WEBVTT - Surveillance: Age of America First With Haass 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you 0:00:13.320 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:30.440 and of course, on the Bloomberg terminal. Richard Hass came 0:00:30.440 --> 0:00:33.199 out of Oberlin College of what I'm gonna call the 0:00:33.240 --> 0:00:37.080 Eastern Midwest, with the Council Foreign Relations and their president 0:00:37.400 --> 0:00:41.720 and all of that. Hearkens back to a Midwest isolationism 0:00:42.240 --> 0:00:46.440 personified by Colonel McCormick at the Chicago Tribune a zillion 0:00:46.520 --> 0:00:50.440 years ago. Here is Hass writing in foreign affairs, and 0:00:50.520 --> 0:00:54.760 he is absolutely blistering. No other way to put it. 0:00:55.160 --> 0:00:58.200 There is a paradigm shift in the United States approach 0:00:58.480 --> 0:01:02.360 to the world. The new paradigm dismisses the court tenant 0:01:02.880 --> 0:01:07.240 of our twentieth century approach that the United States has 0:01:07.280 --> 0:01:11.759 a vital stake in a broader global system. Ambassador has 0:01:11.880 --> 0:01:14.600 are we all reading the Chicago Tribune? Are we going 0:01:14.640 --> 0:01:18.720 back to my grandfather's age. I wouldn't call it quite 0:01:18.760 --> 0:01:22.200 that extreme. The United States under the last two administrations 0:01:22.200 --> 0:01:25.520 both Mr Trump and Mr Biden has a fairly muscular 0:01:25.560 --> 0:01:29.440 policy towards China. So I wouldn't call it isolationism, but 0:01:29.520 --> 0:01:33.680 it's a narrowism. It's a domestic first. It doesn't particularly 0:01:33.680 --> 0:01:38.800 concern itself with building or even joining many international arrangements 0:01:38.920 --> 0:01:42.480 or or or institutions. There really is a domestic first 0:01:42.520 --> 0:01:44.920 approach to the world. How do we minimize what we 0:01:45.000 --> 0:01:48.560 do in the world? Are for instant Laquix interviewed Secretary B. 0:01:48.600 --> 0:01:51.680 Lincoln in Paris in the last I think forty eight 0:01:51.720 --> 0:01:56.480 hours are you Are you conflating Anthony B. Lincoln with 0:01:56.600 --> 0:02:02.480 Rex Tillerson? Yea no, But this administration has been surprisingly 0:02:02.520 --> 0:02:05.680 maladroid and its diplomacy. You've got all these people who 0:02:05.680 --> 0:02:08.040 speak French fluently. You would have thought they could have 0:02:08.120 --> 0:02:11.200 picked up the phone several months ago and told the French, look, 0:02:11.240 --> 0:02:14.360 it doesn't make sense to sell these diesel submarines to Australia. 0:02:14.440 --> 0:02:17.120 They don't have the range, they're not sufficiently quiet. But 0:02:17.200 --> 0:02:19.280 we want to get you involved in Asia. We want 0:02:19.320 --> 0:02:22.040 to find a way to compensate you for the lost 0:02:22.080 --> 0:02:24.920 submarine cell. This ought to have been within the realm 0:02:24.960 --> 0:02:28.359 of doable diplomacy. That's what the Brits frenchying would call 0:02:28.400 --> 0:02:32.120 an own goal. Richard, How significant is it that we're 0:02:32.120 --> 0:02:34.360 talking this morning about the fairy tale a lot of 0:02:34.400 --> 0:02:37.280 your Putin coming to the rescue for the energy situation 0:02:37.680 --> 0:02:41.080 in the United Kingdom in Europe? More broadly, is this 0:02:41.160 --> 0:02:46.200 signify the changing world regime? But what this signifies is 0:02:46.200 --> 0:02:49.919 that Vladimir Putin has played his his limited cards very well, 0:02:50.280 --> 0:02:54.360 whether it's his nuclear, his conventional military, his cyber obviously, 0:02:54.600 --> 0:02:58.440 his his his energy, and he's he's got outsize influence 0:02:58.480 --> 0:03:01.040 in Europe, and the Europeans have it into it, whether 0:03:01.080 --> 0:03:03.960 it's here with nord Stream to the Germans and the Brits, 0:03:04.280 --> 0:03:08.800 they've not been strategic and they've allowed themselves to become dependent. 0:03:08.880 --> 0:03:12.600 So today Putin Gibbeth, but tomorrow he could take it away. Well. 0:03:12.639 --> 0:03:15.080 But it's interesting that the likes of Germany, the biggest, 0:03:15.080 --> 0:03:20.720 most robust economy in the euroregion, is facing increasing dependency 0:03:20.800 --> 0:03:23.120 not only on Vladimir Putin, but also on j and 0:03:23.160 --> 0:03:25.600 Ping at the time when the United States is actually 0:03:25.639 --> 0:03:28.560 having a serious issue with both nations. I'm wondering how 0:03:28.639 --> 0:03:32.240 much the reason for this is because of the increasing 0:03:32.280 --> 0:03:36.080 isolationism of the United States. I don't think so. I 0:03:36.120 --> 0:03:39.320 think it's more European commercialism, a lack of a serious 0:03:39.320 --> 0:03:44.720 strategic culture, putting economics UH first, and almost not taking 0:03:44.720 --> 0:03:47.560 a serious role in the world. It's particularly true of 0:03:47.640 --> 0:03:51.040 Germany under under Merkel. I know she's getting lots of, 0:03:51.080 --> 0:03:53.320 you know, positive things said about her, but the lack 0:03:53.360 --> 0:03:57.080 of a strategic approach to the world I think was remarkable. No, 0:03:57.200 --> 0:04:00.280 you're seeing similar things. What you're seeing in Germany many 0:04:00.320 --> 0:04:02.640 parts of Europe. What you're seeing in the United States 0:04:03.000 --> 0:04:05.839 is a domestic first as we may change the label here, 0:04:05.920 --> 0:04:08.520 and they used to call it here America first. Now 0:04:08.560 --> 0:04:11.160 we've got foreign policy for the middle class. But the 0:04:11.400 --> 0:04:14.400 myopi is pretty similar Richard, as I want to go 0:04:14.440 --> 0:04:16.920 back to foreign policy begins at home. And of course 0:04:16.920 --> 0:04:19.440 the movie was great, A World in Disarray. When you 0:04:19.520 --> 0:04:22.560 wrote a world in disarray, you could not imagine the 0:04:22.560 --> 0:04:26.160 fiscal cast. John Farrell was just describing the debt ceiling, 0:04:26.160 --> 0:04:28.719 the kiketh of the can down the road. How do 0:04:28.800 --> 0:04:34.160 we prosecute whatever foreign policy with our domestic front in 0:04:34.240 --> 0:04:38.240 such disarray? Look, the short answers, we can't do it. Well, 0:04:38.279 --> 0:04:40.880 the disarray means we're no longer a model that others 0:04:41.000 --> 0:04:43.919 respect or want to emulate. We're not predictable, we're not 0:04:44.040 --> 0:04:47.440 reliable to raises fundamental questions for those Tom, who are 0:04:47.480 --> 0:04:51.400 dependent upon us, were security for their security. They look 0:04:51.440 --> 0:04:55.039 at us and they wonder is that a wife's choice. 0:04:55.279 --> 0:04:57.360 Let me give you mentioned some of my previous books. 0:04:57.360 --> 0:05:00.719 The book I'm writing out, Tom is on you're talking about. 0:05:00.760 --> 0:05:04.800 It's on America's domestic turmoil, on the threats to American democracy. 0:05:05.200 --> 0:05:08.000 I actually think the greatest threat to our standing in 0:05:08.040 --> 0:05:10.640 the world, to our standing at home, is not China 0:05:10.720 --> 0:05:14.000 or North Korea, or Ran or Russia. It's ourselves. It's 0:05:14.160 --> 0:05:16.880 farign policy, farn policies that does begin at home. It 0:05:16.920 --> 0:05:19.680 doesn't end there. It begins here, and right now our 0:05:19.720 --> 0:05:22.839 base is extraordinarily weak. Well, then how does the moderate 0:05:22.880 --> 0:05:25.080 take the high ground? I mean, we're advantage here, Richard 0:05:25.120 --> 0:05:27.560 auson that John Farrell looks at the zaneing nous of 0:05:27.560 --> 0:05:30.360 what we're dealing with your every day you know, we 0:05:30.360 --> 0:05:32.600 we look like we're on another planet. How do we 0:05:32.640 --> 0:05:38.400 rediscover the middle ground of American politics? If I'd be 0:05:38.400 --> 0:05:40.760 answered to that, Tom I'd put it out there, and 0:05:41.160 --> 0:05:42.600 you know, I try to bring it about. I think 0:05:42.800 --> 0:05:44.560 there's things we can do over time. A lot of 0:05:44.600 --> 0:05:49.200 talk about renewing civics education. Americans don't understand why democracy 0:05:49.360 --> 0:05:51.840 is valuable, what they have to do to make it. 0:05:52.160 --> 0:05:55.520 But we're also going to need some profiles encourage. Kennedy's 0:05:55.560 --> 0:05:58.000 book needs to find some new people to live in. 0:05:58.480 --> 0:06:02.840 The Republican performance the debt ceiling was really disappointing. The Romneys, 0:06:02.880 --> 0:06:07.600 the raw Apportman's why are these serious centrist Republicans following 0:06:07.600 --> 0:06:11.320 an irresponsible path? I do not understand that, Richard. How 0:06:11.360 --> 0:06:14.880 do you talk about the idea of globalization as being 0:06:14.880 --> 0:06:17.520 a positive thing at a time when they're increasing supply 0:06:17.600 --> 0:06:20.880 chain disruptions, when you have some of the consequences of 0:06:20.960 --> 0:06:24.039 globalization still impeding a labor market, or at least that 0:06:24.120 --> 0:06:27.800 is the perception here in the United States. I mainly 0:06:27.839 --> 0:06:31.320 see globalization as a thing. It's both positive and negative, 0:06:31.360 --> 0:06:34.000 and the challenges to push back against the negatives and 0:06:34.120 --> 0:06:38.120 take advantage of the positives. I think trade is blamed 0:06:38.160 --> 0:06:41.440 for all sorts of problems which were really about productivity increases, 0:06:41.480 --> 0:06:45.400 about technology innovation. People haven't done a good job of 0:06:45.440 --> 0:06:48.159 explaining it. But but that accounts for the fact that 0:06:48.160 --> 0:06:50.440 we don't have a trade policy the ahead of the US. 0:06:50.520 --> 0:06:52.800 The U S. Trade representative gave a speech the other day. 0:06:53.040 --> 0:06:54.960 It was essentially it could have been given by a 0:06:54.960 --> 0:06:58.719 Trump administration official. Meanwhile, the United States is not doing 0:06:58.760 --> 0:07:03.279 anything to reform the w t O. We're not participating 0:07:03.279 --> 0:07:06.080 in the principal trade agreement in the Asia Pacific region. 0:07:06.320 --> 0:07:10.040 We are hurting American workers across the board. We're hurting 0:07:10.040 --> 0:07:13.840 ourselves strategically, so we pay it across an incredible price 0:07:14.200 --> 0:07:18.720 for this rejection of globalization quote unquote Richard, thank you, sir, 0:07:18.800 --> 0:07:20.720 as always great to have you with us on the program. 0:07:20.920 --> 0:07:30.240 Richard House, the Council on Foreign Relations Presidents an important interview. 0:07:30.280 --> 0:07:32.560 Now to summarize and really we could spend an hour 0:07:32.720 --> 0:07:35.960 on this discussion with no bar Afian of Modenner. It 0:07:36.120 --> 0:07:38.960 is Mode M O. D E. R n A. He 0:07:39.080 --> 0:07:42.880 is co founder and chairman and front and center worldwide 0:07:43.040 --> 0:07:46.400 with where we are with his terrific horrific I should 0:07:46.400 --> 0:07:49.400 say pandemic as well. Dr Fan, thank you so much 0:07:49.440 --> 0:07:51.840 for joining us. I want to go back to Harold 0:07:51.920 --> 0:07:54.880 Edgerton in M I T. You have two degrees from 0:07:55.000 --> 0:07:59.320 M I T. You personify the excellence of biochemistry and 0:07:59.440 --> 0:08:05.040 bio engineering. What is next for you? Harold Edgerton? Always 0:08:05.160 --> 0:08:09.679 move forward in optics? How do you move forward after 0:08:09.760 --> 0:08:15.720 the two thousand twenty you've had? Uh? Well, thanks for 0:08:15.760 --> 0:08:18.320 having me and thanks for their kind words to say 0:08:18.480 --> 0:08:23.240 flattering comparison to Dr Edgerton. And perhaps when I'm done 0:08:23.240 --> 0:08:26.040 doing what I'm doing, it might be more apt than now, 0:08:26.160 --> 0:08:28.440 or I've got a long way to go. But basically, 0:08:28.440 --> 0:08:31.880 as you may know, through my company Collection Pioneering, we 0:08:32.000 --> 0:08:36.479 have a platform through which we've able to make innovations 0:08:36.559 --> 0:08:40.000 that might otherwise exist years from now bring them forward. 0:08:40.040 --> 0:08:42.200 And it's a process that we've followed for a number 0:08:42.240 --> 0:08:45.080 of years. We have a team of over a hundred 0:08:45.120 --> 0:08:48.040 scientists engineers to do this and out of that have 0:08:48.200 --> 0:08:52.320 come multiple straight through platforms, Maderna being an important one, 0:08:52.720 --> 0:08:56.400 but several dozen others which are working on some important 0:08:56.400 --> 0:09:00.680 problems in in from batting disease as well as allowing 0:09:00.760 --> 0:09:04.600 for more sustainable development in agriculture, et cetera. So a 0:09:04.640 --> 0:09:07.120 lot of problems left unsolved, and so that's all the 0:09:07.200 --> 0:09:09.959 people working on Dr Effie, and you need to expand 0:09:10.160 --> 0:09:13.200 to the frontier economies of this world. It's easy to 0:09:13.280 --> 0:09:18.320 bring mode RNA to America, to Europe, etcetera. Do you 0:09:18.400 --> 0:09:22.720 have to bring the fanciness of the present vaccines to 0:09:22.840 --> 0:09:26.239 Africa or do you have to find a different process, 0:09:26.640 --> 0:09:32.800 a different technology. I don't think you needed as a technology. 0:09:32.880 --> 0:09:35.880 And as you may be aware, we just announced today 0:09:36.080 --> 0:09:41.680 the commitment environment Arena to establish the first ever mrn 0:09:41.679 --> 0:09:45.040 A manufacturing plants of drug substance as well as the 0:09:45.120 --> 0:09:48.640 faux finished product UM. We will we will select the 0:09:48.720 --> 0:09:51.920 location in the content of Africa over the coming months 0:09:52.160 --> 0:09:55.040 through discussions that are ongoing. But we announced today that 0:09:55.160 --> 0:09:58.959 we had planned to half production capacity up to five 0:09:59.120 --> 0:10:02.439 a million doses of vaccines, multiple different vaccines that we 0:10:02.480 --> 0:10:04.880 have under development as well as of course I've needed 0:10:04.880 --> 0:10:08.360 for COVID, and that will involve an investment up the 0:10:08.400 --> 0:10:11.280 potom million dollars. Is certainly sourcing right now. So that's 0:10:11.320 --> 0:10:14.760 one approach. But I should say the technology there work. 0:10:14.800 --> 0:10:18.320 Sensy of course, could also mean substificated US to be 0:10:18.320 --> 0:10:21.840 pretty simple, it's an information molecule. Everything else has been 0:10:21.920 --> 0:10:25.559 used for vaccines before. I've been dramatically more complex than this. 0:10:25.559 --> 0:10:28.960 This is a pure information molecule, and if you get 0:10:28.960 --> 0:10:31.960 it safely administered, ourselves know what to do with it, 0:10:32.000 --> 0:10:34.240 and they make the emergine that's needed to cause the 0:10:34.240 --> 0:10:37.920 immune system to attack any kind of threat, including the 0:10:37.960 --> 0:10:40.920 respiratory viruses that we're going after. So so I think 0:10:40.920 --> 0:10:44.800 the technology is actually lends itself to deployment globally. Doctor, 0:10:45.360 --> 0:10:48.199 I'm looking at your shares. MODERNA shares up more than 0:10:48.600 --> 0:10:52.160 eight hundred nine percent since the end of March last year. 0:10:52.200 --> 0:10:55.640 There's been a huge surge of money into the pharmaceutical 0:10:55.760 --> 0:10:59.200 industry on the heels of the m R and A advancements, 0:10:59.200 --> 0:11:01.440 and also because there does seem to suddenly be more 0:11:01.440 --> 0:11:04.760 money for vaccines. How much is this going to be 0:11:04.840 --> 0:11:08.400 consistent that more money will continually be deployed to vaccine 0:11:08.440 --> 0:11:11.800 development at a time when traditionally this has really seen 0:11:11.840 --> 0:11:17.600 a dearth of investment. Well, you're making a good observation 0:11:17.800 --> 0:11:22.880 in that remarkably the most effective pharmaceutical company, which is 0:11:22.880 --> 0:11:25.080 actually our own and use system that we carry around 0:11:25.120 --> 0:11:27.880 with this every single day's saying more lized, it's spots 0:11:27.880 --> 0:11:31.520 back more viruses, and it's within US, and yet historically 0:11:31.920 --> 0:11:34.240 we have no real access to being able to use 0:11:34.280 --> 0:11:37.800 it on our behalf, and so occasionally people of their 0:11:37.800 --> 0:11:41.240 own vaccines over decades of work, and that's why it's 0:11:41.240 --> 0:11:43.800 been the back waters of the farmer industry. I'm very 0:11:43.840 --> 0:11:46.680 pleased to see the people have seen a proof concept 0:11:46.720 --> 0:11:49.760 of what vaccines can do. They're in neatly powerful if 0:11:49.800 --> 0:11:52.160 you know how to control them, and so I think 0:11:52.160 --> 0:11:55.120 that that money is not just kind of following a 0:11:55.200 --> 0:11:59.760 short term opportunity that recognizes a real shift in what's 0:12:00.000 --> 0:12:03.079 civil and our effective new system can be. I should 0:12:03.120 --> 0:12:06.880 also say, though, that another phenomenon is driving I think 0:12:06.920 --> 0:12:09.200 the capital that has to do with a shift in 0:12:09.200 --> 0:12:13.200 this industry from being a rather probabilistic shocks on goal. 0:12:13.280 --> 0:12:15.959 We call it in the industry kind of almost lottery, 0:12:16.000 --> 0:12:18.000 where you've been on a lot of different drugs and 0:12:18.040 --> 0:12:20.880 maybe one or two out of a fifty naked versus 0:12:21.000 --> 0:12:24.920 a gradually more deterministic activity. But that I don't mean 0:12:24.920 --> 0:12:27.080 that everything we do will work, but that we should 0:12:27.120 --> 0:12:30.079 expect many things, if not most two works. It's a 0:12:30.200 --> 0:12:33.679 question of iterating and learning and making better and better products. 0:12:33.760 --> 0:12:37.480 That has not been the investment pieces of the pharmaceutical industry, 0:12:37.760 --> 0:12:41.120 and so I think, well, the beginning stages of where 0:12:41.200 --> 0:12:43.880 this begins to look more like tech and less like 0:12:44.040 --> 0:12:47.920 this complicated speculative activity the Bifectors went for the fully 0:12:47.920 --> 0:12:51.120 clive years I've been in it interesting. Mr Affian is 0:12:51.120 --> 0:12:53.920 great to catch up. Let's continue this conversation another time 0:12:55.160 --> 0:12:58.200 there went in on how much that industry is set 0:12:58.240 --> 0:13:07.280 to change. She is absolutely exquisite at the microeconomics and 0:13:07.360 --> 0:13:12.000 micro dynamics, the price theory of hydrocarbons em and joins 0:13:12.040 --> 0:13:14.640 us some energy aspects we've tried for three days, I think, 0:13:14.880 --> 0:13:17.240 to get around the show. We're thrilled she could join 0:13:17.360 --> 0:13:20.240 us at this morning, Emerita. When you look at the 0:13:20.280 --> 0:13:24.560 martial Ian cross of demand and supply, what's the single 0:13:24.679 --> 0:13:28.040 thing our listeners are viewers need to know what's the 0:13:28.160 --> 0:13:36.040 dynamics of oil price and supply demand right now? Well, 0:13:36.160 --> 0:13:38.760 you flattered me Tom firstly, but I'll say this much 0:13:38.800 --> 0:13:42.359 that look, infantries around the world are extremely low everywhere, 0:13:42.640 --> 0:13:45.880 and that is ultimately the reason because supply just isn't 0:13:45.960 --> 0:13:49.120 keeping up with demand. Yes, open aspect capacity, but it 0:13:49.240 --> 0:13:52.000 is choosing to bring back production slowly because there are 0:13:52.040 --> 0:13:54.559 a lot of uncertainties going into the northern hemisphere winter. 0:13:54.920 --> 0:13:56.960 We don't know whether there's going to be COVID flare ups, 0:13:57.000 --> 0:14:01.359 so fair enough they're being cautious, but infantry, every crude particularly, 0:14:01.360 --> 0:14:03.960 but even products very very low. When you look at 0:14:04.040 --> 0:14:09.520 inventory dynamics and your guestimates, your forecast, how far out 0:14:09.600 --> 0:14:12.800 does a pro like you look given what you just said, 0:14:13.160 --> 0:14:16.520 are you trying to guess out a week or a month, 0:14:16.720 --> 0:14:20.120 a quarter? How what's the length of the guests right 0:14:20.160 --> 0:14:26.040 now given these growing demand, Well, we do it all 0:14:26.040 --> 0:14:28.000 the way through to the end of next year, so 0:14:28.040 --> 0:14:30.080 we try and at least have a twelve to eighteen 0:14:30.120 --> 0:14:32.760 month period for the short am outlook. But of course, 0:14:33.040 --> 0:14:35.360 you know, it does become less and less certain the 0:14:35.400 --> 0:14:37.400 further out you go. For the next three months, we 0:14:37.400 --> 0:14:40.400 can be a lot more certain given all the kind 0:14:40.400 --> 0:14:43.320 of high frequency data that we are looking at. And Richa, 0:14:43.400 --> 0:14:46.280 we had two pieces of verbal intervention yesterday, one from 0:14:46.320 --> 0:14:48.960 the Russian president and another from the Energy secretary here 0:14:48.920 --> 0:14:51.640 in the United States, Secretary Grand Home. Out of those two, 0:14:51.720 --> 0:14:57.800 which one or both are actually credible statements? What if 0:14:57.840 --> 0:15:01.680 I said neither, But honestly, I think jokes are part 0:15:01.720 --> 0:15:04.480 of the reality. Is what we've seen from the White 0:15:04.480 --> 0:15:07.480 House in particular is that they're not talking about an 0:15:07.520 --> 0:15:10.640 SPR release as an imminent policy tool. This was a 0:15:10.720 --> 0:15:13.520 question asked and the answer was that, yes, of course, 0:15:13.560 --> 0:15:15.320 all options are on the table. Apec says that to 0:15:15.400 --> 0:15:17.200 us all the time, all options are on the table. 0:15:17.680 --> 0:15:20.480 The key to remember is that the Biden administration is 0:15:20.560 --> 0:15:23.360 very very keen to have low gas line prices for consumers, 0:15:23.520 --> 0:15:25.160 so we should always keep that in mind. And if 0:15:25.200 --> 0:15:28.280 prices continue to go up and overheat, then yes, they 0:15:28.280 --> 0:15:30.760 will be putting more pressure on OPEC, and yes, then 0:15:30.880 --> 0:15:33.840 SPR can become a tool with regards to gas. And 0:15:34.160 --> 0:15:36.680 what Prutin said, you know, the reality is that Russian 0:15:36.680 --> 0:15:40.960 gas infantries are low. Even if they wanted to increase exports, 0:15:41.160 --> 0:15:43.840 they have to refill infantries themselves, and that's why europe. 0:15:44.160 --> 0:15:47.520 European gas prices are so so high. Again, stocks are 0:15:47.600 --> 0:15:50.080 very very low in Europe. So frame winter for me 0:15:50.240 --> 0:15:52.280 and RATEA. I'm trying to understand how it's headed. The 0:15:52.280 --> 0:15:55.040 oil story is to what happens with gas. Given we're 0:15:55.040 --> 0:15:58.480 having a bigger conversation about substitution. Now, what does that 0:15:58.560 --> 0:16:01.400 look like for you through a cult winter in Europe. 0:16:04.240 --> 0:16:06.360 I think if it's a cold winter, um, we just 0:16:06.400 --> 0:16:08.440 have to be prepared for very very high gas and 0:16:08.520 --> 0:16:11.440 oil prices. To your point, I mean, yes, the substitution 0:16:11.480 --> 0:16:13.680 in Europe, it's actually very small because there are a 0:16:13.680 --> 0:16:16.440 lot of environmental restrictions. The place to look out for 0:16:16.480 --> 0:16:18.600 will be actually in the US and particularly on the 0:16:18.600 --> 0:16:20.920 East Coast. You can get more heating oil burn even 0:16:20.920 --> 0:16:23.000 in Asia, Japan can burn more fuel oil, so that 0:16:23.040 --> 0:16:26.200 will again push up prices. So gas and oil kind 0:16:26.200 --> 0:16:29.560 of pull each other up. But ultimately, you know, this 0:16:29.640 --> 0:16:32.400 is a fallout of energy transition, the policies of Western 0:16:32.480 --> 0:16:35.880 policymakers where you've retired coal file plans before demand has 0:16:35.920 --> 0:16:37.840 come off. So we are going to be in this 0:16:37.920 --> 0:16:40.520 era of kind of high fossil fuel or high energy 0:16:40.560 --> 0:16:43.640 prices till demand for fossil fuel comes off, and that's 0:16:43.640 --> 0:16:45.720 going to be that's still years away. Well and read that, 0:16:45.720 --> 0:16:47.360 that's exactly what I wanted to go. What is the 0:16:47.400 --> 0:16:51.520 correct broader narrative to view the recent increases in oil prices? 0:16:51.600 --> 0:16:53.640 Is it what you're just talking about the idea of 0:16:54.120 --> 0:16:58.040 the fallout from the mismatches here in energy policy and 0:16:58.080 --> 0:17:02.200 a stiflationary like tige trend or is it recovery the 0:17:02.200 --> 0:17:05.200 fact that demand is increasing at a time that seems 0:17:05.200 --> 0:17:10.040 to be faster than supplies can come back online. I mean, 0:17:10.119 --> 0:17:12.119 of course, it's a combination of both. In the latter 0:17:12.160 --> 0:17:14.920 point that you're making, I mean, you can't ignore that. Yes, 0:17:14.960 --> 0:17:17.480 there's a lot of pent up demand after COVID and 0:17:17.520 --> 0:17:20.080 if anything, in a way, COVID's kind of brought more 0:17:20.160 --> 0:17:22.480 demand to the market because people just want to go 0:17:22.880 --> 0:17:25.479 get on and you know, whether it be driving or flying. 0:17:25.880 --> 0:17:30.240 But the underlying narrative is absolutely about energy transition and 0:17:30.760 --> 0:17:34.000 the choices policy makers will have to make, because these 0:17:34.040 --> 0:17:36.840 are very stark choices that potentially need to be make 0:17:36.920 --> 0:17:38.639 as soon as this winter. Are you going to have 0:17:38.720 --> 0:17:41.080 rolling blackouts? Are you going to sacrifice economic growth? And 0:17:41.480 --> 0:17:43.639 this is something you know, we have been talking about 0:17:43.680 --> 0:17:46.120 for a while. There is no investment in oil. That's 0:17:46.160 --> 0:17:48.879 why this is a structural move higher in oil prices. 0:17:48.920 --> 0:17:51.119 This is a structural move higher in gas prices. Not 0:17:51.160 --> 0:17:53.639 saying gas will stay here, it will come off, but 0:17:53.680 --> 0:17:55.760 it will still remain much higher than it has been 0:17:55.800 --> 0:17:57.800 for the last ten years and rata. Thank you for 0:17:57.840 --> 0:18:00.440 waynkin and great to catch up. As always, they close 0:18:00.480 --> 0:18:09.280 somewody to send that of energy aspects right now, Sarah House. 0:18:09.320 --> 0:18:12.359 It helps us with the jobs report wells fargal securities 0:18:12.359 --> 0:18:14.400 and of course all of this back to the tradition 0:18:14.440 --> 0:18:18.440 of the Great John Sylvia. They go deeper. Sarah House, 0:18:18.560 --> 0:18:21.560 you and your team have looked at this pandemic, our 0:18:21.680 --> 0:18:25.959 labor dynamics and women. How are women doing within the 0:18:26.000 --> 0:18:31.000 pandemic and within the jobs reports we see tomorrow. So 0:18:31.119 --> 0:18:34.080 women are still lagging behind in terms of the labor 0:18:34.119 --> 0:18:37.720 market recovery, so particularly when it comes to mothers, just 0:18:37.800 --> 0:18:41.520 given the childcare considerations that women and parents generally have 0:18:41.600 --> 0:18:44.080 had to contend with. But you know, we've seen it 0:18:44.359 --> 0:18:47.440 disproportionately on on women. So for example, the labor force 0:18:47.440 --> 0:18:50.840 participation rate of mothers has declined about five times the 0:18:50.840 --> 0:18:54.440 amount as as we've seen for men. So I think 0:18:54.600 --> 0:18:57.680 as we head into the fall, though, we have seen 0:18:58.040 --> 0:19:00.719 some of those burdens and begin to ease, and so 0:19:00.800 --> 0:19:02.879 I think when we look ahead we are expecting to 0:19:02.920 --> 0:19:05.720 see some improvements in the labor supply. I think there's 0:19:05.760 --> 0:19:08.040 been a lot of hype around September and just the 0:19:08.080 --> 0:19:12.440 calendar turning there between schools being back and the unemployment 0:19:12.440 --> 0:19:15.480 insurance benefits ending in all states, and I think you'll 0:19:15.480 --> 0:19:19.080 see some incremental improvement. That these are dynamics and issues 0:19:19.119 --> 0:19:20.960 that are going to take months to play out. Let's 0:19:20.960 --> 0:19:23.160 go back to your work at London School of Economics 0:19:23.160 --> 0:19:27.520 on development. Let's look at national development within three point 0:19:27.520 --> 0:19:29.720 five trillion, whatever the number is going to be of 0:19:29.800 --> 0:19:35.520 social programs forward, is some form of US European like 0:19:35.800 --> 0:19:40.000 childcare the most productive way to get more women employed. 0:19:41.320 --> 0:19:43.760 I think it could certainly help. So we've seen labor 0:19:43.760 --> 0:19:46.960 force participation among women in the US. We used to 0:19:47.040 --> 0:19:49.439 lead the pack back in the late nineties early two thousands, 0:19:49.480 --> 0:19:52.040 and we've just continued to follow behind. It's because we 0:19:52.080 --> 0:19:56.000 haven't made a lot of those investments in childcare. So 0:19:56.040 --> 0:19:58.960 if you look at the labor force participation rate among 0:19:59.280 --> 0:20:02.120 women with if children under under the age of six, 0:20:02.160 --> 0:20:05.320 it's about ten percentage points lower than school age children, 0:20:05.320 --> 0:20:08.439 which I think really speaks to the importance of a 0:20:08.480 --> 0:20:12.479 more robust childcare system in allowing women and you know, 0:20:12.520 --> 0:20:15.920 basically a large share of your population to to work 0:20:15.960 --> 0:20:19.240 and contribute to the overall economy. In the meantime, Sarah, 0:20:19.320 --> 0:20:22.480 we've seen that participation rate is broadly continue to remain 0:20:22.560 --> 0:20:26.119 far below where it was pre pandemic. How do you 0:20:26.240 --> 0:20:29.359 look at this rate to determine the tightness of the 0:20:29.440 --> 0:20:32.240 labor market, considering that some of these people may never 0:20:32.320 --> 0:20:35.480 come back to the labor market. Well, I think it's 0:20:35.480 --> 0:20:38.720 still a big question in terms of what extent workers 0:20:38.720 --> 0:20:41.159 do come back. So you I think some of the 0:20:41.240 --> 0:20:44.240 issues that are keeping workers on the sideline are more 0:20:44.280 --> 0:20:46.520 temporary in nature. I think, you know, some of the 0:20:46.880 --> 0:20:50.159 childcare issues related to at least those parents of school 0:20:50.160 --> 0:20:52.879 aged children where they were having to guide their children 0:20:52.880 --> 0:20:56.920 through remote learning. Perhaps not fully sure how consistently they'll 0:20:56.920 --> 0:20:59.800 be back in the classroom this fall. But I think 0:20:59.840 --> 0:21:02.280 there's questions over Okay, to what extent is this permanent. 0:21:02.320 --> 0:21:04.560 You know, we've seen substantial retirements. If you look at 0:21:04.600 --> 0:21:08.280 labor force participation across age, it's you recovered about half 0:21:08.359 --> 0:21:11.720 its loss for for prime age workers, but it hasn't 0:21:11.760 --> 0:21:15.199 gone anywhere for your your older workers. So those sixty 0:21:15.240 --> 0:21:17.439 five are older, and so I think we've seen um 0:21:17.600 --> 0:21:22.199 some permanent loss of labor of labor supply, although I 0:21:22.240 --> 0:21:25.000 still think there's there's still a decent amount of latent 0:21:25.040 --> 0:21:27.560 supply on the sidelines that can can come into the 0:21:27.600 --> 0:21:29.959 labor market over the next year. John, this is one 0:21:29.960 --> 0:21:32.080 of the most confusing aspects to me out there, the 0:21:32.119 --> 0:21:33.640 idea that we don't have a sense of how many 0:21:33.640 --> 0:21:35.880 people are going to return, how many people have retired, 0:21:36.080 --> 0:21:38.600 who has found a new job, what these frictions are. 0:21:38.640 --> 0:21:40.760 I mean, some of the mysteries underputting the labor mark. 0:21:40.800 --> 0:21:42.879 How much slack is that? How tig is this labor market? 0:21:42.880 --> 0:21:44.760 How loose is I've got no idea. Let's make it 0:21:44.880 --> 0:21:48.080 very simple, Sarah, big question for this market into tomorrow. 0:21:48.240 --> 0:21:50.639 How low is the bar for the Fed to execute 0:21:50.640 --> 0:21:53.800 in any November. How low is it? I think Palace 0:21:53.840 --> 0:21:56.760 at the bar fairly low. So in his press conference 0:21:57.040 --> 0:21:59.720 coming out of the last Fence meeting, all he said 0:21:59.760 --> 0:22:02.399 they only need to see a reasonably good report. It 0:22:02.440 --> 0:22:04.520 does not need to be a knockout. So what could 0:22:04.560 --> 0:22:08.000 be reasonably good? I think probably anywhere around three fifty 0:22:08.160 --> 0:22:11.000 or higher would tick that box. So that's still well 0:22:11.040 --> 0:22:13.800 above even the best year that we saw over the 0:22:13.880 --> 0:22:17.480 last cycle, where the run rate um in that best 0:22:17.600 --> 0:22:20.480 year was about two hundred sixty thousand, and so I 0:22:20.560 --> 0:22:23.400 think given that you have seen directionally some improvement when 0:22:23.440 --> 0:22:26.240