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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and a Marie Hordern. Join us each

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Speaker 2: day for insight from the best in markets, economics, and

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Speaker 2: geopolitics from our global headquarters in New York City. We

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Speaker 2: are live on Bloomberg Television weekday mornings from six to

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Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify,

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Speaker 2: or anywhere else you listen, and as always on the

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Speaker 2: Bloomberg Terminal and the Bloomberg Business app. We begin this

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Speaker 2: out with stock sinching lower. Jim Zelter and the team

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Speaker 2: over at Apollo Asset Management looking for opportunity outside of equities, saying,

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Speaker 2: quote of interest rates remain higher as we expect, and

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Speaker 2: the terminal Fed funds rate stays higher than where it

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Speaker 2: has been historically. We see private credit as an attractive

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Speaker 2: alternative to over valued public equities. Jim joins us now

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Speaker 2: from More. Jim, good morning and a very happy new

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Speaker 2: year to you. I'm going to kick off this conversation

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Speaker 2: by stealing one of Leasa's questions to stand twenty twenty

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Speaker 2: five is stocks to rich or a bonds too cheap.

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Speaker 3: Well, I think we have a backdrop. I think your

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Speaker 3: point about the US and China and Europe and the

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Speaker 3: three parties, you know, it's our view that there's intrsent

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Speaker 3: has been very consistent. The US economy has been the

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Speaker 3: beacon of opportunity in the last several years, strong economic growth,

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Speaker 3: capital coming in from around the globe, and so in

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Speaker 3: terms of those talk, I don't want to talk about

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Speaker 3: the stock market. I really talk about underlying economy. Underlying

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Speaker 3: economy looks like it's a place to invest. I don't

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Speaker 3: think it's any surprise that when you peel the onion

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Speaker 3: back private capital, which has really been embraced in the

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Speaker 3: US and gives diversity of funding, lets companies grow, start expand,

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Speaker 3: and all the things we're talking about the global renaissance.

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Speaker 3: It's been the place to invest and it's been attracting capital.

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Speaker 3: Contrasts that to what's going on in the UK and

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Speaker 3: continental Europe, where they are stuck in a financing system

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Speaker 3: that's really fifteen twenty thirty years behind the rest of

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Speaker 3: what's going on in North America. It tells us that

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Speaker 3: the US is the place to invest.

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Speaker 2: So you think some of these problems in Europe might

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Speaker 2: be more structural in nature.

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Speaker 3: I think structural is really the key to really analysis.

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Speaker 3: It's very easy to focus on the last three to

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Speaker 3: six months we talk about the Liz Trust moment in

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Speaker 3: the UK. I think it is a great reminder for

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Speaker 3: this current administration, as they've got great ambitions in terms

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Speaker 3: of US investment, capex, tariffs, immigration, a variety of other

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Speaker 3: big initiatives. It's good for this reminder of the Liz

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Speaker 3: Trust moment in the back of their minds.

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Speaker 4: You know what can happen if you lose confidence.

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Speaker 3: But there's no doubt I think if you look at

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Speaker 3: what the Drogy document did later last fall, he pointed

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Speaker 3: out in one hundred and fifty eight summary pages of

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Speaker 3: all the challenges that they have not really embraced. And

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Speaker 3: while the banks are in better shape than they've been

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Speaker 3: in a couple of decades in Europe, the US is

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Speaker 3: the standout. We have the greatest financial services sector in

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Speaker 3: the world, we have the deepest, broadest capital markets. We've

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Speaker 3: undergone a tremendous amount of regulations on our banks and

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Speaker 3: they've continued to thrive in a more narrow world. And

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Speaker 3: that's the page that the Europeans should be looking at

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Speaker 3: embracing securitization, embracing private capital. They've got a massive amount

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Speaker 3: of infrastructure needs and they should be embracing that for

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Speaker 3: their long term economic success.

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Speaker 5: In the meantime, people are saying that maybe the ghost

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Speaker 5: of list trust is kind of hovering over this administration

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Speaker 5: and hovering over the US treasure market right now, especially

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Speaker 5: given the rise that we've seen in longer term yields.

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Speaker 5: And I'm wondering how susceptible you are to changing your

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Speaker 5: view on how constructive the US economy is if you

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Speaker 5: get some more negative data prints. We had Greg Daco

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Speaker 5: yesterday talking about a fro in job market. We had

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Speaker 5: Neila Richardson talking about how smaller companies really are feeling

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Speaker 5: rates where they are.

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Speaker 3: Rates have been higher for the last twelve to eighteen

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Speaker 3: ons they been higher. Obviously, we're in a period right

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Speaker 3: now where what the Fed did and its actions in

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Speaker 3: the fall and what the market has responded to is

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Speaker 3: a very unique period. So you're right, we are in

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Speaker 3: a little bit of a unique zone here with regard

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Speaker 3: to macro and rates in the US. I do think

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Speaker 3: we are in a period where rates do look attractive

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Speaker 3: versus where equities are. And we're in a period right

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Speaker 3: now where we're still the place of economic growth, but

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Speaker 3: it is a warning sign for the administration about how

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Speaker 3: much they can push. Now. Clearly the other side of

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Speaker 3: the trade, I would not probably be lowering rates right now.

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Speaker 3: I think that you have full employment, economy is doing

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Speaker 3: quite well. I'm not sure I see a need other

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Speaker 3: than economic textbook to lower rates in terms of the target.

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Speaker 3: But it does create a lot of room for the

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Speaker 3: new administration if they have weakness in any kind of

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Speaker 3: the economy. Because of their initiatives, the Fed put is back,

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Speaker 3: they have a lot.

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Speaker 4: Of room to move.

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Speaker 5: Your colleague, sort of edifying your points as you say

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Speaker 5: them towards the slock moments ago, inflation reaccelerating to your

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Speaker 5: point about not necessarily needing to lower rates further, you

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Speaker 5: talk about credit being the sweet spot in debt, maybe

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Speaker 5: even over equities, and that has been the story over

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Speaker 5: a long period of time, the past couple of years.

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Speaker 5: If inflation could be reaccelerating, could you see that story

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Speaker 5: changing at a certain point.

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Speaker 3: Yes, you could, And I guess this, and there's a

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Speaker 3: lot of consensus out there about where the S and

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Speaker 3: P is in a go where rates are going. But

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Speaker 3: in our view and the backdrop, US economy still the

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Speaker 3: strength of the globe. It's the beacon of economic opportunity.

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Speaker 3: We still have a lot of economic growth in terms

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Speaker 3: of the industrial renaissance that we've been talking about. So

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Speaker 3: in our view, the breadth of credit investment grade as

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Speaker 3: well as non investment grade, we try to find areas

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Speaker 3: of dislocation or areas of mismatch of capital and opportunity,

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Speaker 3: and we're still seeing it in credit versus the equity markets. Now,

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Speaker 3: when you look at the S and P five hundred,

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Speaker 3: I would say that it's interesting, you've got we all

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Speaker 3: know what the magnificent seven are, but certainly the other

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Speaker 3: four hundred and ninety three a lot of unloved opportunities

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Speaker 3: that in that basket. And there's probably an opportunity in

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Speaker 3: a non consensus view in terms of those companies in

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Speaker 3: terms of just pure economic growth. But we are still listen,

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Speaker 3: private crediting has private credit and private capital has been

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Speaker 3: the engine of economic growth in the US. And I

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Speaker 3: will you know again I said earlier, it's not a

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Speaker 3: great iron it's a great irony that the US has

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Speaker 3: been the bastion of economic growth with the embracing of

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Speaker 3: private capital. But you know, one of the greatest investors

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Speaker 3: in US capital history, Warn Buffet in Berkshire. When you

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Speaker 3: really pull the covers back on Berkshire Hathaway. Of the

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Speaker 3: trillion dollars of assets at the end of twenty three,

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Speaker 3: thirty percent are in the public equities that we know

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Speaker 3: about Apple, Coca Cola, American Express via a seventy percent

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Speaker 3: are private companies. It's the growth engine. He's the greatest capitalist.

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Speaker 3: He's been doing it for fifty years. That's where growth

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Speaker 3: and opportunities in America. Private capital in private companies, and

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Speaker 3: they have access in the debt markets. They don't need

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Speaker 3: to go public to raise capital anymore. Eight thousand public

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Speaker 3: companies to four thousand. That's the trend in the future.

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Speaker 3: And we're sitting really at an intersection trying to bring

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Speaker 3: those opportunities to the broad group of investors, retirees and

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Speaker 3: savers around the globe.

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Speaker 2: So you mentioned Europe and Europe certainly the bank channel

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Speaker 2: is overburdened. We've been talking about this for years. The

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Speaker 2: Europeans have drunk and talk about trying to do something

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Speaker 2: with public markets. Are the same way we have here

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Speaker 2: in the United States. It's not happening. I want to

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Speaker 2: understand from your perspective, how you will work with the

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Speaker 2: banks in America going forward from here, because this is

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Speaker 2: not of a new trend where the banks will originate

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Speaker 2: the loans and then you'll provide the money. How's that

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Speaker 2: going to work in years to come? How big can

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Speaker 2: that opportunity be?

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Speaker 3: Oh, I think we're I think twenty four was a

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Speaker 3: pivot year for us as a leading firm in this

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Speaker 3: industry and in this sector. There was a great headline,

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Speaker 3: and you and I talked about the three of us

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Speaker 3: have talked about in this show many times, where the

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Speaker 3: great battle between private capital and banks. The reality is,

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Speaker 3: if you look at the commercial dialogue going on between

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Speaker 3: the top five, top ten institutions and the handful of

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Speaker 3: us that lead our industry, the amount of integration dialogue

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Speaker 3: working together on big deals has never been deeper. Obviously,

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Speaker 3: there was our City Bank transaction, our City Group transaction.

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Speaker 3: There was a transaction we did with Standard Charter BNP,

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Speaker 3: and so I think we're still at the early days.

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Speaker 3: These partnerships need to have substance. They can't be excused

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Speaker 3: the phrase shotgun marriages. They have to be ones that

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Speaker 3: really have substance, dialogue, trust, and some history of doing

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Speaker 3: a lot of transactions together. We've been fortunate and all

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Speaker 3: the ones we've put together where there has been a

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Speaker 3: lot of either history of personnel or of activity. But

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Speaker 3: I think it's I think still it's early days, early innings.

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Speaker 3: Now there's a lot of headlines just to grab headlines,

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Speaker 3: and there's not a lot of substance behind them. But

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Speaker 3: I think that trend of private capital and bank partnerships

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Speaker 3: is going to extend in twenty five and twenty six.

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Speaker 3: And I do think if you think about the economic backdrop,

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Speaker 3: I do sense that there is a great opportunity for

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Speaker 3: strategic m and a that clearly feels like it's going

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Speaker 3: to happen. I'm a little bit more skeptical about the

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Speaker 3: massive IPO window.

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Speaker 4: If you look at the.

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Speaker 3: Last ten years, equity issuance has been about two hundred

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Speaker 3: and fifty billion, fifty billion IPOs, two hundred billion secondaries.

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Speaker 3: That's removing all the stack numbers. I think you still

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Speaker 3: have a valuation issue with a lot of private equity

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Speaker 3: companies that want to want to come out and do

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Speaker 3: their IPO and so I think we have a consensus

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Speaker 3: view or non consensus view would apollow that that number

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Speaker 3: is going to be not as large as people think.

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Speaker 3: And so the big mismatch if you have a big

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Speaker 3: credit market, a big equity market, this area of hybrid

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Speaker 3: in between, which we've been talking a lot about applying

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Speaker 3: capital to those over levered companies. That's the opportunity of

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Speaker 3: twenty five and twenty six.

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Speaker 2: Just to build on the IPI issue just a little

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Speaker 2: bit more. Is that just a valuation issue or do

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Speaker 2: you think it's a role that you have to play

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Speaker 2: here that these companies don't need to go public anymore.

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Speaker 4: It's a combination of both. It's a great question.

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Speaker 3: I think it is a valuation issue for probably fifty

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Speaker 3: to sixty percent of them. I think it's very very

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Speaker 3: clear now private companies have access to all sorts of capital,

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Speaker 3: debt and equity, preferred, convertible, whatever it may be.

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Speaker 4: And so the typical route you needed to.

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Speaker 3: Go to have your employees be able to monetize their

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Speaker 3: investments broad based capital equity revolvers. You saw what OpenAI

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Speaker 3: did several months ago bringing in a bank facility. There's

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Speaker 3: tremendous pools of capital, private capital to confund and financies companies.

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Speaker 3: So going public is by no means the ticket to

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Speaker 3: liquidity you needed in the past, a lot more.

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Speaker 5: Options in five to ten years. Will there be a

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Speaker 5: difference between public and private markets, We don't believe.

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Speaker 3: So I think there will be some differentiations. And I

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Speaker 3: think the question that gets raised right after that question

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Speaker 3: that you ask is well, is there going to be

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Speaker 3: a massive compression in yields and the advantage is going

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Speaker 3: to go to those folks that have the bigger You're

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Speaker 3: going to make money on the origination, the ability to

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Speaker 3: make the three, five, seven, ten billion dollar commitment to

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Speaker 3: XYZ company, that's where you're going to garner the extra spread.

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Speaker 3: But all the things that we're doing in origination, in

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Speaker 3: capital formation, in trying to bring some liquidity these markets,

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Speaker 3: in terms of secondary activity, with transparency and price discovery,

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Speaker 3: I think the barriers and you know what's what's private

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Speaker 3: is risky and what's public is safe. I think those

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Speaker 3: barriers will be coming down. And again I go back

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Speaker 3: to this bookshare It's no one really talks about it,

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Speaker 3: but it's it is quite an irony that the greatest

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Speaker 3: public investor of all time seventy percent of those companies.

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Speaker 4: When you look at the when you look.

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Speaker 3: At the web page, these are some great American companies

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Speaker 3: and over fifty years he's assembled them and they're massive compounders.

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Speaker 3: And that's seventy percent of the underlying value. Geico being

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Speaker 3: at the top, Clayton Holmes, BNSF, many many other great companies.

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Speaker 3: And I think that's a lesson versus all there's there's

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Speaker 3: companies that are private and there's private equity. You should

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Speaker 3: differentiate between the two. But we clearly want to be

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Speaker 3: part of that big trend and offer those two investors

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Speaker 3: in the retirements around the globe. It's a big change

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Speaker 3: in market structure.

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Speaker 2: You're going to be sticking with us to talk about

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Speaker 2: that change in market structure and the changes we could

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Speaker 2: be seeing in Washington, DC. A little bit later this year,

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Speaker 2: Jim's out to the Apollo Asset Management maybe the Register

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Speaker 2: of ABP, predicting a slow down, writing the labor market

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Speaker 2: downshift to a more modest pace of growth in the

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Speaker 2: final month of twenty four where they slow down in

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Speaker 2: both hiring and pay gains, and places say that Nita

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Speaker 2: joins us now for more.

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Speaker 6: Nita good to see you happy, happy, You're good to

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Speaker 6: see you.

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Speaker 2: You put out your numbers yesterday. Where did you see

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Speaker 2: weakness and where did you see some strength?

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Speaker 6: Well, we saw weakness in manufacturing. And this is, you know,

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Speaker 6: doubling down on a trend we've been seeing all year,

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Speaker 6: three consecutive months of shedding jobs in manufacturing. That's very cyclical.

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Speaker 6: On the strength side, we have to turn to a

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Speaker 6: very non cyclical sector, which is healthcare. Healthcare has been

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Speaker 6: posting strong gains for the last six months. You see

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Speaker 6: that in the ADP data. You also see that in

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Speaker 6: the BLS data. It's what's really driving the jobs market now.

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Speaker 6: And the question is is it enough for twenty twenty

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Speaker 6: five for healthcare to be in the dominant position?

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Speaker 2: A work is losing leverage against that backdrop. If you're

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Speaker 2: seeing more narrow gains, if we're losing breadth and it's

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Speaker 2: coming from areas outside of cyclical sectors in the economy,

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Speaker 2: are we seeing a loss of leverage for workers? More broadly,

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Speaker 2: We've been talking about this over the past few days.

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Speaker 2: JP Morgan sank get back to work, get back to

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Speaker 2: the office five days a week. We talked about it

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Speaker 2: a little bit earlier this morning that maybe that's why

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Speaker 2: the union's on the docks are maybe settling a little

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Speaker 2: bit earlier. What are you seeing around pay and signs

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Speaker 2: of a loss of leverage.

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Speaker 6: We're seeing a lot and I would align with those

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Speaker 6: remarks that workers have lost some leverage from the heyday

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Speaker 6: of the Great Resignation when they were clearly in the

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Speaker 6: driver's seat. There is no one in the driver's seat

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Speaker 6: right now. I think in the labor market it's pretty

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Speaker 6: calm and quiet. But what we're seeing is that pay

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Speaker 6: growth has declined. We're looking at the lowest pay growth

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Speaker 6: for job stairs since twenty twenty one, so that is significant.

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Speaker 5: But also you have to look at hours work.

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Speaker 6: Then that's where companies are kind of fine tuning their

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Speaker 6: labor count. Layoffs are very low, there are historical lows

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Speaker 6: for the past two years, but the number of hours

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Speaker 6: people are working have been declining consistently over the past

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Speaker 6: year and a half. That means that workers are making less. Also,

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Speaker 6: I'll point to the Jolts data that came out this week.

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Speaker 6: Everyone made a big hubbub about the job openings. I

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Speaker 6: went directly to the job quits which are much lower,

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Speaker 6: So people are staying put in their jobs, and that

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Speaker 6: means there's been very little turnover in this labor market.

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Speaker 4: I agree with you one.

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Speaker 5: Point nine percent, which is tied with the lowest rate

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Speaker 5: for quits going back to twenty twenty and really raises

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Speaker 5: some eyebrows about just how much mormility and agency workers feel.

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Speaker 5: I am wondering the why behind this. Is it because

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Speaker 5: of policy uncertainty from companies? Is it because borrowing costs

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Speaker 5: are higher, or they're not making big expansionary moves, or

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Speaker 5: is it because they're still watching what's going on in

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Speaker 5: the artificial intelligence front with the potential that this will

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Speaker 5: make some big changes to their workforce, and they're not

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Speaker 5: sure exactly how.

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Speaker 6: So let's take those pieces together. I think there is

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Speaker 6: a bit of uncertainty about policies, but when you look

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Speaker 6: at where the weakness is in terms of firm size,

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Speaker 6: it's really been in small firms that we've seen the

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Speaker 6: hit the slowdown in hiring. Big firms are still hiring,

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Speaker 6: and you see that clearly in the ADP data. So

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Speaker 6: that points to more financing constraints than it does to

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Speaker 6: AI investment or uncertainty about what the next tariff policy

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Speaker 6: will be. Most small firms don't operate in that macro

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Speaker 6: scenario on a consistent basis when adding one or two employees.

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Speaker 6: So when you're looking at that interest rates matter in

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Speaker 6: terms of financing costs for small firms longer term over

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Speaker 6: twenty twenty five, I think that AI investment in those

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Speaker 6: trade offs between capital and labor become much more relevant

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Speaker 6: starting this year, but also into the future.

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Speaker 5: Are you saying that on the ground, from the bottom up,

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Speaker 5: what you're seeing is that long and variable lags still

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Speaker 5: do exist, and that they just got a lot longer,

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Speaker 5: and that they still are restricting certain smaller companies. It's

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Speaker 5: gotten a lot more variable our lag, So okay, all right,

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Speaker 5: so they've gotten a lot more variable, and that's the

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Speaker 5: reason why you are seeing it only in smaller businesses.

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Speaker 5: But are you saying that rate staying here might look

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Speaker 5: like they're not necessarily hampering financial conditions, but they are

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Speaker 5: constraining the labor market in a more significant degree at

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Speaker 5: this point than they did even six months ago.

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Speaker 6: Firms that rely on bank capital and small business loans

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Speaker 6: are feeling the effects of higher interest rates. It may

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Speaker 6: not be translating to the larger firms yet, but in

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Speaker 6: terms of on the ground, the mom and pop, the

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Speaker 6: main street businesses. I think you see that in their

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Speaker 6: hiring decisions, and so yes, that is material because small

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Speaker 6: firms are the engine of growth for the labor market

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Speaker 6: and for the economy, and if you want that dynamism

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Speaker 6: to continue, it really has to be at the small

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Speaker 6: firm level.

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Speaker 2: So, Nator, what's your reaction to the race and shift

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Speaker 2: over the Federal Reserve? What do you make of things?

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Speaker 6: Very extension, Well, there's been a couple couple shifts. I

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Speaker 6: think what we're seeing in terms of the commentary around

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Speaker 6: the FED is that they have put out this idea

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Speaker 6: of being more patient. And this is a FED that

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Speaker 6: we're not really used to seeing. Historically, Usually the FED

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Speaker 6: when it's starting a policy change, its moderate, predictable, modest

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Speaker 6: moves every decision meeting. Now we're a said that says, hey,

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Speaker 6: we might take a break, we might go on vacation

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Speaker 6: for this one, and do a rate cut at the

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Speaker 6: next meeting. And I think that adds a little uncertainty

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Speaker 6: to what the future path of interest rates will be.

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Speaker 2: And some of us might include some changes to policy

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Speaker 2: that we might expect, and some of us might know

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Speaker 2: and that's been part of the confusion. It's wildly strive

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Speaker 2: for the past month or so.

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Speaker 5: How does a market factor in what the FED is

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Speaker 5: going to be looking at When we don't have a

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Speaker 5: sense of what policies and input data will potentially be

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Speaker 5: going into their equation. It makes for rather confusing.

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Speaker 2: Does that make get more confusing for you, Neva?

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Speaker 6: For me, it's about the data, right. Some of this

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Speaker 6: is just kind of animal spirits. It matters for the markets,

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Speaker 6: it matters for the mood of making investment decisions, But

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Speaker 6: does it matter for that HR director in a company

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Speaker 6: who's trying to figure out how to grow a business

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Speaker 6: in a particular area. Those policy changes are not going

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Speaker 6: to hit that HR director in this month. It might

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Speaker 6: play out over six months or year. But they have

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Speaker 6: to figure out the here and now in terms of

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Speaker 6: the economic conditions that they're confronting with their customers, not

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Speaker 6: with the FETIS doing.

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Speaker 2: It's increasing the complex, that's for sure. It's good to

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Speaker 2: see you a white thanks for dropping by Nata Richard

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Speaker 2: than that of id Pai set down to Washington, DC,

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Speaker 2: where Amory is sitting down with a former City of

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Speaker 2: US Intelligence official, Norman rule Hi, a Marie.

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Speaker 1: Hey, John, thanks so much.

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Speaker 4: Yeah.

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Speaker 1: What we're hearing right now from the incoming Trump administration

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Speaker 1: from Steve Wickoff, who went over to Joha to be

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Speaker 1: a part and witness these negotiations and to really lend

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Speaker 1: some support, is that they think that they can have

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Speaker 1: good news to deliver. So of course you want to

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Speaker 1: bring in Norm Rule, who spent decades at the CIA

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Speaker 1: dealing with Middle East and conflicts. Norman, is it your

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Speaker 1: understanding that potentially we could get a Gaza hostage agreement

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Speaker 1: before President by and leaves office.

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Speaker 4: Good morning. Yes, that is correct.

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Speaker 7: The incoming Trump administration and outgoing Biden administration have been

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Speaker 7: working very closely with no reports of any disagreements or

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Speaker 7: frictions to achieve this. These statements by President Trump beginning

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Speaker 7: in December that there would be all hell to pay

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Speaker 7: if the hostages were not released injected a new life

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Speaker 7: into this issue, and both Hamas and the Israelis have

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Speaker 7: claimed that they have made concessions to make this hostage deal,

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Speaker 7: which would be the first phase of a longer deal, happen.

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Speaker 7: This said, the phrase cautious optimism has been used repeatedly

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Speaker 7: in the past. Hamas has not dropped its primary demand,

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Speaker 7: which is that Israel and the war and withdraw Israel

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Speaker 7: has not dropped its primary demand, which is Hamas cannot

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Speaker 7: be allowed to regain control over God. So the exit

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Speaker 7: strategy for this conflict continues to be tied to this

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Speaker 7: hostage deal.

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Speaker 1: Norm I'm in Washington, d C. Today because of the

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Speaker 1: funeral of President Jimmy Carter, and like Jimmy Carter, President

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Speaker 1: Biden on his final days of office, is working to

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Speaker 1: secure Americans abroad. Now, obviously these hostages I'm talking about

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Speaker 1: the Iranian hostage crisis that Carter dealt with. The conflict

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Speaker 1: the crisis very different in nature, but all roads lead

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Speaker 1: back to Iran. Given your work in decades of experience

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Speaker 1: dealing with Iran, what has changed from Jimmy Carter's presidency

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Speaker 1: to now?

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Speaker 7: In some ways, the modus operandi of Iran and its

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Speaker 7: proxies and hostage taking remains identical. And in fact, there's

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Speaker 7: another echo from nineteen seventy nine. During the Carter administration,

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Speaker 7: the Algerians played a prominent role in engaging with the Iranians.

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Speaker 7: Today we have the Qatari government playing its large role

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Speaker 7: in dealing with Hamas itself and sometimes the Iranians. So

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Speaker 7: you do have strange echoes of this period. But since

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Speaker 7: nineteen seventy nine, not only the Carter administration, but the

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Speaker 7: Reagan administration in Lebanon and the United States repeatedly with

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Speaker 7: Iran have dealt with a drumbeat of hostage taking by

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Speaker 7: Iran and its proxies. And these events tend to be

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Speaker 7: multi month, multi year in many cases, where in the

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Speaker 7: end significant financial or political concessions are required to release hostages.

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Speaker 7: Iran and its proxies have very little care for human

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Speaker 7: life and dignity, but focus on their own interests.

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Speaker 1: Many observers would point to the peace agreement between Egypt

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Speaker 1: and Israel that Carter was able to get over the

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Speaker 1: finish line. How do you see that shaping the region?

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Speaker 7: It was dramatic and significant, but at the time it

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Speaker 7: was not something that was a sure thing. The Carter

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Speaker 7: administration entered office hoping to follow the steps of its predecessors,

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Speaker 7: large international conferences involving the Soviet Union, the Geneva Process.

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Speaker 7: In fact, the Carter administration was not initially enthusiastic about

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Speaker 7: sadatsa solo diplomatic engagement. The Washington Post at the time

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Speaker 7: famously described the cool Carter reception as being so chilly

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00:23:24,560 --> 00:23:29,000
Speaker 7: it could freeze the Nile. But it did open for

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00:23:29,040 --> 00:23:32,680
Speaker 7: the first time the possibility of something that eventually under

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00:23:32,720 --> 00:23:36,320
Speaker 7: the Trump administration became the Abraham Accords. It's just things

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00:23:36,480 --> 00:23:39,520
Speaker 7: moved slowly on these issues.

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Speaker 1: I'd love to end on that point, because we do

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00:23:42,800 --> 00:23:46,600
Speaker 1: have an outgoing president who wanted to expand peace in

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00:23:46,640 --> 00:23:50,159
Speaker 1: the region that Abraham Accords between Saudi Arabia and Israel,

447
00:23:50,200 --> 00:23:53,160
Speaker 1: he wasn't able to finish it. Now with an incoming

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00:23:53,200 --> 00:23:56,320
Speaker 1: Trump administration that certainly wants to make sure they're able

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00:23:56,320 --> 00:23:58,680
Speaker 1: to get that over the finish line, do you see

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00:23:58,720 --> 00:24:00,719
Speaker 1: that doable in the next four years.

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00:24:02,440 --> 00:24:02,760
Speaker 4: Yes.

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00:24:03,480 --> 00:24:07,320
Speaker 7: And in fact, the Biden administration also built on the

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00:24:07,359 --> 00:24:13,200
Speaker 7: previous Trump administration's work to pull together a Gulf security

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00:24:13,440 --> 00:24:17,080
Speaker 7: agreement with an important agreement with the government of Bahrain.

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00:24:17,800 --> 00:24:20,600
Speaker 7: And this agreement with Bahrain, which is a bilateral security

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00:24:20,880 --> 00:24:23,760
Speaker 7: agreement with the United States, now also includes the United

457
00:24:23,840 --> 00:24:26,959
Speaker 7: Kingdom and is open to other partners. I think what

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00:24:27,000 --> 00:24:29,639
Speaker 7: we're going to see is perhaps not an expansion of

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00:24:29,640 --> 00:24:32,840
Speaker 7: the Abraham Accords, although that is possible. We may see

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00:24:32,840 --> 00:24:37,240
Speaker 7: economic integration, we may see greater an expansion of the

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00:24:37,280 --> 00:24:41,600
Speaker 7: Bahrain Agreement. We may see a variety of different architectures,

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00:24:41,640 --> 00:24:45,520
Speaker 7: but if a two state process can be established, I

463
00:24:45,560 --> 00:24:49,280
Speaker 7: think it's inevitable that you're going to see this integration

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00:24:49,400 --> 00:24:52,199
Speaker 7: of the region, which would mean an expansion of the

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00:24:52,200 --> 00:24:53,960
Speaker 7: Abraham Accords and the peace process.

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Speaker 1: Norm Thank you so much, Jonathan. That was, of course

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Speaker 1: Norman Rule, a former US intelligence of.

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