1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,200 Speaker 1: us live on YouTube. 6 00:00:27,440 --> 00:00:31,280 Speaker 2: In from San Diego David Stubbs, which is wonderful cross 7 00:00:31,320 --> 00:00:35,400 Speaker 2: sectional analysis of the markets. Okay, for the stock market, 8 00:00:35,960 --> 00:00:39,000 Speaker 2: what's the greatest benefit now to look at the bond market, 9 00:00:39,080 --> 00:00:42,400 Speaker 2: to look at commodities, to look at currencies, which market 10 00:00:42,479 --> 00:00:45,080 Speaker 2: assiss you in a stock market forecast. 11 00:00:45,440 --> 00:00:47,560 Speaker 3: It's all about oil and energy, and it's all about 12 00:00:47,880 --> 00:00:51,000 Speaker 3: the math now about how long can different parts of 13 00:00:51,000 --> 00:00:54,120 Speaker 3: the global economy survive with this cost not just of 14 00:00:54,120 --> 00:00:56,760 Speaker 3: the raw oil, but of the refined products, and then 15 00:00:56,880 --> 00:00:59,040 Speaker 3: how long do we get to genuine shortages. The Asian 16 00:00:59,040 --> 00:01:01,080 Speaker 3: economy is a pretty close to it right. Four to 17 00:01:01,120 --> 00:01:03,560 Speaker 3: six weeks is the sailing time, so the last ships 18 00:01:03,600 --> 00:01:06,800 Speaker 3: that got out are about to dock in Asia. They 19 00:01:06,880 --> 00:01:10,120 Speaker 3: both energy intensive economies, energy dependent economies. They don't have 20 00:01:10,360 --> 00:01:12,759 Speaker 3: a lot of the inventory, so that's where it's really 21 00:01:12,800 --> 00:01:13,400 Speaker 3: going to bite Tom. 22 00:01:13,560 --> 00:01:15,959 Speaker 2: I totally agree Paul. When I was coming in this morning. 23 00:01:16,560 --> 00:01:19,199 Speaker 2: The basic besides a guy in the Bentley complaining about 24 00:01:19,200 --> 00:01:21,959 Speaker 2: the price berger, Gail, I know what David says. They're 25 00:01:21,959 --> 00:01:27,920 Speaker 2: about feedstock down. The pipeline is critical. Yep, David, what 26 00:01:27,920 --> 00:01:28,560 Speaker 2: are we doing here? 27 00:01:28,600 --> 00:01:30,880 Speaker 4: I mean, are you trying to suggest to your clients 28 00:01:31,400 --> 00:01:34,440 Speaker 4: let's look past this war weather? I mean the president 29 00:01:34,480 --> 00:01:36,880 Speaker 4: last night I was saying, maybe a couple three weeks left. 30 00:01:36,920 --> 00:01:38,520 Speaker 4: Who knows where the timetable is. 31 00:01:38,560 --> 00:01:40,160 Speaker 2: But to an extent, we can look. 32 00:01:40,000 --> 00:01:42,920 Speaker 4: Past where we are with some of this Iran risk. 33 00:01:43,800 --> 00:01:45,960 Speaker 4: Try to focus on that because and then focus on 34 00:01:46,000 --> 00:01:48,760 Speaker 4: the fundamentals or are you just trying to dive back 35 00:01:48,840 --> 00:01:49,240 Speaker 4: risk here? 36 00:01:49,280 --> 00:01:50,640 Speaker 2: What are you doing? Well? 37 00:01:50,680 --> 00:01:53,760 Speaker 3: We don't tend to be overly tactical in our portfolios. 38 00:01:53,840 --> 00:01:56,120 Speaker 3: The whole concept of alpha core is a core of 39 00:01:56,160 --> 00:02:00,400 Speaker 3: long term private markets and alternatives as alpha driver in 40 00:02:00,440 --> 00:02:06,920 Speaker 3: the medium term that should be resilient to most most shocks. Now, 41 00:02:07,280 --> 00:02:09,760 Speaker 3: the big news for markets, of course, is the sixty 42 00:02:09,760 --> 00:02:13,640 Speaker 3: to forty just failing again. Equities down, bonds are not protecting, 43 00:02:14,080 --> 00:02:16,280 Speaker 3: so you need to do something to trying to fix 44 00:02:16,320 --> 00:02:18,200 Speaker 3: that in this new world, because that's that happened in 45 00:02:18,200 --> 00:02:19,880 Speaker 3: twenty twenty two. It's going to happen again and again 46 00:02:19,880 --> 00:02:22,880 Speaker 3: and again as inflation comes back over and over again. 47 00:02:23,080 --> 00:02:24,960 Speaker 3: So we use a lot of absolute return products, We 48 00:02:25,040 --> 00:02:27,959 Speaker 3: use private markets, We use heavily thematic managers in both 49 00:02:28,000 --> 00:02:32,160 Speaker 3: liquid and the liquord strategies to try and get around that. 50 00:02:32,280 --> 00:02:35,320 Speaker 3: So to a certain extent, we hope we've built a 51 00:02:35,320 --> 00:02:37,120 Speaker 3: portfolio does pretty well for there, and they seem to 52 00:02:37,160 --> 00:02:38,960 Speaker 3: be doing okay. I think you could say as long 53 00:02:38,960 --> 00:02:42,880 Speaker 3: as the global AI buildout is not materially interrupted, then 54 00:02:42,880 --> 00:02:46,360 Speaker 3: the fundamentals, especially if an equity index like the US, 55 00:02:46,680 --> 00:02:49,760 Speaker 3: will be okay. But you're a brave person today to 56 00:02:49,840 --> 00:02:53,000 Speaker 3: go into parts of the international space and say I 57 00:02:53,120 --> 00:02:56,400 Speaker 3: need to own this now Again. Three months ago, obviously 58 00:02:56,440 --> 00:02:59,280 Speaker 3: International was dramatically outperforming. Even two months ago, it was 59 00:02:59,320 --> 00:03:03,160 Speaker 3: dramatically out warming EQUO. It was beating your market cap. 60 00:03:03,240 --> 00:03:05,280 Speaker 3: There was a medium term view of a lower dollar, 61 00:03:05,600 --> 00:03:07,040 Speaker 3: and I think one of the reasons why you've seen 62 00:03:07,040 --> 00:03:10,720 Speaker 3: International suffer so greatly is because that was a consensus 63 00:03:10,720 --> 00:03:12,400 Speaker 3: trable with a lot of flows that have come in. 64 00:03:12,639 --> 00:03:15,320 Speaker 3: And now, of course we see the truth we always 65 00:03:15,320 --> 00:03:16,799 Speaker 3: have over and over again, which is the US is 66 00:03:16,840 --> 00:03:20,440 Speaker 3: insulated cleaner shirt and the dirty laundry and doesn't feel 67 00:03:20,440 --> 00:03:24,480 Speaker 3: the impacts of its own actions. Right, Yes, gasoline is over? 68 00:03:24,560 --> 00:03:28,360 Speaker 3: Four doctor does about a big deal? Six dollars you 69 00:03:28,400 --> 00:03:32,080 Speaker 3: are I've paid seven and a half in coastal California. 70 00:03:31,560 --> 00:03:35,560 Speaker 4: The other DAYO Tom, have you been the LA lawyer before? You? 71 00:03:35,640 --> 00:03:39,120 Speaker 2: Guys? Ridiculous? I mean all. 72 00:03:38,840 --> 00:03:42,160 Speaker 4: Time love Valencia Hotel lawyer. They love me there. Private credit? 73 00:03:42,200 --> 00:03:44,960 Speaker 4: How concerned should we be about private creditor? Is it 74 00:03:45,160 --> 00:03:48,320 Speaker 4: idiosyncratic risk? Is it something more systemic? How do you 75 00:03:48,320 --> 00:03:50,200 Speaker 4: guys think a better that? Because I'm assuming you have 76 00:03:50,320 --> 00:03:51,080 Speaker 4: exposure there. 77 00:03:51,320 --> 00:03:53,800 Speaker 3: We have some exposure in most most of our models 78 00:03:53,800 --> 00:03:55,760 Speaker 3: and most of our client accounts is less than five percent. 79 00:03:55,840 --> 00:03:58,200 Speaker 3: So a big picture is we think that private credit 80 00:03:58,360 --> 00:04:01,840 Speaker 3: is an incredibly innovation in the US financial system. 81 00:04:01,920 --> 00:04:02,680 Speaker 2: Right, it's very deliberate. 82 00:04:02,680 --> 00:04:04,400 Speaker 3: Dodd Frank came in twenty ten. You want to move 83 00:04:04,440 --> 00:04:07,520 Speaker 3: these loans out of the banks, right, huge improvement we 84 00:04:07,560 --> 00:04:10,200 Speaker 3: think to financial stability. That we showed that in twenty 85 00:04:10,200 --> 00:04:12,760 Speaker 3: twenty three regional banking issues, there wouldn't have been any 86 00:04:12,800 --> 00:04:15,640 Speaker 3: IPOs without private credit. At the same time, a lot 87 00:04:15,640 --> 00:04:17,400 Speaker 3: of money's gone in a lot of new funds have 88 00:04:18,040 --> 00:04:21,400 Speaker 3: been launched, and somewhere in there, I'm sure underwriting standards 89 00:04:21,720 --> 00:04:23,800 Speaker 3: have not been great. Those are the type of funds 90 00:04:23,839 --> 00:04:26,280 Speaker 3: we don't particularly engage with, but there's certainly going to 91 00:04:26,279 --> 00:04:28,800 Speaker 3: be some out there. I think the bigger picture is nothing. 92 00:04:28,839 --> 00:04:31,360 Speaker 3: There's nothing particularly wrong with private credit. What is happening 93 00:04:31,440 --> 00:04:35,239 Speaker 3: is this massive technological shock of AI, which is almost 94 00:04:35,320 --> 00:04:39,720 Speaker 3: a kind of not systemic but systematic market shock, right, 95 00:04:39,720 --> 00:04:42,320 Speaker 3: And if AI is as transformatives as people think, it's 96 00:04:42,360 --> 00:04:45,599 Speaker 3: going to undermine the fundamentals of investments in both equity 97 00:04:45,640 --> 00:04:48,440 Speaker 3: and debt, public and private right to a certain extent. 98 00:04:48,480 --> 00:04:50,520 Speaker 3: So again, it's not a particularly a private credit issue. 99 00:04:50,520 --> 00:04:54,560 Speaker 3: Now we know that private equity love software because it's 100 00:04:54,600 --> 00:04:57,719 Speaker 3: asset light, repeatable revenue, and my two years of Blackstone 101 00:04:57,760 --> 00:05:00,840 Speaker 3: heard all about about that. They love that investment. So 102 00:05:01,400 --> 00:05:03,479 Speaker 3: this is the big issue. I don't there's anything wrong 103 00:05:03,480 --> 00:05:06,160 Speaker 3: with private credit, but there is a question about you know, 104 00:05:06,360 --> 00:05:08,320 Speaker 3: who is most exposed. I think most of the private 105 00:05:08,320 --> 00:05:10,520 Speaker 3: credit funds are going to be just fine. But I 106 00:05:10,520 --> 00:05:12,960 Speaker 3: do think we've seen the end of the third inning, 107 00:05:13,000 --> 00:05:15,560 Speaker 3: as it were, to a baseball term, huge growth, very good, 108 00:05:16,040 --> 00:05:18,479 Speaker 3: and now, just like the private real estate, your funds 109 00:05:18,520 --> 00:05:22,200 Speaker 3: which had the same proation issues three or four years ago. 110 00:05:22,560 --> 00:05:25,080 Speaker 3: You look at those assets, they've kind of stagnated. I 111 00:05:25,080 --> 00:05:28,320 Speaker 3: wouldn't be surprised if we see you now plateauing in 112 00:05:28,360 --> 00:05:30,440 Speaker 3: private credit assets. But that for us is it's still 113 00:05:30,440 --> 00:05:32,800 Speaker 3: going to be there. It's still a core asset, especially 114 00:05:32,800 --> 00:05:33,799 Speaker 3: for income Davids. 115 00:05:33,839 --> 00:05:35,919 Speaker 2: Let me get this in and I think within the 116 00:05:35,960 --> 00:05:38,600 Speaker 2: President's speech in the shock of the markets this morning 117 00:05:38,680 --> 00:05:41,040 Speaker 2: and again Brent Crude, I'm looking at at one oh 118 00:05:41,120 --> 00:05:43,640 Speaker 2: nine level. I want to go back to your original 119 00:05:43,680 --> 00:05:46,599 Speaker 2: observation and what it means for Singapore, what it means 120 00:05:46,640 --> 00:05:50,320 Speaker 2: for poland do you suggest I mean, maybe it's not 121 00:05:50,480 --> 00:05:53,240 Speaker 2: what you're doing now at Alpha Core Wealth Advisory, but 122 00:05:53,320 --> 00:05:55,960 Speaker 2: to take it back to your iconic work in London 123 00:05:56,000 --> 00:05:59,479 Speaker 2: at JP Morgan. The basic idea here of calling a 124 00:05:59,560 --> 00:06:02,320 Speaker 2: global recession, how close are we to that? 125 00:06:03,200 --> 00:06:06,760 Speaker 3: I think there are three tipping points that if they occur, 126 00:06:06,880 --> 00:06:08,960 Speaker 3: then the global recession risk is going to be much higher. 127 00:06:09,080 --> 00:06:11,520 Speaker 3: One of those is food with the fertilizer issue. It's 128 00:06:11,560 --> 00:06:13,720 Speaker 3: not there's planting season around the world right now. If 129 00:06:13,720 --> 00:06:16,560 Speaker 3: there's a material constriction in that, that's going to be 130 00:06:17,040 --> 00:06:20,719 Speaker 3: very significant. Secondly is around money, specifically central banks, some EM, 131 00:06:20,800 --> 00:06:23,880 Speaker 3: some DM that may be forced into hiking to protect 132 00:06:23,920 --> 00:06:27,200 Speaker 3: the inflation fighting credibility that a bunch of EMS will 133 00:06:27,279 --> 00:06:29,440 Speaker 3: do that, maybe the Europeans as well. And then the 134 00:06:29,520 --> 00:06:32,960 Speaker 3: systemic conductor supply chain, the constriction of helium coming out 135 00:06:33,000 --> 00:06:36,440 Speaker 3: of that part of the world. If that is interrupts 136 00:06:36,600 --> 00:06:39,479 Speaker 3: the global capex cycle around AI, that's also going to 137 00:06:39,520 --> 00:06:42,200 Speaker 3: raise that risk. Now we're only six to eight weeks 138 00:06:42,200 --> 00:06:45,680 Speaker 3: around most of those things happen, right, So you would 139 00:06:45,680 --> 00:06:49,039 Speaker 3: need to see a material improvement in the situation for 140 00:06:49,120 --> 00:06:52,000 Speaker 3: certainly parts of Asia, part of them, parts of Europe 141 00:06:52,040 --> 00:06:54,200 Speaker 3: in the Middle East to raise a recession risk. And 142 00:06:54,240 --> 00:06:58,200 Speaker 3: we want to see tom the OECD downgrade growth in 143 00:06:58,200 --> 00:07:00,480 Speaker 3: most economies and again only a slight great to do. 144 00:07:00,880 --> 00:07:05,040 Speaker 2: Thirty seconds. Are your seats Alpha Core Alpha Core Wealth 145 00:07:05,080 --> 00:07:09,000 Speaker 2: Advisory at the padres at Petco Park. Are your seats 146 00:07:09,080 --> 00:07:11,880 Speaker 2: just off of Fernando to Atis and right field or 147 00:07:11,960 --> 00:07:16,480 Speaker 2: you right down rocking it under or Sulio. 148 00:07:16,800 --> 00:07:20,320 Speaker 3: Well, unfortunately we don't have our own seat storm, but 149 00:07:20,520 --> 00:07:22,320 Speaker 3: we do. We do host a little events and I 150 00:07:22,320 --> 00:07:24,240 Speaker 3: get taken there and use of the seats, have a 151 00:07:24,320 --> 00:07:24,840 Speaker 3: very nice time. 152 00:07:24,920 --> 00:07:28,760 Speaker 4: The best surfing I've ever had. Literally, you walk out 153 00:07:28,760 --> 00:07:32,320 Speaker 4: of his office down to the beach right there. This 154 00:07:32,520 --> 00:07:34,040 Speaker 4: thing is tremendous, phenomenal, that. 155 00:07:34,000 --> 00:07:36,800 Speaker 2: Little break there literally lahoya. Yeah, not that I know 156 00:07:36,920 --> 00:07:38,280 Speaker 2: that I get it right, Not that I get it right. 157 00:07:38,360 --> 00:07:41,920 Speaker 2: Most of the time. I usually rested. David, what is 158 00:07:41,960 --> 00:07:45,200 Speaker 2: this this whole week? We have a Gordon in from 159 00:07:45,800 --> 00:07:47,720 Speaker 2: what are your West Coast? I know, I know this 160 00:07:47,760 --> 00:07:50,560 Speaker 2: doesn't work, David Stuffs, Thank you so much. Mona's going thanks, 161 00:07:50,600 --> 00:07:52,559 Speaker 2: get to me, Get to me, David Stuffs with us 162 00:07:52,760 --> 00:07:55,560 Speaker 2: Alpha Core Wealth Advisor're here to get us started here 163 00:07:55,680 --> 00:07:57,680 Speaker 2: and it's really nice here to segue I think with 164 00:07:57,760 --> 00:08:02,880 Speaker 2: Mona Mahajan, head an investment strategy to Edward Jones. Stay 165 00:08:02,920 --> 00:08:06,800 Speaker 2: with us. More from Bloomberg Surveillance coming up after this. 166 00:08:14,040 --> 00:08:17,640 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 167 00:08:17,680 --> 00:08:20,840 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 168 00:08:20,920 --> 00:08:24,600 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 169 00:08:24,760 --> 00:08:26,240 Speaker 1: watch us live on YouTube. 170 00:08:26,640 --> 00:08:29,160 Speaker 2: Terry Haynes and the Old Days, Paul We all owned 171 00:08:29,240 --> 00:08:33,959 Speaker 2: Henry Kissinger's diplomacy. Yes only, Terry Haynes Reddit joining us, 172 00:08:34,360 --> 00:08:36,680 Speaker 2: Joining us now to talk to real politic of the 173 00:08:36,720 --> 00:08:40,360 Speaker 2: moment is Terry Hayes of Pangea is as well. Terry, 174 00:08:40,559 --> 00:08:44,720 Speaker 2: what's the new diplomacy look like with this President of 175 00:08:44,760 --> 00:08:46,280 Speaker 2: the United States? 176 00:08:47,600 --> 00:08:52,000 Speaker 5: Good morning, Tom and Paul and everyone. I think the 177 00:08:52,000 --> 00:08:55,920 Speaker 5: way it looks is improvisational. And by that I don't 178 00:08:55,960 --> 00:08:59,680 Speaker 5: mean slap dash. I mean a situation where there's much 179 00:08:59,720 --> 00:09:04,800 Speaker 5: less reliance on established institutions like the United Nations or 180 00:09:05,360 --> 00:09:08,960 Speaker 5: kind of established ways of doing business like in the 181 00:09:09,000 --> 00:09:12,480 Speaker 5: Cold War where the United States and the Soviet Union 182 00:09:13,480 --> 00:09:18,040 Speaker 5: ended up checking in on each other. The watchboard of 183 00:09:18,040 --> 00:09:22,920 Speaker 5: the Trump foreign policy is interdependence, and that's the way 184 00:09:22,960 --> 00:09:24,680 Speaker 5: the diplomacy runs too, I think. 185 00:09:24,720 --> 00:09:25,680 Speaker 2: But there's now. 186 00:09:25,600 --> 00:09:29,319 Speaker 5: An outlet for potationial diplomacy here. 187 00:09:29,920 --> 00:09:33,720 Speaker 2: I listened carefully wonderful interview on CNN yesterday with John 188 00:09:33,760 --> 00:09:37,680 Speaker 2: Bolton and Terry. I thought of you, actually, and that 189 00:09:38,480 --> 00:09:41,840 Speaker 2: there's this whole effort to try to find a real 190 00:09:41,920 --> 00:09:46,280 Speaker 2: politic of John Meersheimer of Chicago and realists out there, 191 00:09:46,320 --> 00:09:49,480 Speaker 2: even Robert D. Kaplan talking here about these are the 192 00:09:49,520 --> 00:09:52,960 Speaker 2: facts right now? Is there any real politic to the 193 00:09:53,040 --> 00:09:57,240 Speaker 2: Donald Trump foreign policy? Or is it truly just as 194 00:09:57,320 --> 00:09:58,880 Speaker 2: ad hoc as we're observing. 195 00:10:00,120 --> 00:10:03,439 Speaker 5: There's I think it's possible to be both the real 196 00:10:03,480 --> 00:10:07,160 Speaker 5: politic and you know, in a bit ad hoc. 197 00:10:07,920 --> 00:10:08,040 Speaker 6: Uh. 198 00:10:08,800 --> 00:10:14,040 Speaker 5: You know, I think markets get distracted by Trump's eorishness, 199 00:10:14,280 --> 00:10:18,280 Speaker 5: if you will, from that great foreign policy Tom Winnie 200 00:10:18,320 --> 00:10:23,800 Speaker 5: the Pooh and kind of the negative aspects of you know, God, 201 00:10:23,840 --> 00:10:26,240 Speaker 5: I hate NATO, I hate this, I hate that, and 202 00:10:26,320 --> 00:10:31,800 Speaker 5: you're all terrible and and miss that and miss the context. 203 00:10:31,840 --> 00:10:34,320 Speaker 5: The context is we were, you know, even before this speech, 204 00:10:34,600 --> 00:10:36,960 Speaker 5: we were going to keep on squeezing on Hormos and 205 00:10:37,000 --> 00:10:40,960 Speaker 5: the options. He continues to want European and Allied help, 206 00:10:41,000 --> 00:10:45,760 Speaker 5: which is somewhat being developed but not completely. But you know, 207 00:10:45,800 --> 00:10:47,480 Speaker 5: he's not going to get out of NATO. He's not 208 00:10:47,520 --> 00:10:50,000 Speaker 5: going to cut off the UK while the while the 209 00:10:50,080 --> 00:10:53,240 Speaker 5: King is going to come this month, and he's not 210 00:10:53,280 --> 00:10:55,680 Speaker 5: going to abandon the Middle East. These are major non 211 00:10:55,760 --> 00:10:59,000 Speaker 5: NATO allies who are, among other things, major investors in 212 00:10:59,040 --> 00:11:02,160 Speaker 5: the United States, thus thus the interdependence part of this, 213 00:11:02,679 --> 00:11:06,440 Speaker 5: and he's not going to abandon the situation. And you 214 00:11:06,440 --> 00:11:08,840 Speaker 5: know that was always pretty clear, even though markets talk 215 00:11:08,920 --> 00:11:10,440 Speaker 5: themselves into something otherwise. 216 00:11:11,160 --> 00:11:14,760 Speaker 4: Terry, What are the political angles here? If I'm at 217 00:11:14,760 --> 00:11:19,800 Speaker 4: the Republican National Committee, this is a president that seems seemingly, 218 00:11:20,760 --> 00:11:24,400 Speaker 4: you know, just doing everything exact opposite of what I 219 00:11:24,400 --> 00:11:26,839 Speaker 4: would like to do as it relates to the midterms, 220 00:11:26,960 --> 00:11:30,400 Speaker 4: whether it be tariffs or a war that nobody seemed 221 00:11:30,400 --> 00:11:31,800 Speaker 4: to be looking for. 222 00:11:32,200 --> 00:11:33,320 Speaker 2: What are the politics here? 223 00:11:34,080 --> 00:11:37,040 Speaker 5: Well, in a pure political sense, You're absolutely right, Paul. 224 00:11:37,080 --> 00:11:39,160 Speaker 5: I mean, it's not optimal. It's not an optimal moment, 225 00:11:39,200 --> 00:11:43,680 Speaker 5: to put it lightly, but that actually increases the gravity 226 00:11:43,720 --> 00:11:47,280 Speaker 5: of the kind of the geopolitical foreign policy moment, right, 227 00:11:47,320 --> 00:11:50,480 Speaker 5: I mean, if if the wager was we can't wait 228 00:11:51,040 --> 00:11:54,280 Speaker 5: any longer for whatever reasons, most of which I think 229 00:11:54,320 --> 00:11:58,439 Speaker 5: are specifically are not known, even though the broad parameters are. 230 00:12:00,480 --> 00:12:02,559 Speaker 2: You know, the the IAEA. 231 00:12:02,080 --> 00:12:04,240 Speaker 5: Had been warning for two and two and a half 232 00:12:04,320 --> 00:12:06,600 Speaker 5: years now that around was well on its way to 233 00:12:06,600 --> 00:12:08,280 Speaker 5: getting a bomb. So this is not as if some 234 00:12:08,320 --> 00:12:11,880 Speaker 5: of this, you know, they they came up within town 235 00:12:11,880 --> 00:12:15,280 Speaker 5: of whole cloth. You know, politically it's not great. But 236 00:12:15,320 --> 00:12:18,720 Speaker 5: then you've got a situation where I'd say two things. 237 00:12:18,760 --> 00:12:21,440 Speaker 5: One is, you know, you've got seven months and change 238 00:12:21,520 --> 00:12:24,880 Speaker 5: now before the midterms, so over half a year a 239 00:12:24,960 --> 00:12:29,240 Speaker 5: really long time, particularly when forgive me media, we've got 240 00:12:29,240 --> 00:12:32,200 Speaker 5: some a D D media, uh, and we've got an ad. 241 00:12:32,040 --> 00:12:33,959 Speaker 2: D public, so long way to go. 242 00:12:34,679 --> 00:12:39,520 Speaker 5: And secondly, everything is compared to something else, and people 243 00:12:39,559 --> 00:12:43,679 Speaker 5: focus on on Trump's approval ratings, I think and forget 244 00:12:43,720 --> 00:12:46,920 Speaker 5: that he is the most popular political entity in the 245 00:12:47,000 --> 00:12:51,000 Speaker 5: United States right now. He's more popular than Republicans generally 246 00:12:51,040 --> 00:12:54,400 Speaker 5: by a little bit. He's more popular than Democrats by 247 00:12:54,440 --> 00:12:57,040 Speaker 5: a lot. And this is after six months of Democrats 248 00:12:58,240 --> 00:13:01,160 Speaker 5: going on going on about what outrages they want to 249 00:13:01,200 --> 00:13:01,640 Speaker 5: go on about. 250 00:13:02,000 --> 00:13:04,760 Speaker 2: Let me interrupt, this is too important, Terry Haynes with 251 00:13:04,760 --> 00:13:07,320 Speaker 2: this pengee, I can't say enough, folks, you need to 252 00:13:07,360 --> 00:13:09,719 Speaker 2: be on LinkedIn. There's all sorts of reasons urin in 253 00:13:09,800 --> 00:13:13,040 Speaker 2: Timors wonderful work, Way Lee at black Rock is wonderful. 254 00:13:13,240 --> 00:13:16,959 Speaker 2: And then there's Terry Haynes who's literally writing his Pangaea 255 00:13:17,040 --> 00:13:20,920 Speaker 2: notes for you on LinkedIn, and they're really, really quite good. 256 00:13:21,120 --> 00:13:24,720 Speaker 2: Because so Terry, I was thunderstruck by the polling of 257 00:13:24,760 --> 00:13:28,040 Speaker 2: the Democratic Party that I've seen over the last three 258 00:13:28,080 --> 00:13:30,880 Speaker 2: four or five days. It's well into the twenties and 259 00:13:31,080 --> 00:13:34,840 Speaker 2: even the lower twenties is well, you and I were 260 00:13:34,880 --> 00:13:38,840 Speaker 2: weaned on Scoop Jackson. We were weaned on Senator Irving, 261 00:13:38,920 --> 00:13:42,880 Speaker 2: the great Southern Democrats, were weaned on the oddity of 262 00:13:42,960 --> 00:13:47,720 Speaker 2: mister Carroll's Lyndon Baine Johnson. Where is that centrist Democrat 263 00:13:48,080 --> 00:13:50,720 Speaker 2: out there, Terry Hayes, Well. 264 00:13:50,520 --> 00:13:55,360 Speaker 5: There's no uh, there's probably more oddity than ever, but 265 00:13:55,559 --> 00:13:59,840 Speaker 5: you know the uh uh. But the center gets we 266 00:14:00,240 --> 00:14:04,800 Speaker 5: out in this public, in this environment over the past 267 00:14:04,840 --> 00:14:09,720 Speaker 5: fifty years because the political the way both parties have 268 00:14:09,800 --> 00:14:14,160 Speaker 5: set themselves up is they reward. And you know, I 269 00:14:14,200 --> 00:14:17,200 Speaker 5: would blame people like George McGovern and Gary Hart for this. 270 00:14:17,320 --> 00:14:20,360 Speaker 2: Franks, I agree with that, and I've said that it goes. 271 00:14:20,880 --> 00:14:22,160 Speaker 5: It goes back to seventy two. 272 00:14:22,560 --> 00:14:24,920 Speaker 2: You were reward. Yeah, you're right. I said this to 273 00:14:25,000 --> 00:14:28,160 Speaker 2: Senator Hart sitting on Park Avenue. We are years ago. 274 00:14:28,440 --> 00:14:30,080 Speaker 2: Continue but the. 275 00:14:32,440 --> 00:14:35,880 Speaker 5: Primary system which is now binding where it didn't used 276 00:14:35,920 --> 00:14:39,440 Speaker 5: to be. You know, I mean when Adley Stevenson got 277 00:14:39,440 --> 00:14:42,240 Speaker 5: nominated in nineteen fifty two, he got nominated on the 278 00:14:42,280 --> 00:14:46,040 Speaker 5: basis of his keynote speech in the Chicago convention, and 279 00:14:46,080 --> 00:14:48,080 Speaker 5: people started looking around and saying, why don't we get 280 00:14:48,080 --> 00:14:52,160 Speaker 5: that guy, you know, that sort of thing. But it 281 00:14:52,320 --> 00:14:56,240 Speaker 5: rewards the binding primaries, reward extremists. So now what you 282 00:14:56,400 --> 00:15:01,720 Speaker 5: have are people who are you know, like political junkies, 283 00:15:02,440 --> 00:15:06,600 Speaker 5: purists really uh political purists kind of running both party 284 00:15:07,120 --> 00:15:12,360 Speaker 5: primary outlets, and that tramples on the broad center and 285 00:15:12,720 --> 00:15:15,160 Speaker 5: sort of fix and fix this. You got to fix that. 286 00:15:15,240 --> 00:15:16,920 Speaker 2: I got to go to a headline materry. This is 287 00:15:16,960 --> 00:15:20,680 Speaker 2: too important. So if I'm mayor, is he Mayor Emmanuel 288 00:15:20,840 --> 00:15:28,440 Speaker 2: or Ambassador Manuel sudor Ambassador Trump's mayor? Yeah, Chicago, Okay, Terry, 289 00:15:28,520 --> 00:15:31,880 Speaker 2: I mean, where's the place in the next Democratic Party 290 00:15:32,480 --> 00:15:35,760 Speaker 2: for somewhat centrists like Mayor Emmanuel of Chicago? 291 00:15:36,680 --> 00:15:39,400 Speaker 5: Well, uh, you know where i'ms trying to carve a 292 00:15:39,400 --> 00:15:42,520 Speaker 5: place out for himself, frankly, and you know, you know, 293 00:15:42,600 --> 00:15:46,280 Speaker 5: he's judged quite correctly that there's uh, there's no more 294 00:15:46,360 --> 00:15:49,360 Speaker 5: market for purists, but there's plenty of market for pragmatism 295 00:15:49,440 --> 00:15:52,280 Speaker 5: and uh kind of wedging your way through and. 296 00:15:52,240 --> 00:15:53,880 Speaker 2: Hopes to appeal in that way. 297 00:15:54,120 --> 00:15:54,240 Speaker 1: Uh. 298 00:15:54,960 --> 00:15:57,240 Speaker 5: To do that, though, he of course has to attract 299 00:15:57,280 --> 00:16:00,440 Speaker 5: money and energy that now resides with the purists the party, 300 00:16:00,480 --> 00:16:02,760 Speaker 5: So he's swimming against the tide to some extent. 301 00:16:02,920 --> 00:16:05,400 Speaker 2: You are beyond generous with your work on LinkedIn. Terry 302 00:16:05,440 --> 00:16:07,760 Speaker 2: Haynes with us from Pangaea. Thank you so much for 303 00:16:07,840 --> 00:16:13,040 Speaker 2: the brief this morning. Stay with us. More from Bloomberg 304 00:16:13,160 --> 00:16:15,200 Speaker 2: Surveillance coming up after this. 305 00:16:22,440 --> 00:16:26,040 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live 306 00:16:26,080 --> 00:16:29,240 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 307 00:16:29,360 --> 00:16:32,760 Speaker 1: Apple Karplay and Android Auto with the Bloomberg Business app, 308 00:16:32,920 --> 00:16:34,680 Speaker 1: or watch us live on YouTube. 309 00:16:34,920 --> 00:16:39,240 Speaker 2: Martha Gimble, executive director at the Yell Budget Lab, and 310 00:16:39,560 --> 00:16:41,960 Speaker 2: Mark I want to get back to terrorists because it's 311 00:16:41,960 --> 00:16:44,720 Speaker 2: been pushed completely aside. We'll get to the war and 312 00:16:44,720 --> 00:16:48,720 Speaker 2: oil in a moment. What is your run rate now 313 00:16:48,840 --> 00:16:49,560 Speaker 2: of terrorists? 314 00:16:49,600 --> 00:16:50,720 Speaker 5: Do do? 315 00:16:50,760 --> 00:16:54,520 Speaker 2: I believe you're back to nineteen thirty nine on the 316 00:16:54,560 --> 00:16:56,120 Speaker 2: tariff impact. 317 00:16:56,800 --> 00:17:01,000 Speaker 7: So it's about nineteen forty three, but you know, nineteen 318 00:17:01,040 --> 00:17:03,760 Speaker 7: thirty nine, nineteen forty three. What's a couple of terriff 319 00:17:03,800 --> 00:17:06,160 Speaker 7: rates between friends at this point, right, it's high? 320 00:17:06,240 --> 00:17:07,400 Speaker 6: I think is the real point. 321 00:17:07,880 --> 00:17:12,520 Speaker 2: What do we say about, uh, the impact on our 322 00:17:12,560 --> 00:17:16,920 Speaker 2: listeners and viewers distracted by five dollars a gallon gas? 323 00:17:18,680 --> 00:17:22,679 Speaker 7: I mean you're still going to see continually rising prices. 324 00:17:22,760 --> 00:17:24,399 Speaker 7: You know, one of the things that we've been talking 325 00:17:24,400 --> 00:17:27,359 Speaker 7: about is trying to figure out how much of the 326 00:17:27,440 --> 00:17:31,359 Speaker 7: tariffs have actually been passed through already. I think the 327 00:17:31,400 --> 00:17:34,520 Speaker 7: sort of back of the envelope easiest number to kind 328 00:17:34,520 --> 00:17:37,320 Speaker 7: of fixate on is around fifty percent. It's not exact, 329 00:17:37,359 --> 00:17:40,720 Speaker 7: but gives you an idea, and so you know, you 330 00:17:41,000 --> 00:17:44,359 Speaker 7: still have costs that are waiting to hit the consumer 331 00:17:44,880 --> 00:17:47,359 Speaker 7: again at the same time that you're obviously seeing a 332 00:17:47,400 --> 00:17:49,040 Speaker 7: lot of pressure from energy prices. 333 00:17:49,720 --> 00:17:51,040 Speaker 2: By the way, Tom, I just wanted. 334 00:17:50,800 --> 00:17:53,199 Speaker 7: To you know, you were talking about the team just 335 00:17:53,240 --> 00:17:55,800 Speaker 7: as a measure of the dedication of the team. The 336 00:17:55,880 --> 00:17:59,919 Speaker 7: team was up late last night like incorporating new ways 337 00:18:00,080 --> 00:18:02,840 Speaker 7: of how they realized metal tariffs impact dairy. So I 338 00:18:02,840 --> 00:18:04,600 Speaker 7: do just want to say, you know, this is a 339 00:18:04,640 --> 00:18:07,040 Speaker 7: team that is always iterating, always trying to make sure 340 00:18:07,040 --> 00:18:08,639 Speaker 7: they're doing this exactly right, and I just want to 341 00:18:08,640 --> 00:18:10,000 Speaker 7: give them a huge, huge shout out. 342 00:18:10,800 --> 00:18:11,080 Speaker 2: Martha. 343 00:18:11,119 --> 00:18:13,840 Speaker 4: What's the given that we have a one year kind 344 00:18:13,840 --> 00:18:18,440 Speaker 4: of perspective here, what's kind of the layout of who 345 00:18:18,560 --> 00:18:22,000 Speaker 4: really bore these teriff expenses, whether it be the exporter, 346 00:18:22,480 --> 00:18:26,800 Speaker 4: the importer, companies, consumers. How's that checking out now? 347 00:18:27,840 --> 00:18:31,120 Speaker 7: So at this point it's probably you know, partially consumers. 348 00:18:31,760 --> 00:18:34,520 Speaker 7: You know, prices, for instance, for durable goods do look 349 00:18:34,600 --> 00:18:38,639 Speaker 7: like they've been affected. You've also seen companies trying to 350 00:18:38,720 --> 00:18:42,240 Speaker 7: hold on, right because there's been so much uncertainty about 351 00:18:42,280 --> 00:18:45,719 Speaker 7: these tariffs, and companies don't like raising prices if they 352 00:18:45,720 --> 00:18:49,879 Speaker 7: don't have to write make consumers mad, and so you know, 353 00:18:49,920 --> 00:18:52,000 Speaker 7: they've been trying to hold on. But at some point 354 00:18:52,040 --> 00:18:53,840 Speaker 7: the economic pressures become too much and then they have 355 00:18:53,920 --> 00:18:55,000 Speaker 7: to raise prices. 356 00:18:55,760 --> 00:19:00,399 Speaker 4: So where do we think we go from here? Give 357 00:19:00,480 --> 00:19:04,119 Speaker 4: us a sense of how constructive or how adamant that 358 00:19:04,200 --> 00:19:10,080 Speaker 4: administration is in terms of imposing these tars. Have they 359 00:19:10,119 --> 00:19:11,679 Speaker 4: been really on top of it? 360 00:19:11,720 --> 00:19:12,080 Speaker 2: Do you think? 361 00:19:13,280 --> 00:19:13,560 Speaker 8: I mean? 362 00:19:13,840 --> 00:19:15,679 Speaker 7: I think, you know, at the moment, we have these 363 00:19:15,760 --> 00:19:18,280 Speaker 7: kind of temporary tariffs in place while they figure out 364 00:19:18,680 --> 00:19:21,439 Speaker 7: the new legal authorities they're going to be using. I 365 00:19:21,480 --> 00:19:24,040 Speaker 7: think one thing that's really hard is that at this point, 366 00:19:24,080 --> 00:19:25,879 Speaker 7: I think we have a pretty good sense of what 367 00:19:25,920 --> 00:19:28,239 Speaker 7: the headline tariff number is going to be. You know, 368 00:19:28,840 --> 00:19:32,159 Speaker 7: let's call it somewhere between eleven and fifteen percent. But 369 00:19:32,240 --> 00:19:35,760 Speaker 7: if you're a business that actually doesn't help you very much. 370 00:19:35,800 --> 00:19:37,560 Speaker 7: You don't need to know what the headline. You know, 371 00:19:38,080 --> 00:19:40,280 Speaker 7: you and I care. You need to know what the 372 00:19:40,280 --> 00:19:43,639 Speaker 7: effective tariff rate is for your industry, for your products, 373 00:19:43,720 --> 00:19:46,200 Speaker 7: and there we just have know certainty and we don't 374 00:19:46,200 --> 00:19:47,760 Speaker 7: know what products are going to be targeting. 375 00:19:47,880 --> 00:19:50,760 Speaker 2: To get all McKinley on you and the President would 376 00:19:50,840 --> 00:19:54,760 Speaker 2: say this, you estimate we're raising nine zero zero, just 377 00:19:54,920 --> 00:19:59,480 Speaker 2: under a trillion dollars out x number of years by 378 00:19:59,560 --> 00:20:03,920 Speaker 2: all of with the war, with the massive Pentagon budget. 379 00:20:05,040 --> 00:20:08,520 Speaker 2: Are we addicted whether we agree or disagree with tariffs, 380 00:20:08,880 --> 00:20:12,160 Speaker 2: are we now addicted to that tax cash flow? 381 00:20:13,600 --> 00:20:15,520 Speaker 7: I mean, I think you're asking the question that a 382 00:20:15,520 --> 00:20:18,840 Speaker 7: lot of people are starting to kind of whisper to themselves. Right, 383 00:20:18,960 --> 00:20:24,920 Speaker 7: it's really really hard to raise taxes in DC. Economists 384 00:20:24,920 --> 00:20:28,919 Speaker 7: would tell you raise literally any tax except for tariffs. Right, 385 00:20:28,960 --> 00:20:32,920 Speaker 7: They're really inefficient, they have really high economic costs. At 386 00:20:32,960 --> 00:20:35,320 Speaker 7: the same time, it seems to be the only tax 387 00:20:35,400 --> 00:20:36,679 Speaker 7: that we're able to raise. 388 00:20:37,119 --> 00:20:40,879 Speaker 2: Well to Paul's good question before given all the distractions, folks, 389 00:20:40,880 --> 00:20:43,240 Speaker 2: the screen that I'm seeing here, I just saw the 390 00:20:43,280 --> 00:20:46,640 Speaker 2: House will not vote on the DHS thing. Ed Ludlow 391 00:20:46,760 --> 00:20:50,119 Speaker 2: just sent me how the Orion mission is going to 392 00:20:50,119 --> 00:20:53,720 Speaker 2: go from seventeen thousand miles per hour to twenty four 393 00:20:53,760 --> 00:20:56,119 Speaker 2: thousand miles per hour. We're gonna have Ludlow on at 394 00:20:56,240 --> 00:20:59,600 Speaker 2: nine o'clock our I mean, all these distractions, Martha, what 395 00:21:00,080 --> 00:21:03,560 Speaker 2: on a baseball sense, think Ron Darling at Yale years ago? 396 00:21:03,960 --> 00:21:07,240 Speaker 2: On a baseball sense, Martha Gimble, where are we in 397 00:21:07,359 --> 00:21:10,280 Speaker 2: the tariff impact? Are we? Like? I think there's a 398 00:21:10,280 --> 00:21:12,600 Speaker 2: feeling we're in the ninth inning. I don't buy it. 399 00:21:12,840 --> 00:21:14,560 Speaker 2: Where are we in the tariff effect? 400 00:21:15,440 --> 00:21:17,919 Speaker 7: We're not even at the seventh inning stretch. You know, 401 00:21:18,119 --> 00:21:20,840 Speaker 7: we're you know, only just starting to get there. You 402 00:21:20,960 --> 00:21:25,639 Speaker 7: have to remember Smot Holly took years to you know, 403 00:21:25,800 --> 00:21:30,040 Speaker 7: fully incorporate and this is it's not the case that 404 00:21:30,119 --> 00:21:33,679 Speaker 7: you raise tariffs and the effects of those are fully 405 00:21:33,720 --> 00:21:37,160 Speaker 7: incorporated the next day, especially when those tariffs have been 406 00:21:37,240 --> 00:21:38,960 Speaker 7: so uncertain as these have been. 407 00:21:40,520 --> 00:21:42,280 Speaker 2: You have no idea what I'll get it out on 408 00:21:42,320 --> 00:21:45,640 Speaker 2: LinkedIn and Twitter as well. It's the budget lab. But yeah, 409 00:21:45,720 --> 00:21:48,720 Speaker 2: I can't say enough about the clarity and the sickness 410 00:21:49,080 --> 00:21:53,119 Speaker 2: of it. Martha Gimble, there with a great team, stay 411 00:21:53,160 --> 00:21:57,040 Speaker 2: with us more from Bloomberg Surveillance coming up after this. 412 00:22:04,280 --> 00:22:07,879 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 413 00:22:07,920 --> 00:22:11,080 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 414 00:22:11,160 --> 00:22:14,840 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 415 00:22:15,000 --> 00:22:16,440 Speaker 1: watch us Live on YouTube. 416 00:22:16,600 --> 00:22:20,800 Speaker 2: As she is chief credit Officer at Moody's Rating. They 417 00:22:20,800 --> 00:22:25,000 Speaker 2: are always criticized for being behind, but their job is 418 00:22:25,400 --> 00:22:28,600 Speaker 2: to be behind and get it right. That's been the 419 00:22:28,640 --> 00:22:31,840 Speaker 2: heritage of Moody's ratings for years. She is the chief 420 00:22:31,840 --> 00:22:35,359 Speaker 2: Credit Officer as the worst job in debt in the world. 421 00:22:35,880 --> 00:22:39,720 Speaker 2: I mean, you guys are a pinata. We're behind. Moody's 422 00:22:39,760 --> 00:22:44,120 Speaker 2: is behind. You're so slow. Explain why the rating agencies 423 00:22:44,480 --> 00:22:45,800 Speaker 2: have to be so cautious. 424 00:22:46,560 --> 00:22:48,440 Speaker 6: We have to get it right, as you said, And 425 00:22:48,800 --> 00:22:51,040 Speaker 6: with regard to my job, Tom, somebody's got to do 426 00:22:51,080 --> 00:22:55,000 Speaker 6: it and I'm loving it. But you know, I wouldn't 427 00:22:55,080 --> 00:22:58,440 Speaker 6: say that we're behind. I would say we're less volatile 428 00:22:58,480 --> 00:23:01,159 Speaker 6: than markets, and that is our We don't want to 429 00:23:01,200 --> 00:23:04,280 Speaker 6: move up and down with every news flash. So that's 430 00:23:04,359 --> 00:23:07,439 Speaker 6: number one. Number two. We want to tell the market 431 00:23:07,520 --> 00:23:10,960 Speaker 6: not only where things are today, but where they're going. Tomorrow, 432 00:23:11,240 --> 00:23:14,200 Speaker 6: and sometimes the market's moving today and moving back tomorrow, 433 00:23:14,320 --> 00:23:16,639 Speaker 6: whereas the rating needs to stay where it is so 434 00:23:16,680 --> 00:23:18,720 Speaker 6: that when you're investing your pension money, you're not pulling 435 00:23:18,720 --> 00:23:20,560 Speaker 6: out and off too frequently. 436 00:23:20,880 --> 00:23:23,600 Speaker 4: Assie, what do you guys do, because I know you 437 00:23:23,600 --> 00:23:25,800 Speaker 4: have a longer term focus, What do you do when 438 00:23:25,840 --> 00:23:28,800 Speaker 4: we get these black swan events like a Warner rant? 439 00:23:28,840 --> 00:23:31,320 Speaker 4: How do you assess or do you assess? How you 440 00:23:32,359 --> 00:23:33,120 Speaker 4: look at credit? 441 00:23:34,160 --> 00:23:36,480 Speaker 6: You know, and that has changed so much in the 442 00:23:36,560 --> 00:23:39,399 Speaker 6: last five years because in the last five years, if 443 00:23:39,440 --> 00:23:41,479 Speaker 6: you think about it, you had the pandemic, you had 444 00:23:41,520 --> 00:23:47,359 Speaker 6: Russia Ukraine, you had high inflation, high rates, some banking stress, Israel, Gaza, 445 00:23:47,400 --> 00:23:50,439 Speaker 6: and now we have the war. Now, so we do 446 00:23:50,560 --> 00:23:53,520 Speaker 6: a couple of things. First, we take stock of what 447 00:23:53,680 --> 00:23:57,199 Speaker 6: is happening today, what is likely to happen, and we 448 00:23:57,240 --> 00:23:59,240 Speaker 6: could be wrong or right, but we create a scenario 449 00:23:59,280 --> 00:24:04,640 Speaker 6: analysis baseline downside upside, and then we think about how 450 00:24:04,680 --> 00:24:08,000 Speaker 6: these things would actually transmit to the credit profiles of 451 00:24:08,000 --> 00:24:10,000 Speaker 6: the entities we rate. And these are one hundreds and 452 00:24:10,000 --> 00:24:12,640 Speaker 6: thousands of ratings that we have. With the war, we're 453 00:24:12,680 --> 00:24:16,560 Speaker 6: thinking three things. One is the oil price channel. Who's 454 00:24:16,600 --> 00:24:19,800 Speaker 6: most exposed to the input costs. Two is the financial channel, 455 00:24:19,800 --> 00:24:22,040 Speaker 6: which you've just been talking about, who's most exposed to 456 00:24:22,040 --> 00:24:24,200 Speaker 6: sort of capital costs rising? And three is actually the 457 00:24:24,200 --> 00:24:27,520 Speaker 6: physical risk of war. Who's going to have their facilities attack? 458 00:24:27,600 --> 00:24:33,000 Speaker 4: Okay, and so have you guys changed your any your 459 00:24:33,040 --> 00:24:36,159 Speaker 4: credit outlook for any major part of the economy? Are 460 00:24:36,200 --> 00:24:38,080 Speaker 4: you waiting to see how the scene plays out? How 461 00:24:38,119 --> 00:24:40,479 Speaker 4: do you kind of talk to your how do you 462 00:24:40,520 --> 00:24:42,520 Speaker 4: look at your credit So you. 463 00:24:42,480 --> 00:24:45,800 Speaker 6: Know, the word that we were using last year after 464 00:24:45,920 --> 00:24:49,679 Speaker 6: tariffs and everything that had happened is remarkable resilience that 465 00:24:49,760 --> 00:24:53,120 Speaker 6: we were seeing, remarkable resilience. The word we're using now 466 00:24:53,760 --> 00:24:57,080 Speaker 6: is emerging fragility, which is exactly the case. The data 467 00:24:57,080 --> 00:24:59,720 Speaker 6: that you have so far is still telling a story 468 00:24:59,760 --> 00:25:01,800 Speaker 6: of a little bit of resilience mixed with a little 469 00:25:01,800 --> 00:25:04,720 Speaker 6: bit of fragility. And that's how we're guiding our analysts 470 00:25:04,720 --> 00:25:05,240 Speaker 6: in the market. 471 00:25:06,040 --> 00:25:09,840 Speaker 2: Look at what Moody's does, and the optimism here is 472 00:25:09,920 --> 00:25:13,920 Speaker 2: to search for credit upgrades. This is dem Daniel Fuss, 473 00:25:14,160 --> 00:25:19,560 Speaker 2: the giant Lumas sales for years in Moody's. Are you 474 00:25:19,640 --> 00:25:24,560 Speaker 2: seeing a trend of upgrades versus the nominal GDP prosperity 475 00:25:24,560 --> 00:25:25,040 Speaker 2: of the nation. 476 00:25:25,400 --> 00:25:28,480 Speaker 6: Yeah, it's an interesting story, tom. So where we're seeing 477 00:25:28,600 --> 00:25:31,760 Speaker 6: upgrades in the sovereign world has tended to actually be 478 00:25:31,880 --> 00:25:35,200 Speaker 6: at the lower end of the rating spectrum. So countries 479 00:25:35,200 --> 00:25:38,280 Speaker 6: that entered the markets when rates were very low got 480 00:25:38,320 --> 00:25:41,639 Speaker 6: hit very badly during the pandemic. They've been making a 481 00:25:41,680 --> 00:25:44,640 Speaker 6: lot of economic reforms. That's where we're seeing the upgrades. 482 00:25:44,800 --> 00:25:46,760 Speaker 2: But is it over with brncrude one hundred and nine 483 00:25:46,800 --> 00:25:47,120 Speaker 2: and Barra. 484 00:25:47,760 --> 00:25:49,960 Speaker 6: Yes, but if you're Angola, that's not bad for you. 485 00:25:50,000 --> 00:25:51,840 Speaker 6: If you're in Nigeria, that's not bad for you. 486 00:25:52,280 --> 00:25:54,400 Speaker 2: But they have not get hammered. 487 00:25:54,520 --> 00:25:57,800 Speaker 4: Yeah, get hammered. I mean, so, I guess one of 488 00:25:57,800 --> 00:25:59,720 Speaker 4: the questions here for a lot of folks is just. 489 00:26:01,520 --> 00:26:04,480 Speaker 2: Credit quality over all going into this. 490 00:26:04,400 --> 00:26:07,960 Speaker 4: War was generally pretty good, right, I mean, how was 491 00:26:08,000 --> 00:26:10,080 Speaker 4: your upgrades the downgrades kind of ratio? 492 00:26:10,240 --> 00:26:12,960 Speaker 6: Yeah, so the upgrade down grade ratio was roughly balanced, 493 00:26:13,000 --> 00:26:16,160 Speaker 6: but it varied by industry. So in banks we were 494 00:26:16,160 --> 00:26:20,800 Speaker 6: actually seeing more upgrades than downgrades. In corporates about roughly 495 00:26:20,840 --> 00:26:23,880 Speaker 6: balanced in sovereigns depending in Europe we were seeing sort 496 00:26:23,880 --> 00:26:27,440 Speaker 6: of more balanced emerging markets less so credit quality was good, 497 00:26:27,480 --> 00:26:30,159 Speaker 6: but credit conditions were good too. Look at where hial 498 00:26:30,240 --> 00:26:32,760 Speaker 6: spreads are three point fifty four hundred long term average 499 00:26:32,760 --> 00:26:37,920 Speaker 6: at five hundred investment grades spreads ninety longterime average hundred 500 00:26:37,920 --> 00:26:39,440 Speaker 6: and twenty. So conditions were good too. 501 00:26:40,720 --> 00:26:42,639 Speaker 2: We're gonna have to run around breaking news. Thank you 502 00:26:42,680 --> 00:26:47,480 Speaker 2: so much at CICHE with this chief credit officer at Moody's, 503 00:26:48,480 --> 00:26:52,680 Speaker 2: stay with us. More from Bloomberg Surveillance coming up after this. 504 00:27:00,080 --> 00:27:03,520 Speaker 1: Are listening to the Bloomberg Surveillance podcast. Catch us live 505 00:27:03,560 --> 00:27:06,760 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 506 00:27:06,800 --> 00:27:10,480 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 507 00:27:10,640 --> 00:27:12,280 Speaker 1: watch us live on YouTube. 508 00:27:12,800 --> 00:27:16,760 Speaker 2: Everett Ludlow has made a science around Bloomberg technology of 509 00:27:16,960 --> 00:27:22,520 Speaker 2: banned and unmanned spaceflight for all of Bloomberg LP. Tonight, 510 00:27:22,880 --> 00:27:26,679 Speaker 2: it's seven to eight pm. Is a frightening moment for 511 00:27:27,080 --> 00:27:30,120 Speaker 2: this mission to the moon ed. Thank you so much 512 00:27:30,160 --> 00:27:33,879 Speaker 2: for joining us from Cape Canaveral this morning. This Orion 513 00:27:34,000 --> 00:27:38,640 Speaker 2: capsule has to migrate from seventeen thousand miles per hour 514 00:27:39,080 --> 00:27:42,800 Speaker 2: to twenty four thousand, five hundred miles per hour. How 515 00:27:42,840 --> 00:27:43,760 Speaker 2: assured is that? 516 00:27:47,280 --> 00:27:51,439 Speaker 8: Yeah, it's not assured. Nothing in space is certain. And 517 00:27:51,520 --> 00:27:53,280 Speaker 8: you know, while we've been here on the ground at 518 00:27:53,440 --> 00:27:57,320 Speaker 8: historic Kennedy Space Center, the focus of course is when 519 00:27:57,400 --> 00:28:01,080 Speaker 8: the moment that the combined system lifts off off from 520 00:28:01,320 --> 00:28:06,680 Speaker 8: Launch Complex thirty nine B. But the complication continues. So basically, 521 00:28:06,680 --> 00:28:09,000 Speaker 8: the crew have been in an elliptical orbit of the 522 00:28:09,000 --> 00:28:12,520 Speaker 8: Earth and between seven and eight PM, the flight director 523 00:28:12,560 --> 00:28:15,520 Speaker 8: and mission directors have to decide if they are a 524 00:28:15,600 --> 00:28:19,400 Speaker 8: go or a no go to throttle up on the 525 00:28:19,400 --> 00:28:25,200 Speaker 8: Iran Capsule spacecraft and do what's called a trans lunar injection, 526 00:28:25,640 --> 00:28:29,400 Speaker 8: a burn that propels the crew in the capsule towards 527 00:28:29,480 --> 00:28:33,119 Speaker 8: the Moon, right, and go with that sling shock figure 528 00:28:33,119 --> 00:28:36,200 Speaker 8: eight formation. And there are risks, right. That's why they've 529 00:28:36,200 --> 00:28:39,760 Speaker 8: spent two days orbiting the planet before taking that action, 530 00:28:40,000 --> 00:28:42,200 Speaker 8: or at least more than twenty four hours, because they 531 00:28:42,280 --> 00:28:46,920 Speaker 8: need to know the data supports that decision. Human life's involved, 532 00:28:47,160 --> 00:28:49,120 Speaker 8: and they are going to go two hundred and fifty 533 00:28:49,160 --> 00:28:51,560 Speaker 8: thousand miles to the dark or far side of the 534 00:28:51,600 --> 00:28:54,200 Speaker 8: Moon if that burn is executed. 535 00:28:55,880 --> 00:28:56,040 Speaker 6: Ed. 536 00:28:56,080 --> 00:28:58,600 Speaker 4: If the burn is executed, talk to us about how 537 00:28:58,640 --> 00:29:01,840 Speaker 4: the following couple of days will be for this mission. 538 00:29:05,000 --> 00:29:09,320 Speaker 8: Yeah, it's this is real rocket science. It's four days 539 00:29:09,360 --> 00:29:12,360 Speaker 8: basically to go that balance of the two hundred and 540 00:29:12,400 --> 00:29:16,080 Speaker 8: fifty thousand miles. So when they reach the far side 541 00:29:16,160 --> 00:29:18,840 Speaker 8: or dark side of the Moon, there'll be about four 542 00:29:18,920 --> 00:29:22,280 Speaker 8: thousand miles off the lunar surface, which is you know, 543 00:29:22,400 --> 00:29:24,400 Speaker 8: depending on how you look at it, it's record breaking. 544 00:29:24,640 --> 00:29:29,600 Speaker 8: At that point, the orion capsule or spacecraft loses contact 545 00:29:29,640 --> 00:29:33,200 Speaker 8: with Houston. Why, you know, everyone's yelling at the radio. 546 00:29:33,240 --> 00:29:35,640 Speaker 8: Why Why would they lose? Because the Moon's in the way, 547 00:29:36,720 --> 00:29:41,800 Speaker 8: That's why. And so this is all high stakes. Then literally, 548 00:29:41,920 --> 00:29:47,080 Speaker 8: using Earth's gravitational pull and Moon's gravitational field, it's a slingshot, 549 00:29:47,120 --> 00:29:51,200 Speaker 8: a free return trajectory where there is no reliance on propulsion. 550 00:29:51,600 --> 00:29:55,440 Speaker 8: It guarantees the return back towards Earth over another four days. 551 00:29:55,640 --> 00:29:58,840 Speaker 2: Nicely explained Ed Lovelove. Who's running this mission? I think 552 00:29:58,840 --> 00:30:02,760 Speaker 2: when we see a ray capsule many think of Jeff 553 00:30:02,760 --> 00:30:06,880 Speaker 2: Bezos and Amazon. But tell us, like, who put this 554 00:30:06,960 --> 00:30:09,720 Speaker 2: thing into orbit? Is this a NASA mission? Is it 555 00:30:09,760 --> 00:30:13,040 Speaker 2: a Boeing mission? Is it a McDonald douglas mission from 556 00:30:13,080 --> 00:30:14,840 Speaker 2: a million years ago? What is it? 557 00:30:17,840 --> 00:30:22,720 Speaker 8: NASA owns this. NASA is the project. The customer, as 558 00:30:22,840 --> 00:30:26,120 Speaker 8: Lockheed Space president put it to me yesterday, is the crew, 559 00:30:26,200 --> 00:30:30,600 Speaker 8: the astronauts. Boeing is responsible for the SLS Starship Space 560 00:30:30,680 --> 00:30:35,200 Speaker 8: launch System, the rocket part. The European Space Agency, through 561 00:30:35,240 --> 00:30:38,600 Speaker 8: European companies like Talez, make the service module that provides 562 00:30:38,680 --> 00:30:42,120 Speaker 8: power and life support systems to the capsule the spacecraft, 563 00:30:42,360 --> 00:30:46,360 Speaker 8: which is principally Lockheed Martin. The safety system called the 564 00:30:46,400 --> 00:30:49,880 Speaker 8: Launcherborn system, which was the spiky bit that was Northrolk Grumman. 565 00:30:50,160 --> 00:30:50,840 Speaker 5: But they are a. 566 00:30:50,760 --> 00:30:55,239 Speaker 2: Collecting Okay, this is important, folks. In nineteen eighty two, 567 00:30:55,400 --> 00:31:00,240 Speaker 2: James Mentioner, our great historical fiction author, was he so 568 00:31:00,440 --> 00:31:03,000 Speaker 2: fed up with the certitude of NASA that he wrote 569 00:31:03,000 --> 00:31:08,480 Speaker 2: a book called Space. It was a massive bestseller about 570 00:31:08,480 --> 00:31:12,760 Speaker 2: the interior confidence of NASA at the time. Four years 571 00:31:12,880 --> 00:31:17,160 Speaker 2: later there was a small accident called Challenger. Ed Ludlow 572 00:31:17,360 --> 00:31:23,320 Speaker 2: explained that dialectic that James Minchner described in nineteen eighty 573 00:31:23,400 --> 00:31:29,480 Speaker 2: two about confidence in NASA and their acuity to get 574 00:31:29,480 --> 00:31:30,000 Speaker 2: this right. 575 00:31:33,760 --> 00:31:37,720 Speaker 8: The power of NASA and NASA's ability to execute directly 576 00:31:37,760 --> 00:31:42,160 Speaker 8: corresponds to the administration of the day in nineteen sixties. 577 00:31:42,240 --> 00:31:44,880 Speaker 8: Everyone makes a lot of what Kennedy said about going 578 00:31:44,880 --> 00:31:46,479 Speaker 8: to the moon not because it was the easy thing, 579 00:31:46,520 --> 00:31:48,479 Speaker 8: but because it was the hard thing. But if you're 580 00:31:48,480 --> 00:31:51,640 Speaker 8: a student of history. He made a second speech later on, 581 00:31:52,120 --> 00:31:54,640 Speaker 8: which was, we have to do this because the world 582 00:31:54,760 --> 00:31:56,920 Speaker 8: is at a crossroad, a fork in the road, either 583 00:31:56,960 --> 00:32:00,480 Speaker 8: capitalism or communism. So the Moon was a priority. In 584 00:32:00,520 --> 00:32:03,320 Speaker 8: two thousand and five, George W. Bush launched the Consolation 585 00:32:03,520 --> 00:32:06,160 Speaker 8: Program and made the Moon a priority again. But by 586 00:32:06,200 --> 00:32:09,280 Speaker 8: the time Obama came into office, he wasn't interested in 587 00:32:09,320 --> 00:32:12,080 Speaker 8: the Moon, so the project fell apart. Brings us to 588 00:32:12,120 --> 00:32:16,000 Speaker 8: present day and President Trump in administration one made the 589 00:32:16,000 --> 00:32:19,680 Speaker 8: moon priority again. He empowered NASA to do it. But 590 00:32:19,760 --> 00:32:23,080 Speaker 8: it's the inconsistency of the attitude of the administration of 591 00:32:23,120 --> 00:32:25,640 Speaker 8: the day that has led to where we are now. 592 00:32:25,840 --> 00:32:29,080 Speaker 8: And one of the reasons why this mission's highlight is 593 00:32:29,080 --> 00:32:31,520 Speaker 8: that it returns humans towards the Moon because there's no 594 00:32:31,640 --> 00:32:34,000 Speaker 8: landing in this specific mission for the first time in 595 00:32:34,040 --> 00:32:37,800 Speaker 8: more than fifty years. The correlation of politics geopolitics as well, 596 00:32:37,960 --> 00:32:40,720 Speaker 8: because China has its own lunar ambitions to land in 597 00:32:40,720 --> 00:32:44,720 Speaker 8: twenty thirty, it's a race that has impacted this timeline 598 00:32:44,840 --> 00:32:48,240 Speaker 8: for this country and also for this agency in pulling 599 00:32:48,280 --> 00:32:48,920 Speaker 8: Artemus off. 600 00:32:50,880 --> 00:32:54,040 Speaker 4: Assuming this is a successful mission ed, what are next steps? 601 00:32:57,240 --> 00:33:01,800 Speaker 8: Yeah, if all goes well and to plan, the crew 602 00:33:01,840 --> 00:33:03,920 Speaker 8: splashes down off the coast of San Diego in ten 603 00:33:03,960 --> 00:33:06,080 Speaker 8: days time. But this mission Artemist too, is just a 604 00:33:06,200 --> 00:33:09,760 Speaker 8: dress rehearsal for the systems that Tom and I went through. 605 00:33:09,880 --> 00:33:10,080 Speaker 5: Right. 606 00:33:11,040 --> 00:33:14,560 Speaker 8: The ultimate near term goal is for America to land 607 00:33:14,680 --> 00:33:17,240 Speaker 8: astronauts on the Moon as early as twenty twenty eight, 608 00:33:17,600 --> 00:33:19,800 Speaker 8: and from that point on there is a thirty billion 609 00:33:19,840 --> 00:33:23,080 Speaker 8: dollars decade long project to establish a base on the Moon. 610 00:33:23,240 --> 00:33:26,280 Speaker 8: Which sounds like science fiction, right. Science fiction often front 611 00:33:26,360 --> 00:33:29,800 Speaker 8: runs reality, but the goal is to establish a presence 612 00:33:29,800 --> 00:33:32,400 Speaker 8: on the Moon's moon for a multitude of reasons. 613 00:33:32,680 --> 00:33:36,960 Speaker 2: That is the single best explanation of the politics of 614 00:33:37,080 --> 00:33:40,400 Speaker 2: Nassa Paul I've ever heard on error yep. That could 615 00:33:40,400 --> 00:33:43,560 Speaker 2: have been on NBC or with water cran Kate in 616 00:33:43,600 --> 00:33:47,520 Speaker 2: the nineteen sixties, Edward Ludlow nailing it each and every 617 00:33:47,560 --> 00:33:51,320 Speaker 2: moment for Bloomberg Technology. He comes to us today, what 618 00:33:51,440 --> 00:33:54,760 Speaker 2: will always and forever be Cape Canaveral. 619 00:33:55,000 --> 00:33:59,760 Speaker 1: This is the Bloomberg Surveillance podcast available on Apple, Spotify, 620 00:33:59,840 --> 00:34:04,200 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 621 00:34:04,320 --> 00:34:07,800 Speaker 1: seven to ten am Eastern on Bloomberg dot Com, the 622 00:34:07,880 --> 00:34:11,920 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 623 00:34:11,960 --> 00:34:15,319 Speaker 1: can also watch us live every weekday on YouTube and 624 00:34:15,520 --> 00:34:17,240 Speaker 1: always on the Bloomberg terminal