WEBVTT - Bloomberg Surveillance TV: February 20th, 2026 0:00:00.040 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordernt. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.080 Terminal and the Bloomberg Business app. So here's the lacest 0:00:37.120 --> 0:00:39.840 this morning. The US amassing it's the largest military build 0:00:39.880 --> 0:00:43.240 up in decades around around with current and former officials 0:00:43.240 --> 0:00:46.279 saying the Trump administration appears ready for strikes on military 0:00:46.560 --> 0:00:49.240 and strategic targets. Joining us to discuss as Stephen Kirk, 0:00:49.280 --> 0:00:52.319 the senior Middle East Fellow at CFR. Stephen, welcome back 0:00:52.360 --> 0:00:54.600 to the program. I asked Jonathan, our colleague, what does 0:00:54.600 --> 0:00:57.560 success look like? Struggle to answer, think most people do. 0:00:57.800 --> 0:00:59.480 But there's an additional question we've all got to ask 0:00:59.520 --> 0:01:02.320 as well. What is success and are the risks of 0:01:02.360 --> 0:01:05.560 pursuing get worth it? What's the answer to that, Stephen. 0:01:05.840 --> 0:01:08.600 Well, first, on the question of success, the success is 0:01:08.640 --> 0:01:11.120 anything that President Trump defines it as, and I think 0:01:11.120 --> 0:01:13.600 that that's the issue here, and that's what I think 0:01:13.600 --> 0:01:18.440 people are struggling with. He operates in a totally different 0:01:18.640 --> 0:01:20.920 foreign policy level than most of us who have grown 0:01:21.000 --> 0:01:24.720 up around the US foreign policy establishment, which is, he 0:01:24.760 --> 0:01:27.760 could very well order the strikes, and however they come out, 0:01:28.160 --> 0:01:31.320 he'll declare it a success, whether it's regime change or 0:01:31.480 --> 0:01:34.920 attacking the around nuclear program. Now you asked a very 0:01:34.920 --> 0:01:38.280 important question about the risks. The risks are, of course, 0:01:39.040 --> 0:01:42.320 one that it does not work, and that the regime 0:01:42.360 --> 0:01:47.280 remains in place, retaliates against American partners in the region, 0:01:48.480 --> 0:01:52.280 fires on American forces in the region, and we're often 0:01:52.360 --> 0:01:56.120 running into a broader regional war. That is, I think 0:01:56.120 --> 0:01:58.160 the worst case scenario for the United States of the 0:01:58.160 --> 0:02:02.160 Iranians are greatly weakened, but the Iranians still have the 0:02:02.200 --> 0:02:05.000 ability to cause a lot of trouble around the region. 0:02:05.040 --> 0:02:07.400 So if the United States goes, it's going to have 0:02:07.440 --> 0:02:10.520 to be sure that it's going to be able to 0:02:10.800 --> 0:02:12.880 affect the kinds of changes it's seeking. 0:02:13.320 --> 0:02:14.520 The question is what. 0:02:14.360 --> 0:02:17.560 Are those changes? Is it removing the nuclear program, which 0:02:17.600 --> 0:02:20.279 by the way, last June the President said was totally obliterated. 0:02:20.600 --> 0:02:21.600 Is it regime change? 0:02:21.720 --> 0:02:23.720 Is it going after the ballistic missile program as the 0:02:23.760 --> 0:02:28.840 Israelis have been advising. We won't know until if and 0:02:28.840 --> 0:02:30.320 when he orders those strikes. 0:02:30.480 --> 0:02:33.000 Stephen, If there is a strike, what do you expect 0:02:33.000 --> 0:02:35.440 the Iranians to do immediately in terms of retaliation? 0:02:36.520 --> 0:02:40.200 Yeah, they have been full of bravado. In the last week, 0:02:40.639 --> 0:02:44.040 they conducted an exercise for several hours in the Strait 0:02:44.080 --> 0:02:47.160 of Hormuz, a very strategic waterway that connects the Persian 0:02:47.200 --> 0:02:51.160 Gulf in the Indian Ocean. They have threatened to rain 0:02:51.200 --> 0:02:54.800 missiles down on Tel Aviv. I think that that is 0:02:54.919 --> 0:02:58.679 probably the most likely response from the uron Ins, which 0:02:58.720 --> 0:03:02.480 is why the President has ordered the USS Gerald R 0:03:02.560 --> 0:03:05.360 Ford and its carrier Battlegroup into the region. 0:03:06.840 --> 0:03:09.000 That group of ships, along with. 0:03:08.960 --> 0:03:13.480 The USS Lincoln, provide and augment air defense systems for 0:03:13.600 --> 0:03:16.800 Israel's already robust air defense systems and provides air cover 0:03:16.960 --> 0:03:21.919 for America's partners in the Golf. But the Iranians are 0:03:22.000 --> 0:03:25.679 limited in terms of their ability to take on the 0:03:25.760 --> 0:03:28.880 United States. So that's why it seems likely they'll use 0:03:29.000 --> 0:03:31.680 what remains of their ballistic missile force to try to 0:03:31.720 --> 0:03:33.959 do a lot of damage to Israel and perhaps other 0:03:34.000 --> 0:03:34.920 partners in the region. 0:03:35.280 --> 0:03:38.440 When the USS Gerald r Ford arrives this weekend, it's 0:03:38.480 --> 0:03:41.200 going to be a massive military build up. Do you 0:03:41.280 --> 0:03:43.800 think that build up is enough for the Ruddians to 0:03:43.840 --> 0:03:46.640 come to the table in earnest on the three top 0:03:46.680 --> 0:03:50.120 issues this administration has outlined ballistic missiles, nuclear as well 0:03:50.120 --> 0:03:51.280 as money to proxies. 0:03:51.760 --> 0:03:54.680 Well, that would probably be the best possible outcome for 0:03:54.800 --> 0:03:59.840 the Iranians, But so far, at least publicly, they are 0:04:00.000 --> 0:04:02.400 digging in. They are saying that they will retain their 0:04:02.480 --> 0:04:06.880 right to enrich They're willing to negotiate enrichment around the margins. 0:04:06.920 --> 0:04:09.680 They've come up with some ideas about a pause, which 0:04:09.680 --> 0:04:14.320 really doesn't matter shipping enrich uranium out of the country. 0:04:15.680 --> 0:04:18.480 But I think the theory is a mass a lot 0:04:18.600 --> 0:04:22.440 of force. If the Iranians don't capitulate, then you really 0:04:22.480 --> 0:04:24.919 do have to use that force, because otherwise your credibility 0:04:25.000 --> 0:04:27.000 is blown unless you use it. And the President has 0:04:27.040 --> 0:04:30.440 been clear they either come to terms within the next 0:04:30.480 --> 0:04:33.039 ten or fifteen days or he's going to use that force. 0:04:33.440 --> 0:04:35.640 What did you think the outreach has been between the 0:04:35.680 --> 0:04:39.120 administration and allies in the region, Saudi Arabia, UAE, and 0:04:39.279 --> 0:04:42.279 Israel as well on the oil front, do you think 0:04:42.440 --> 0:04:46.160 the OPEC members if Iran starts to strike some tankers 0:04:46.240 --> 0:04:48.320 or close the strait of her moves, are they willing 0:04:48.360 --> 0:04:50.840 to get some more exports on the market to keep 0:04:50.839 --> 0:04:51.520 prices down. 0:04:52.480 --> 0:04:55.560 Certainly think that the Saudis and the Amoradis, who have 0:04:55.640 --> 0:04:58.880 said that they will not participate in American strikes on Iran, 0:04:59.080 --> 0:05:03.279 will definitely play ball on the oil front. First, I 0:05:03.279 --> 0:05:05.479 think there's a lot of American force in the region, 0:05:05.560 --> 0:05:07.760 so whatever disruptions there might be to the oil market, 0:05:07.800 --> 0:05:11.200 it'll be temporary. But of course, the Iranians have been 0:05:11.200 --> 0:05:14.000 putting oil on the market despite being under heavy sanction. 0:05:14.320 --> 0:05:17.520 But I do think we are at a moment where 0:05:17.800 --> 0:05:25.120 the Saudis and the Marats, despite Saudi financial and fiscal troubles, 0:05:25.560 --> 0:05:30.279 would play ball if it does mean a positive change 0:05:30.440 --> 0:05:31.080 to Iran. 0:05:31.640 --> 0:05:35.640 How close is coordination right now between Israel and the 0:05:35.760 --> 0:05:38.040 United States, Because, as you said, if there's going to 0:05:38.080 --> 0:05:41.520 be a retaliation, it's going to be across the Israeli skies. 0:05:42.120 --> 0:05:45.440 Yeah, and there is a very significant amount of coordination. 0:05:45.480 --> 0:05:47.839 There has always been a significant amount of coordination, and 0:05:47.920 --> 0:05:52.799 at these moments, the United States and Israel are working 0:05:52.920 --> 0:05:55.000 hand in hand. The Israelis has said that though this 0:05:55.160 --> 0:05:57.040 is going to be an American operation and they are 0:05:57.040 --> 0:06:01.320 going to be the wingman for the operation, there's also 0:06:01.320 --> 0:06:05.200 a close coordination with other members of SENCOM. If you 0:06:05.279 --> 0:06:09.200 look at where the United States is moving assets, it 0:06:09.279 --> 0:06:14.080 is throughout the region. So countries, although they are somewhat 0:06:14.960 --> 0:06:18.720 reluctant to publicly say that they support or will participate 0:06:18.880 --> 0:06:22.400 in this operation should it come to pass, are nevertheless 0:06:23.080 --> 0:06:27.400 keeping up with their responsibilities to Sencom and opening access 0:06:27.440 --> 0:06:30.440 to their bases and allowing the United States to operate 0:06:30.480 --> 0:06:31.279 from those bases. 0:06:31.800 --> 0:06:44.800 Stay with US. Multilanberg surveillance coming up after this. Let's 0:06:44.839 --> 0:06:45.120 move on. 0:06:45.240 --> 0:06:48.400 Let's turn to Netflix, the company's co CEO Ted Sarandosk, 0:06:48.520 --> 0:06:52.400 countering a key complaint in the High Stakespencil for Warner Brothers. 0:06:53.520 --> 0:06:56.520 We're going to keep Warner Brothers running pretty much like 0:06:56.560 --> 0:06:58.680 they are today. And in fact, it's even quite better 0:06:58.720 --> 0:07:00.680 for theaters because now they are going to be in 0:07:00.720 --> 0:07:03.960 that business and own a theatrical distribution entity. We're going 0:07:04.040 --> 0:07:06.520 to take some of the Netflix films and put them 0:07:06.520 --> 0:07:08.880 through that as well, So it's very likely that you'll 0:07:08.880 --> 0:07:12.560 have even more outcome of high quality films or the 0:07:12.560 --> 0:07:13.960 theaters if this deal goes through. 0:07:14.280 --> 0:07:17.080 His comments coming is the Justice Department assesses the deal's 0:07:17.120 --> 0:07:20.560 impact on theaters. Alisha Race of Wetbush Securities writing, we 0:07:20.640 --> 0:07:24.000 believe that Netflix can create jobs, boost production, and offer 0:07:24.000 --> 0:07:26.960 consumers more value at a reasonable price. The Netflix deal 0:07:27.280 --> 0:07:31.480 is superior to paramounts guidance. Alisha joins us now for more. Alisha, 0:07:31.560 --> 0:07:34.440 welcome this tracks on is it becoming a distraction for 0:07:34.480 --> 0:07:34.840 the stock. 0:07:36.360 --> 0:07:39.720 It is a distraction for the stock. Absolutely. The issue 0:07:39.760 --> 0:07:42.960 is that Netflix is perfectly well balanced as a company 0:07:42.960 --> 0:07:48.760 without the acquisition. It has significant growth opportunities, particularly in advertising. 0:07:49.240 --> 0:07:51.960 Now this certainly would help if they got the deal 0:07:52.040 --> 0:07:54.960 through for long term growth, especially if they're able to 0:07:55.480 --> 0:07:59.440 leverage their new advertising vehicle throughout Warner Brothers as well. 0:08:00.080 --> 0:08:03.080 I have that global growth, but they don't need it, 0:08:03.720 --> 0:08:07.240 and it's certainly been a distraction and has weighed heavily 0:08:07.280 --> 0:08:10.360 on the stock. But ultimately, you know, we do think 0:08:11.240 --> 0:08:15.720 you know, Netflix will be okay without this deal, and 0:08:15.760 --> 0:08:18.920 the regulatory headwinds are you know, significant. 0:08:19.040 --> 0:08:21.560 Well, Alicia, let's talk about why you believe they'll be okay, 0:08:21.720 --> 0:08:24.240 and you alluded to it. Do you think we're underpricing 0:08:24.400 --> 0:08:27.640 how their position to take advantage of a big rebound 0:08:27.680 --> 0:08:28.680 in global add growth? 0:08:29.360 --> 0:08:32.600 Oh? Absolutely, yeah, you know, and I think without the 0:08:32.679 --> 0:08:35.880 deal the shares would have been okay. You know, they 0:08:35.880 --> 0:08:38.040 did have a bit of a hiccup a couple quarters 0:08:38.040 --> 0:08:41.599 ago with their reporting just because you know, the expectations 0:08:41.600 --> 0:08:44.480 are enormously high, you know, for the stock because they've 0:08:44.520 --> 0:08:47.640 bet you know, so healthy for so long. But the 0:08:47.679 --> 0:08:52.160 AD opportunity is growing. They're adding more capabilities throughout the 0:08:52.200 --> 0:08:56.000 AD stack, and the ability to do targeting on a 0:08:56.000 --> 0:09:00.240 global scale is significant with all of the users. So 0:09:00.520 --> 0:09:04.520 I think a lot of that performative marketing capabilities that 0:09:04.559 --> 0:09:07.920 they have or will have in our building are wildly 0:09:08.080 --> 0:09:09.800 underappreciated at this point. 0:09:09.600 --> 0:09:11.520 Because everyone else is looking ow swear. So let's talk 0:09:11.559 --> 0:09:14.200 about the set one feats release. As you know of 0:09:14.200 --> 0:09:16.319 the hold up and closing this deal. One aspect of 0:09:16.360 --> 0:09:20.880 all the complications theatrical releases, have they got a pr problem? 0:09:21.080 --> 0:09:23.040 And what are they doing to counter that now. 0:09:24.000 --> 0:09:27.200 Well, going on Bloomberg yesterday and on Matt Belanie's The 0:09:27.240 --> 0:09:31.240 Town podcast, Ted Srando's I think dispelled some of the 0:09:31.360 --> 0:09:35.600 concerns around that. You saw, you know, Sean Gamble, the 0:09:36.040 --> 0:09:39.720 CEO of Cinemark the other day on his earnings call, 0:09:40.160 --> 0:09:42.400 noted that, you know, the forty five day window that 0:09:42.520 --> 0:09:45.360 was promised, it wasn't clear, you know, is that going 0:09:45.400 --> 0:09:47.280 to streaming right afterwards or is that going to go 0:09:47.320 --> 0:09:49.760 to the t VOT window where you can buy a rent. 0:09:50.880 --> 0:09:54.720 The actual windowing matters a lot to Hollywood, and so 0:09:55.440 --> 0:09:58.319 Ted Surrandos did clarify that yesterday that he does intend 0:09:58.360 --> 0:10:03.680 to take the titles to t VOD before the streaming window, 0:10:03.720 --> 0:10:07.040 and that helps a lot. They have an opportunity Netflix 0:10:07.080 --> 0:10:11.679 does to show Hollywood the real intent. They have Narnia 0:10:11.679 --> 0:10:13.960 coming out later this year. They have it set for 0:10:14.000 --> 0:10:17.040 an exclusive Imax release and then going to streaming directly. 0:10:17.600 --> 0:10:20.760 If they change that to you know, an Imax exclusive 0:10:20.800 --> 0:10:23.960 release and then created a wide release for that with 0:10:24.000 --> 0:10:27.080 a t VOD window, perhaps that would give Hollywood a 0:10:27.160 --> 0:10:29.679 lot more backing for this deal. This would create a 0:10:29.679 --> 0:10:30.520 lot less friction. 0:10:30.679 --> 0:10:32.360 Do you think they need to do that to really 0:10:32.360 --> 0:10:34.400 show Hollywood that they're committed to theaters. 0:10:35.559 --> 0:10:37.440 I think there's still a lot of skepticism, you know, 0:10:37.520 --> 0:10:40.720 even with those promises. The skepticism is that they'll do 0:10:40.840 --> 0:10:43.320 that at first for the first few years, and then 0:10:43.360 --> 0:10:47.959 they'll shift back to their old ways. And so doing 0:10:48.080 --> 0:10:50.680 that with Narnia where they don't have to, I think 0:10:50.679 --> 0:10:52.080 that would create a lot of goodwill. 0:10:52.320 --> 0:10:55.400 I think it's obvious why people think that. Remember Netflix 0:10:55.679 --> 0:10:57.720 was the blockbuster killer. You get they used to get 0:10:57.760 --> 0:10:59.920 the DVDs in the mail. And what's the point then, 0:11:00.080 --> 0:11:02.040 why you want to go to a theater? You say 0:11:02.040 --> 0:11:04.640 in your note, The bottom line is that Paramount Skuy 0:11:04.760 --> 0:11:07.920 needs this deal along Netflix does not. Why does Paramount 0:11:07.960 --> 0:11:08.600 need this deal? 0:11:09.520 --> 0:11:13.319 Well, Paramount needs it because they you know, they're struggling 0:11:13.360 --> 0:11:17.600 to you know, get to profitability and they need more 0:11:17.880 --> 0:11:21.000 you know, theatrical and they'll be out. They'll have to 0:11:21.040 --> 0:11:24.640 cut costs though you know, they're cutting costs pretty significantly 0:11:24.760 --> 0:11:28.560 right now with the current integration, and so you know, 0:11:29.160 --> 0:11:32.000 looking for growth in this market, especially if they have 0:11:32.120 --> 0:11:35.240 the linear TV deal, and especially if they bring on 0:11:35.320 --> 0:11:38.560 the Warner Brothers linear as well. You know, there's just 0:11:38.600 --> 0:11:41.360 a lot that needs to be cut, and there's not 0:11:41.440 --> 0:11:44.520 a lot of natural growth in that market particularly, so 0:11:44.640 --> 0:11:49.719 Paramount will have to build on its theatrical releases and 0:11:50.320 --> 0:11:52.280 build in other areas of the business, and that's not 0:11:52.320 --> 0:11:55.160 necessarily easy to do organically in these in its market. 0:11:55.360 --> 0:11:56.480 They should just to wrap things up. 0:11:56.520 --> 0:11:58.559 Can I get your thoughts on the other threats to 0:11:58.679 --> 0:12:01.160 the studio business in this projection for the price of content? 0:12:01.600 --> 0:12:05.000 Given the amount of AI initiatives we've seen developed more recently, 0:12:05.040 --> 0:12:07.200 and we've all seen these examples come out in social 0:12:07.200 --> 0:12:09.720 media of people just making their own movies. I have 0:12:09.760 --> 0:12:12.720 to say started out not so good, and now at 0:12:12.720 --> 0:12:14.920 the moment, from what I've seen over the past few weeks, 0:12:14.960 --> 0:12:17.200 things have moved on pretty quickly. What are your thoughts 0:12:17.240 --> 0:12:18.280 on the trajectory of things? 0:12:19.200 --> 0:12:22.160 They are moving on pretty quickly. But you're seeing the 0:12:22.240 --> 0:12:26.800 studios come out vehemently against this and you know, putting 0:12:26.800 --> 0:12:30.480 out some c syndicist orders. This isn't going to fly 0:12:30.640 --> 0:12:34.200 because the issue is that those models were learning based 0:12:34.200 --> 0:12:36.679 off content that they shouldn't have had access to and 0:12:36.720 --> 0:12:39.600 they certainly didn't pay for if there were deals in 0:12:39.640 --> 0:12:42.920 place that they had paid for to teach those models. Sure, 0:12:43.559 --> 0:12:45.600 but a lot of the AI models are based on 0:12:46.040 --> 0:12:48.480 content that you know, they shouldn't have had access to, 0:12:48.520 --> 0:12:50.920 and they certainly didn't legally, and so there are a 0:12:50.960 --> 0:12:53.720 lot of ways for the studios to protect themselves against this, 0:12:54.240 --> 0:12:58.640 and hopefully that's swift enough to be meaningful over time. 0:12:58.679 --> 0:13:00.720 Though for the studios. Do you see reduced in the 0:13:00.720 --> 0:13:01.560 price of content? 0:13:02.920 --> 0:13:06.000 Sure? I mean, just as you know, user generated content 0:13:06.040 --> 0:13:09.800 has become more and more popular, it creates an alternative, 0:13:10.160 --> 0:13:14.600 certainly to more expensive content. But you know, really it 0:13:14.600 --> 0:13:18.600 comes down to what's the most compelling, and so I think, yeah, 0:13:18.760 --> 0:13:21.360 these kind of combinations like you see, you know, Netflix 0:13:21.400 --> 0:13:24.559 wanting to do with Warner Brothers is more meaningful because 0:13:24.600 --> 0:13:27.319 you know, there are a lot of content alternatives out there. 0:13:27.840 --> 0:13:30.400 But if studios are able to leverage that to get 0:13:30.600 --> 0:13:35.600 better content to screens faster, that can certainly, you know, 0:13:35.720 --> 0:13:37.680 thwart some of those AI efforts. 0:13:38.240 --> 0:13:41.720 Stay with us more Bloomberg Surveillance coming up after this 0:13:51.080 --> 0:13:53.560 stocks adding to losses after snapping a three day winning 0:13:53.600 --> 0:13:56.840 straight to Chiney contownary of more can standing investment management writing. 0:13:56.880 --> 0:13:59.600 We see a shift from concentrated sources of growth and 0:13:59.679 --> 0:14:03.040 return to a greater dispersion and wider set of opportunities 0:14:03.080 --> 0:14:06.600 both within the US and across global markets. Jatania joins 0:14:06.679 --> 0:14:09.040 us now for more. Jatania, Good morning. How are you 0:14:09.120 --> 0:14:11.719 considering developments in the Middle East and the risk of 0:14:11.800 --> 0:14:14.240 version we're starting to see and the moving crude off 0:14:14.280 --> 0:14:17.400 the back of threats of military strikes in Iran. 0:14:18.000 --> 0:14:20.520 Yes, I do think that the probability of that is 0:14:20.520 --> 0:14:24.880 clearly rising. I do also believe that the Middle East 0:14:25.000 --> 0:14:28.760 is now one of the Middle powers as you as 0:14:28.800 --> 0:14:32.600 you can see that region between the western and the 0:14:32.640 --> 0:14:36.680 Eastern hemisphere which is getting dominated by US on the 0:14:36.680 --> 0:14:39.880 west and China on the east, and that region is 0:14:39.920 --> 0:14:45.360 becoming very critical from a logistics standpoint, from a trade 0:14:45.600 --> 0:14:50.000 capital standpoint. So I do think that the higher likelihood 0:14:50.160 --> 0:14:55.040 of tensions in that is going to cause some market volatility. 0:14:55.240 --> 0:14:58.080 Gapolitics is traditionally very very hard to predict, so I'm 0:14:58.080 --> 0:14:59.320 not going to put you on the spot and ask 0:14:59.400 --> 0:15:02.080 for prediction. I'd like to go through a range of scenarios. 0:15:02.080 --> 0:15:04.640 One in particular, if we do get another spy car 0:15:04.720 --> 0:15:07.120 and crude, and yesterday we've already seen a move of 0:15:07.160 --> 0:15:10.320 almost twenty percent on crude, whether that would upend some 0:15:10.400 --> 0:15:12.040 of the cyclical traits that a lot of people have 0:15:12.200 --> 0:15:15.040 gained some enthusiasm for coming into twenty six. 0:15:15.480 --> 0:15:18.920 I think the most important manifestation of an increase in 0:15:18.960 --> 0:15:22.080 oil prices will be on the CPI, and I think 0:15:22.120 --> 0:15:25.800 that that the inflation outlook, which has been relatively okay 0:15:25.840 --> 0:15:29.520 even the expectations of core PCE in our models, is 0:15:29.560 --> 0:15:34.600 about two point seven percent if assuming crude prices at 0:15:34.600 --> 0:15:38.320 these levels. So I think that can really be detrimental 0:15:38.440 --> 0:15:43.000 to the inflation situation, which then leads to the rate 0:15:43.160 --> 0:15:47.080 story and therefore cost some of the cyclical traits unwinding. 0:15:47.120 --> 0:15:49.240 And so that's something to keep in mind. But I 0:15:49.320 --> 0:15:53.160 do not think our base case view here is there 0:15:53.280 --> 0:15:59.120 is still supply. There is still opeque capacity to supply oil, 0:15:59.400 --> 0:16:01.880 so there could be an interim move, but I think 0:16:02.040 --> 0:16:06.640 overall the demand supply situation is not justifying a spike 0:16:06.760 --> 0:16:09.040 in prices once the dust settled. 0:16:09.280 --> 0:16:11.560 Could it, though, galvanize the hawks on the FED to 0:16:11.840 --> 0:16:14.480 potentially want to continue their weight and see mode or 0:16:14.520 --> 0:16:15.760 even hike. 0:16:16.920 --> 0:16:20.760 Yeah, I mean I think that you know, the interest 0:16:20.800 --> 0:16:25.320 rate expectations in terms of two cuts are the maximum 0:16:25.360 --> 0:16:29.360 we can get, and based on the current CPI and 0:16:29.440 --> 0:16:32.760 the PCE at two point seven percent, as I mentioned, 0:16:33.400 --> 0:16:37.680 I think that at these levels one can expect maybe 0:16:37.720 --> 0:16:41.440 a cut or maybe none. So that will definitely be 0:16:42.160 --> 0:16:43.800 an issue for FED cuts. 0:16:43.920 --> 0:16:45.600 When do you have your first cut price ten? 0:16:46.600 --> 0:16:47.120 Next year? 0:16:47.400 --> 0:16:49.520 Next year, so this whole year will be weight and 0:16:49.520 --> 0:16:51.160 sea mode when it comes to federal reserve, is that 0:16:51.240 --> 0:16:53.200 even possible to Kevin worship the Fed? 0:16:54.320 --> 0:16:56.640 Well, you know, I think it's going to be a function, 0:16:56.720 --> 0:17:00.360 as I said, of inflation, but also employment and that 0:17:00.640 --> 0:17:04.520 clearly there has been some stabilization, but if you're not 0:17:04.560 --> 0:17:06.800 out of the woods there, so there will be an 0:17:06.920 --> 0:17:10.960 equal emphasis there. So I think we could definitely see 0:17:10.960 --> 0:17:14.439 a cut. But the fact that QT is over and 0:17:14.480 --> 0:17:17.600 the FED is expanding their balance sheet that may be 0:17:17.760 --> 0:17:21.320 under question under wash because he has not been really 0:17:21.520 --> 0:17:22.359 a proponent of that. 0:17:22.600 --> 0:17:24.960 Let's down equities on the equity side. In the US, 0:17:25.000 --> 0:17:26.879 the rually stored at the index level, and we can 0:17:26.920 --> 0:17:29.800 see that the SMP within around two percent of all 0:17:29.840 --> 0:17:33.240 time highs. It's taken off elsewhere Japan's South Korea. South 0:17:33.280 --> 0:17:36.359 Korea has had a massive move yere today and AM equities. 0:17:36.680 --> 0:17:39.240 Looking at the AM equity story for year today, double 0:17:39.280 --> 0:17:42.959 digit gains so far. What's happening there? What am I buying? 0:17:43.200 --> 0:17:44.960 What's the story at the moment, what's the best. 0:17:45.240 --> 0:17:49.879 I think you're buying uncoorrelated sources of alpha outside the 0:17:49.880 --> 0:17:54.680 AI trade and the maximum juice on the AI trade, 0:17:54.680 --> 0:17:57.800 which is the AI enablers. So in Asia, it's a 0:17:57.840 --> 0:18:02.359 lot about the semiconductors and network working equipment, exports, the 0:18:02.440 --> 0:18:05.800 capex that's coming with those exports, and the networth effect 0:18:05.920 --> 0:18:10.280 that's happening with the buoyancy and exports. In pockets of 0:18:10.359 --> 0:18:15.000 Latin America, you have a commodity tailwind because a lot 0:18:15.040 --> 0:18:19.080 of these countries are actually in the critical mineral supply 0:18:19.200 --> 0:18:23.360 chain and copper, in uranium and all that we need 0:18:23.440 --> 0:18:27.520 to power this AI story. And then in Eastern Europe 0:18:27.560 --> 0:18:33.119 you have spillovers from pockets of Europe and the stimulus there. 0:18:33.160 --> 0:18:37.159 So the core versus the periphery versus Eastern Europe. I 0:18:37.200 --> 0:18:40.560 think the smaller cap countries look interesting, which are in 0:18:40.600 --> 0:18:45.760 the emerging space, So different sources of drivers across different 0:18:45.840 --> 0:18:50.880 regions which is powering this. And lastly, the monetary and 0:18:50.920 --> 0:18:55.520 fiscal orthodoxy in the EM world has been much more 0:18:55.560 --> 0:19:00.160 superior than the DM world. So that is showing up 0:19:00.080 --> 0:19:02.760 up in terms of central banks cutting rates, in terms 0:19:02.800 --> 0:19:07.320 of fiscal balances, being in a much better situation than 0:19:07.400 --> 0:19:09.000 the developers, especially the US. 0:19:09.160 --> 0:19:10.679 When you look at the bankdrop, how much of it 0:19:10.680 --> 0:19:12.680 is a cyclical story versus secular? 0:19:12.840 --> 0:19:13.439 Is it a mix of. 0:19:13.440 --> 0:19:16.000 Both, It's a mix of what I'd say. One interesting 0:19:16.280 --> 0:19:20.800 theme that is developing in North Asia specifically, which seems 0:19:20.840 --> 0:19:24.399 to have structural legs, is US will not be able 0:19:24.440 --> 0:19:31.159 to really onshore everything, right, whether it's shipping some electronics, biotech, 0:19:31.640 --> 0:19:37.120 automation robots and that supply chain, the autonomy supply chain. 0:19:37.880 --> 0:19:41.560 They won't buy from the China, but they buy from 0:19:41.960 --> 0:19:46.200 North Asia which have exports similarity like China, and where 0:19:46.240 --> 0:19:50.080 those vendors will be US preferred in terms of supply 0:19:50.240 --> 0:19:54.080 of all these things. So I think that's another area 0:19:54.200 --> 0:19:59.600 outside SEMIS and tech that is seeing momentum in terms 0:19:59.640 --> 0:20:00.560 of the markets. 0:20:00.720 --> 0:20:03.840 So you want to be exposed to those What potentially 0:20:03.840 --> 0:20:06.000 are these partners when with the United States when it 0:20:06.000 --> 0:20:09.560 comes to national security and core features of the AI. 0:20:09.359 --> 0:20:15.239 Trade right, and even like shipping in autonomy. Look at 0:20:15.240 --> 0:20:18.880 the about density in China compared to the US, so 0:20:18.920 --> 0:20:22.600 the second derivative place of sensors and lied doers and 0:20:22.920 --> 0:20:27.280 you know everything that is in the supply chain of autonomy, 0:20:27.320 --> 0:20:29.520 which is coming on the factory floor in the low 0:20:29.720 --> 0:20:34.080 low altitude economy in space. So yes, I think Korea 0:20:34.280 --> 0:20:39.360 Japan are some interesting markets there to source a lot 0:20:39.400 --> 0:20:42.399 of this because China is going to not be the 0:20:42.440 --> 0:20:43.200 preferred vendor. 0:20:43.280 --> 0:20:45.040 Do you think the midterms will be a catalyst to 0:20:45.040 --> 0:20:47.960 potentially pour money back into the United States because there'll 0:20:47.960 --> 0:20:49.440 be loose surfaceco policy. 0:20:50.640 --> 0:20:53.440 The interesting thing is that, you know, there has been 0:20:53.480 --> 0:20:58.600 the Americanization on the trade side, where regional trade blocks 0:20:59.040 --> 0:21:04.960 and trade deal and are being made. On the capital side, interestingly, 0:21:05.520 --> 0:21:08.480 we're still seeing a lot of FBI come into the US. 0:21:08.520 --> 0:21:11.120 So I think that is because part of the trade 0:21:11.200 --> 0:21:15.560 negotiation has been bring capital back. You know, I was 0:21:15.560 --> 0:21:17.840 at a healthcare conference. A lot of the companies said 0:21:17.880 --> 0:21:21.600 we're bringing manufacturing backs. I think that seems to happen 0:21:22.000 --> 0:21:24.359 and will continue. But I think the big thing on 0:21:24.400 --> 0:21:27.159 the midterm is what has a Democratic win of the 0:21:27.200 --> 0:21:29.199 House mean. You know, we've seen a lot of Trump 0:21:29.280 --> 0:21:33.320 trades in the market. Does that come under question? You know, 0:21:33.359 --> 0:21:37.640 a goal is a trump trade in regional banks and deregulation, 0:21:38.280 --> 0:21:41.120 So I think one has to be really discerning because 0:21:41.480 --> 0:21:45.439 that could have some sentiment impact tactically in the market. 0:21:45.480 --> 0:21:47.080 Then the financial story is vulnerable. 0:21:47.880 --> 0:21:50.479 I don't think the financial story is vulnerable because I 0:21:50.560 --> 0:21:54.720 do believe that the consumer and the private sector from 0:21:54.720 --> 0:21:58.080 the banking side, is delevered in the US. It's there's 0:21:58.119 --> 0:22:01.840 no excesses, the accesses are citing more else, you know, 0:22:01.920 --> 0:22:05.879 in private probably, But I don't think it's vulnerable. But 0:22:05.920 --> 0:22:09.399 I think there has been a decent momentum trade there 0:22:10.200 --> 0:22:11.719 and one has to be just discerned. 0:22:11.760 --> 0:22:13.159 Can we finish on that in private markets? 0:22:13.240 --> 0:22:14.840 So I'm not going to talk about the story too 0:22:14.840 --> 0:22:16.760 directly because I know I imagine you can't talk to 0:22:16.800 --> 0:22:17.600 it directly either. 0:22:18.000 --> 0:22:19.679