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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: John Talker sitting in for Alex steel On. Paul Swiney're

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Speaker 2: live here in our Bloomberg Interactive Broker studio in New

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Speaker 2: York City. Were streaming live on YouTube as well. What

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Speaker 2: we've been trying to do all day today, starting at

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Speaker 2: seven am with Tom Keen and surveillance, is just to

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Speaker 2: try to find some guests here who are experienced and

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Speaker 2: educated in all things in the complexities of the Middle

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Speaker 2: East and help us the audience to get some context

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Speaker 2: about what's happening in the Middle Eastern. Next guest as

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Speaker 2: certainly one of those folks, Aaron David Miller, Senior Fellow

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Speaker 2: at the Carnegie Endowment for International Peace, joining us from Washington,

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Speaker 2: DC via zoom Here. Aaron, We've had presidents and President's

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Speaker 2: Trump urging Israel to have restraint, particularly as it relates

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Speaker 2: to Iran. But I guess today Iran said, Hey, the

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Speaker 2: risks to us are just too high. Iran is making

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Speaker 2: too much progress on the nuclear front. We had to act.

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Speaker 2: What kind of contexts? How do you view what happened

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Speaker 2: last night?

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Speaker 3: It's a long movie, guys, and thanks for having me.

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Speaker 3: First of all, I think the Israeli's acted in large

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Speaker 3: part because you have an his early prime minister who

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Speaker 3: is now very risk ready his lifelong mission is to

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Speaker 3: Freezer from the shadow of an Irani and bomb. And

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Speaker 3: the Israeli's not just the prime minister, get behind this

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Speaker 3: idea of the Began doctrine. You know that in the

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Speaker 3: summer of nineteen eighty one, then Israeli Prime Minister of

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Speaker 3: Monock and Began went after the Assira reactor in Iraq

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Speaker 3: and destroyed it. The Americans destroyed the reactor again, by

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Speaker 3: the way, during their campaigns in Iraq, just doing the

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Speaker 3: Reagan administration, and Reagan's not very happy with the Israeli decisions.

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Speaker 3: He later came to regret it, though, and agreed with

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Speaker 3: Began that getting rid of the reactor was a wise move.

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Speaker 3: In this case, I think the first Democratic and Republican

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Speaker 3: president ever did not communicate in an unmistakable way to

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Speaker 3: the Prime Minister of Israel, and they talked on Thursday.

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Speaker 3: We're not sure what the conversation was before these strikes tomorrow,

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Speaker 3: last night, and this morning. Let's put this way, Donald

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Speaker 3: Trump did not say no. Had he wanted to say no,

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Speaker 3: he could have brought to bear an enormous amount of

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Speaker 3: leverage and pressure to dissuade the Israelies from not striking.

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Speaker 3: So I don't think that conversation was necessary. He may

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Speaker 3: have had doubts, but I think in the end he's

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Speaker 3: simply enabled to exceed an acquiesced in the Prime Minister's decision.

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Speaker 3: And remember, the negotiations were supposed to zoom on Sunday

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Speaker 3: in Oman, and yet the administration kept saying right up

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Speaker 3: to the end. Five hours before the strikes, the President

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Speaker 3: tweeted on true Social that he hoped there would be

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Speaker 3: a diplomatic ending to this. So the administration cooperated with

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Speaker 3: this ruse. And right now we are waiting for the

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Speaker 3: Iranian response. It could be weeks before it occurs. They're

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Speaker 3: clearly knocked off balance. Much of their general staff has

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Speaker 3: been eliminated, former head of the Iran Iranian Revolutionary Guard eliminated,

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Speaker 3: Chief of staff for the Iranian military eliminating the Israelis.

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Speaker 3: They are still ongoing now, striking ballistic missile sites you

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Speaker 3: wa East sites, drone sites in effort to repress and

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Speaker 3: suppress whatever remains of Iran's air defense. There will be

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Speaker 3: an Iranian response. It may be asymmetrical, using terror against

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Speaker 3: Israeli or Jewish targets. There's a history there. It could

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Speaker 3: be a while. And then you raised the question, or

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Speaker 3: I'd raise it, what are the Iranians going to respond to? Well,

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Speaker 3: they confine their strikes to the United Two, I'm sorry,

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Speaker 3: to Israel proper. Or are they going to go after

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Speaker 3: American assets in the Gulf, or in Iraq, or in

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Speaker 3: Syria or oil infrastructure in Saudi Arabia. I would bet,

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Speaker 3: given how weak and vulnerable the Iranians are, they'd probably,

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Speaker 3: at least at this stage confine their response to Israel.

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Speaker 4: A secretary at Rubio said this was a unilateral action.

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Speaker 4: Then we got a tweet or something on social media

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Speaker 4: from the President that said, among other things, the next

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Speaker 4: attack being planned will be quote even more brutal and

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Speaker 4: begs the question for me, what is US foreign policy

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Speaker 4: with respect to this?

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Speaker 3: Well, I think the President had made a judgment he

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Speaker 3: obviously argued the Iranian negotiations were not producing. He gave

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Speaker 3: them two months to reach an agreement, which is an

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Speaker 3: unrealistic deadline. To be sure, that deadline was reached June eleven,

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Speaker 3: and that Thursday overnight, Thursday Friday morning, they attack. So no,

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Speaker 3: I think the administration rode the tiger of what the

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Speaker 3: Israelis now have in this region, which is an escalation dominance.

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Speaker 3: They've essentially hollowed out Hamasa as a military organization. They've

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Speaker 3: basically decimated his Bullah, as well as the statement saying

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Speaker 3: remarkably they would not initiate any activity in response to

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Speaker 3: what the Israelis have done. So I think that right

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Speaker 3: now the NFC presidents chairing an NFSC meeting, i'd say

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Speaker 3: the priorities you asked me what US foreign policy will

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Speaker 3: be in this case, I think there are three or

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Speaker 3: four issues. Number One, protect Americans. Make sure that the

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Speaker 3: sites that are vulnerable are as hardened as they could be.

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Speaker 3: Number Two, prepare for a significant defense. Assistance of Israel

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Speaker 3: helped the Israelis multi layer their own defenses, as the

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Speaker 3: Biden administration did in response to the Iranian attacks last year.

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Speaker 3: In April October. That's number two, Number three Coordinate Regional

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Speaker 3: defense unnamed golf countries in April and October helped both

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Speaker 3: intelligence wise and participation in an Aaron missile defense shield

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Speaker 3: remarkably supporting Israel in the face of that Iranian attack.

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Speaker 3: Jordan shot down Jernes in April, last April and October,

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Speaker 3: and US deployed F fifteen specially equipped with interceptors to

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Speaker 3: protect and help the Jordans airspace. The final piece of

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Speaker 3: what policy would be, are they looking for a way

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Speaker 3: to de escalate. Will they try and push a doubt

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Speaker 3: for something in the Security Council, but some sort of

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Speaker 3: initiative that would try to get the Iranians back to

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Speaker 3: the negotiating table. That's going to be a very heavy lift, though, Guy,

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Speaker 3: and the Iranians invested five trillion dollars over time in

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Speaker 3: this nuclear program. They are humiliated. They are embarrassed to

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Speaker 3: the extreme. So I think we're talking about we're beginning

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Speaker 3: to a very long and very difficult Israeli Iranian confrontation.

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Speaker 2: Aaron, thank you so much for joining us. Really appreciate

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Speaker 2: getting a few minutes of your time, Aaron. David Miller,

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Speaker 2: he's a Senior Fellow at the carnegieen Dowment for International

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Speaker 2: Piece in Washington, TC, joining us of via zoom.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Let's get back to the geopolitical topic of the day,

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Speaker 2: Israel and Iren. Ariel Cohen joins his senior fellow at

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Speaker 2: the Atlanta Council, joining us from Stockholm, Sweden of via zoom. Ariel,

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Speaker 2: can you put into context what has happened over the

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Speaker 2: last twenty four hours? What is israel strategy? Where does

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Speaker 2: a rain go from here?

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Speaker 5: First of all, this was in the works for probably

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Speaker 5: twenty years. Iran was giving every opportunity to walk away

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Speaker 5: from its nuclear weapons program. First with a jcpoa planned

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Speaker 5: by the Obama administration, it didn't work. Instead of yes

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Speaker 5: they could enrich for the domestic power production three and

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Speaker 5: a half percent enriched uranium, they escalated twenty percent and more.

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Speaker 5: Now they were enriching it sixty to eighty percent, which

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Speaker 5: the only application is weapons. They kept accelerating development of

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Speaker 5: their ballistic missiles, and they were funding proxies from the

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Speaker 5: Red Sea to the Mediterranean, from the Hufis to Ribala,

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Speaker 5: to Irate to Iraqi Typeisbala. So they were building or

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Speaker 5: try to build a Middle Eastern empire. And it all

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Speaker 5: came down rushing, and Trump gave him six sixty days

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Speaker 5: to agree to keep their internal domestic power production through

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Speaker 5: nuclear reactors, but to shut down the Richmond They refused.

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Speaker 5: Every Friday, they chanted death to America, death to Israel.

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Speaker 5: They tried to assassinate Tromp on American soil. So when

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Speaker 5: people are telling me, now we don't care about Iran,

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Speaker 5: nobody talks about Iran like this, bright lights, Marjorie tailor, Marjorie.

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Speaker 4: I just want to quickly ask, do we know if

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Speaker 4: the the Iranian nuclear capabilities have been neutralized or anywhere

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Speaker 4: near neutralized? At this point, I think.

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Speaker 5: Israel is way on its way to do that because

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Speaker 5: of NATON In Richmond facility, despite the fact that it

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Speaker 5: was protected with the eight meter concrete envelope, is destroyed

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Speaker 5: and other nuclear facilities are destroyed. But if this regime

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Speaker 5: stays in place, they may rebuild, or it will require

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Speaker 5: another war. In five or ten years. So the question

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Speaker 5: I'm asking myself number one, with Trump watching the inflation,

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Speaker 5: can the Saudis and other Gulf oil producing countries export

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Speaker 5: oil east I'm sorry, west to the Red Sea so

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Speaker 5: that the oil supply is not disrupted too much. This

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Speaker 5: is important for the US that Iran doesn't put mines

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Speaker 5: in the Strait of Hormuz, through which twenty five to

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Speaker 5: thirty percent of oil exports is going through. And secondly,

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Speaker 5: can the regimes survive either giving up its nuclear program

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Speaker 5: or being bombed as badly as the Israeli seemed to

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Speaker 5: be doing and still stay in power. And at this

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Speaker 5: point I'm not sure about either outcome.

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Speaker 2: Doctor Colin, can you just reiterate what I think I

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Speaker 2: heard you say, which is you believe that Israel has

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Speaker 2: destroyed or neutralized their nuclear facilities.

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Speaker 5: Indeed, the main enrichment facility was in Natans. Israel is

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Speaker 5: also destroying or destroyed most of the massive ballistic missile arsenals.

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Speaker 5: Just the other day we saw that Iran was buying

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Speaker 5: enough materials and precursors to build ten thousand ballistic missiles

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Speaker 5: over a period of three years from China. Apparently this

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Speaker 5: is also a target. It may not be fully destroyed

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Speaker 5: yet because we're barely twenty four hours into the operation,

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Speaker 5: but in terms of the success us of taking out

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Speaker 5: the leadership of the Iranian Air Force, the head of

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Speaker 5: the Iranian Revolutionary Guard commanders up.

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Speaker 2: We're gonna have to leave it there just because of

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Speaker 2: the time. We really appreciate getting a few minutes of

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Speaker 2: your time. Doctor Ariel Cohen, Senior Fellow at the Atlantic Council,

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Speaker 2: joining us via zoom from Stockholm.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Inflation expectations coming down, so let's check out with Joan Shue,

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Speaker 2: Surveys of Consumers, Director at the University of Admission, Joanne

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Speaker 2: Big snapback in the numbers at Big Reversal.

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Speaker 6: It seems like, yes, consumers are feeling a little bit

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Speaker 6: more settled after the big shock of the April developments

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Speaker 6: and tariffs, so they do think that the outlook for

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Speaker 6: the economy has improved. At the same time, we're still

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Speaker 6: you know, almost twenty p sent below where we were

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Speaker 6: back in December after sentiments saw a post election bump.

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Speaker 6: So consumers are still pretty far from where they were

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Speaker 6: just a few months ago, and they don't think we're

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Speaker 6: out of the woods yet.

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Speaker 4: And joined with respect to all the great work that

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Speaker 4: you guys do with the events of the past twenty

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Speaker 4: four hours, particularly with the inflation expectations, I kind of

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Speaker 4: tend to want to throw these numbers right out the window.

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Speaker 7: Well, there's a lot going on in the world right now,

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Speaker 7: and in terms of how consumers react to global events

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Speaker 7: in the Middle East, where we can wait until the

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Speaker 7: final reading for June, but of course things are happening

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Speaker 7: on a daily basis. Consumers are incorporating this information separate

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Speaker 7: from the possible disruption to energy prices, from what's going

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Speaker 7: on overall. Consumers worst fears about what might happen to inflation.

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Speaker 7: When they saw the development developments in April, they feel

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Speaker 7: better about that, but they're still bracing for higher inflation

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Speaker 7: than they were just a few months ago. So consumers

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Speaker 7: are looking bracing for that.

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Speaker 2: And the one year inflation expectation was six point four

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Speaker 2: percent down. It came in at five point one still

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Speaker 2: much higher than where we want to see it, where

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Speaker 2: the FED wants to see it. Joan, thanks so much

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Speaker 2: for joining us. Joe and Shue, Surveys of Consumers Director

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Speaker 2: at the University of Michigan.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Let's check in with the story from yesterday, the air

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Speaker 2: crash in India that claims so many lives, a lot

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Speaker 2: of issues they're one of the issues is just boeing

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Speaker 2: the plane, ge the engines. From a business perspective, that's

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Speaker 2: kind of where a lot of folks are looking at

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Speaker 2: this state. Sid Phillip joins his deputy team lever for

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Speaker 2: Global Aviation Zoom from Paris.

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Speaker 5: Sid.

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Speaker 2: What do we know about the actual pla itself? Maybe

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Speaker 2: some causes here or is anything been reported?

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Speaker 4: So far?

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Speaker 8: There hasn't been much in terms of causes. I mean

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Speaker 8: so far we sort of we understand that investigators are

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Speaker 8: coming through the wreckage to determine really what caused that

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Speaker 8: crash and it killed all but one person on board,

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Speaker 8: so two hundred and forty one.

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Speaker 4: People in fact that somebody wanted away from that. It's

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Speaker 4: absolutely a mirror ple.

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Speaker 2: I can't wait to see the reporting on that. So

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Speaker 2: it is has Boeing said anything? What's Boeing said?

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Speaker 8: Since Boeing is actually sort of it hasn't said a lot.

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Speaker 8: It's Boeing is basically deferring to the regulators and investigators

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Speaker 8: on this matter. So they're sort of putting it onto

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Speaker 8: investigators saying they're not going to comment and they're not

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Speaker 8: going to say anything about this accident. They're going to

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Speaker 8: help with the investigation, but they aren't going to comment,

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Speaker 8: and they're going to let that the investigators sort of

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Speaker 8: work through the whatever evidence that they can find and

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Speaker 8: whatever sort of the black boxes and what they decode

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Speaker 8: from those black boxes before they really make a determination

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Speaker 8: and say anything on the matter.

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Speaker 4: It also gets to the investigation. But you know more

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Speaker 4: than us about that particular airport in question. I understand

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Speaker 4: that's known for a lot of bird strikes. Do I

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Speaker 4: have that right?

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Speaker 8: There have been some bus strikes. I mean again, at

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Speaker 8: this point, it's a bit early to be seeing what

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Speaker 8: the matter is. I mean At the moment, the accident's

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Speaker 8: being investigated by the Air Aircraft Accident Investigation Bureau of

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Speaker 8: India and they also have investigators from the UK and

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Speaker 8: the US who are assisting with the probe, and so

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Speaker 8: they're looking at multiple angles in this investigation. And I

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Speaker 8: think the DGCA, which is India's aviation regulator, also ordered

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Speaker 8: some maintenance checks on all of Air India's Boeing sevent

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Speaker 8: eighty seven's, including they asking them to check on fuel systems,

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Speaker 8: cabinet engine controlled hydraulics, just to rule out what really

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Speaker 8: caused this incident, he said.

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Speaker 2: Just thinking about Boeing it it seemed like just recently,

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Speaker 2: maybe the last six to nine months, Boeing was putting

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Speaker 2: behind it a lot of the safety issue that have

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Speaker 2: plagued it for the last several years of seven three

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Speaker 2: seven macs and so on, and then this happened. What's

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Speaker 2: the feeling within Boeing about kind of where they are

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Speaker 2: in terms of getting back some of their engineering chops,

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Speaker 2: their safety chops, getting production levels backed up to where

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Speaker 2: they need need to be. What's what do you think

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Speaker 2: the view is from Boeing.

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Speaker 8: So Boeing, I mean Boeing obviously has been working on

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Speaker 8: improving their quality systems. They have a new CEO, Kerry Outberg,

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Speaker 8: who is sitting there who's basically been working on improving

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Speaker 8: quality and making sure that the company can actually ramp

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Speaker 8: up production and ramp up safely. And so that's what

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Speaker 8: they've been ramping up. And they've sort of just reached

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Speaker 8: a key milestone on the seven three seven Max, which

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Speaker 8: is separate from the jet that actually crashed in India,

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Speaker 8: and that jet is the one that had those two

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Speaker 8: fatal crashes in twenty eighteen and nineteen and also the

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Speaker 8: door plug falling off last year, and so they've they've

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Speaker 8: ramped up production on that. They've sort of got to

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Speaker 8: the FA mandated level of thirty eight a month, and

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Speaker 8: so they are in the process of sort of showing

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Speaker 8: up their company, showing up their balance sheet. And this

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Speaker 8: will be a sort of blow to that effort, and

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Speaker 8: this will sort of force Kelly Ottberg and new CEO

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Speaker 8: to sort of again go back into crisis mode. And

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Speaker 8: I mean, he isn't going to be attending the Paris

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Speaker 8: Ashore which starts next week. He's decided to skip that

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Speaker 8: along with Stephanie Pop who leads a commercial commercial unit.

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Speaker 4: Yeah, I was kind of curious how that proceeds. Arguably

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Speaker 4: the Paris Era show, as we that's the biggest event

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Speaker 4: on the aviation calendar, isn't it is?

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Speaker 8: It is the biggest aviation event typically where airlines splash

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Speaker 8: out on big orders. There's lots. It's very celebratory. That's

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Speaker 8: where alines sort of talk about their future fleet plans

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Speaker 8: and aircraft manufacturers including Airbus and Boeing show off what

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Speaker 8: their latest products are and all the innovations and developments

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Speaker 8: that they have.

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Speaker 2: So where is Boeing in terms of like a lot

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Speaker 2: of folks tell me, Hey, if you're looking at Boeing,

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Speaker 2: the only thing you'd really need to focus on is

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Speaker 2: how many seven thirty events are they getting off the

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Speaker 2: line every month? Where are we right now and where

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Speaker 2: do they want to go?

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Speaker 8: At the moment, we're close to the FA mandated limit

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Speaker 8: of thirty eight a month, and they have talked about

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Speaker 8: getting beyond that to about fifty a month, but that

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Speaker 8: is long term, it's not yet, it's not yet, not

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Speaker 8: a near term consideration. But that's basically where they I

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Speaker 8: mean air buses, which is Boeing's direct rival, makes about

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Speaker 8: sixty eighty twenty one s, which compete with the seven

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Speaker 8: three seven MAXs. They make about sixty a month and

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Speaker 8: they have an ambition of reaching seventy five a month

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Speaker 8: by twenty twenty seven.

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Speaker 4: Tell us about GE, the engines in question, and does

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Speaker 4: Boeing Is GE just one of the many suppliers of

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Speaker 4: engines for Boeing.

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Speaker 8: No, so, G is one of the main suppliers of

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Speaker 8: engines for Boeing, I mean on the seven three seven Max.

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Speaker 8: GE is one half of a joint venture that makes

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Speaker 8: the exclusive engines for the seven three seven Max. And

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Speaker 8: they also provide all the engines on the CET Triple

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Speaker 8: seven X, which is the upcoming model, and they're one

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Speaker 8: of two engine options on the seven eighty seven. So

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Speaker 8: they are a very very important supplier in terms of

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Speaker 8: the aviation ecosystem. They're very important supplier to Boeing. And

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Speaker 8: I mean, this engine has has been in service for

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Speaker 8: over a decade now, and so this isn't a new engine,

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Speaker 8: It isn't an engine that has any particular issues, so

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Speaker 8: it is I mean, I'm sure that she is also

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Speaker 8: contributing to the investigation.

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Speaker 2: All right, So thanks so much for joining us at

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Speaker 2: phill Up, Bloomberg Deputy team leader for Global Aviation.

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