WEBVTT - Target Surprises With Upbeat Forecast on Improving Demand 0:00:02.720 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence podcast. Catch us live weekdays at ten am. 0:00:14.600 --> 0:00:17.239 He's done on Apple, Cocklay and Android Auto with the 0:00:17.280 --> 0:00:21.040 Bloomberg Business app. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:23.080 or watch us live on YouTube. 0:00:24.000 --> 0:00:28.320 All about the geopolitics front and center here, But there 0:00:28.320 --> 0:00:30.560 are earnings. Companies reporting earnings, and one of the companies 0:00:30.640 --> 0:00:33.159 we want to focus on here is Target because it 0:00:33.200 --> 0:00:37.120 goes to the consumer. Here Emily con joins his consumer 0:00:37.159 --> 0:00:40.680 team leader for Bloomberg News. Target reporters cenumbers is some 0:00:40.720 --> 0:00:42.639 better than expected profit for the full year. 0:00:43.960 --> 0:00:46.120 What you learn from the Target and what's the management saying? 0:00:46.880 --> 0:00:50.040 So on management, it's important to remember this is a 0:00:50.320 --> 0:00:55.160 new CEO, Michael Fidelki's first earnings call, and there's some 0:00:55.280 --> 0:00:59.880 optimism here. There's an upbeat forecast on the coming years 0:01:00.040 --> 0:01:05.040 and tease talking about this improving the store experience and 0:01:05.080 --> 0:01:09.000 bringing shoppers back with that cheap chic appeal that the 0:01:09.360 --> 0:01:13.720 that the stores have definitely lost in recent years. So 0:01:13.920 --> 0:01:16.080 the stock is responding quite positively. 0:01:16.680 --> 0:01:20.280 I love the term cheap chic. I do agree that 0:01:20.319 --> 0:01:22.800 when I go to Target, I find some quirky fines 0:01:22.840 --> 0:01:25.320 and I'm like, is this really this cheap? But how 0:01:25.360 --> 0:01:28.360 does Target plant to differentiate itself from competitors like Walmart 0:01:28.360 --> 0:01:32.399 and Amazon, especially as consumers remain price sensitive and their 0:01:32.959 --> 0:01:36.040 spending is shifting towards more essential so not anymore they're 0:01:36.120 --> 0:01:37.199 random things that. 0:01:37.360 --> 0:01:40.399 Totally find Yeah, you nailed it. I mean what we 0:01:40.800 --> 0:01:42.800 What Target used to do really well is you'd go 0:01:42.920 --> 0:01:45.479 in for some rolls of toilet paper and you'd come 0:01:45.480 --> 0:01:48.080 out with sweatshirts and sweatpants and fun things that you 0:01:48.080 --> 0:01:50.960 didn't know you needed. That was that tarje appeal. It 0:01:51.000 --> 0:01:54.720 attracted wealthier clients to Target. That was its advantage over 0:01:54.760 --> 0:01:57.800 Walmart for many years. It's lost that appeal. A big 0:01:57.840 --> 0:02:00.840 part of it is partnership. So we heard Fidelki just 0:02:00.920 --> 0:02:04.960 now speaking about increasing the pace of partnerships. They have 0:02:05.000 --> 0:02:09.280 a partnership with Roller Rabbit and more to come. That's 0:02:09.360 --> 0:02:12.280 part of it, bringing in brands that you know and 0:02:12.440 --> 0:02:16.080 love into Target at a at a good price point. 0:02:16.120 --> 0:02:20.200 They have a partnership with other partnerships with other brands 0:02:20.200 --> 0:02:22.480 coming out over the course of the year. I think 0:02:22.520 --> 0:02:25.320 that's part of the way they want to differentiate themselves 0:02:25.320 --> 0:02:29.160 for sure. Food and beverage we heard about this morning too. 0:02:30.600 --> 0:02:32.760 What do they really compete against day to day do 0:02:32.760 --> 0:02:33.120 you think? 0:02:34.200 --> 0:02:38.480 I mean, I think it's obviously Walmart and Amazon. I 0:02:38.480 --> 0:02:41.040 think one of the reasons Target is struggling right now 0:02:41.120 --> 0:02:44.960 is because they haven't invested as much in grocery as 0:02:45.040 --> 0:02:48.280 Walmart has. So one of the reasons that Walmart is 0:02:48.280 --> 0:02:52.560 seeing higher income shoppers come to Walmart increasingly is because 0:02:52.560 --> 0:02:55.440 they've made their grocery section a lot more appealing. There's 0:02:55.720 --> 0:02:58.440 you can find organic there, you can find a lot 0:02:58.440 --> 0:03:00.680 of fresh products. You go to Target, it it's just 0:03:00.760 --> 0:03:04.720 not there. So I think with you're going to increasingly 0:03:04.760 --> 0:03:08.639 see Target try to get more competitive in the grocery aisles, 0:03:08.680 --> 0:03:12.800 which would put it up against lots of other grocery companies. 0:03:13.120 --> 0:03:15.800 So does Target then plan to expand their food and 0:03:16.080 --> 0:03:19.240 essential assortments to I don't know, maybe stabilized traffic or 0:03:19.280 --> 0:03:22.680 do you think it'll double down on more discretionary or 0:03:23.560 --> 0:03:25.239 style lad categories. 0:03:25.520 --> 0:03:27.560 Yeah, I think we'll see, we'll see a bit of both. 0:03:27.600 --> 0:03:30.120 I think that they called out beauty and food and 0:03:30.160 --> 0:03:34.280 beverage this morning as some bright spots, and I think 0:03:34.360 --> 0:03:35.800 we'd expect to see. 0:03:35.960 --> 0:03:36.520 More of that. 0:03:37.480 --> 0:03:42.280 So what's Target saying about their consumer? How's their consumer behaving? 0:03:43.680 --> 0:03:45.560 Yeah, I mean the word of the you know that 0:03:45.720 --> 0:03:50.320 we're still seeing like very picky consumers who aren't spending 0:03:50.320 --> 0:03:58.040 as much in the discretionary categories. So I think Target 0:03:58.160 --> 0:04:00.680 is focusing on what it can do to bring people back. 0:04:01.840 --> 0:04:05.600 The CEO just said that they're going to be investing 0:04:05.640 --> 0:04:09.200 in hiring more workers and raising pay. That's pretty key 0:04:09.240 --> 0:04:12.800 to making the stores more enjoyable to shop in. 0:04:12.800 --> 0:04:16.080 Because that's what Alexis Christophers was saying earlier about her 0:04:16.160 --> 0:04:17.200 Target experiences. 0:04:17.440 --> 0:04:20.040 Not enough help on the floors. 0:04:20.080 --> 0:04:22.799 That's something that's a shared concern among this company aware 0:04:22.880 --> 0:04:23.400 that kind of is. 0:04:23.600 --> 0:04:26.320 It sounded like it. I mean raising pay is key. 0:04:27.240 --> 0:04:29.279 I think you know, there's going to spend a billion 0:04:29.360 --> 0:04:34.680 dollars on making the stores more pleasant. I think they 0:04:34.960 --> 0:04:38.400 laid off a lot of corporate employees to you know, 0:04:39.480 --> 0:04:44.400 perhaps that investment is going into making the stores better. So, yeah, 0:04:44.400 --> 0:04:47.919 that is a problem. Slow lines, lots of things locked 0:04:48.000 --> 0:04:49.040 up in cages when you. 0:04:49.040 --> 0:04:53.240 Try to don't get Matt Miller started all the stuff, gosh. 0:04:53.200 --> 0:04:53.440 I know. 0:04:53.960 --> 0:04:57.960 So then with a new CEO, any cultural or operational 0:04:58.040 --> 0:05:02.039 changes that signaled that the company truly turning a page 0:05:02.040 --> 0:05:05.520 after recent challenges, because you have probably skeptic saying maybe 0:05:05.520 --> 0:05:06.920 this is a one off. 0:05:07.560 --> 0:05:09.880 Yeah, I mean, we've seen he's been in the job 0:05:09.920 --> 0:05:13.440 for a month, we've seen a reshuffling in leadership, we've 0:05:13.440 --> 0:05:18.680 seen some layoffs. But where you know, the company is 0:05:18.720 --> 0:05:21.520 hosting its investor day later today, so we're hoping to 0:05:21.600 --> 0:05:25.039 learn more about what that turnaround strategy is and any 0:05:25.480 --> 0:05:30.080 specifics on new initiatives. How big are these investments and stores. 0:05:30.120 --> 0:05:32.880 Those are the things we're looking for later today with 0:05:33.000 --> 0:05:35.560 the event that's kicking off shortly. 0:05:36.040 --> 0:05:39.159 Stay with us. More from Bloomberg Intelligence coming up after this. 0:05:43.040 --> 0:05:46.760 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:05:46.839 --> 0:05:49.520 weekdays at ten am. He's done on Apple, cocklay and 0:05:49.520 --> 0:05:52.800 Android Auto with the Bloomberg Business App. Listen on demand 0:05:52.839 --> 0:05:56.960 wherever you get your podcasts, or watch us live on YouTube. 0:05:57.080 --> 0:06:00.400 This military conflict in the Mid East cannot be good 0:06:00.560 --> 0:06:04.239 for logistics, the global supply chain, all that kind of stuff. 0:06:04.279 --> 0:06:06.280 We learned about this. Every time there's something wrong in 0:06:06.360 --> 0:06:09.760 the world, it impacts global trade, which means we need 0:06:09.800 --> 0:06:12.800 to check in with Lee Glasgow, Senior transport Logistics and 0:06:12.839 --> 0:06:14.640 shipping analysts for Bloomberg Intelligence. 0:06:14.960 --> 0:06:17.200 Lee, what do you make here of what we're. 0:06:17.040 --> 0:06:19.919 Seeing in the Middle East and how it may impact 0:06:20.120 --> 0:06:22.040 global trade? How are you thinking about it? 0:06:23.240 --> 0:06:24.800 Yeah, so, I mean, at the end of the day, 0:06:24.839 --> 0:06:27.760 it's going to put upward pressure on rates because there's 0:06:27.880 --> 0:06:31.719 now a premium on capacity, especially as it relates to 0:06:31.760 --> 0:06:35.320 the tanker industry. We've seen tanker rates get closed to 0:06:35.360 --> 0:06:38.039 almost five hundred thousand dollars a day. That is just 0:06:38.160 --> 0:06:41.839 being driven by the fact that people want oil, they're 0:06:41.839 --> 0:06:45.080 going to have to pay to get it. And the 0:06:45.160 --> 0:06:47.800 ripple effect really for my world because you know, I 0:06:47.839 --> 0:06:52.640 cover marine shipping, air freight guys, and also the folks 0:06:52.640 --> 0:06:55.599 here in the US, the railroads and trucking companies, the 0:06:55.680 --> 0:06:58.880 biggest impact is going to be the inflationary aspect and 0:06:59.080 --> 0:07:04.320 the higher decail prices. When diesel prices rise significantly, it 0:07:04.400 --> 0:07:08.400 tends to weigh on margins because there is a lag 0:07:08.480 --> 0:07:13.440 effect on the fuel search charges that they charge their customers. 0:07:13.480 --> 0:07:16.840 So you're going to see margins getting pressed. And also 0:07:17.000 --> 0:07:19.200 the you know, the one two punch from that is 0:07:19.320 --> 0:07:22.360 going to be if consumers have less discritionary money to 0:07:22.400 --> 0:07:24.720 spend on goods. That means it's going to be less 0:07:24.720 --> 0:07:27.440 stuff shipped around. So you know, there's really kind of 0:07:27.480 --> 0:07:31.600 a ripple effect going on with the events unfolding in 0:07:31.640 --> 0:07:32.280 the Middle East. 0:07:32.840 --> 0:07:36.120 If disruptions persist, do you think we could see supply 0:07:36.200 --> 0:07:38.920 chain bottlenecks similar to twenty twenty one to twenty two 0:07:39.000 --> 0:07:41.360 And if so, which sectors do you see will be 0:07:41.560 --> 0:07:43.360 falling first or will be affected first? 0:07:44.960 --> 0:07:46.560 I don't think you're going to see what we saw 0:07:46.800 --> 0:07:48.720 during the pandemic, because at the end of the day, 0:07:48.760 --> 0:07:52.320 the biggest impact really is the crude and energy markets. 0:07:53.600 --> 0:07:56.920 So you know, container aligners that are leaving Asia are 0:07:56.960 --> 0:08:03.200 still going to go to southern California to unload their goods. 0:08:03.920 --> 0:08:05.640 You know, the only time it's going to become a 0:08:05.680 --> 0:08:08.840 problem is that if you know, this is really prolonged 0:08:08.960 --> 0:08:11.720 and just people just don't have the energy to manufacture stuff. 0:08:11.760 --> 0:08:13.600 But let's hope you don't get there. 0:08:15.680 --> 0:08:18.680 What about vessels with vessels stalled and re routing around 0:08:18.720 --> 0:08:21.440 choke points? How sharply are fright and tanker rates going 0:08:21.480 --> 0:08:22.480 to rise? In your view? 0:08:24.240 --> 0:08:26.480 You know, my colleague ken Low out of Singapore, you 0:08:26.560 --> 0:08:28.960 just put out a note on the Blueberg terminal earlier 0:08:29.000 --> 0:08:31.960 today and he was calling for over five hundred thousand 0:08:32.040 --> 0:08:34.720 dollars a day and time traiter rates. 0:08:35.720 --> 0:08:36.040 Again. 0:08:36.200 --> 0:08:39.440 You know what, it's not so much the diversion, it's 0:08:39.480 --> 0:08:41.640 the kind of the demand. So people are willing to 0:08:41.679 --> 0:08:44.280 pay up high. A lot of insurance companies are no 0:08:44.360 --> 0:08:47.040 longer insuring in the region. So, uh, the you know, 0:08:47.080 --> 0:08:49.440 the straight of her Moves is pretty much you know, 0:08:49.480 --> 0:08:51.720 the right the Persian Gulf and the strade of her 0:08:51.720 --> 0:08:53.560 Moves is pretty much shut down no matter what the 0:08:53.600 --> 0:08:54.320 Iranians do. 0:08:55.080 --> 0:08:58.240 Solely, if I'm a FedEx pilot, I'm not flying anywhere 0:08:58.280 --> 0:09:00.480 near that airspace, so I'm gonna fly around. 0:09:00.520 --> 0:09:03.600 It is not going to raise costs for everybody. 0:09:04.640 --> 0:09:07.320 Yeah, and so like the ripple effect, you know, after 0:09:07.960 --> 0:09:11.760 the the ocean markets, probably the air markets are most impacted. 0:09:11.920 --> 0:09:13.760 A lot of the airspace and the Middle East has 0:09:13.800 --> 0:09:16.280 been shut down. A lot of commercial flights are no 0:09:16.320 --> 0:09:18.480 longer going in and out. And you know what the 0:09:18.480 --> 0:09:21.720 commercial airlines do is, you know, where we put our luggage, 0:09:21.760 --> 0:09:26.160 they also take cargo, so that that capacity is not available, 0:09:27.080 --> 0:09:29.920 and you know, it is going to impact FedEx UPS 0:09:29.920 --> 0:09:33.160 and DHL. DHL is more exposed to the Middle East 0:09:33.200 --> 0:09:36.040 than the other two. But you know, I think right 0:09:36.080 --> 0:09:41.000 now it's kind of a deminomous impact to UPS and FedEx. 0:09:41.920 --> 0:09:45.240 The real question is is how long does this go for? 0:09:45.400 --> 0:09:48.319 You know, is it going to be days, weeks or months? 0:09:49.080 --> 0:09:51.839 You know, if it's just going to be weeks, the 0:09:51.840 --> 0:09:56.920 impact earnings probably won't be that that significant for the 0:09:56.960 --> 0:09:59.760 FedEx is and the UPS is the world and slightly 0:10:00.240 --> 0:10:03.839 more for DHL. All right then, and then also, you 0:10:03.920 --> 0:10:06.480 know a lot of a lot of these businesses, they 0:10:06.559 --> 0:10:10.040 have forwarder freightforwarding businesses as well, and when you have 0:10:10.200 --> 0:10:14.640 these supply chains disruptions, shippers will lean heavily on the 0:10:14.640 --> 0:10:18.240 freightfowarders and help them navigate these new situations. So you 0:10:18.360 --> 0:10:22.200 might see, you know, the freightfowarders also could benefit. They 0:10:22.240 --> 0:10:26.040 can benefit from a higher rates and be also getting 0:10:26.440 --> 0:10:27.720 more customs business. 0:10:28.280 --> 0:10:31.439 Stay with us more from Bloomberg Intelligence coming up after this. 0:10:35.320 --> 0:10:39.040 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:10:39.120 --> 0:10:42.160 weekdays at ten am Eastern on Apple, Cocklay and Android 0:10:42.200 --> 0:10:45.520 Auto with the Bloomberg Business app. Listen on demand wherever 0:10:45.559 --> 0:10:48.680 you get your podcasts or watch US live on YouTube. 0:10:49.440 --> 0:10:52.640 The US Israeli war on Iran has entered its fourth day, 0:10:52.679 --> 0:10:54.440 with oil and gas prices surging in. 0:10:54.440 --> 0:10:55.960 The world adjusting to a conflict. 0:10:56.320 --> 0:10:59.599 The President Donald Trump says has no fixed timeline, and 0:10:59.600 --> 0:11:02.120 now we're see other countries in the region being pulled 0:11:02.120 --> 0:11:05.760 into the conflict, with Iranian response. 0:11:05.520 --> 0:11:07.160 Hitting a number of countries in the region. 0:11:07.559 --> 0:11:10.800 Our next guest has twenty years experience working in at 0:11:10.800 --> 0:11:13.200 the Middle East through various forms of the US government 0:11:13.200 --> 0:11:16.319 and private practice. Kirsten Fontain Rose joins his heare senior 0:11:16.360 --> 0:11:21.320 Fellow at the Atlantic Council, joining us via zoom from Washington, DC. Kirston, 0:11:21.480 --> 0:11:25.320 what do you make of the US action against Iran here? 0:11:25.600 --> 0:11:30.359 Just from your experience in the State Department in other areas. 0:11:31.600 --> 0:11:34.079 If the question is why are we doing this now 0:11:34.240 --> 0:11:37.319 or why is the US getting involved, there are two answers. 0:11:37.640 --> 0:11:40.400 One is that during the talks that people were tracking 0:11:40.440 --> 0:11:43.960 on the nuclearphile, the US team assessed that Iran was 0:11:43.960 --> 0:11:49.320 not actually making concessions. We heard encouraging things about movement 0:11:49.360 --> 0:11:52.240 being made, but the reality is what Iran was offering 0:11:52.400 --> 0:11:55.840 was not to enrich uranium. For three years, this time 0:11:55.880 --> 0:12:00.280 period is what the International Atomic Energy Agency, the IAEA 0:12:00.600 --> 0:12:04.320 told us same timeframe it would take Iran to restore 0:12:04.360 --> 0:12:07.640 their Uranian Richmond if no restrictions were placed on it. 0:12:08.080 --> 0:12:11.000 So the US team said, Iran is just toying with us. 0:12:11.280 --> 0:12:13.800 This is the same delay diplomacy they've been displaying for 0:12:13.840 --> 0:12:18.160 several US administrations. This is a problem. Back in DC, 0:12:18.640 --> 0:12:21.720 the military and the National Security Council and the presidents 0:12:21.720 --> 0:12:25.280 and our team said when the regime revealed this, that 0:12:25.320 --> 0:12:27.760 they were not willing to truly make concessions on the 0:12:27.800 --> 0:12:31.560 nuclear file or on their missile file, even though the 0:12:31.640 --> 0:12:34.080 US had a massive military build up on their shores. 0:12:34.520 --> 0:12:37.520 It caused the US administration to say they intend to 0:12:37.520 --> 0:12:40.000 build out both programs to the point where the international 0:12:40.000 --> 0:12:43.720 community would lose any leverage to negotiate with them. They 0:12:43.760 --> 0:12:46.480 would either build up their nuclear program to the extent 0:12:46.559 --> 0:12:49.760 that you could no longer safely go after their missile 0:12:49.760 --> 0:12:53.160 program kinetically, or they would build up their missile program 0:12:53.200 --> 0:12:55.440 to the extent that it made it too risky to 0:12:55.640 --> 0:12:59.320 destroy any of their nuclear facilities. So if the current 0:13:00.280 --> 0:13:03.400 on their borders was not enough, nothing would be, and 0:13:03.440 --> 0:13:06.959 therefore the time was now or never. The other pressure 0:13:06.960 --> 0:13:09.480 that was in was the US got signals from Israel 0:13:09.720 --> 0:13:12.800 that they were going to strike potentially unilaterally because of 0:13:12.880 --> 0:13:15.559 their own feeling of this being a small window of 0:13:15.600 --> 0:13:19.320 opportunity and being an existential threat. The US knew that 0:13:19.320 --> 0:13:22.840 that would mean that the US would be receiving attacks, 0:13:22.920 --> 0:13:25.120 our bases would be on the receiving end, because the 0:13:25.160 --> 0:13:27.600 Iranian regime had made it clear that any strike by 0:13:27.640 --> 0:13:30.160 Israel would also be considered a strike by the US. 0:13:30.520 --> 0:13:33.920 So combine those, then add in sprinkle in intelligence that 0:13:34.000 --> 0:13:36.679 told us that there would be clustered meetings of senior 0:13:36.720 --> 0:13:39.920 Iranian leadership almost too good to be true, and you 0:13:40.000 --> 0:13:42.240 wound up with the recipe for strikes when they happened. 0:13:43.040 --> 0:13:46.520 So, with Iran signaling reddiness for a long war, where 0:13:46.520 --> 0:13:49.199 does that leave the US when it comes to reshaping 0:13:49.240 --> 0:13:51.480 their strategy. We have some people saying it'll be three, 0:13:51.559 --> 0:13:52.520 four or five weeks. 0:13:54.440 --> 0:13:58.000 It's not really a reshaping. However, the US battle plan 0:13:58.080 --> 0:14:00.640 has been laid. You know, these can agencies have been 0:14:00.679 --> 0:14:02.240 on the shelf for quite some time, and of course 0:14:02.280 --> 0:14:05.960 they've been updated, massively updated. But the intent is to 0:14:06.080 --> 0:14:09.640 wipe out the military, wipe out the navy and prevent 0:14:09.640 --> 0:14:12.960 Iran from having a nuclear weapon and create a pathway 0:14:13.240 --> 0:14:17.839 for the Iranian people to govern themselves, to decide whether 0:14:17.880 --> 0:14:20.480 they want that to be someone new or to be 0:14:20.720 --> 0:14:23.520 levels three or four down within the regime. It's on them. 0:14:24.000 --> 0:14:27.280 But this kind of operation to destroy an entire military, 0:14:27.360 --> 0:14:31.080 an entire navy, including underwater assets, all the ships, all 0:14:31.120 --> 0:14:35.800 the bases, any missile facilities, drawn facilities, factories, manufacturing stockpiles, 0:14:36.120 --> 0:14:36.600 the like. 0:14:37.040 --> 0:14:37.800 It takes some time. 0:14:38.040 --> 0:14:41.920 So the US and Israel started with those air defenses 0:14:41.960 --> 0:14:44.920 that would prevent Iran from being able to guard against 0:14:44.920 --> 0:14:47.720 these kinds of strikes, and it went then to long range, 0:14:47.800 --> 0:14:51.520 medium range ballistic missiles, things that would threaten our bases 0:14:52.040 --> 0:14:55.960 and Israel. And it's moving on then to leadership, to 0:14:56.040 --> 0:14:59.360 things like the short range ballistic missiles that Terran barely 0:14:59.400 --> 0:15:02.000 touched in the June war and is what we're seeing 0:15:02.000 --> 0:15:05.320 them fire along with drones onto their golf neighbors now. 0:15:05.680 --> 0:15:08.960 So there's kind of a tiered hierarchy of places that 0:15:09.040 --> 0:15:12.160 were first priority to hit and now moving down. But 0:15:12.200 --> 0:15:15.560 the US operations won't finish until they hit all of 0:15:15.560 --> 0:15:19.400 their high value target list, some of those being individuals, 0:15:19.400 --> 0:15:23.000 but mostly being regime assets the ways they exert control. 0:15:23.880 --> 0:15:27.600 So, given your experience at Kirsten, is this something that 0:15:27.680 --> 0:15:30.440 can be achieved in the space of four to five weeks, 0:15:30.480 --> 0:15:33.520 as President Trump was suggesting, or going to go perhaps 0:15:33.560 --> 0:15:34.360 even longer. 0:15:36.280 --> 0:15:38.840 It depends on the state of Iran's air defenses, which 0:15:38.880 --> 0:15:42.040 right now we assess being pretty low, and then on intelligence, 0:15:42.040 --> 0:15:44.760 because we know Iran moves things around. So right now, 0:15:44.840 --> 0:15:47.680 satellite imagery, for instance, is helping our jets that are 0:15:47.680 --> 0:15:51.480 doing launcher hunting. They're literally scanning the air to look 0:15:51.480 --> 0:15:53.480 for launchers being moved from the places where they are 0:15:53.520 --> 0:15:56.120 secretly stored to the places where they are intended to launch, 0:15:56.440 --> 0:15:58.720 taking them out that way. How many of the stockpiles 0:15:58.800 --> 0:16:02.120 underground can we reach? Is the leadership on that list 0:16:02.200 --> 0:16:05.160 moving around? Do we know where they are? So it's 0:16:05.360 --> 0:16:07.640 the battle plan is there. It's just whether or not 0:16:07.720 --> 0:16:11.080 intelligence shifts day to day that lays out whether or 0:16:11.160 --> 0:16:14.920 not the timeline stays solid or not. It also will 0:16:14.960 --> 0:16:18.560 depend on some geopolitical factors. How is the economy reacting 0:16:18.560 --> 0:16:20.720 around the world, What kind of damage is coming to 0:16:21.240 --> 0:16:26.080 golf partners. It's not that things like damage would cut 0:16:26.080 --> 0:16:29.320 short US operations. In fact, if anything, it would probably 0:16:29.360 --> 0:16:30.120 speed them up. 0:16:30.600 --> 0:16:32.520 What are the odds that Golf states like cut there 0:16:32.600 --> 0:16:36.920 or UAE will be pulled deeper into a direct confrontation. 0:16:37.080 --> 0:16:43.560 Perhaps well, the US may not even want that. These 0:16:43.560 --> 0:16:46.160 Golf states have a lot of assets, They have standoff weaponry, 0:16:46.200 --> 0:16:49.720 they have great air defenses that the US is interoperable with. 0:16:49.960 --> 0:16:51.720 But you don't want to clutter the air space. You 0:16:51.720 --> 0:16:54.360 don't want more situations like we had in Kuwait. We're 0:16:54.400 --> 0:16:58.040 turning on Kuwait's air defenses wound up crashing three US 0:16:58.200 --> 0:17:01.680 fighter jets. So anything would have to be well coordinated. 0:17:01.720 --> 0:17:05.600 The US has planned the battle plan around those territories 0:17:05.600 --> 0:17:08.520 and that airspace not being available, so it certainly won't 0:17:08.560 --> 0:17:11.119 be a message, hey, everybody, pitch in when you're ready. 0:17:11.560 --> 0:17:14.800 All of that would be integrated. The Golf also tends 0:17:14.840 --> 0:17:17.480 to have a lot of their air defenses on automode, 0:17:17.600 --> 0:17:21.639 so it expends quite a bit of interceptor stockpile on 0:17:21.720 --> 0:17:24.280 perhaps one drone and its remnants and the like. So 0:17:24.320 --> 0:17:27.000 the US would want to say, before you get involved 0:17:27.000 --> 0:17:32.000 directly in anything offensive, let's really watch your defenses and 0:17:32.000 --> 0:17:35.840 make sure they're being well strategically expended. And then if 0:17:35.880 --> 0:17:38.440 we're going to use things like your standoff weapons, let's 0:17:38.760 --> 0:17:42.320 coordinate targeting. We want to really limit civilian casualties here. 0:17:42.600 --> 0:17:45.840 That's a big percentage of the planning has gone into 0:17:45.880 --> 0:17:49.400 how to limit those civilian casualties. But when you look around, 0:17:49.640 --> 0:17:52.959 even them participating in air defense is a contribution, and 0:17:53.000 --> 0:17:55.880 now that you have their civilians being hit, they're much 0:17:55.920 --> 0:17:58.520 more likely to say we would like to participate on 0:17:58.600 --> 0:18:02.400 the offensive side. Saw Cutter already take down two jet fighters. 0:18:02.480 --> 0:18:05.600 That's more than just turning on a jammer, for instance. 0:18:05.880 --> 0:18:09.400 And now that Saudi has had embassy's hit in their capital, 0:18:10.040 --> 0:18:13.359 they made their rethinking the Saudis prior to any engagement 0:18:13.640 --> 0:18:15.919 message to the your on nimes very clearly we're not 0:18:16.000 --> 0:18:18.280 allowing the US to use this as a base for launches, 0:18:18.680 --> 0:18:22.760 but if you do anything that strikes civilian architecture, we 0:18:22.800 --> 0:18:25.280 will consider it an act of war. And everything's on 0:18:25.280 --> 0:18:27.600 the table then, so we could be seeing the golf 0:18:27.600 --> 0:18:29.080 being drawn in. 0:18:30.040 --> 0:18:32.479 Stay with us more from Bloomberg Intelligence coming up. 0:18:36.200 --> 0:18:39.880 You're listening to the Bloomberg Intelligence podcast. Catch us Live 0:18:39.960 --> 0:18:43.080 weekdays at ten am Eastern on Apple Cocklay and Android 0:18:43.080 --> 0:18:46.400 auto with the Bloomberg Business App, Listen on demand wherever 0:18:46.440 --> 0:18:49.560 you get your podcasts, or watch us live on YouTube. 0:18:50.200 --> 0:18:53.960 Congressional warpower votes aimed at blocking President Donald Trump from 0:18:53.960 --> 0:18:57.240 further military action in Iran will likely fail. 0:18:57.280 --> 0:18:58.640 That is the assessment of our next. 0:18:58.440 --> 0:19:02.280 Guest, Nathan Dee, senior policy analyst the Bloomberg intelligencies down. 0:19:02.119 --> 0:19:05.119 There in DC. I mean this is just for show, 0:19:05.240 --> 0:19:05.800 isn't it, Nathan. 0:19:05.840 --> 0:19:08.480 I mean that Congress has given up a whole you know, 0:19:08.640 --> 0:19:11.040 war power thing a long time ago to this to 0:19:11.119 --> 0:19:12.880 our US presidency, haven't they. 0:19:13.760 --> 0:19:14.000 Yeah? 0:19:14.040 --> 0:19:16.680 Absolutely. I mean this is essentially a symbolic vote here. 0:19:16.720 --> 0:19:18.359 I mean, in order to get this through law, you 0:19:18.359 --> 0:19:20.640 would have to have both chambers pass it, and you'd 0:19:20.680 --> 0:19:21.800 have to have pass it in a way to get 0:19:21.800 --> 0:19:24.480 a veto proof majority, because President Trump would obviously vetoed 0:19:24.560 --> 0:19:27.160 this measured. So I think what you know Senator Tim Kaine, 0:19:27.160 --> 0:19:29.560 who is the sponsor of this legislation or this resolution, 0:19:29.600 --> 0:19:32.000 and he did something very similar to Venezuela is aiming 0:19:32.040 --> 0:19:34.280 to do, is essentially just put people on record ahead 0:19:34.280 --> 0:19:37.080 of the US midterms. Because current bully suggests that sixty 0:19:37.080 --> 0:19:39.840 percent of Americans are not on board with President Trump's 0:19:39.840 --> 0:19:42.919 strategy in Iran, and you know, as you can do 0:19:43.000 --> 0:19:45.159 in an election year, people like to play politics, and 0:19:45.240 --> 0:19:47.720 so this is something that I think just generally is 0:19:47.800 --> 0:19:50.359 more so about political aspects as we get closer and 0:19:50.400 --> 0:19:51.399 closer to November. 0:19:51.800 --> 0:19:54.560 But even if passed, resolutions would need a super majority 0:19:54.600 --> 0:19:58.639 to override Trump's veto, and so that leaves them, to 0:19:58.720 --> 0:20:02.639 Paul's points, something largely symbolics. So what is the ideal 0:20:02.720 --> 0:20:04.080 situation in your view? 0:20:04.840 --> 0:20:07.600 Yeah, so there's two reasons why Senator Tim Tim Kane 0:20:07.680 --> 0:20:09.560 is pushing this. The first is Congress doesn't like it 0:20:09.600 --> 0:20:11.639 when presidents start conflicts. And then you don't even have 0:20:11.680 --> 0:20:13.919 to have a Republican president or a Democratic president, you 0:20:14.000 --> 0:20:15.480 go all the way back, you know, over the last 0:20:15.480 --> 0:20:18.680 fifty sixty years. Congress doesn't like when president starts conflicts 0:20:18.720 --> 0:20:21.920 without going for congressional authorization. So this is the first reason. 0:20:21.960 --> 0:20:23.880 The second reason is is that, you know, just going 0:20:23.880 --> 0:20:26.720 back to my point about politics, all four hundred and 0:20:26.720 --> 0:20:28.720 thirty five members of the House representatives in one third 0:20:28.760 --> 0:20:31.160 of the Senate are running in November, and this could 0:20:31.240 --> 0:20:34.120 be a situation where Senator Keane wants to put people 0:20:34.160 --> 0:20:36.200 on the record, so that if that's sixty percent of 0:20:36.240 --> 0:20:39.240 the American populace isn't on board with President Trump's I 0:20:39.320 --> 0:20:42.920 RAN strategy grows larger. You can have some very difficult conversations. 0:20:42.960 --> 0:20:45.040 I mean, this is not going to change President Trump's, 0:20:45.440 --> 0:20:47.760 you know, strategy. When he says that he doesn't need 0:20:47.800 --> 0:20:50.040 to even think of the polling numbers, he's correct, But 0:20:50.200 --> 0:20:52.919 you know, he's also not running on the ticket in November. 0:20:53.040 --> 0:20:54.679 You know, there are going to be some Republicans on 0:20:54.680 --> 0:20:56.520 the other hand, who are looking at this and looking 0:20:56.520 --> 0:20:58.880 at the chances the Democrats take the House in November. 0:20:59.119 --> 0:21:00.520 And I'm not going to say there going to speak 0:21:00.520 --> 0:21:02.560 in opposition to this, but they certainly would be a 0:21:02.560 --> 0:21:05.400 little bit more wary or at least their uneasiness would 0:21:05.480 --> 0:21:07.240 rise as a result of this vote. 0:21:07.760 --> 0:21:11.320 Nathan realistically is the Senate up for play here in 0:21:11.320 --> 0:21:12.000 the midterms. 0:21:13.520 --> 0:21:15.480 So right now, the prediction markets have it about a 0:21:15.520 --> 0:21:17.400