke last week, we've heard a couple different FED officials 0:10:32.880 --> 0:10:34.319 come out and say that's a possibility. 0:10:35.520 --> 0:10:37.080 No, he stayed away from that. 0:10:37.240 --> 0:10:39.920 He was asked about it, and he said, when we 0:10:40.000 --> 0:10:43.160 get the right information about what we need, we can 0:10:43.200 --> 0:10:44.680 consider cutting rates. 0:10:44.679 --> 0:10:46.000 Did not put a time frame on it. 0:10:46.040 --> 0:10:49.000 And I might point out that we heard from Atlanta's 0:10:49.080 --> 0:10:51.760 raphae Al Bostik this morning in a Reuter's interview. We 0:10:51.840 --> 0:10:54.880 heard from Beth Hammock of Cleveland today, we heard from 0:10:54.960 --> 0:10:57.720 John Williams, the New York FED president, and all of 0:10:57.760 --> 0:11:01.760 them have said no to July, that they think rates 0:11:01.760 --> 0:11:04.360 are going to stay higher for a little bit longer, 0:11:04.760 --> 0:11:09.000 maybe September, but July doesn't seem to be the majorities view. 0:11:09.120 --> 0:11:11.640 Those FED creatures are such shy individuals. 0:11:11.679 --> 0:11:14.839 We never we never hear from them. It's a quiet 0:11:15.400 --> 0:11:18.000 rate environment on the energy world. Does it make a 0:11:18.000 --> 0:11:20.120 difference the cost of money for them like it does 0:11:20.160 --> 0:11:20.640 for a lot of. 0:11:20.559 --> 0:11:23.160 Business Thinking about that a little bit less it did 0:11:23.200 --> 0:11:26.040 back in like twenty fourteen, because you had a lot 0:11:26.080 --> 0:11:28.040 of companies that had negative cash flow and had to 0:11:28.080 --> 0:11:29.920 borrow a lot, and those rates were high and that's 0:11:29.920 --> 0:11:31.320 why you got to wash out. But there's been so 0:11:31.400 --> 0:11:34.320 much consolidation that maybe not in the same kind of way. 0:11:34.400 --> 0:11:37.520 One last question because it plays into the geopolitics. I mean, 0:11:37.600 --> 0:11:40.280 you see Saudi Arabia and the Middle East really kind 0:11:40.280 --> 0:11:43.440 of looking to diversify in terms of their exposure. I mean, 0:11:43.480 --> 0:11:45.600 they certainly see the energy markets as not going to 0:11:45.600 --> 0:11:48.560 be you know, the money machine that it's been, you know, 0:11:48.600 --> 0:11:51.880 for such a long time. Are they right to like, well, 0:11:51.960 --> 0:11:55.640 this will oil ultimately change maybe geo politics going forward. 0:11:55.679 --> 0:11:57.000 Just kind of about thirty seconds. 0:11:57.200 --> 0:11:59.560 Yeah, it's going to be oil and everything else at 0:11:59.600 --> 0:12:01.600 the same time, and that will be a different kind 0:12:01.600 --> 0:12:03.600 of fight than when it comes to energy. It's going 0:12:03.640 --> 0:12:06.320 to be energy security and energy nationalization. But it's not 0:12:06.360 --> 0:12:08.760 necessarily going to mean oil. It can mean other forms 0:12:08.760 --> 0:12:09.120 as well. 0:12:09.280 --> 0:12:11.440 All Right, I got ten seconds twenty. 0:12:11.440 --> 0:12:13.640 I don't know, Mike, you did so great that we 0:12:13.720 --> 0:12:16.480 get ten seconds more from Mike Jay Powell tomorrow. Any 0:12:16.480 --> 0:12:19.640 indication that the senators could ask different questions than the 0:12:19.640 --> 0:12:20.439 members of the House or. 0:12:20.400 --> 0:12:22.599 Is it rinse repeat, wash rints repeat. 0:12:22.760 --> 0:12:25.280 Probably wash rints repeat. Although we might get a little 0:12:25.320 --> 0:12:28.520 more on banking. There was very little talk of banking 0:12:28.559 --> 0:12:29.520 regulations today. 0:12:29.720 --> 0:12:32.560 All right, Like we said, truly, truly. 0:12:32.720 --> 0:12:36.240 Two of Bloomberg's finest are Michael McKee out there in DC, 0:12:36.360 --> 0:12:39.440 international Economics and Policy correspondent, and of course our Alex Steele, 0:12:40.160 --> 0:12:41.720 anchor for Bloomberg Television Radio. 0:12:41.720 --> 0:12:44.240 We love you both. This is Bloomberg Business Weekdaily. 0:12:44.920 --> 0:12:48.760 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:12:48.840 --> 0:12:51.520 us live weekday afternoons from two to five East during 0:12:51.520 --> 0:12:54.960 this listen on Applecarplay and Android Auto with the Bloomberg 0:12:55.000 --> 0:12:56.560 Business app, or watch. 0:12:56.360 --> 0:12:58.360 Us live on YouTube. 0:12:58.880 --> 0:13:02.920 Certainly, the conflict between Israel Iran, that Middle East conflict 0:13:02.960 --> 0:13:05.440 is top of mind among NATO allies, and this is 0:13:05.440 --> 0:13:08.280 happening as Israel and Iran appeared to be honoring that 0:13:08.360 --> 0:13:12.960 ceasefire agreement unexpectedly announced by President Donald Trump overnight after 0:13:13.040 --> 0:13:16.360 earlier this morning, on his way to that NATO summit, 0:13:16.920 --> 0:13:19.920 he reacted rather angrily to early breaches of the deal 0:13:20.000 --> 0:13:20.760 by both sides. 0:13:21.559 --> 0:13:24.360 I'm really unhappy if Israel is going out this morning 0:13:24.400 --> 0:13:27.559 because the one rocket that didn't land, that was shot 0:13:27.800 --> 0:13:32.199 perhaps by mistake, that didn't land, I'm not happy about that. 0:13:33.520 --> 0:13:36.040 You know what we have, We basically have twoth countries 0:13:36.480 --> 0:13:39.600 that have been fighting so long. And so hard that 0:13:39.640 --> 0:13:42.600 they don't know what the they're doing. You understand that, 0:13:43.160 --> 0:13:43.480 all right? 0:13:43.480 --> 0:13:43.760 Pretty? 0:13:43.800 --> 0:13:46.000 He did President Trump earlier this morning in DC on 0:13:46.080 --> 0:13:48.160 his way to that NATO summit. He of course is 0:13:48.200 --> 0:13:51.080 there on the ground, as you heard from our Anne Marie. 0:13:51.520 --> 0:13:54.920 Let's head to Geneva, Switzerland and to Bloomberg News Middle 0:13:54.920 --> 0:13:58.840 East JUNI Economics reporter Dina as Fondiari. She has worked 0:13:58.840 --> 0:14:01.360 at the International Crisis Group, the Harvard Kennedy School at 0:14:01.440 --> 0:14:05.600 King's College, London, and the International Institute for Strategic Studies. 0:14:05.640 --> 0:14:07.559 We have been dying to talk to you, Diana, and 0:14:07.600 --> 0:14:10.120 I know it's been a busy couple of weeks for you. 0:14:10.320 --> 0:14:12.800 We had a headline a little more than an hour 0:14:12.840 --> 0:14:16.480 ago Iran's president, the Saudi Crown Prince discussing the US 0:14:16.559 --> 0:14:17.520 and Israel in a call. 0:14:17.640 --> 0:14:18.400 It feels like. 0:14:20.040 --> 0:14:23.720 New relationships maybe being for maybe new alliances. 0:14:23.760 --> 0:14:25.600 You are the author of new order in the golf. 0:14:25.640 --> 0:14:28.360 The rise of the UAE is the order of the 0:14:28.400 --> 0:14:30.400 golf being rewritten as we speak. 0:14:30.960 --> 0:14:33.800 I don't know if it's being rewritten, but it's certainly changing. 0:14:33.920 --> 0:14:36.440 A lot of things are changing at the moment. I 0:14:36.480 --> 0:14:40.440 think the Gulf Arab States were quite confident of their 0:14:40.480 --> 0:14:43.760 position in the region, of their relationship with Trump, of 0:14:43.840 --> 0:14:46.800 their new relationship with Iran a few weeks ago when 0:14:46.800 --> 0:14:50.280 Trump was visiting the region, and now things really do 0:14:50.360 --> 0:14:53.080 seem to be up in the air. They're absolutely terrified 0:14:53.080 --> 0:14:57.120 by what happens last night when Iran targeted US bases 0:14:58.080 --> 0:15:01.760 in Qatar in a first. I think it caught them 0:15:01.800 --> 0:15:04.760 off guards. It is one of their biggest fears to 0:15:04.800 --> 0:15:07.440 be caught in the middle of an escalation between the 0:15:07.560 --> 0:15:09.960 US and Iran, and it happened, And so I think 0:15:10.000 --> 0:15:13.760 everybody is just trying to grapple with what just happened 0:15:13.880 --> 0:15:15.120 and where we go from here. 0:15:15.280 --> 0:15:18.480 Well, it certainly seems like markets here in the US 0:15:18.960 --> 0:15:23.240 are sending the signal that they're confident that this crisis 0:15:23.280 --> 0:15:27.120 has been de escalated, and perhaps it appears that this 0:15:27.320 --> 0:15:31.280 truce between the two countries may actually hold. Is that 0:15:31.440 --> 0:15:33.920 view in your opinion? Is that shortsighted? 0:15:34.720 --> 0:15:37.240 No, I do think that the truce will hold, But 0:15:37.280 --> 0:15:40.240 I think we're going to find ourselves in a new normal. 0:15:40.920 --> 0:15:43.200 I don't think things are going to escalate like they 0:15:43.280 --> 0:15:46.680 have over the course of the last twelve days. I'm 0:15:46.800 --> 0:15:50.120 hopeful that that has been put behind us, because I 0:15:50.160 --> 0:15:52.760 do think that President Trump is now going to wield 0:15:52.800 --> 0:15:55.600 the hammer and try to make sure that both Israel 0:15:55.640 --> 0:15:58.640 and Iran stick to this ceasefire. And also Israel and 0:15:58.680 --> 0:16:01.560 Iran don't want this war to extend beyond these twelve days. 0:16:01.600 --> 0:16:05.000 I think both have been badly hit and so they 0:16:05.280 --> 0:16:09.720 are more than willing to move on. But that doesn't 0:16:09.760 --> 0:16:12.160 mean the tensions between Israel and Iran are going to 0:16:12.160 --> 0:16:16.680 dissipate overnight. These two countries are long standing rivals that 0:16:16.760 --> 0:16:21.360 will continue. So I anticipate that we find ourselves in 0:16:21.400 --> 0:16:23.960 a situation where we were a few months ago, or 0:16:24.000 --> 0:16:29.400 even before October seventh, where the two sides are trading blows, 0:16:29.800 --> 0:16:32.040 but at a lower level, at a more manageable level. 0:16:32.080 --> 0:16:36.480 Will the tensions exist between Israel and Iran until there is, 0:16:36.640 --> 0:16:39.800 or unless there is regime change in Iran? 0:16:40.800 --> 0:16:43.960 You know, it's the regime change question is the million 0:16:43.960 --> 0:16:47.320 dollar question. At the moment. What is for sure is 0:16:47.320 --> 0:16:49.960 that regime change isn't going to happen at the hands 0:16:50.000 --> 0:16:54.400 of Israelian American bombs. There is discontent in Iran, but 0:16:54.520 --> 0:16:57.720 the more Iran faces external attacks, the more you have 0:16:57.800 --> 0:17:00.720 a bit of a rally around the flag effect and 0:17:00.880 --> 0:17:03.680 a sense of nationalism that infuses the country, which we're 0:17:03.760 --> 0:17:05.719 kind of in the middle of right now, and so 0:17:05.760 --> 0:17:08.879 people put aside their discontent and come together in the 0:17:08.920 --> 0:17:14.280 face of this external enemy. The enmity with Israel is 0:17:14.560 --> 0:17:19.479 really from government's official to government official. It doesn't really 0:17:19.520 --> 0:17:23.360 trickle down to the people. But what happens is when 0:17:23.400 --> 0:17:26.800 you have these cycles of escalation, then that's when it 0:17:26.840 --> 0:17:29.200 trickles down to the people. That's when they start to 0:17:29.240 --> 0:17:32.480 feel it personally. So the faster these wars are dealt with, 0:17:32.680 --> 0:17:33.359 the better it is. 0:17:33.520 --> 0:17:34.640 Hey, you know on that. 0:17:34.720 --> 0:17:37.960 And I'm curious in terms of tensions continuing certainly between 0:17:38.320 --> 0:17:41.879 Iran and Israel. Let me just go back to something 0:17:41.880 --> 0:17:45.480 that came out former US Secretary of State under President Biden, 0:17:45.600 --> 0:17:47.640 Anthony Blincoln, in an op ed in The New York 0:17:47.680 --> 0:17:52.080 Times critical of President Trump's strikes in Iran, he does 0:17:52.119 --> 0:17:54.679 hope it works, though he noted that Iran will essentially 0:17:54.720 --> 0:17:58.919 build back their nuclear enrichment capabilities, and he said, finally, well, 0:17:58.960 --> 0:18:02.600 there's no doubt the Americans strikes set back Iran's nuclear ambitions. 0:18:02.680 --> 0:18:06.960 Iran could rebuild quickly in locations and adepts virtually immune 0:18:07.000 --> 0:18:11.000 to airstrikes while pursuing weaponization at the same time. So 0:18:11.040 --> 0:18:13.159 he goes on to say, while their program has been 0:18:13.200 --> 0:18:15.920 significantly disrupted and buying time is a good thing, it 0:18:16.040 --> 0:18:19.800 underscores that sticking with the JCPOA was the better option. 0:18:19.880 --> 0:18:22.719 It bought US at least fifteen years ago instead of 0:18:22.760 --> 0:18:25.520 just a few, or bought US at least fifteen years 0:18:25.560 --> 0:18:27.040 instead of just a few. And that was, of course 0:18:27.080 --> 0:18:30.760 the Joint Comprehensive Plan of Action, that twenty fifteen agreement 0:18:30.760 --> 0:18:32.520 between Iran and several world powers. 0:18:32.880 --> 0:18:35.680 So is he right that? 0:18:36.160 --> 0:18:40.000 I mean, will these tensions continue because Iran will continue 0:18:40.000 --> 0:18:43.480 to want to have those nuclear enrichment capabilities or do 0:18:43.480 --> 0:18:46.600 you think there is a truce where they say I'm out, 0:18:46.760 --> 0:18:47.240 I'm done. 0:18:47.640 --> 0:18:52.000 Realistically, Look, I think it's really hard to imagine that 0:18:52.040 --> 0:18:54.400 Iran is going to put its hands up after facing 0:18:54.480 --> 0:18:57.400 twelve days of attacks plus a round of US attacks, 0:18:57.440 --> 0:18:59.840 and say, you know what, that program that we in 0:19:00.280 --> 0:19:03.840 all that money, all that energy, all that time into, 0:19:04.160 --> 0:19:06.440 We're going to give it up just because of twelve 0:19:06.520 --> 0:19:09.520 days of air stripes. I just don't foresee that happening. 0:19:09.840 --> 0:19:13.200