1 00:00:02,720 --> 00:00:10,600 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,560 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,640 --> 00:00:17,880 Speaker 1: Eastern on Apple, Coarclay, and Android Auto with the Bloomberg 4 00:00:17,920 --> 00:00:21,000 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,360 --> 00:00:23,120 Speaker 1: or watch us live on YouTube. 6 00:00:23,920 --> 00:00:26,520 Speaker 2: Taking a look at the oil market, cred prices down 7 00:00:26,640 --> 00:00:29,360 Speaker 2: by about three point seven percent on the news from 8 00:00:29,400 --> 00:00:32,120 Speaker 2: the Wall Street Journal that perhaps Aron is open to 9 00:00:32,280 --> 00:00:35,199 Speaker 2: a de escalation with Israel. Let's get more on this 10 00:00:35,240 --> 00:00:39,000 Speaker 2: with Ellen Wald, president of Transversal Consulting, joining us. Ellen 11 00:00:40,200 --> 00:00:43,440 Speaker 2: what kind of risk premium should be in the market 12 00:00:43,600 --> 00:00:45,560 Speaker 2: for at least the short term. 13 00:00:46,120 --> 00:00:48,720 Speaker 3: Yeah, I think I wouldn't be surprised between like two 14 00:00:48,760 --> 00:00:51,400 Speaker 3: and four dollars, kind of vacillating a bit. I mean, 15 00:00:51,400 --> 00:00:54,800 Speaker 3: we're definitely in a situation of much higher risk than 16 00:00:54,840 --> 00:00:59,200 Speaker 3: we were last month, but we have seen similar ish 17 00:00:59,240 --> 00:01:02,720 Speaker 3: situations and that's kind of the risk premium we saw. 18 00:01:03,200 --> 00:01:04,520 Speaker 4: I do think that. 19 00:01:06,240 --> 00:01:09,560 Speaker 3: It does depend a lot on what happens in the 20 00:01:09,600 --> 00:01:13,399 Speaker 3: Persian Gulf, other country's reactions to it, and also but 21 00:01:13,440 --> 00:01:15,960 Speaker 3: it does seem that Iran is continues to have the 22 00:01:16,000 --> 00:01:19,759 Speaker 3: ability to export oil and that's really what matters for 23 00:01:20,120 --> 00:01:23,920 Speaker 3: oil prices, whether or not these supplies are disrupted. 24 00:01:24,560 --> 00:01:27,759 Speaker 4: If they're not, then really it's just a risk premium. 25 00:01:27,800 --> 00:01:28,839 Speaker 4: It's going to go up and down. 26 00:01:29,240 --> 00:01:31,800 Speaker 3: I wouldn't be surprised if we see insurance rates for 27 00:01:32,560 --> 00:01:34,600 Speaker 3: takers go up, and that can. 28 00:01:34,480 --> 00:01:36,759 Speaker 4: Also impact prices as well. 29 00:01:37,200 --> 00:01:40,240 Speaker 3: But at the same time, you know, it's just I 30 00:01:40,240 --> 00:01:42,160 Speaker 3: think we're kind of in the in the range of 31 00:01:42,680 --> 00:01:45,080 Speaker 3: you know, maybe three four dollars. 32 00:01:45,400 --> 00:01:49,600 Speaker 5: The straits, the Straits of Hormuz that's never been closed 33 00:01:49,600 --> 00:01:52,360 Speaker 5: down in the past. Is the market as far as 34 00:01:52,360 --> 00:01:53,760 Speaker 5: you can tell when you talk to people in the industry, 35 00:01:53,880 --> 00:01:56,559 Speaker 5: are they believe that is still going to be the case, 36 00:01:56,680 --> 00:01:58,360 Speaker 5: that that's still going to be you're able to get 37 00:01:58,360 --> 00:02:01,280 Speaker 5: your oil in and out of the straight Yeah. 38 00:02:01,320 --> 00:02:03,440 Speaker 4: I think what's going on is people are. 39 00:02:03,440 --> 00:02:07,680 Speaker 3: Very jittery, and you know, every time there's any kind 40 00:02:07,720 --> 00:02:11,080 Speaker 3: of you know, military action in the Persian Gulf, that's 41 00:02:11,280 --> 00:02:13,760 Speaker 3: kind of the worst case scenario that everyone jumps to. 42 00:02:14,240 --> 00:02:16,240 Speaker 3: And I think a lot of that is a holdover 43 00:02:16,400 --> 00:02:19,400 Speaker 3: from the seventy three oil shocks, where you know, oil 44 00:02:19,480 --> 00:02:23,760 Speaker 3: was embargoed, and also from the Iran Iraq War where 45 00:02:23,800 --> 00:02:26,880 Speaker 3: there was this tanker war and essentially the US military 46 00:02:27,040 --> 00:02:30,920 Speaker 3: had to escort oil tankers out of out of the 47 00:02:30,919 --> 00:02:34,240 Speaker 3: Persian golf to ensure their safety. I don't think that 48 00:02:34,280 --> 00:02:36,880 Speaker 3: we have the same dynamic now because, first of all, 49 00:02:37,120 --> 00:02:40,760 Speaker 3: China is a really big player. China is basically the 50 00:02:40,840 --> 00:02:44,160 Speaker 3: largest customer. Asia is now the largest customer for these 51 00:02:44,200 --> 00:02:47,280 Speaker 3: Persian golf producers that includes Iran and Saudi Arabia and 52 00:02:47,320 --> 00:02:49,880 Speaker 3: other ones. And you don't want to kick the nest 53 00:02:50,040 --> 00:02:52,639 Speaker 3: when it comes to China. China is not going to 54 00:02:52,800 --> 00:02:55,160 Speaker 3: like it if their ships are disrupted, if there are 55 00:02:55,240 --> 00:02:59,800 Speaker 3: access to oil is disrupted, and so they will put 56 00:03:00,200 --> 00:03:04,760 Speaker 3: economic pressure to cool things down and to make sure 57 00:03:04,800 --> 00:03:09,560 Speaker 3: that their economic needs and desires are protected there. So 58 00:03:09,600 --> 00:03:11,960 Speaker 3: I think that's that's a new factor now that we 59 00:03:12,000 --> 00:03:14,400 Speaker 3: haven't seen that we didn't see in previous years. 60 00:03:14,520 --> 00:03:15,519 Speaker 4: There's also a matter. 61 00:03:15,280 --> 00:03:19,680 Speaker 3: Of can they physically actually close thee of wour moves. 62 00:03:20,280 --> 00:03:23,120 Speaker 3: I would argue that it's not as easy as it 63 00:03:23,160 --> 00:03:24,000 Speaker 3: seems or as they say. 64 00:03:24,000 --> 00:03:25,160 Speaker 4: They can definitely. 65 00:03:24,760 --> 00:03:28,200 Speaker 3: Threaten ships, which can also be pretty bad, but you 66 00:03:28,240 --> 00:03:29,720 Speaker 3: can't actually close it. 67 00:03:30,720 --> 00:03:34,480 Speaker 4: Eron's not the only country that has ownership over the waters. 68 00:03:34,480 --> 00:03:37,520 Speaker 3: There and you can actually re route ships into waters 69 00:03:37,560 --> 00:03:41,840 Speaker 3: into Emirati and Amani waters. It would take some time, 70 00:03:42,280 --> 00:03:45,960 Speaker 3: and during that logistical you know, inter inter period, it 71 00:03:45,960 --> 00:03:48,600 Speaker 3: would be we'd see higher oil prices. 72 00:03:48,640 --> 00:03:50,840 Speaker 4: But I do believe it would work itself out in 73 00:03:50,880 --> 00:03:51,160 Speaker 4: the end. 74 00:03:51,680 --> 00:03:55,200 Speaker 2: And there are some spare pipeline capacity through Saudi Arabia 75 00:03:55,200 --> 00:03:57,400 Speaker 2: and the UAE to bypass the straight but it is 76 00:03:57,400 --> 00:04:01,000 Speaker 2: still relatively limited. Do we have good sense as to 77 00:04:01,080 --> 00:04:04,680 Speaker 2: whether Israel truly wants to strike oil and gas facilities. 78 00:04:04,720 --> 00:04:06,360 Speaker 2: I mean, I know over the weekend we did see 79 00:04:06,400 --> 00:04:09,240 Speaker 2: some of that, but nothing that truly disrupted production. 80 00:04:10,120 --> 00:04:11,360 Speaker 4: Right, And I think that's interesting. 81 00:04:11,400 --> 00:04:13,920 Speaker 3: I think they're really walking a very close line because 82 00:04:14,240 --> 00:04:18,200 Speaker 3: all of the facilities that they hit they hit to 83 00:04:18,600 --> 00:04:21,640 Speaker 3: gas processing plants in the South Pars gas field, they 84 00:04:21,720 --> 00:04:27,200 Speaker 3: hit a fuel depot outside of Tehran, and they hit 85 00:04:27,240 --> 00:04:30,919 Speaker 3: an oil refinery, and those all have domestic impacts because 86 00:04:30,960 --> 00:04:34,240 Speaker 3: Iran doesn't export it's natural gas. It uses it only 87 00:04:34,279 --> 00:04:38,880 Speaker 3: for you know, electricity, Domestically, Iran has to make all 88 00:04:38,880 --> 00:04:41,520 Speaker 3: of its own gasoline, et cetera. So you can see 89 00:04:41,520 --> 00:04:47,600 Speaker 3: that their strikes are designed for maximum domestic effect and 90 00:04:47,640 --> 00:04:50,960 Speaker 3: that they have not touched carg Island, which is where 91 00:04:51,240 --> 00:04:55,200 Speaker 3: the ninety percent of Iran's exports are loaded into tankers, 92 00:04:55,560 --> 00:05:00,360 Speaker 3: and they haven't touched anything that would impact Iran's exports. Now, 93 00:05:00,720 --> 00:05:04,440 Speaker 3: the question is how long can they not touch them, 94 00:05:04,560 --> 00:05:08,400 Speaker 3: either by accident or because the exports are a primary 95 00:05:08,440 --> 00:05:11,240 Speaker 3: source of Iran's funding and at a certain point you've 96 00:05:11,240 --> 00:05:13,919 Speaker 3: got to go after their funding. And so I think 97 00:05:14,000 --> 00:05:17,360 Speaker 3: that right now it's not on the table. But if 98 00:05:17,360 --> 00:05:20,279 Speaker 3: there isn't any kind of resolution to this, I wouldn't 99 00:05:20,279 --> 00:05:23,960 Speaker 3: be surprised to see them at least threaten it diplomatically 100 00:05:24,160 --> 00:05:25,719 Speaker 3: or someone down the road. 101 00:05:26,520 --> 00:05:31,039 Speaker 5: Ellen Aside from the geopolitical risk there, what is underlying demand? 102 00:05:31,080 --> 00:05:33,520 Speaker 5: What are the assumptions for underlying demand for the rest 103 00:05:33,560 --> 00:05:35,599 Speaker 5: of the year for oil and gas. 104 00:05:36,400 --> 00:05:37,200 Speaker 4: It's a good question. 105 00:05:37,240 --> 00:05:40,039 Speaker 3: I think we're in a pretty good demand situation. I 106 00:05:40,080 --> 00:05:42,760 Speaker 3: do think, you know, everyone's a little bit nervous about 107 00:05:42,760 --> 00:05:44,560 Speaker 3: whether or not there might be a recession or not. 108 00:05:44,640 --> 00:05:47,160 Speaker 3: In that case, demand can go down, but otherwise demand 109 00:05:47,160 --> 00:05:48,279 Speaker 3: seems pretty stable. 110 00:05:48,800 --> 00:05:51,000 Speaker 4: I think, you know, there can be. 111 00:05:50,880 --> 00:05:54,599 Speaker 3: Some variation depending on what happens in China or you know, 112 00:05:54,960 --> 00:05:56,479 Speaker 3: or India, but in general. 113 00:05:56,200 --> 00:05:59,159 Speaker 4: Demand's pretty stable. Supply looks good as well. 114 00:05:59,360 --> 00:06:01,880 Speaker 3: I don't think we're We're not in an oversupplied situation 115 00:06:03,320 --> 00:06:06,480 Speaker 3: at this point, or like not a massive oversupplied situation, 116 00:06:07,200 --> 00:06:10,200 Speaker 3: but likewise we're not under supplied either, And so I 117 00:06:10,200 --> 00:06:11,920 Speaker 3: think prices. 118 00:06:11,560 --> 00:06:14,119 Speaker 4: Seem to be pretty good for where they are. 119 00:06:14,640 --> 00:06:17,080 Speaker 3: And I don't think unless you know, I don't think 120 00:06:17,160 --> 00:06:21,840 Speaker 3: that this issue in the Middle East, provided that it 121 00:06:21,880 --> 00:06:26,120 Speaker 3: remains within kind of the confines where Iranian oil exports 122 00:06:26,160 --> 00:06:30,520 Speaker 3: aren't hurt and Iran doesn't try to obstruct any other 123 00:06:30,640 --> 00:06:34,080 Speaker 3: oil exports, that I don't see that we shouldn't really 124 00:06:34,160 --> 00:06:37,120 Speaker 3: hit one hundred dollars a barrel, for example, because of this. 125 00:06:37,680 --> 00:06:39,680 Speaker 4: I think that that's not realistic. 126 00:06:39,400 --> 00:06:42,280 Speaker 2: So different than what we would have seen ten years ago, 127 00:06:42,839 --> 00:06:45,599 Speaker 2: all fifteen years ago. Allen, before you let you go, 128 00:06:46,120 --> 00:06:48,240 Speaker 2: what are the Saudi's doing right now? How are they 129 00:06:48,240 --> 00:06:50,040 Speaker 2: involved or not in these discussions? 130 00:06:51,120 --> 00:06:53,719 Speaker 4: The Saudis are probably involved. 131 00:06:53,720 --> 00:06:57,040 Speaker 3: I wouldn't be surprised if they're talking to Russia because 132 00:06:57,040 --> 00:06:59,279 Speaker 3: they're very keen. They'd love to be, you know, help 133 00:06:59,320 --> 00:07:03,560 Speaker 3: broker some sort of a deal here. They are privately 134 00:07:03,720 --> 00:07:07,799 Speaker 3: very happy that Israel attacked Iran's nuclear facilities. They don't 135 00:07:07,839 --> 00:07:10,720 Speaker 3: want Iran having a nuclear weapon either, but they're not 136 00:07:10,760 --> 00:07:13,480 Speaker 3: going to say that out loud in private. They you know, 137 00:07:13,520 --> 00:07:17,000 Speaker 3: they in public they are condemning Israel's attacks, but basically 138 00:07:17,000 --> 00:07:20,520 Speaker 3: there I'd say they're focused on keeping their oil supplies, 139 00:07:21,280 --> 00:07:24,000 Speaker 3: you know, going, and kind of to have. 140 00:07:24,040 --> 00:07:24,840 Speaker 4: A low profile. 141 00:07:25,880 --> 00:07:27,680 Speaker 6: All Right, Allen, thank you so much. We appreciate it 142 00:07:27,720 --> 00:07:28,240 Speaker 6: as always. 143 00:07:28,240 --> 00:07:31,320 Speaker 5: Ellen Wall the president of Transversal Consulting and a senior 144 00:07:31,320 --> 00:07:33,000 Speaker 5: fellow with the Atlantic Council. 145 00:07:34,720 --> 00:07:38,440 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 146 00:07:38,520 --> 00:07:41,880 Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto 147 00:07:42,000 --> 00:07:45,080 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 148 00:07:45,120 --> 00:07:48,120 Speaker 1: get your podcasts, or watch us live on YouTube. 149 00:07:48,720 --> 00:07:50,520 Speaker 2: Let's get to the markets here with the SMP up 150 00:07:50,600 --> 00:07:53,440 Speaker 2: over one percent, Fill Orlando, chief equity market strategist and 151 00:07:53,440 --> 00:07:57,040 Speaker 2: head of client portfolio Management in Federating Hermes joins us. 152 00:07:57,040 --> 00:07:58,320 Speaker 7: So Phil I was out Friday. 153 00:07:58,920 --> 00:08:01,720 Speaker 2: If I pretended Friday Day happened, the equity markets in 154 00:08:01,760 --> 00:08:04,240 Speaker 2: the exact same place it was when it closed on Thursday, 155 00:08:04,520 --> 00:08:07,240 Speaker 2: What do I make of that? When there is actual 156 00:08:07,440 --> 00:08:09,600 Speaker 2: severe geopolitical risk out there? 157 00:08:10,400 --> 00:08:14,640 Speaker 8: Well as as your previous guests just talked about I 158 00:08:14,640 --> 00:08:20,160 Speaker 8: guess there's an assumption that is dissettling, as the Israeli 159 00:08:20,320 --> 00:08:24,760 Speaker 8: attack of Iran was. Maybe Iran this is going to 160 00:08:24,800 --> 00:08:29,040 Speaker 8: force them to the bargaining table. Point number one, point 161 00:08:29,120 --> 00:08:32,720 Speaker 8: number two. Look at what transpired in the energy market 162 00:08:33,280 --> 00:08:35,559 Speaker 8: that in the first you know, four or five months 163 00:08:35,559 --> 00:08:38,560 Speaker 8: of the year, crude oil went from eighty dollars a 164 00:08:38,559 --> 00:08:41,600 Speaker 8: barrel down to fifty five. Then we spiked up to 165 00:08:41,679 --> 00:08:45,600 Speaker 8: seventy seven dollars on Friday, and now we're back down 166 00:08:45,679 --> 00:08:48,320 Speaker 8: to seventy two dollars. And if you think about what's 167 00:08:48,360 --> 00:08:50,920 Speaker 8: gone on behind the scenes, we were talking about this 168 00:08:51,000 --> 00:08:55,440 Speaker 8: at our morning meeting today. Over the last couple of months, 169 00:08:55,480 --> 00:09:02,280 Speaker 8: the Saudis spurred OPEK to sort of oversupply the market 170 00:09:02,520 --> 00:09:04,400 Speaker 8: with a lot of crude oil. In each the last 171 00:09:04,400 --> 00:09:08,199 Speaker 8: two or three months. In the United States, very quietly, 172 00:09:08,720 --> 00:09:12,720 Speaker 8: we have increased the size of our strategic petroleum reserve. 173 00:09:13,520 --> 00:09:16,320 Speaker 8: From three hundred and fifty million barrels at the beginning 174 00:09:16,360 --> 00:09:18,960 Speaker 8: of the year, we're now a little over four hundred 175 00:09:19,040 --> 00:09:21,840 Speaker 8: million barrels. I think on our way back to peak 176 00:09:21,880 --> 00:09:24,800 Speaker 8: capacity at about seven hundred and twenty million barrels. So 177 00:09:26,120 --> 00:09:28,760 Speaker 8: you wonder whether or not the United States and the 178 00:09:28,800 --> 00:09:35,680 Speaker 8: Saudis anticipated what transpired on Friday, or maybe had advanced 179 00:09:35,800 --> 00:09:38,680 Speaker 8: noticed that something might happen, and it might not be 180 00:09:38,720 --> 00:09:41,320 Speaker 8: a bad idea to, you know, make sure that there's 181 00:09:41,360 --> 00:09:45,480 Speaker 8: some fruit on hand in case there is some problems 182 00:09:45,520 --> 00:09:49,240 Speaker 8: with the Straits of Hormuz or the Uranians take their 183 00:09:49,240 --> 00:09:52,880 Speaker 8: oil up the market or whatever. And it looks like 184 00:09:53,200 --> 00:09:56,040 Speaker 8: things are reasonably stable. And so as a result of 185 00:09:56,040 --> 00:10:00,240 Speaker 8: the markets sort of bouncing back today, you know, the 186 00:10:00,280 --> 00:10:04,160 Speaker 8: benefit of having had the weekend to think through, you know, 187 00:10:04,240 --> 00:10:05,479 Speaker 8: last Friday's developments. 188 00:10:06,600 --> 00:10:08,440 Speaker 5: Phil, it's been if you look at the charter of 189 00:10:08,480 --> 00:10:10,480 Speaker 5: the s and P five hundred year to date, talk 190 00:10:10,520 --> 00:10:14,040 Speaker 5: about a v bottom and recovery here, like we should 191 00:10:14,080 --> 00:10:15,439 Speaker 5: talk about for the economy. 192 00:10:16,160 --> 00:10:16,560 Speaker 6: I don't know. 193 00:10:16,600 --> 00:10:18,920 Speaker 5: I was kind of surprised that we went down as much, 194 00:10:18,960 --> 00:10:21,200 Speaker 5: and now I'm equally surprised that we came back as 195 00:10:21,280 --> 00:10:22,960 Speaker 5: much and how quickly it all happened. 196 00:10:23,440 --> 00:10:24,840 Speaker 6: You're an old pro what do you make of what 197 00:10:24,880 --> 00:10:25,800 Speaker 6: we've seen here? To date? 198 00:10:26,600 --> 00:10:31,319 Speaker 8: Markets tend to overshoot on both sides, and we were 199 00:10:31,360 --> 00:10:37,400 Speaker 8: disappointed with the market's response to the Liberation Day chaos. 200 00:10:37,480 --> 00:10:41,520 Speaker 8: But look, frankly, the Trump administration did a poor job 201 00:10:41,760 --> 00:10:48,000 Speaker 8: in orchestrating the implementation of that tariff announcement. So the market, 202 00:10:48,160 --> 00:10:51,440 Speaker 8: in the absence of any knowledge, you know, responded appropriately 203 00:10:51,520 --> 00:10:54,120 Speaker 8: down fifteen percent in the space of a week. And 204 00:10:54,160 --> 00:10:56,679 Speaker 8: then once we had a better sense of how that 205 00:10:56,880 --> 00:11:00,920 Speaker 8: was going to work, along with how is the economy doing, 206 00:11:01,440 --> 00:11:04,440 Speaker 8: the market rebounded back to what, you know, we felt 207 00:11:04,440 --> 00:11:08,040 Speaker 8: were more reasonable levels of valuation. Remember, Paul, we talked 208 00:11:08,040 --> 00:11:11,120 Speaker 8: about this down in Washington a couple of weeks ago. 209 00:11:11,600 --> 00:11:13,720 Speaker 8: Our full year forecast for the S and P this 210 00:11:13,800 --> 00:11:16,720 Speaker 8: year is still sixty five hundred. We're sitting now a 211 00:11:16,760 --> 00:11:20,240 Speaker 8: little bit over six thousand, So we've still got you know, 212 00:11:20,440 --> 00:11:24,640 Speaker 8: five hundred points, you know, maybe eight or nine percent 213 00:11:24,679 --> 00:11:27,760 Speaker 8: of potential appreciation over the course of the back half 214 00:11:27,800 --> 00:11:31,720 Speaker 8: of the year. So there's more room for the market 215 00:11:31,760 --> 00:11:35,280 Speaker 8: to continue to grind higher if the fundamentals continue to 216 00:11:35,280 --> 00:11:36,000 Speaker 8: fall into place. 217 00:11:37,120 --> 00:11:40,200 Speaker 2: What's the safety right now? Are bonds portraying the safe 218 00:11:40,240 --> 00:11:41,280 Speaker 2: haven bid or does it have. 219 00:11:41,280 --> 00:11:41,760 Speaker 7: To be gold? 220 00:11:43,720 --> 00:11:46,280 Speaker 8: Well, Gold's been the safe haven play for a while, 221 00:11:46,440 --> 00:11:53,400 Speaker 8: and given any concerns about geopolitical risk or inflation, gold 222 00:11:53,480 --> 00:11:55,480 Speaker 8: is the play, and so having a little bit of 223 00:11:55,480 --> 00:11:59,320 Speaker 8: gold in your portfolio. I can't. I can't. I don't 224 00:11:59,360 --> 00:12:02,720 Speaker 8: have any problem with a client taking that position. But 225 00:12:02,840 --> 00:12:06,920 Speaker 8: certainly if you think that there's going to be slower 226 00:12:06,960 --> 00:12:14,240 Speaker 8: economic growth, certainly bond should rally. Treasuries historically are great 227 00:12:14,240 --> 00:12:18,360 Speaker 8: safety play. You know, we think the treasury yields benchmark 228 00:12:18,400 --> 00:12:21,360 Speaker 8: ten's are probably going to grind down towards four percent 229 00:12:21,760 --> 00:12:23,960 Speaker 8: over the balance of the year. So I don't have 230 00:12:24,000 --> 00:12:28,280 Speaker 8: a problem with investors holding both treasuries and gold as 231 00:12:28,320 --> 00:12:31,959 Speaker 8: sort of safe havens, given you know, the complete uncertainty 232 00:12:32,000 --> 00:12:35,160 Speaker 8: and volatility of what you know. We've we've watched over 233 00:12:35,200 --> 00:12:36,400 Speaker 8: the last seventy two hours. 234 00:12:37,360 --> 00:12:39,600 Speaker 5: Phil, thanks so much. Always appreciate getting a few minutes 235 00:12:39,640 --> 00:12:41,880 Speaker 5: of your time. Phil Orlando. He's a chief equity market 236 00:12:41,880 --> 00:12:45,720 Speaker 5: strategist and had a client portfolio Management and Federated Hermes 237 00:12:46,440 --> 00:12:49,240 Speaker 5: joining us there, and we spoke to Phil when we 238 00:12:49,240 --> 00:12:50,760 Speaker 5: were down in Washington a few weeks ago. 239 00:12:50,840 --> 00:12:52,000 Speaker 8: He was there as well. 240 00:12:53,800 --> 00:12:57,440 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 241 00:12:57,600 --> 00:13:00,640 Speaker 1: weekdays at ten am Eastern on alf o'clock and Android 242 00:13:00,679 --> 00:13:04,000 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 243 00:13:04,040 --> 00:13:07,160 Speaker 1: you get your podcasts, or watch us live on YouTube. 244 00:13:07,640 --> 00:13:09,439 Speaker 7: We're also, of course paying attention was happening at the 245 00:13:09,440 --> 00:13:09,840 Speaker 7: G seven. 246 00:13:09,840 --> 00:13:12,440 Speaker 2: We're waiting for biladeral meeting to begin between President Trump 247 00:13:12,840 --> 00:13:16,960 Speaker 2: and Canadian Prime Minister Mark Carney. Also reports indicate that 248 00:13:17,000 --> 00:13:20,280 Speaker 2: President Trump and Germany's A Chancellor Frederick Mertz will be 249 00:13:20,320 --> 00:13:23,600 Speaker 2: meeting this morning as well at the G seven. So 250 00:13:23,640 --> 00:13:26,319 Speaker 2: we'll bring you all of those headlines of course as 251 00:13:26,440 --> 00:13:27,240 Speaker 2: they cross. 252 00:13:27,400 --> 00:13:27,640 Speaker 8: All right. 253 00:13:27,679 --> 00:13:29,640 Speaker 2: Want to get to the news though, of the last 254 00:13:29,640 --> 00:13:32,720 Speaker 2: few days, and that's what's happening with Iran and Israel. 255 00:13:32,800 --> 00:13:35,120 Speaker 7: Lots of different reports coming out right now. 256 00:13:35,200 --> 00:13:39,040 Speaker 2: Israel's continuing to strike despite reports that iron would like 257 00:13:39,120 --> 00:13:42,280 Speaker 2: to de escalate. They've exchanged fire now for the fourth 258 00:13:42,320 --> 00:13:46,080 Speaker 2: consecutive day. And this then raises the possibility and the 259 00:13:46,200 --> 00:13:48,199 Speaker 2: risk of and all out war that could drag the 260 00:13:48,240 --> 00:13:50,200 Speaker 2: rest of the Middle East as well as Western nations 261 00:13:50,240 --> 00:13:53,720 Speaker 2: into it. Ned Lazarus is Associate Professor of International Affairs 262 00:13:53,960 --> 00:13:58,240 Speaker 2: at George Washington University, joining US now, professor, what is 263 00:13:58,360 --> 00:14:02,160 Speaker 2: your base case now, uh, and what is the biggest risk? 264 00:14:04,200 --> 00:14:09,280 Speaker 9: Well, I think you brought in an important development, which 265 00:14:09,360 --> 00:14:13,360 Speaker 9: is that there are reports that Iran, through other channels, 266 00:14:13,360 --> 00:14:18,559 Speaker 9: through Arab Arab neighbors UH. And also I've heard through Cyprus, 267 00:14:19,120 --> 00:14:22,800 Speaker 9: is attempting to send messages UH to to return to 268 00:14:22,920 --> 00:14:27,080 Speaker 9: negotiations and to and to de escalate UH and to 269 00:14:27,480 --> 00:14:30,040 Speaker 9: uh you know, according to some reports, is floating the 270 00:14:30,080 --> 00:14:33,480 Speaker 9: idea that it will become more flexible in its stance 271 00:14:33,560 --> 00:14:40,560 Speaker 9: on UH enriching uranium UH and UH nuclear development. So this, 272 00:14:41,240 --> 00:14:45,520 Speaker 9: if correct, this is a signal that Israel's strikes are 273 00:14:46,200 --> 00:14:52,400 Speaker 9: being felt acutely by the regime which previously had you know, 274 00:14:52,480 --> 00:14:55,560 Speaker 9: really seem seemed to be dragging out its talks with 275 00:14:55,600 --> 00:15:00,000 Speaker 9: the Trump administration, not in any way willing to uh 276 00:15:00,200 --> 00:15:05,000 Speaker 9: uh compromise on its desire to enrich uranium to very 277 00:15:05,080 --> 00:15:07,880 Speaker 9: high levels UH and to maintain the option to break 278 00:15:07,880 --> 00:15:11,120 Speaker 9: out to you know, uh nuclear weaponization. 279 00:15:13,000 --> 00:15:13,640 Speaker 4: UH. 280 00:15:14,080 --> 00:15:20,200 Speaker 9: Whether this will actually lead to a cease fire, I 281 00:15:20,200 --> 00:15:24,360 Speaker 9: think I would say that's unlikely for the moment. I 282 00:15:24,360 --> 00:15:30,000 Speaker 9: think Israel initiated this uh uh this attack because of 283 00:15:30,360 --> 00:15:34,600 Speaker 9: an opportunity that it was time limited and a threat 284 00:15:34,680 --> 00:15:38,680 Speaker 9: that was time limited. So Israel sensed also from reports 285 00:15:38,680 --> 00:15:43,720 Speaker 9: of the International Inspectors that Iran was moving towards uh 286 00:15:43,920 --> 00:15:46,960 Speaker 9: you know, nuclear breakout or the ability to move quickly 287 00:15:47,000 --> 00:15:51,160 Speaker 9: to nuclear breakout. And Israel also has an opportunity because 288 00:15:52,000 --> 00:15:57,040 Speaker 9: Iran's entire strategy of maintaining these uh you know, this 289 00:15:57,200 --> 00:16:02,080 Speaker 9: network of regional proxies that could inflict damage on Israel 290 00:16:02,120 --> 00:16:04,760 Speaker 9: in this kind of conflict had been weakend. Israel had 291 00:16:04,760 --> 00:16:09,840 Speaker 9: taken Hasbellah out of the out of the war, essentially 292 00:16:09,880 --> 00:16:14,560 Speaker 9: out of commission. The Syrian regime of Asad collapsed because 293 00:16:15,080 --> 00:16:18,720 Speaker 9: of what Israel did to Hasbelah in essence, and Iran 294 00:16:19,600 --> 00:16:25,600 Speaker 9: lost its ability to effectively defend its airspace when Israel 295 00:16:25,720 --> 00:16:31,200 Speaker 9: responded effectively, if more quietly, to previous rounds of Iranian 296 00:16:31,440 --> 00:16:35,800 Speaker 9: missile barrages. So there's a time limited opportunity, and I 297 00:16:35,800 --> 00:16:39,960 Speaker 9: think Israel is going to maximize the damage that it 298 00:16:40,000 --> 00:16:42,800 Speaker 9: can inflict on Iran's nuclear program and its regime. 299 00:16:43,280 --> 00:16:44,960 Speaker 6: Ned would they even take it even further? 300 00:16:45,040 --> 00:16:48,120 Speaker 5: I mean, if I'm Israel, I'm on a roll here, 301 00:16:48,320 --> 00:16:51,160 Speaker 5: I mean everywhere. Look, I've been very aggressive, I've been 302 00:16:51,280 --> 00:16:54,840 Speaker 5: very successful. You just mentioned some of the successes Israel's 303 00:16:54,840 --> 00:16:57,560 Speaker 5: had against some of its enemies and the proxies and 304 00:16:57,600 --> 00:16:57,960 Speaker 5: so on. 305 00:16:58,480 --> 00:17:00,960 Speaker 6: So I press my bets here and look for. 306 00:17:00,960 --> 00:17:04,600 Speaker 5: Something bigger and around, whether it's regime change or really 307 00:17:04,960 --> 00:17:08,200 Speaker 5: really just decimating their military capabilities. 308 00:17:09,440 --> 00:17:12,879 Speaker 9: I think the ladder. Yes, I think right now, uh, 309 00:17:13,240 --> 00:17:16,600 Speaker 9: you know, the the Israeli Air Force is probably busy 310 00:17:16,720 --> 00:17:19,359 Speaker 9: both with trying to do what it can to the 311 00:17:19,720 --> 00:17:24,639 Speaker 9: you know, to the to to uh undermine the nuclear program, 312 00:17:25,440 --> 00:17:27,960 Speaker 9: but also very much I think the Israeli Air Force 313 00:17:28,040 --> 00:17:32,800 Speaker 9: is trying to take out the missile capacities because Iran 314 00:17:33,000 --> 00:17:36,920 Speaker 9: is certainly able to you know, to damage Israel. They've 315 00:17:37,000 --> 00:17:40,040 Speaker 9: killed twenty four Israelis in uh, you know, a series 316 00:17:40,119 --> 00:17:44,359 Speaker 9: of late night missile barrages that you know, their their 317 00:17:44,359 --> 00:17:48,320 Speaker 9: capacity to fire. They can fire enough huge just you know, 318 00:17:48,400 --> 00:17:51,560 Speaker 9: massive missiles that all of the Israeli air defenses cannot 319 00:17:51,880 --> 00:17:57,359 Speaker 9: hermetically prevent hits. And they've hit Tel Aviv, they've hit Haifa, 320 00:17:57,400 --> 00:18:01,760 Speaker 9: they've hit an oil refinery. So Iran is capable of 321 00:18:01,800 --> 00:18:05,720 Speaker 9: doing damage and is doing damage in a way that 322 00:18:06,400 --> 00:18:09,760 Speaker 9: you know, is painful for Israelis. The Israel obviously has 323 00:18:09,800 --> 00:18:12,680 Speaker 9: a tremendous military advantage and they are able to get 324 00:18:12,760 --> 00:18:16,240 Speaker 9: strategic Iranian sites right. So yes, I think they will 325 00:18:16,240 --> 00:18:18,560 Speaker 9: continue and I think what they are hoping to do 326 00:18:18,640 --> 00:18:22,400 Speaker 9: is really reduces Iran's capacity. Yeah, get to strike back. 327 00:18:22,560 --> 00:18:24,359 Speaker 7: Yeah, we gotta leave it there. Thanks very much. 328 00:18:24,400 --> 00:18:26,919 Speaker 2: Nand Laser, Associate Professor of the National Affairs at George 329 00:18:26,960 --> 00:18:27,960 Speaker 2: Washington University. 330 00:18:29,720 --> 00:18:33,440 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 331 00:18:33,520 --> 00:18:36,600 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 332 00:18:36,600 --> 00:18:39,920 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 333 00:18:39,960 --> 00:18:43,080 Speaker 1: you get your podcasts, or watch us live on YouTube. 334 00:18:43,840 --> 00:18:46,320 Speaker 5: All right, this is the gig here for the airspace 335 00:18:46,359 --> 00:18:49,280 Speaker 5: and airline industry. They get together every year and they 336 00:18:49,320 --> 00:18:53,480 Speaker 5: alternate between London, outside of London and in Paris, always 337 00:18:53,520 --> 00:18:56,440 Speaker 5: in June, plenty of rose flowing, and they never meet 338 00:18:56,480 --> 00:18:57,960 Speaker 5: in like sheboygan in January. 339 00:18:58,000 --> 00:19:00,440 Speaker 6: I know, right, So George Version is over there every year. 340 00:19:00,440 --> 00:19:02,159 Speaker 5: I send them over there and he goes and I 341 00:19:02,160 --> 00:19:04,280 Speaker 5: don't know. But this is where the big deals happen, 342 00:19:04,600 --> 00:19:07,320 Speaker 5: I mean some big orders. And right now Airbus is 343 00:19:07,359 --> 00:19:10,680 Speaker 5: dominating the story as it looks like Boeing is sitting 344 00:19:10,760 --> 00:19:13,439 Speaker 5: out here as they deal with the crash of the 345 00:19:13,480 --> 00:19:17,040 Speaker 5: Air India flight. Kate Duffy joins us Bloomberg Aviation reporter 346 00:19:17,240 --> 00:19:20,880 Speaker 5: on this Paris air Show again, I'm looking at your reporting, Kate. 347 00:19:21,040 --> 00:19:25,639 Speaker 5: Along with sid and Lean, Airbus dominates air shows. Boeing 348 00:19:25,680 --> 00:19:28,880 Speaker 5: sits out the order Freenzing tell us about what Airbus 349 00:19:28,920 --> 00:19:29,200 Speaker 5: is doing. 350 00:19:30,280 --> 00:19:32,880 Speaker 10: Yeah, absolutely, I mean this has been a big win 351 00:19:33,000 --> 00:19:35,560 Speaker 10: for air Bus currently in the show. So we've had 352 00:19:36,080 --> 00:19:39,640 Speaker 10: order from Avilease which have signed for some A three 353 00:19:39,720 --> 00:19:43,840 Speaker 10: fifty freighters and a three twenty family jets. Also Riad 354 00:19:43,920 --> 00:19:47,919 Speaker 10: Air order for fifty Airbus wide body jets and a 355 00:19:47,960 --> 00:19:51,639 Speaker 10: lot as well a Polish airline for forty eight twenties. 356 00:19:51,720 --> 00:19:54,400 Speaker 10: And as you say, Boeing has really stepped back from 357 00:19:54,480 --> 00:19:56,840 Speaker 10: the Paris Air Show this year following the seven eight 358 00:19:57,400 --> 00:20:00,919 Speaker 10: seven eight seven crash last week, so no orders have 359 00:20:01,040 --> 00:20:06,040 Speaker 10: been announced and executives are really slim in attendance or 360 00:20:06,160 --> 00:20:08,959 Speaker 10: Berg obviously canceled and they've rolled back any sort of 361 00:20:09,240 --> 00:20:12,600 Speaker 10: commercial announcements as they focus on really finding out what 362 00:20:12,760 --> 00:20:15,879 Speaker 10: happened with their India crash. 363 00:20:16,240 --> 00:20:20,840 Speaker 2: So how much of Airbus's triumph is Boeing issues like 364 00:20:20,880 --> 00:20:23,359 Speaker 2: what we saw with the seven eighty seven and Air India, 365 00:20:23,400 --> 00:20:25,359 Speaker 2: and how much of it is just like everything was 366 00:20:25,440 --> 00:20:27,639 Speaker 2: kind of going in this direction anyway, and Boeing just 367 00:20:27,680 --> 00:20:29,399 Speaker 2: has so much runway to make up. 368 00:20:30,520 --> 00:20:32,800 Speaker 10: No, I think it was definitely a cause of what 369 00:20:32,920 --> 00:20:36,240 Speaker 10: happened last week. There were potentially orders in the works, 370 00:20:36,840 --> 00:20:40,000 Speaker 10: but this is all down to sort of what happened 371 00:20:40,160 --> 00:20:44,439 Speaker 10: and executives taking the decision to not really take up 372 00:20:44,480 --> 00:20:47,440 Speaker 10: the limelight this week just because of the crash and 373 00:20:47,920 --> 00:20:52,480 Speaker 10: the consequent deaths that did happen. So yeah, there could 374 00:20:52,480 --> 00:20:55,000 Speaker 10: be orders further down the line, but at the moment, 375 00:20:55,040 --> 00:20:57,960 Speaker 10: their main focus is trying to sort of sort out 376 00:20:57,960 --> 00:20:59,160 Speaker 10: the situation in India. 377 00:21:00,680 --> 00:21:03,880 Speaker 5: So announcing big orders at these air shows is one thing. 378 00:21:04,119 --> 00:21:07,480 Speaker 5: Actually delivering the planes is another. And it's not just 379 00:21:07,520 --> 00:21:12,160 Speaker 5: bowing that Scott problems. Airbus has some production issues as well. 380 00:21:12,160 --> 00:21:14,119 Speaker 5: Can you highlight kind of where Airbus is today in 381 00:21:14,240 --> 00:21:16,280 Speaker 5: terms of their deliverables. 382 00:21:17,520 --> 00:21:20,679 Speaker 10: Yeah, absolutely, I mean Airbus is also struggling just as 383 00:21:20,760 --> 00:21:23,240 Speaker 10: much as Boeing is with the supply chain at the moment. 384 00:21:23,680 --> 00:21:27,520 Speaker 10: Is something that's happening across all airlines. You know, they 385 00:21:27,600 --> 00:21:30,879 Speaker 10: are struggling to get in these deliveries and whether it 386 00:21:30,920 --> 00:21:33,520 Speaker 10: be sort of wide bodies or narrow bodies, that is 387 00:21:33,560 --> 00:21:35,000 Speaker 10: the real pinch point at the moment. 388 00:21:36,520 --> 00:21:38,480 Speaker 7: What do you think is well in general? 389 00:21:38,960 --> 00:21:40,720 Speaker 2: I know this is the place where they unveil everything 390 00:21:40,720 --> 00:21:43,520 Speaker 2: that's cool, and it's always good, happy talk and all that. 391 00:21:43,600 --> 00:21:45,760 Speaker 2: But how is the aviation industry doing? 392 00:21:47,200 --> 00:21:49,000 Speaker 7: Abe engine is doing well at the moment. 393 00:21:49,000 --> 00:21:50,800 Speaker 10: I mean, what we're seeing here is a lot of 394 00:21:50,840 --> 00:21:56,280 Speaker 10: EVETEL companies, that's the electric vertical takeoff and landing firms, 395 00:21:57,040 --> 00:22:01,919 Speaker 10: displaying and flying their aircraft around and having lots of 396 00:22:01,920 --> 00:22:06,040 Speaker 10: interviews with the press, and that includes vertical aerospace and archer. 397 00:22:07,040 --> 00:22:07,920 Speaker 7: What we've seen is. 398 00:22:07,880 --> 00:22:12,200 Speaker 10: That they are particularly interested in sort of pointing their 399 00:22:12,240 --> 00:22:17,200 Speaker 10: aircraft towards the defense sector and selling that to defense 400 00:22:17,240 --> 00:22:19,520 Speaker 10: as they see sort of the growth in Europe that 401 00:22:19,640 --> 00:22:24,200 Speaker 10: is coming from the defense industry. We're also seeing, as 402 00:22:24,200 --> 00:22:29,560 Speaker 10: you say, lots of defense companies present. So it's doing well. 403 00:22:31,119 --> 00:22:33,359 Speaker 6: So how has the town changed? 404 00:22:33,359 --> 00:22:35,840 Speaker 5: Because now I might take a meeting if I'm an 405 00:22:35,880 --> 00:22:38,879 Speaker 5: aerospace company with I don't know Italy, because now it 406 00:22:38,880 --> 00:22:41,840 Speaker 5: looks like they're going to have to spend more on defense, Germany. 407 00:22:41,440 --> 00:22:42,119 Speaker 6: And all the others. 408 00:22:42,800 --> 00:22:46,399 Speaker 5: Is there are different meetings taking place between I don't know, 409 00:22:46,840 --> 00:22:48,760 Speaker 5: the contractors themselves in various countries. 410 00:22:50,080 --> 00:22:52,680 Speaker 10: Yeah, there's lots of meetings taking place. I mean, we've 411 00:22:52,680 --> 00:22:56,280 Speaker 10: seen executives on the ground, such as air Burski and FOURY, 412 00:22:57,320 --> 00:23:01,640 Speaker 10: also Talz and Leonardo as well. What we're watching there, 413 00:23:01,640 --> 00:23:05,680 Speaker 10: for example, is the possible space merger between those three 414 00:23:06,000 --> 00:23:08,720 Speaker 10: and what could come of that. There's a huge space 415 00:23:08,800 --> 00:23:12,240 Speaker 10: hub just further down the air show at the moment, 416 00:23:12,800 --> 00:23:16,919 Speaker 10: so that's interesting. That's the first time they've done it. 417 00:23:17,000 --> 00:23:20,600 Speaker 10: We've also got the Ariane five on site, lots of 418 00:23:20,760 --> 00:23:25,399 Speaker 10: planes on display, people walking around, private jets, people walking 419 00:23:25,440 --> 00:23:29,359 Speaker 10: onto helicopters and also sitting in the fighter jets too. 420 00:23:30,200 --> 00:23:32,880 Speaker 10: But yeah, there are lots of business meetings happening. We're 421 00:23:32,880 --> 00:23:36,400 Speaker 10: speaking to defense executives, they're meeting with other defense companies. 422 00:23:36,600 --> 00:23:39,000 Speaker 10: So there's lots of collaboration in Europe. There's lots of 423 00:23:39,080 --> 00:23:44,080 Speaker 10: cooperation and partnerships happening and possibly you know, chances of 424 00:23:44,200 --> 00:23:45,920 Speaker 10: M and A happening in the near future too. 425 00:23:46,200 --> 00:23:47,600 Speaker 7: Really, that's quite interesting. 426 00:23:48,040 --> 00:23:50,520 Speaker 2: What about US defense companies, Like, if Europe wants to 427 00:23:50,600 --> 00:23:52,720 Speaker 2: ram up its defense budget, do they really want to 428 00:23:52,720 --> 00:23:55,440 Speaker 2: do that with US companies when there's still terriff issues. 429 00:23:56,440 --> 00:23:59,000 Speaker 10: I think that is a struggle at the moment, you know, 430 00:23:59,040 --> 00:24:01,800 Speaker 10: we're sort of hearing that the potentially there is more, 431 00:24:01,840 --> 00:24:04,320 Speaker 10: there is more growth in Europe, and I think European 432 00:24:04,359 --> 00:24:06,760 Speaker 10: companies want to find out more, you know what are 433 00:24:06,800 --> 00:24:09,160 Speaker 10: the companies are out there to beef up their portfolios. 434 00:24:09,760 --> 00:24:14,280 Speaker 10: For example, we spoke with Honeywell yesterday and they have 435 00:24:14,359 --> 00:24:17,520 Speaker 10: a lot of components on fighter jets and they were 436 00:24:17,560 --> 00:24:20,800 Speaker 10: saying that they are looking at sort of M and 437 00:24:20,880 --> 00:24:26,080 Speaker 10: A in and across Europe and also expanding their own 438 00:24:26,160 --> 00:24:30,040 Speaker 10: existing capabilities as well, so factories in the UK, Germany 439 00:24:30,160 --> 00:24:30,800 Speaker 10: and Poland. 440 00:24:33,280 --> 00:24:36,840 Speaker 5: Oh well there, okay, all right, very good. We'll make 441 00:24:36,840 --> 00:24:38,960 Speaker 5: that a nice easy spot to get out. Kate Duffy 442 00:24:39,359 --> 00:24:42,400 Speaker 5: Bloomberg Aviation Report on the Paris Air Show in Paris. 443 00:24:43,040 --> 00:24:47,720 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 444 00:24:47,960 --> 00:24:51,400 Speaker 1: and anywhere else you get your podcasts. Listen live each 445 00:24:51,440 --> 00:24:55,399 Speaker 1: weekday ten am to nooneisterne on Bloomberg dot com, the 446 00:24:55,480 --> 00:24:59,359 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business App. You 447 00:24:59,359 --> 00:25:02,679 Speaker 1: can also watch us live every weekday on YouTube and 448 00:25:02,880 --> 00:25:04,840 Speaker 1: always on the Bloomberg terminal