1
00:00:02,520 --> 00:00:13,760
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

2
00:00:13,840 --> 00:00:17,920
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

3
00:00:18,200 --> 00:00:22,000
Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.

4
00:00:22,360 --> 00:00:25,680
Speaker 1: Listen on demand wherever you get your podcasts, or watch

5
00:00:25,760 --> 00:00:27,160
Speaker 1: us live on YouTube.

6
00:00:27,360 --> 00:00:29,480
Speaker 2: I've been anticipating this all morning.

7
00:00:29,960 --> 00:00:34,760
Speaker 3: Tina Fordham is exquisite on our fractured international relations with

8
00:00:34,840 --> 00:00:39,400
Speaker 3: Fordham Global Insight, her academics at Columbia among others, and

9
00:00:39,440 --> 00:00:41,479
Speaker 3: of course her work over the years of the Eurasia

10
00:00:41,520 --> 00:00:44,040
Speaker 3: Group now Fordham Global Foresight.

11
00:00:44,320 --> 00:00:47,720
Speaker 2: Tina, within your wonderful note this morning, you just cut

12
00:00:47,760 --> 00:00:48,479
Speaker 2: to the chase.

13
00:00:48,760 --> 00:00:53,880
Speaker 3: Nuclear states in active conflict is not business as usual?

14
00:00:54,400 --> 00:00:57,520
Speaker 2: How should the White House the State Department? Respond?

15
00:01:00,040 --> 00:01:05,440
Speaker 4: Thanks? Tom. I think that we've got to be very

16
00:01:05,480 --> 00:01:08,479
Speaker 4: focused on the fact that we're not just looking at

17
00:01:08,959 --> 00:01:13,440
Speaker 4: a bold Israeli attack on Iran taking out at least

18
00:01:13,480 --> 00:01:17,479
Speaker 4: twenty of its senior personnel at one time, as well

19
00:01:17,520 --> 00:01:23,160
Speaker 4: as some attacks on nuclear facilities, but the Ukrainian spiderweb attack,

20
00:01:23,319 --> 00:01:27,720
Speaker 4: drone attack deep into Russia, which of course has nuclear capability,

21
00:01:28,360 --> 00:01:31,679
Speaker 4: and the teraf War all happening at the same time.

22
00:01:32,720 --> 00:01:37,000
Speaker 4: For investors that are having flashbacks to the last round

23
00:01:37,120 --> 00:01:40,600
Speaker 4: of Iran Israel tensions in twenty twenty four. We're in

24
00:01:40,640 --> 00:01:44,080
Speaker 4: a really different environment. But I didn't answer your question

25
00:01:44,160 --> 00:01:46,400
Speaker 4: about what the White House and the State Department should do.

26
00:01:46,720 --> 00:01:51,840
Speaker 4: At the moment, it looks like the White House is

27
00:01:52,320 --> 00:01:56,880
Speaker 4: trying to give the impression that they were on board

28
00:01:56,960 --> 00:02:01,120
Speaker 4: with these attacks, when almost every thing that we're hearing

29
00:02:01,240 --> 00:02:05,560
Speaker 4: is that the White House was cautioning Natanaho not to

30
00:02:05,600 --> 00:02:10,200
Speaker 4: go for it. So both Natagnyaho and Zelensky and Ukraine,

31
00:02:11,400 --> 00:02:14,560
Speaker 4: you know, really not heating Washington's warnings.

32
00:02:15,320 --> 00:02:18,720
Speaker 5: So what does that say about our position in the

33
00:02:18,760 --> 00:02:22,519
Speaker 5: world in terms of shaping events that are in our

34
00:02:22,600 --> 00:02:26,440
Speaker 5: best interest, Because, as you mentioned in Ukraine and now

35
00:02:26,560 --> 00:02:29,920
Speaker 5: most recently in the Middle East, it appears that we

36
00:02:30,240 --> 00:02:32,519
Speaker 5: perhaps didn't don't have the influence we once did.

37
00:02:34,000 --> 00:02:39,160
Speaker 4: Well, we don't seem able to deter leaders who are

38
00:02:39,800 --> 00:02:43,399
Speaker 4: willing to take advantage of an opportunistic moment, and that's

39
00:02:43,440 --> 00:02:46,600
Speaker 4: where we are. There is a perceived power vacuum, and

40
00:02:46,680 --> 00:02:49,400
Speaker 4: both Ukraine and Israel, which of course are in very

41
00:02:49,400 --> 00:02:52,840
Speaker 4: different conflicts that I don't mean to draw equivalentss between them,

42
00:02:53,160 --> 00:02:56,760
Speaker 4: but part of being in a geopolitical risk supercycle is

43
00:02:56,800 --> 00:03:01,480
Speaker 4: the notion that the global guardrails which deter more dramatic

44
00:03:01,960 --> 00:03:06,799
Speaker 4: escalations are not working, and so that's where we find ourselves.

45
00:03:07,040 --> 00:03:09,880
Speaker 4: Having said that, of course, the United States has a

46
00:03:09,919 --> 00:03:14,680
Speaker 4: lot of cards. In particular, if Israel wants to you know,

47
00:03:14,919 --> 00:03:22,160
Speaker 4: truly a degrade Iran's nuclear facilities, that will require the

48
00:03:22,200 --> 00:03:28,280
Speaker 4: involvement of US long range bunk or buster bombs if to.

49
00:03:28,480 --> 00:03:29,040
Speaker 2: Ford him with US.

50
00:03:29,080 --> 00:03:32,440
Speaker 3: And we will continue here light economic data posts when

51
00:03:32,480 --> 00:03:34,760
Speaker 3: you will enjoy the Michigan reports that we see here

52
00:03:34,760 --> 00:03:37,840
Speaker 3: at ten am this morning. Thank you so much on

53
00:03:37,920 --> 00:03:42,000
Speaker 3: YouTube of Fiery live chat over these military and political

54
00:03:42,080 --> 00:03:44,040
Speaker 3: moments of the nation.

55
00:03:45,040 --> 00:03:48,480
Speaker 2: Tina, let me ask the question, and you're so wonderfully

56
00:03:48,520 --> 00:03:50,760
Speaker 2: a political I think I can get away with.

57
00:03:50,760 --> 00:03:54,800
Speaker 3: This for our audiences and their politics of say the

58
00:03:54,880 --> 00:03:58,560
Speaker 3: left and the right, of Democrat and Republican.

59
00:03:59,160 --> 00:04:01,840
Speaker 2: This question is going to come up this weekend.

60
00:04:02,280 --> 00:04:06,000
Speaker 3: Are we at this moment because of the unique policy

61
00:04:06,040 --> 00:04:10,280
Speaker 3: and approach of Donald Trump in his second term? Are

62
00:04:10,280 --> 00:04:14,120
Speaker 3: we going to get naval gazing into next week into

63
00:04:14,240 --> 00:04:19,120
Speaker 3: August into twenty twenty six that says we have this

64
00:04:19,279 --> 00:04:22,840
Speaker 3: conflict this war because of President Trump.

65
00:04:22,880 --> 00:04:25,839
Speaker 2: Are we going to get there? Tom?

66
00:04:26,120 --> 00:04:28,719
Speaker 4: I love that question, and you know that I'm not

67
00:04:28,880 --> 00:04:32,320
Speaker 4: afraid of being bold. I mean, I think one of

68
00:04:32,360 --> 00:04:36,480
Speaker 4: the tragedies of the present moment is that every single

69
00:04:36,600 --> 00:04:41,239
Speaker 4: issue that the US is facing is now left coded

70
00:04:41,279 --> 00:04:44,679
Speaker 4: and right coded in a way which is very bad

71
00:04:44,720 --> 00:04:47,800
Speaker 4: for the world and for dealing with threats. I am

72
00:04:48,040 --> 00:04:50,600
Speaker 4: in this role and in this seat because I think

73
00:04:50,640 --> 00:04:53,960
Speaker 4: that in order for commerce and financial markets to function,

74
00:04:54,320 --> 00:04:59,040
Speaker 4: we need safety and stability. And unfortunately, it's very difficult

75
00:04:59,080 --> 00:05:02,760
Speaker 4: to have those convers stations, even on Wall Street anymore,

76
00:05:03,120 --> 00:05:06,239
Speaker 4: without going down some kind of rabbit hole of whether

77
00:05:06,320 --> 00:05:10,799
Speaker 4: one is defending Ukraine policy or is pro or anti Israel,

78
00:05:11,320 --> 00:05:13,839
Speaker 4: when what we really need to be looking at as

79
00:05:13,839 --> 00:05:17,560
Speaker 4: investors is the potential for conflicts to move from regional

80
00:05:17,600 --> 00:05:21,560
Speaker 4: to systemic, to generate shocks from acid prices or to growth.

81
00:05:21,880 --> 00:05:24,080
Speaker 4: And we're not having those conversations anymore.

82
00:05:24,360 --> 00:05:27,520
Speaker 3: Ten fortum, I've stood outside that quiet room at the

83
00:05:27,520 --> 00:05:30,159
Speaker 3: White House down in the basement below the Roosevelt Room,

84
00:05:30,560 --> 00:05:33,320
Speaker 3: where the President will meet with a National Security Council.

85
00:05:33,360 --> 00:05:35,159
Speaker 3: I assume they'll be in that closed you know, the

86
00:05:35,200 --> 00:05:39,120
Speaker 3: famous room in all that, I would suggest we have

87
00:05:39,160 --> 00:05:44,599
Speaker 3: a fractured process under NSC right now, with Marco Rubio

88
00:05:44,680 --> 00:05:48,680
Speaker 3: having was it Paul five jobs, he's mowing the lawn whatever.

89
00:05:49,240 --> 00:05:52,640
Speaker 3: What's going to go on at that eleven am meeting today, Tina.

90
00:05:52,360 --> 00:05:56,760
Speaker 4: Fordham, Yes, eleven Am, no rush, you know it will

91
00:05:56,760 --> 00:05:59,640
Speaker 4: it will have been something like ten hours since the

92
00:06:00,120 --> 00:06:04,320
Speaker 4: bombs first dropped. I think they're going to be playing cleanup,

93
00:06:04,800 --> 00:06:07,800
Speaker 4: to be honest, those warnings from the White House to

94
00:06:07,880 --> 00:06:12,320
Speaker 4: NATANYAHUO were pretty well known in analysts and intelligence circles.

95
00:06:12,680 --> 00:06:15,360
Speaker 4: Now the President has had to come out saying he'd

96
00:06:15,400 --> 00:06:18,679
Speaker 4: been warning Iran all along. I think that's probably true.

97
00:06:19,240 --> 00:06:24,719
Speaker 4: The prospects for diplomacy now are zero between Israel, Iran,

98
00:06:24,839 --> 00:06:29,159
Speaker 4: and the United States. And what we're waiting for again

99
00:06:29,200 --> 00:06:32,039
Speaker 4: in terms of the scale of the response is does

100
00:06:32,080 --> 00:06:36,920
Speaker 4: Iran have anything left to respond with the one hundred

101
00:06:37,000 --> 00:06:40,640
Speaker 4: or sore drones that were launched seem to have been intercepted.

102
00:06:41,000 --> 00:06:44,200
Speaker 4: And how much further we're will Israel go. I've seen

103
00:06:44,240 --> 00:06:48,159
Speaker 4: some estimates twelve days and then going further. And will

104
00:06:48,200 --> 00:06:52,760
Speaker 4: the US actively get involved providing that kind of support

105
00:06:52,800 --> 00:06:55,080
Speaker 4: I mentioned. I don't think the White house will want

106
00:06:55,120 --> 00:06:55,680
Speaker 4: to go there.

107
00:06:56,640 --> 00:07:01,279
Speaker 5: Tina, You've recently published some work entitled ever going back

108
00:07:01,480 --> 00:07:04,320
Speaker 5: to Normal, and that was before the last twelve hours.

109
00:07:04,320 --> 00:07:06,320
Speaker 5: What do you mean by we're never going back to normal?

110
00:07:07,880 --> 00:07:12,160
Speaker 4: Well, I put this report together developing an evidence space

111
00:07:12,280 --> 00:07:16,600
Speaker 4: to really try to assess whether we are indeed experiencing

112
00:07:16,640 --> 00:07:19,880
Speaker 4: more geopolitical risks or not. And this speaks to Tom's

113
00:07:19,880 --> 00:07:23,160
Speaker 4: earlier point, which is basically, is this the fault of

114
00:07:23,200 --> 00:07:26,280
Speaker 4: the Trump administration. The answer is no, We've seen an

115
00:07:26,280 --> 00:07:30,520
Speaker 4: acceleration of geopolitical risk. Events they started to pick up

116
00:07:30,560 --> 00:07:33,560
Speaker 4: in the aftermath of the global financial crisis around about

117
00:07:33,640 --> 00:07:38,600
Speaker 4: twenty ten, really accelerated, whether measured by trade in tariffs,

118
00:07:38,640 --> 00:07:42,240
Speaker 4: or cyber attacks or conflicts. Lots of different variables that

119
00:07:42,240 --> 00:07:46,920
Speaker 4: we looked at. But again it's that combination of more guardrails, sorry,

120
00:07:46,920 --> 00:07:52,200
Speaker 4: more drivers of geopolitical risk and weaker guard rails, diplomacy norms,

121
00:07:53,120 --> 00:07:56,200
Speaker 4: even just you know, the deterrence factor when those things

122
00:07:56,240 --> 00:07:59,240
Speaker 4: break down. We're seeing a lot of nations willing to

123
00:07:59,280 --> 00:07:59,880
Speaker 4: take chance.

124
00:08:00,680 --> 00:08:03,960
Speaker 3: Tina, Thank you so much, Rave Reviews for the quality

125
00:08:03,960 --> 00:08:06,680
Speaker 3: of his conversation on YouTube LiveChat. Thank you so much,

126
00:08:06,760 --> 00:08:08,440
Speaker 3: gentlemen and gentle ladies.

127
00:08:08,440 --> 00:08:08,680
Speaker 5: For that.

128
00:08:08,800 --> 00:08:11,720
Speaker 2: Tina Fordham is with Fordham Global Insight.

129
00:08:17,800 --> 00:08:21,360
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live

130
00:08:21,440 --> 00:08:24,600
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

131
00:08:24,680 --> 00:08:28,320
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or

132
00:08:28,480 --> 00:08:30,560
Speaker 1: watch us live on YouTube right now.

133
00:08:30,600 --> 00:08:32,680
Speaker 3: We are honored to bring you. As Paul mentioned, a

134
00:08:32,800 --> 00:08:36,480
Speaker 3: marine mcmulroy, co founder of the Lobo Institute, the former

135
00:08:36,640 --> 00:08:40,920
Speaker 3: Deputy Assistant Secretary of Defense for the Middle East. Make

136
00:08:40,960 --> 00:08:43,000
Speaker 3: if I get out a map of the forty to

137
00:08:43,000 --> 00:08:47,360
Speaker 3: fifty thousand Americans at some nineteen sites in the Middle East,

138
00:08:48,000 --> 00:08:51,520
Speaker 3: with a substantial presence in Kuwait, don de behrein to

139
00:08:51,559 --> 00:08:55,240
Speaker 3: cut her over to the United Arab Emirates strapped across

140
00:08:55,280 --> 00:08:56,319
Speaker 3: the Persian Gulf.

141
00:08:56,760 --> 00:09:00,760
Speaker 2: What is the risk to American military personnel at this moment?

142
00:09:03,280 --> 00:09:06,800
Speaker 6: Good to be with you all again. Obviously a big

143
00:09:06,840 --> 00:09:10,280
Speaker 6: concern around stated essentially that if they were attacked, that

144
00:09:10,320 --> 00:09:14,640
Speaker 6: they would go after US personnel and facilities. That would

145
00:09:14,640 --> 00:09:17,160
Speaker 6: be a huge strategic mistake. That's one of the reasons

146
00:09:17,200 --> 00:09:19,800
Speaker 6: why I think Secretary of Rubio made it clear that

147
00:09:19,920 --> 00:09:23,800
Speaker 6: this was a unilateral attack Byron not by the United States,

148
00:09:24,120 --> 00:09:26,520
Speaker 6: So they would be drawing the United States into a

149
00:09:26,559 --> 00:09:30,160
Speaker 6: conflict that they're already having with Israel. So they would

150
00:09:30,520 --> 00:09:33,640
Speaker 6: be fighting a regional superpower, if you will, plus US.

151
00:09:34,440 --> 00:09:37,520
Speaker 6: So I don't think they will. Hopefully they will have

152
00:09:38,480 --> 00:09:41,520
Speaker 6: better ideas and not do that. But if they did,

153
00:09:42,040 --> 00:09:44,880
Speaker 6: I think we have done everything we can to mitigate

154
00:09:44,920 --> 00:09:47,560
Speaker 6: that threat, to get people out that don't need to

155
00:09:47,559 --> 00:09:50,280
Speaker 6: be there, and of course bring in air and missile

156
00:09:50,280 --> 00:09:53,040
Speaker 6: defense systems, which is the most likely way they would

157
00:09:53,040 --> 00:09:55,839
Speaker 6: attack us. To defend these positions.

158
00:09:55,760 --> 00:09:59,320
Speaker 3: Mick, I don't want to go back to Eisenhower or

159
00:09:59,360 --> 00:10:04,320
Speaker 3: to nineteen seventy ninety either, but the absolute memory of

160
00:10:04,440 --> 00:10:08,920
Speaker 3: pros like you is the absolutely stunning war on the

161
00:10:08,920 --> 00:10:12,720
Speaker 3: border of Iraq and Iran in the Iran in the

162
00:10:12,800 --> 00:10:18,600
Speaker 3: nineteen eighties that colors everything about Persia about Iran. They

163
00:10:18,640 --> 00:10:22,880
Speaker 3: don't have that capability for large war like they did

164
00:10:22,880 --> 00:10:24,640
Speaker 3: in the middle nineteen eighties, do.

165
00:10:24,600 --> 00:10:29,959
Speaker 6: They They do not, And of course this is after

166
00:10:30,120 --> 00:10:34,000
Speaker 6: multiple attacks by Israel on Iran that have been mitigating

167
00:10:34,040 --> 00:10:39,199
Speaker 6: their air missile defense systems, their ability to launch cruise missiles,

168
00:10:39,200 --> 00:10:43,280
Speaker 6: ballistic missiles and produce them. So this is something I

169
00:10:43,280 --> 00:10:46,160
Speaker 6: think Israel took the opportunity to mitigate, not just their

170
00:10:46,240 --> 00:10:49,800
Speaker 6: nuclear facilities, let's remember that's what we're talking about, but

171
00:10:49,840 --> 00:10:54,360
Speaker 6: they also went after their ballistic missile launch sites, manufacturing centers,

172
00:10:54,679 --> 00:11:00,160
Speaker 6: air bases, military bases, and essentially eliminated their entire general

173
00:11:00,440 --> 00:11:04,600
Speaker 6: staff Major General Bulgary On down, essentially their joint chiefs

174
00:11:04,640 --> 00:11:08,360
Speaker 6: of staff and the entire staff was eliminated, plus most

175
00:11:08,400 --> 00:11:12,480
Speaker 6: of their senior nuclear scientists. They took every opportunity with this,

176
00:11:12,600 --> 00:11:15,840
Speaker 6: and say it might actually last up to two weeks,

177
00:11:16,160 --> 00:11:16,880
Speaker 6: so this might not.

178
00:11:16,880 --> 00:11:17,920
Speaker 7: Be over, Mick.

179
00:11:18,000 --> 00:11:21,439
Speaker 5: Let's talk about timing. Why do you believe Israel acted now?

180
00:11:23,960 --> 00:11:27,280
Speaker 6: There's some speculation they were concerned about the agreement that

181
00:11:27,360 --> 00:11:30,360
Speaker 6: the United States in Iran looked like they might be

182
00:11:30,400 --> 00:11:33,760
Speaker 6: willing to agree to, which would have been very similar

183
00:11:34,160 --> 00:11:36,120
Speaker 6: at least from what we see in reporting as the

184
00:11:36,160 --> 00:11:40,480
Speaker 6: twenty fifteen JCPOA, the one that the United States unitedly

185
00:11:40,600 --> 00:11:43,640
Speaker 6: withdrew from in twenty eighteen, and something that I think

186
00:11:43,760 --> 00:11:47,720
Speaker 6: Israel found to be unacceptable. It would have allowed some

187
00:11:47,920 --> 00:11:52,280
Speaker 6: type of richment in Iran to continue. Some would say

188
00:11:52,320 --> 00:11:55,040
Speaker 6: that that's why they did it. There might have been intelligence.

189
00:11:55,080 --> 00:11:56,760
Speaker 6: I'm not aware of it, but of course because I

190
00:11:56,760 --> 00:11:59,280
Speaker 6: don't have access to it, that they were getting closer

191
00:11:59,320 --> 00:12:02,079
Speaker 6: to a nuclear weapon and that was the trigger point

192
00:12:02,640 --> 00:12:06,080
Speaker 6: for Israel. But certainly I think the United States would

193
00:12:06,120 --> 00:12:09,240
Speaker 6: have rather seen a nuclear agreement, a new one that

194
00:12:09,280 --> 00:12:11,920
Speaker 6: both parties could agree to oran in the United States,

195
00:12:12,400 --> 00:12:14,600
Speaker 6: rather than see this escalate and to it could be

196
00:12:14,800 --> 00:12:18,000
Speaker 6: a long term conflict that could continue to escalate nck.

197
00:12:18,080 --> 00:12:20,199
Speaker 5: What does this say about the role of the United

198
00:12:20,200 --> 00:12:22,840
Speaker 5: States in this region at this particular time. We know

199
00:12:22,840 --> 00:12:27,079
Speaker 5: that the Trump administration was pushing for a diplomatic resolution and

200
00:12:27,280 --> 00:12:29,760
Speaker 5: maybe a nuclear deal, and there were planned talks this

201
00:12:29,880 --> 00:12:32,360
Speaker 5: weekend and then this happened, So what does that say

202
00:12:32,360 --> 00:12:34,000
Speaker 5: about the US role here?

203
00:12:36,400 --> 00:12:38,319
Speaker 6: So I agree, I agree with the premise that this

204
00:12:39,120 --> 00:12:41,200
Speaker 6: was something the US did not want to see. They

205
00:12:41,240 --> 00:12:43,959
Speaker 6: wanted to see a nuclear agreement that would have been

206
00:12:44,040 --> 00:12:48,240
Speaker 6: acceptable to US, perhaps a slightly better for US than

207
00:12:48,320 --> 00:12:50,880
Speaker 6: the twenty fifteen So politically.

208
00:12:50,760 --> 00:12:52,640
Speaker 2: It would have it would have landed well.

209
00:12:53,200 --> 00:12:56,120
Speaker 6: But that's unlikely to happen now. The Iman meetings that

210
00:12:56,160 --> 00:12:59,600
Speaker 6: were set for Sunday or completely off and there's literally

211
00:12:59,640 --> 00:13:01,240
Speaker 6: no chance that we're going to get back to that

212
00:13:01,320 --> 00:13:03,840
Speaker 6: place and back around made it clear that if their

213
00:13:03,880 --> 00:13:07,480
Speaker 6: facilities would ever attacked, that they would spend all of

214
00:13:07,559 --> 00:13:09,840
Speaker 6: their effort trying to get to a nuclear weapon. So

215
00:13:09,920 --> 00:13:12,640
Speaker 6: that's another concern that we have. The United States, of course,

216
00:13:12,679 --> 00:13:14,280
Speaker 6: does not want to see another war start in the

217
00:13:14,280 --> 00:13:17,000
Speaker 6: Middle East. That's not in anybody's interest, certainly not the

218
00:13:17,000 --> 00:13:20,400
Speaker 6: countries of the Middle East. So hopefully we can play

219
00:13:20,440 --> 00:13:23,520
Speaker 6: a role that de escalates this as quickly as possible.

220
00:13:24,000 --> 00:13:25,960
Speaker 6: One way to do so, of course, is to protect

221
00:13:26,559 --> 00:13:30,280
Speaker 6: Israel if they see a large amount of incoming missiles

222
00:13:30,320 --> 00:13:32,680
Speaker 6: and drones like they saw back in October.

223
00:13:32,800 --> 00:13:33,520
Speaker 2: We welcome all of.

224
00:13:33,520 --> 00:13:36,520
Speaker 3: You across the nation with us now. McMurray. Rebecca Patterson

225
00:13:36,559 --> 00:13:39,719
Speaker 3: will be with us here in a bit again. Our

226
00:13:39,760 --> 00:13:44,160
Speaker 3: team led by Ethan Bronner in Tel Aviv monitoring each

227
00:13:44,240 --> 00:13:47,959
Speaker 3: moment of this. We've had reports recently of continued attacks.

228
00:13:48,000 --> 00:13:51,600
Speaker 3: We'll have to get more verification of that. Mcmurroy, I

229
00:13:51,640 --> 00:13:54,360
Speaker 3: have a presidential tweet in front of me. It is

230
00:13:54,440 --> 00:13:58,120
Speaker 3: too long to waste time with precious time with I

231
00:13:58,120 --> 00:14:01,840
Speaker 3: should say, but to end the presidential tweet, Iran must

232
00:14:01,880 --> 00:14:05,440
Speaker 3: make a deal before there is nothing left and say

233
00:14:05,520 --> 00:14:09,400
Speaker 3: what was once known as the Iranian Empire. No more death,

234
00:14:09,480 --> 00:14:13,080
Speaker 3: no more destruction, all caps. Just do it before it's

235
00:14:13,120 --> 00:14:17,240
Speaker 3: too late. God bless you all. With great respect from

236
00:14:17,240 --> 00:14:22,000
Speaker 3: the Arc of Dwight David Eisenhower out to President Obama.

237
00:14:22,440 --> 00:14:23,040
Speaker 2: Mick Molroy.

238
00:14:23,120 --> 00:14:27,640
Speaker 3: Do we have a coherent Middle East policy at this moment?

239
00:14:30,920 --> 00:14:33,240
Speaker 6: It does not appear that we are actually running the

240
00:14:33,240 --> 00:14:36,760
Speaker 6: show when it comes to this, and less one believes

241
00:14:36,800 --> 00:14:39,760
Speaker 6: that this was to force around to the table. I

242
00:14:39,760 --> 00:14:43,640
Speaker 6: think that's very unlikely that they. I mean, this was

243
00:14:44,040 --> 00:14:47,440
Speaker 6: a complete disaster for Iran. They have been shown that

244
00:14:47,520 --> 00:14:51,120
Speaker 6: they have almost no ability to defend themselves. For them

245
00:14:51,160 --> 00:14:53,240
Speaker 6: to then come to the table and come to an

246
00:14:53,280 --> 00:14:57,280
Speaker 6: agreement with the US would be the ultimate humiliation. They

247
00:14:57,320 --> 00:15:00,520
Speaker 6: will have to respond to this attack, and they will

248
00:15:00,640 --> 00:15:03,720
Speaker 6: likely not want to have any discussions going forward. They

249
00:15:03,760 --> 00:15:05,440
Speaker 6: have made it clear that they're now will try to

250
00:15:05,480 --> 00:15:09,280
Speaker 6: get to a nuclear weapon. The US, of course, will

251
00:15:09,280 --> 00:15:12,600
Speaker 6: always play a key and vital part of the Middle East.

252
00:15:13,320 --> 00:15:15,320
Speaker 6: It is in our own interest to do so, and

253
00:15:15,880 --> 00:15:18,640
Speaker 6: I think ultimately if we can get this back on track,

254
00:15:18,680 --> 00:15:20,360
Speaker 6: it would be in our interests as well as Iran

255
00:15:20,400 --> 00:15:23,040
Speaker 6: and all that countries in the region. Do have a

256
00:15:23,120 --> 00:15:26,040
Speaker 6: diplomatic resolution, and if that means a new nuclear agreement,

257
00:15:26,320 --> 00:15:28,840
Speaker 6: that would be good. It's very difficult to see how

258
00:15:28,840 --> 00:15:31,200
Speaker 6: we can get there from here right now.

259
00:15:31,600 --> 00:15:33,440
Speaker 5: Mick, Within Iran, do we have a sense of You

260
00:15:33,440 --> 00:15:36,600
Speaker 5: mentioned the senior leadership was dealt a big, big blow

261
00:15:36,600 --> 00:15:39,400
Speaker 5: in this attack here. How about just the leadership, the

262
00:15:39,440 --> 00:15:43,080
Speaker 5: political leadership in Iran? How stable is that given you know,

263
00:15:43,120 --> 00:15:45,840
Speaker 5: this really a surprising attack here.

264
00:15:48,280 --> 00:15:49,800
Speaker 6: Well, this is one of the reasons why I think

265
00:15:49,840 --> 00:15:53,600
Speaker 6: Prime Minister Nan Yahoo came out and said this was

266
00:15:53,600 --> 00:15:56,000
Speaker 6: the time, This was the time for the Iranian people

267
00:15:56,000 --> 00:15:59,360
Speaker 6: to rise up against the Iranian regime which has done

268
00:15:59,400 --> 00:16:03,960
Speaker 6: nothing to help them because of their near continuous desire

269
00:16:04,040 --> 00:16:07,320
Speaker 6: to be at constant war with their neighbors. Of course,

270
00:16:07,400 --> 00:16:10,720
Speaker 6: they support all the proxies that continuously attack not only

271
00:16:10,800 --> 00:16:13,400
Speaker 6: Israel but the United States. Up until nine to eleven,

272
00:16:13,760 --> 00:16:17,240
Speaker 6: Hesbolo was the biggest killer of Americans, the biggest terrorist

273
00:16:17,320 --> 00:16:20,880
Speaker 6: organization killer of Americans. So they caused this, and now

274
00:16:20,920 --> 00:16:24,320
Speaker 6: they've come home to you know, to roost, so to speak.

275
00:16:24,880 --> 00:16:27,760
Speaker 6: Whether they can change that in or on this this

276
00:16:28,000 --> 00:16:31,680
Speaker 6: is their opportunity. The leadership has been decimated. They are

277
00:16:31,760 --> 00:16:36,200
Speaker 6: obviously in very direk the economic situation will have to

278
00:16:36,240 --> 00:16:38,400
Speaker 6: see it has to be organic, I think for it

279
00:16:38,520 --> 00:16:41,160
Speaker 6: to take take hold. But they are in a very

280
00:16:41,160 --> 00:16:43,400
Speaker 6: bad place and we have to see whether they have

281
00:16:43,440 --> 00:16:46,200
Speaker 6: the capacity istry around that is unclear.

282
00:16:46,480 --> 00:16:48,440
Speaker 3: Make We hope to speak to you next week with

283
00:16:48,520 --> 00:16:50,800
Speaker 3: the Lobo Institute and of course his service to the

284
00:16:50,840 --> 00:16:54,760
Speaker 3: Pentagon and the United States Marines. Mcmulroy starts us off

285
00:16:54,800 --> 00:16:57,600
Speaker 3: this morning. Futures negative sixty or the vix out, two

286
00:16:57,680 --> 00:17:00,760
Speaker 3: big figures as Paul mentioned over twenty twenty point one

287
00:17:00,960 --> 00:17:05,760
Speaker 3: five brent crewed seventy four dollars seventy seven cents up

288
00:17:05,760 --> 00:17:06,280
Speaker 3: per barrel.

289
00:17:06,480 --> 00:17:06,920
Speaker 2: Too short.

290
00:17:06,920 --> 00:17:09,359
Speaker 3: A visit this morning with Rebecca Patterson with a consul

291
00:17:09,440 --> 00:17:13,200
Speaker 3: and foreign relations, a student of the Litmus paper of

292
00:17:13,280 --> 00:17:16,320
Speaker 3: the system the currency.

293
00:17:16,359 --> 00:17:18,200
Speaker 2: This is an upset.

294
00:17:18,560 --> 00:17:23,760
Speaker 3: This is a continued cacophony of events that we see.

295
00:17:24,359 --> 00:17:28,280
Speaker 3: We clearly have a threatened dollar down ten percent. How

296
00:17:28,320 --> 00:17:31,160
Speaker 3: does this add to the burden of a weaker dollar.

297
00:17:33,359 --> 00:17:36,199
Speaker 8: I think what we're seeing overnight in this morning is

298
00:17:36,280 --> 00:17:40,520
Speaker 8: some very modest dollar strength the DXY Dollar Index modest

299
00:17:40,560 --> 00:17:43,040
Speaker 8: and I expected it right, and you're seeing a bigger

300
00:17:43,080 --> 00:17:46,080
Speaker 8: reaction in gold. You're seeing a reaction in the Swiss

301
00:17:46,080 --> 00:17:51,560
Speaker 8: frank so other quote unquote safe havens, some fall in

302
00:17:52,280 --> 00:17:55,760
Speaker 8: ten year bond yields, although not much. Again, so I

303
00:17:55,800 --> 00:17:58,520
Speaker 8: think even though we are getting the typical flight to

304
00:17:58,600 --> 00:18:02,160
Speaker 8: safety reaction in market that we've seen sadly too many

305
00:18:02,160 --> 00:18:05,480
Speaker 8: times over our careers, the fact that the dollar rally

306
00:18:05,520 --> 00:18:09,080
Speaker 8: is so muted, I think tom speaks to what's happening

307
00:18:09,160 --> 00:18:10,240
Speaker 8: with the dollar more broadly.

308
00:18:10,280 --> 00:18:10,960
Speaker 2: Now, thank you.

309
00:18:11,520 --> 00:18:16,320
Speaker 5: So, Global Wall Street waking up to this news just

310
00:18:16,400 --> 00:18:18,800
Speaker 5: another issue. I'm not going to call it a headwind

311
00:18:18,800 --> 00:18:21,240
Speaker 5: per se, but another issue for Global Wall Strate and

312
00:18:21,240 --> 00:18:24,639
Speaker 5: global investors to deal with. How to historically, how have

313
00:18:24,720 --> 00:18:27,800
Speaker 5: you kind of viewed some of these global tensions and

314
00:18:27,880 --> 00:18:30,159
Speaker 5: how it informs your investment outlook.

315
00:18:30,280 --> 00:18:33,040
Speaker 8: Yeah, I mean, as horrible as these events are from

316
00:18:33,080 --> 00:18:36,720
Speaker 8: a humanitarian point of view, I think for financial markets

317
00:18:37,000 --> 00:18:39,760
Speaker 8: you always go back to what is going to be

318
00:18:39,880 --> 00:18:43,600
Speaker 8: the global or regional economic impact, and in this case,

319
00:18:44,080 --> 00:18:48,160
Speaker 8: it's looking at what will hire crude oil prices and

320
00:18:48,200 --> 00:18:52,000
Speaker 8: gas natural gas prices due to the global economy. What

321
00:18:52,080 --> 00:18:56,800
Speaker 8: will potentially a slowdown in international flights. Do we see

322
00:18:56,800 --> 00:18:59,359
Speaker 8: that in the airline stocks today and can there be

323
00:18:59,480 --> 00:19:02,960
Speaker 8: contagious So the marker I'd be watching is an escalation

324
00:19:03,080 --> 00:19:05,560
Speaker 8: in this conflict. If the Strait of horn Moots would

325
00:19:05,600 --> 00:19:09,000
Speaker 8: be the red line. If we see any attempt to

326
00:19:09,080 --> 00:19:13,720
Speaker 8: close the strait. That hurts Iran itself because it needs

327
00:19:13,720 --> 00:19:16,760
Speaker 8: to ship its energy out of there, especially to China,

328
00:19:16,840 --> 00:19:18,879
Speaker 8: but it hurts everyone and that would be a big

329
00:19:18,960 --> 00:19:22,560
Speaker 8: stagflationary step forward if it happens. I think probably a

330
00:19:22,600 --> 00:19:25,159
Speaker 8: low probability, but you need to keep an eye out

331
00:19:25,200 --> 00:19:25,560
Speaker 8: for it.

332
00:19:25,880 --> 00:19:28,600
Speaker 3: With your work with JPM Morgan and of course with Bridgewater.

333
00:19:28,680 --> 00:19:31,360
Speaker 3: Back to City Road in London, I'm going to say

334
00:19:31,400 --> 00:19:35,120
Speaker 3: there's a conceit that the United States is distant from

335
00:19:35,160 --> 00:19:38,280
Speaker 3: all this. There's two oceans in the way. It's in

336
00:19:38,359 --> 00:19:41,720
Speaker 3: bred in our culture to say it's their problem and

337
00:19:41,800 --> 00:19:45,560
Speaker 3: their problem is continental Europe and over to the United Kingdom.

338
00:19:46,000 --> 00:19:50,000
Speaker 3: With your global work that you've done over the years, Rebecca,

339
00:19:50,480 --> 00:19:54,200
Speaker 3: how does this affect Europe? In London more so? Now?

340
00:19:54,240 --> 00:19:59,200
Speaker 3: To me, they're shockingly close to the Greater Persian Gulf absolutely.

341
00:19:59,240 --> 00:20:03,159
Speaker 8: I mean they rely on oil and energy imports a

342
00:20:03,200 --> 00:20:07,120
Speaker 8: lot more than the US. We're self sufficient effectively and energy,

343
00:20:07,480 --> 00:20:09,560
Speaker 8: So they're going to be much more vulnerable to that

344
00:20:09,800 --> 00:20:12,920
Speaker 8: as well as just trade between the Middle East and Europe.

345
00:20:13,080 --> 00:20:16,680
Speaker 8: But I do think the US is more vulnerable than

346
00:20:16,680 --> 00:20:20,080
Speaker 8: normal right now because even though the hard data, so

347
00:20:20,160 --> 00:20:22,639
Speaker 8: to speak, the economy in the US is moderating but

348
00:20:22,720 --> 00:20:26,760
Speaker 8: still solid, you do have this heightened level of uncertainty

349
00:20:26,800 --> 00:20:30,439
Speaker 8: among businesses in particular. You're just adding more fuel to

350
00:20:30,480 --> 00:20:33,920
Speaker 8: that fire with this. If you want business activity to pause,

351
00:20:34,600 --> 00:20:36,159
Speaker 8: this is going to contribute to that.

352
00:20:36,240 --> 00:20:40,480
Speaker 3: Paul publishing last night, Michael Ferole JP Morgan models out

353
00:20:40,480 --> 00:20:44,120
Speaker 3: to Q four Q four of this year. JP Morgan

354
00:20:44,200 --> 00:20:48,679
Speaker 3: is modeling a sub one percent GDP for that quarter.

355
00:20:48,880 --> 00:20:52,119
Speaker 5: So, Rebecca, given what Thomas just mentioning that about slow

356
00:20:52,160 --> 00:20:57,280
Speaker 5: in growth but not recessionary scenarios, what does that suggest

357
00:20:57,280 --> 00:21:00,000
Speaker 5: to you for investors where they should be maybe position

358
00:21:00,240 --> 00:21:01,399
Speaker 5: in this slower growth world.

359
00:21:01,480 --> 00:21:01,680
Speaker 7: Yeah.

360
00:21:01,720 --> 00:21:04,600
Speaker 8: I mean we've seen this trend already this year, but

361
00:21:04,680 --> 00:21:07,399
Speaker 8: I think it continues that large cap stocks that are

362
00:21:07,440 --> 00:21:11,160
Speaker 8: more able to weather these storms outperform small caps, which

363
00:21:11,240 --> 00:21:14,439
Speaker 8: need that sick locality, that momentum plus lower rates to

364
00:21:14,480 --> 00:21:17,119
Speaker 8: really outperform. So you want to be in large caps,

365
00:21:17,160 --> 00:21:19,879
Speaker 8: and you probably want to keep quote unquote barbelling your

366
00:21:19,920 --> 00:21:23,880
Speaker 8: portfolio in that both within stocks have the consumer staples,

367
00:21:23,920 --> 00:21:26,600
Speaker 8: have the save stocks, but then have some tech to

368
00:21:26,680 --> 00:21:29,040
Speaker 8: play the long term AI theme. And if there's no

369
00:21:29,200 --> 00:21:33,040
Speaker 8: turn in consumer sentiment and then globally, I'm pounding my

370
00:21:33,080 --> 00:21:35,760
Speaker 8: fist on the table on this one. Gold keeps going higher.

371
00:21:35,880 --> 00:21:36,560
Speaker 7: Thank you, Tom.

372
00:21:37,080 --> 00:21:39,160
Speaker 8: I've been bullish on gold for a couple of years,

373
00:21:39,200 --> 00:21:42,520
Speaker 8: and this is yet another reason, sadly that you want

374
00:21:42,520 --> 00:21:45,280
Speaker 8: to keep in that even it's up thirty percent year today.

375
00:21:45,200 --> 00:21:47,600
Speaker 3: Such a pro gold up thirty six dollars thirty four

376
00:21:47,600 --> 00:21:51,639
Speaker 3: to thirty eight. One final question Kindeth Pollock and Ambassador

377
00:21:51,760 --> 00:21:56,440
Speaker 3: Shapiro published this morning at the Console and Foreign Relations

378
00:21:56,440 --> 00:22:00,920
Speaker 3: in Foreign Affairs magazine. When those fancy people in international

379
00:22:00,960 --> 00:22:03,520
Speaker 3: relations talk to a market.

380
00:22:03,160 --> 00:22:06,280
Speaker 2: Beast like you, what do they ask you?

381
00:22:06,280 --> 00:22:08,560
Speaker 8: You know, I've really enjoyed being part of the Council

382
00:22:08,560 --> 00:22:11,280
Speaker 8: on Foreign Relations to try to tie the policy and

383
00:22:11,359 --> 00:22:14,760
Speaker 8: economics with the financial markets because they all affect each other.

384
00:22:15,280 --> 00:22:18,399
Speaker 8: In fact, we had an event yesterday on foreign direct

385
00:22:18,400 --> 00:22:20,720
Speaker 8: investment to the United States and what some of the

386
00:22:20,840 --> 00:22:23,600
Speaker 8: uncertainty we're living through, what some of the policies could

387
00:22:23,640 --> 00:22:27,800
Speaker 8: do to foreign direct investments so they're thinking about the

388
00:22:27,800 --> 00:22:33,600
Speaker 8: policy of Commerce Secretary Lutenux FastTrack proposal. I'm thinking about

389
00:22:33,760 --> 00:22:36,800
Speaker 8: if we have less FDI to the US. FDI today

390
00:22:37,200 --> 00:22:40,159
Speaker 8: accounts for about eight million jobs and about a quarter

391
00:22:40,200 --> 00:22:44,920
Speaker 8: of all US manufacturing jobs. If FDI slows because of

392
00:22:45,119 --> 00:22:48,520
Speaker 8: global policy concerns, how does that feed through to our

393
00:22:48,560 --> 00:22:52,360
Speaker 8: equity market, to household wealth, to the dollar. So I'm

394
00:22:52,440 --> 00:22:55,320
Speaker 8: trying to square that circle at the Council on Foreign

395
00:22:55,359 --> 00:22:57,960
Speaker 8: Relations and learning a lot from my colleagues.

396
00:22:58,000 --> 00:23:00,159
Speaker 3: Frankly, Rebecca, thank you so much, Thank you, thank you

397
00:23:00,240 --> 00:23:02,960
Speaker 3: so much for coming in early this morning. Ms Patterson

398
00:23:03,000 --> 00:23:05,439
Speaker 3: with the Console and Foreign Relations as a senior fellow,

399
00:23:05,840 --> 00:23:09,920
Speaker 3: and of course heard years i should say, with Bridgewater

400
00:23:10,320 --> 00:23:12,520
Speaker 3: and with JP Morgan and bestmer Trust as well.

401
00:23:12,920 --> 00:23:16,800
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

402
00:23:16,840 --> 00:23:19,880
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

403
00:23:19,880 --> 00:23:22,919
Speaker 1: Auto with the Bloomberg Business app. You can also listen

404
00:23:23,000 --> 00:23:26,280
Speaker 1: live on Amazon Alexa from our flagship New York station,

405
00:23:26,800 --> 00:23:29,679
Speaker 1: Just say Alexa play Bloomberg eleven thirty.

406
00:23:29,520 --> 00:23:31,840
Speaker 3: To short A visit this morning with Rebecca Patterson with

407
00:23:31,920 --> 00:23:35,720
Speaker 3: the Consul and Foreign Relations, a student of the litmus

408
00:23:35,760 --> 00:23:41,119
Speaker 3: paper of the system the currency. This is an upset.

409
00:23:41,520 --> 00:23:46,800
Speaker 3: This is a continued cacophony of events that we see.

410
00:23:47,320 --> 00:23:51,240
Speaker 3: We clearly have a threatened dollar down ten percent. How

411
00:23:51,240 --> 00:23:54,119
Speaker 3: does this add to the burden of a weeker dollar.

412
00:23:56,320 --> 00:23:59,119
Speaker 8: I think what we're seeing overnight in this morning is

413
00:23:59,240 --> 00:24:02,760
Speaker 8: some very much oddest dollar strength. The DXY Dollar index

414
00:24:03,119 --> 00:24:05,679
Speaker 8: modest and I expected it right. And you're seeing a

415
00:24:05,680 --> 00:24:08,679
Speaker 8: bigger reaction in gold. You're seeing a reaction in the

416
00:24:08,720 --> 00:24:14,399
Speaker 8: Swiss frank so other quote unquote safe havens, some fall

417
00:24:14,480 --> 00:24:18,560
Speaker 8: in ten year bond yields, although not much. Again, so

418
00:24:18,640 --> 00:24:21,320
Speaker 8: I think even though we are getting the typical flight

419
00:24:21,400 --> 00:24:24,800
Speaker 8: to safety reaction in markets that we've seen sadly too

420
00:24:24,880 --> 00:24:28,000
Speaker 8: many times over our careers, the fact that the dollar

421
00:24:28,080 --> 00:24:31,680
Speaker 8: rally is so muted, I think tom speaks to what's

422
00:24:31,720 --> 00:24:33,199
Speaker 8: happening with the dollar more broadly.

423
00:24:33,240 --> 00:24:37,240
Speaker 5: Now, thank you so, Global Wall Street waking up to

424
00:24:37,280 --> 00:24:41,280
Speaker 5: this news just another issue. I'm not gonna call it

425
00:24:41,280 --> 00:24:43,840
Speaker 5: a headwind per se, but another issue for Global Wall

426
00:24:43,880 --> 00:24:45,399
Speaker 5: Strate and global investors to deal with.

427
00:24:46,119 --> 00:24:48,080
Speaker 7: How historically, how have you kind.

428
00:24:47,960 --> 00:24:51,800
Speaker 5: Of viewed some of these global tensions and how it

429
00:24:51,800 --> 00:24:53,119
Speaker 5: informs your investment outlook.

430
00:24:53,200 --> 00:24:55,960
Speaker 8: Yeah, I mean, as horrible as these events are from

431
00:24:56,040 --> 00:24:59,640
Speaker 8: a humanitarian point of view, I think for financial markets

432
00:25:00,040 --> 00:25:02,720
Speaker 8: you always go back to what is going to be

433
00:25:02,840 --> 00:25:06,560
Speaker 8: the global or regional economic impact, and in this case,

434
00:25:07,040 --> 00:25:11,120
Speaker 8: it's looking at what will hire crude oil prices and

435
00:25:11,160 --> 00:25:14,960
Speaker 8: gas natural gas prices due to the global economy. What

436
00:25:15,040 --> 00:25:19,480
Speaker 8: will potentially a slow down in international flights. Do we

437
00:25:19,560 --> 00:25:22,240
Speaker 8: see that in the airline stocks today? And can there

438
00:25:22,240 --> 00:25:25,200
Speaker 8: be contagion? So the marker I'd be watching is an

439
00:25:25,400 --> 00:25:28,280
Speaker 8: escalation in this conflict. If the Strait of horm Moots

440
00:25:28,320 --> 00:25:31,800
Speaker 8: would be the red line. If we see any attempt

441
00:25:31,880 --> 00:25:36,359
Speaker 8: to close the strait, that hurts Iran itself because it

442
00:25:36,440 --> 00:25:39,720
Speaker 8: needs to ship its energy out of there, especially to China,

443
00:25:39,800 --> 00:25:41,840
Speaker 8: but it hurts everyone and that would be a big

444
00:25:41,920 --> 00:25:45,520
Speaker 8: stagflationary step forward. If it happens. I think probably a

445
00:25:45,560 --> 00:25:48,119
Speaker 8: low probability, but you need to keep an eye out

446
00:25:48,119 --> 00:25:48,879
Speaker 8: for it with.

447
00:25:49,000 --> 00:25:51,520
Speaker 3: Your work with JP Morgan and of course with Bridgewater.

448
00:25:51,640 --> 00:25:54,320
Speaker 3: Back to City Road in London, I'm going to say

449
00:25:54,359 --> 00:25:58,080
Speaker 3: there's a conceit that the United States is distant from

450
00:25:58,119 --> 00:26:01,240
Speaker 3: all this. There's two oceans in the way. It's in

451
00:26:01,320 --> 00:26:04,679
Speaker 3: bred in our culture to say it's their problem, and

452
00:26:04,760 --> 00:26:08,639
Speaker 3: their problem is continental Europe and over to the United Kingdom.

453
00:26:08,960 --> 00:26:12,520
Speaker 3: With your global work that you've done over the years, Rebecca,

454
00:26:13,400 --> 00:26:17,160
Speaker 3: how does this affect Europe and London more so? Now?

455
00:26:17,200 --> 00:26:22,160
Speaker 3: To me, they're shockingly close to the Greater Persian Gulf absolutely.

456
00:26:22,200 --> 00:26:26,119
Speaker 8: I mean they rely on oil and energy imports a

457
00:26:26,160 --> 00:26:30,040
Speaker 8: lot more than the US. We're self sufficient effectively and energy,

458
00:26:30,440 --> 00:26:32,520
Speaker 8: so they're going to be much more vulnerable to that

459
00:26:32,760 --> 00:26:35,800
Speaker 8: as well as just trade between the Middle East and Europe.

460
00:26:36,040 --> 00:26:39,640
Speaker 8: But I do think the US is more vulnerable than

461
00:26:39,640 --> 00:26:43,040
Speaker 8: normal right now because even though the hard data, so

462
00:26:43,119 --> 00:26:45,600
Speaker 8: to speak, the economy in the US is moderating but

463
00:26:45,680 --> 00:26:49,720
Speaker 8: still solid, you do have this heightened level of uncertainty

464
00:26:49,760 --> 00:26:53,399
Speaker 8: among businesses in particular. You're just adding more fuel to

465
00:26:53,440 --> 00:26:56,880
Speaker 8: that fire with this. If you want business activity to pause,

466
00:26:57,560 --> 00:26:59,119
Speaker 8: this is going to contribute to that.

467
00:26:59,200 --> 00:27:03,640
Speaker 3: Publishing last night, Michael Faroli, JP Morgan models out.

468
00:27:03,440 --> 00:27:06,879
Speaker 2: To Q four Q four of this year, JP.

469
00:27:06,680 --> 00:27:11,040
Speaker 3: Morgan is modeling a sub one percent yep GDP for

470
00:27:11,119 --> 00:27:11,639
Speaker 3: that quarter.

471
00:27:11,840 --> 00:27:15,080
Speaker 5: So, Rebecca, given what Thomas just mentioning, they about slow

472
00:27:15,080 --> 00:27:20,240
Speaker 5: in growth but not recessionary scenarios, what does that suggest

473
00:27:20,240 --> 00:27:23,200
Speaker 5: to you for investors where they should be maybe positioned

474
00:27:23,200 --> 00:27:24,359
Speaker 5: in this slower growth world.

475
00:27:24,440 --> 00:27:24,640
Speaker 7: Yeah.

476
00:27:24,680 --> 00:27:27,600
Speaker 8: I mean we've seen this trend already this year, but

477
00:27:27,640 --> 00:27:30,359
Speaker 8: I think it continues that large cap stocks that are

478
00:27:30,400 --> 00:27:34,119
Speaker 8: more able to weather these storms outperform small caps, which

479
00:27:34,200 --> 00:27:38,440
Speaker 8: need that sickleicality, that momentum plus lower rates to really outperform.

480
00:27:38,720 --> 00:27:40,439
Speaker 8: So you want to be in large caps, and you

481
00:27:40,520 --> 00:27:43,679
Speaker 8: probably want to keep quote unquote barbelling your portfolio in

482
00:27:43,720 --> 00:27:47,119
Speaker 8: that both within stocks have the consumer staples, have the

483
00:27:47,160 --> 00:27:49,920
Speaker 8: save stocks, but then have some tech to play the

484
00:27:49,960 --> 00:27:52,480
Speaker 8: long term AI theme. And if there's no turn in

485
00:27:52,520 --> 00:27:56,439
Speaker 8: consumer sentiment and then globally I'm pounding my fist on

486
00:27:56,480 --> 00:27:58,719
Speaker 8: the table on this one. Gold keeps going higher.

487
00:27:58,840 --> 00:27:59,520
Speaker 7: Thank you, Tom.

488
00:28:00,080 --> 00:28:02,119
Speaker 8: I've been bullish on gold for a couple of years,

489
00:28:02,160 --> 00:28:05,480
Speaker 8: and this is yet another reason, sadly that you want

490
00:28:05,480 --> 00:28:08,000
Speaker 8: to keep in that evens up thirty percent year today,

491
00:28:08,119 --> 00:28:08,680
Speaker 8: such a pro.

492
00:28:08,640 --> 00:28:11,000
Speaker 3: Gold of thirty six dollars thirty four to thirty eight.

493
00:28:11,080 --> 00:28:17,160
Speaker 3: One final question Kindeth Pollock and Ambassador Shapiro published this

494
00:28:17,240 --> 00:28:19,800
Speaker 3: morning at the Council and Foreign Relations in a Foreign

495
00:28:19,800 --> 00:28:21,000
Speaker 3: Affairs magazine.

496
00:28:21,400 --> 00:28:23,240
Speaker 2: When those fancy people.

497
00:28:23,000 --> 00:28:27,040
Speaker 3: In international relations talk to a market beast like you,

498
00:28:27,480 --> 00:28:29,240
Speaker 3: what do they ask you?

499
00:28:29,240 --> 00:28:31,520
Speaker 8: You know, I've really enjoyed being part of the Council

500
00:28:31,520 --> 00:28:34,240
Speaker 8: on Foreign Relations to try to tie the policy and

501
00:28:34,320 --> 00:28:37,680
Speaker 8: economics with the financial markets, because they all affect each other.

502
00:28:38,240 --> 00:28:41,360
Speaker 8: In fact, we had an event yesterday on foreign direct

503
00:28:41,360 --> 00:28:43,680
Speaker 8: investment to the United States and what some of the

504
00:28:43,800 --> 00:28:46,560
Speaker 8: uncertainty we're living through, what some of the policies could

505
00:28:46,600 --> 00:28:50,719
Speaker 8: do to foreign direct investments. So they're thinking about the

506
00:28:50,760 --> 00:28:56,600
Speaker 8: policy of Commerce Secretary Lutnx FastTrack proposal. I'm thinking about

507
00:28:56,720 --> 00:28:59,760
Speaker 8: if we have less FDI to the US. FDI today

508
00:29:00,160 --> 00:29:03,080
Speaker 8: accounts for about eight million jobs and about a quarter

509
00:29:03,160 --> 00:29:07,800
Speaker 8: of all US manufacturing jobs. If FDI slows because of

510
00:29:08,080 --> 00:29:11,480
Speaker 8: global policy concerns, how does that feed through to our

511
00:29:11,520 --> 00:29:15,320
Speaker 8: equity market, to household wealth, to the dollar. So I'm

512
00:29:15,360 --> 00:29:18,280
Speaker 8: trying to square that circle at the Council on Foreign

513
00:29:18,360 --> 00:29:20,920
Speaker 8: Relations and learning a lot from my colleagues.

514
00:29:20,960 --> 00:29:23,480
Speaker 3: Frankly, Rebecca, thank you so much, Thank you so much

515
00:29:23,480 --> 00:29:26,160
Speaker 3: for coming in early this morning. Ms Patterson with the

516
00:29:26,160 --> 00:29:29,040
Speaker 3: Console on Foreign Relations as a senior fellow, and of

517
00:29:29,080 --> 00:29:33,360
Speaker 3: course uh hear years I should say, with Bridgewater and

518
00:29:33,400 --> 00:29:35,480
Speaker 3: with JP Morgan and best in my trust as well.

519
00:29:41,760 --> 00:29:45,640
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

520
00:29:45,680 --> 00:29:49,000
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

521
00:29:49,120 --> 00:29:51,960
Speaker 1: with the Bloomberg Business app. You can also watch us

522
00:29:52,000 --> 00:29:55,880
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal.

523
00:29:56,280 --> 00:30:01,240
Speaker 3: You continue our coverage here of the attacks by Israel

524
00:30:01,600 --> 00:30:06,000
Speaker 3: across a wren and usually qualified this morning to speak

525
00:30:06,040 --> 00:30:09,800
Speaker 3: as god a Macunda. Professor yale A School of Management,

526
00:30:09,840 --> 00:30:14,160
Speaker 3: in his study of the presidency is well, we got

527
00:30:14,160 --> 00:30:16,160
Speaker 3: a four hour conversation.

528
00:30:15,640 --> 00:30:16,400
Speaker 2: Coming in here, Goud.

529
00:30:16,440 --> 00:30:20,240
Speaker 3: I mean, we're gonna squeeze it in rather quickly as well.

530
00:30:20,520 --> 00:30:25,400
Speaker 3: Secretary of State Rubio follows on from Hamilton, I'm gonna

531
00:30:25,400 --> 00:30:27,040
Speaker 3: say Quincy Adams.

532
00:30:26,560 --> 00:30:30,200
Speaker 2: And other worthies of the nineteenth century to Dean Rusk

533
00:30:30,720 --> 00:30:31,400
Speaker 2: in others.

534
00:30:31,840 --> 00:30:34,640
Speaker 3: Do we have an operative Secretary of State with an

535
00:30:34,720 --> 00:30:37,560
Speaker 3: operative American foreign policy right now?

536
00:30:37,680 --> 00:30:40,320
Speaker 9: It certainly doesn't look that way. The conflict between rubio

537
00:30:40,400 --> 00:30:44,120
Speaker 9: statement which disassociated ourselves from the US from the attacks.

538
00:30:43,680 --> 00:30:46,640
Speaker 2: From what I just read, is really noticeable.

539
00:30:47,400 --> 00:30:50,040
Speaker 9: I mean, the Trump administration kind of takes, you know,

540
00:30:50,160 --> 00:30:54,360
Speaker 9: like everybody running in different directions as it's operating principle,

541
00:30:54,440 --> 00:30:56,880
Speaker 9: But that's really not a great idea when bombs are

542
00:30:56,880 --> 00:30:58,720
Speaker 9: going off, and so this might be a time worse

543
00:30:58,720 --> 00:31:02,120
Speaker 9: message discipline and actual strategic thinking would be well rewarded.

544
00:31:02,520 --> 00:31:02,880
Speaker 7: Got him.

545
00:31:02,920 --> 00:31:05,760
Speaker 5: I think it seems like President Trump and his administration

546
00:31:05,880 --> 00:31:09,000
Speaker 5: move moving towards a peace negotiation in this.

547
00:31:09,080 --> 00:31:12,800
Speaker 7: Part of the world, Yet in Israel wasn't on the

548
00:31:12,800 --> 00:31:15,000
Speaker 7: same page. And they went and they acted officially. Here

549
00:31:15,400 --> 00:31:18,040
Speaker 7: what does that do for US policy? Now? Where is

550
00:31:18,080 --> 00:31:20,160
Speaker 7: our position in that part of the world now?

551
00:31:20,600 --> 00:31:23,000
Speaker 9: Really bad, certainly much worse than it could be. So

552
00:31:23,080 --> 00:31:24,800
Speaker 9: let's split this out in two things. One is, this

553
00:31:24,840 --> 00:31:28,360
Speaker 9: is just a dramatic statement of the complete collapse of

554
00:31:28,360 --> 00:31:32,000
Speaker 9: American influence under the Trump administration, not just in the

555
00:31:32,000 --> 00:31:33,920
Speaker 9: Middle East, but particularly in the Middle East. If there

556
00:31:33,960 --> 00:31:35,880
Speaker 9: is any country that the United States should be able

557
00:31:35,920 --> 00:31:38,080
Speaker 9: to influence at is Israel. And and Trump was very

558
00:31:38,080 --> 00:31:39,760
Speaker 9: clear he did not want this happen in the israelis

559
00:31:39,760 --> 00:31:42,560
Speaker 9: that hey, we're doing this anyways, So says that people

560
00:31:42,600 --> 00:31:46,400
Speaker 9: do not take Trump seriously. But the broader thing is,

561
00:31:46,720 --> 00:31:48,760
Speaker 9: with any operation like this, you want to differentiate between

562
00:31:48,800 --> 00:31:52,160
Speaker 9: right strategic, operational tactical. So at the operational and the

563
00:31:52,200 --> 00:31:55,840
Speaker 9: technical level. This was done with the normal extraordinary skill

564
00:31:55,880 --> 00:31:58,160
Speaker 9: we expect from the IDEF in Israeli intelligence, they're really

565
00:31:58,160 --> 00:31:59,479
Speaker 9: good at this, and they showed this over and over

566
00:31:59,480 --> 00:32:02,840
Speaker 9: again and they they you know, early returns are impressive

567
00:32:02,840 --> 00:32:06,640
Speaker 9: in terms of that. Yeah, but this is a strategic catastrophe.

568
00:32:06,440 --> 00:32:11,280
Speaker 9: The Trump administration's policy, joined with the net NAH policy

569
00:32:11,440 --> 00:32:14,959
Speaker 9: of pulling out of the Iranian nuclear agreement, left Trump

570
00:32:15,000 --> 00:32:17,920
Speaker 9: frantically negotiating to try to get an agreement with Iran

571
00:32:18,200 --> 00:32:21,800
Speaker 9: that was considerably inferior to the one that he exited. Right,

572
00:32:22,320 --> 00:32:24,960
Speaker 9: and the deadline that people aren't talking about yet is

573
00:32:25,000 --> 00:32:28,960
Speaker 9: in four months, are the snapback authority, that is, the

574
00:32:28,960 --> 00:32:32,280
Speaker 9: authority to reimpose the sanctions that we had that the

575
00:32:32,280 --> 00:32:35,320
Speaker 9: Obama administration had coordinated to keep Iran from doing. Right,

576
00:32:35,720 --> 00:32:39,600
Speaker 9: that snapback authority goes away, So the ability to get everyone,

577
00:32:39,760 --> 00:32:41,560
Speaker 9: essentially everyone in the world who would all agree that

578
00:32:41,600 --> 00:32:43,080
Speaker 9: we were going to stop the Iranians from doing this

579
00:32:43,320 --> 00:32:45,680
Speaker 9: in four months, that goes away. Does anyone think that

580
00:32:45,760 --> 00:32:48,360
Speaker 9: any of the remaining signatories are going to authorize snapback

581
00:32:48,400 --> 00:32:48,760
Speaker 9: after this?

582
00:32:48,840 --> 00:32:50,959
Speaker 3: I'm going to take a risk that everyone got him

583
00:32:51,000 --> 00:32:55,160
Speaker 3: except your class at Yale everyone has their head spinning.

584
00:32:55,240 --> 00:32:58,560
Speaker 3: They can't keep straight what Secretary of State John Carrey did.

585
00:32:58,840 --> 00:33:01,719
Speaker 3: They can't keep straight what happened under Bush, the younger

586
00:33:02,080 --> 00:33:06,680
Speaker 3: Bush the older. It's a cacophony of diplomacy. And I'm

587
00:33:06,720 --> 00:33:09,960
Speaker 3: just going to bring it back to Sadat nineteen sixty seven,

588
00:33:10,560 --> 00:33:14,440
Speaker 3: you had the new Non Proliferation Treaty of nineteen sixty eight.

589
00:33:14,800 --> 00:33:18,840
Speaker 3: Ken Polyk instructs me, you go to a twenty fifteen agreement.

590
00:33:19,400 --> 00:33:23,880
Speaker 3: Is all this multi decade diplomacy just blown to smithereens

591
00:33:23,920 --> 00:33:24,400
Speaker 3: this morning.

592
00:33:25,240 --> 00:33:27,440
Speaker 9: Uh, it's been unraveling for a long time. This is

593
00:33:27,520 --> 00:33:30,120
Speaker 9: just one more blow to that. And the great fear

594
00:33:30,120 --> 00:33:31,920
Speaker 9: I think that everybody has is that Iran will at

595
00:33:31,960 --> 00:33:33,760
Speaker 9: this point and will withdrawal from the NPT.

596
00:33:34,120 --> 00:33:36,760
Speaker 2: And make their own chemicals, their own yellow cake, right.

597
00:33:36,640 --> 00:33:38,440
Speaker 9: And wish they've been doing. And let's be very clear,

598
00:33:38,520 --> 00:33:41,160
Speaker 9: right when they were under the Iran Nuclear Agreement, which

599
00:33:41,600 --> 00:33:44,760
Speaker 9: there were no accusations they had violated, they were enriching

600
00:33:44,840 --> 00:33:47,080
Speaker 9: up to a very low threshold. Since we pulled out

601
00:33:47,120 --> 00:33:49,560
Speaker 9: of the agreement, they've been enriching up to a threshold

602
00:33:49,560 --> 00:33:52,560
Speaker 9: that you only do if you're trying to make nuclear wes.

603
00:33:52,600 --> 00:33:55,400
Speaker 9: There's no reason to take me enrich uranium as.

604
00:33:55,400 --> 00:33:57,520
Speaker 2: Much as theyre going. It's the mathematics here, folks.

605
00:33:57,520 --> 00:34:01,520
Speaker 3: On uranium two thirty five is eighty percent is like

606
00:34:02,040 --> 00:34:05,360
Speaker 3: being sure my teeth are done correctly with nuclear energy.

607
00:34:05,680 --> 00:34:08,080
Speaker 3: But if you go over twenty percent and then you

608
00:34:08,120 --> 00:34:10,760
Speaker 3: get up to eighty percent, that's where we get into trouble.

609
00:34:10,920 --> 00:34:13,960
Speaker 9: And so they're very close, essentially in a snario that

610
00:34:13,960 --> 00:34:16,759
Speaker 9: we call breakout, where it would not take them very

611
00:34:16,760 --> 00:34:19,680
Speaker 9: long at all to go from the uranium they have

612
00:34:19,920 --> 00:34:21,960
Speaker 9: to uranium that is that is actually usable in a

613
00:34:22,040 --> 00:34:23,960
Speaker 9: nuclear weapon, and from there you then have to go

614
00:34:23,960 --> 00:34:25,479
Speaker 9: and they have to deploy it. Right, So there's still

615
00:34:25,600 --> 00:34:27,640
Speaker 9: lots of steps between having the uranium in the bomb,

616
00:34:27,800 --> 00:34:31,120
Speaker 9: but that is the key step. And so the sort

617
00:34:31,160 --> 00:34:33,880
Speaker 9: of orientation of policy that we're going to bluster and

618
00:34:33,920 --> 00:34:36,600
Speaker 9: threaten and not work with anyone else has just been

619
00:34:36,600 --> 00:34:41,920
Speaker 9: a strategic failure of unbelievable proportions. And now like so,

620
00:34:42,200 --> 00:34:45,160
Speaker 9: when we withdrew from the j from the Iron Nuclear

621
00:34:45,200 --> 00:34:50,319
Speaker 9: Deal in twenty nineteen, Secretary Pompeo tried to invoke snapback instead.

622
00:34:50,360 --> 00:34:52,400
Speaker 9: The Iranians are in violation and we need to have

623
00:34:52,480 --> 00:34:55,440
Speaker 9: the sanctions again, and our own allies, the British and French,

624
00:34:55,520 --> 00:34:57,799
Speaker 9: were sort of you pulled out of the deal. You

625
00:34:57,840 --> 00:34:59,759
Speaker 9: don't get to do that anymore, you do not have

626
00:34:59,800 --> 00:35:01,600
Speaker 9: the authority, and they just ignored us.

627
00:35:02,160 --> 00:35:02,680
Speaker 7: So we have.

628
00:35:02,840 --> 00:35:05,440
Speaker 9: Lost all of our leverage for no reason other than

629
00:35:05,520 --> 00:35:07,680
Speaker 9: Donald Trump wanted to bluster about how he could make

630
00:35:07,680 --> 00:35:09,360
Speaker 9: a better deal than Barack Obama did.

631
00:35:09,400 --> 00:35:12,680
Speaker 7: And he could. So, Okay, where do we go from here?

632
00:35:12,680 --> 00:35:17,239
Speaker 5: If I'm the United States diplomatic community, where do we

633
00:35:17,280 --> 00:35:20,560
Speaker 5: go from here? As Marco Ruby fly over to Israel,

634
00:35:20,680 --> 00:35:24,680
Speaker 5: I mean, how do we perhaps? Is it even maybe

635
00:35:24,680 --> 00:35:26,400
Speaker 5: Donald Trump got elected by saying, hey.

636
00:35:26,400 --> 00:35:29,000
Speaker 7: That's not our problem, Yeah, let them let them fix it.

637
00:35:29,040 --> 00:35:31,720
Speaker 7: And I would argue, at least half the country agrees

638
00:35:31,719 --> 00:35:34,640
Speaker 7: with him. So is this his policy playing out?

639
00:35:34,920 --> 00:35:35,120
Speaker 2: Yeah?

640
00:35:35,120 --> 00:35:38,560
Speaker 9: I mean the Middle East, it's like it's like the Godfather, right,

641
00:35:38,640 --> 00:35:40,400
Speaker 9: Like every time we think we're out, they pull us

642
00:35:40,440 --> 00:35:42,720
Speaker 9: back in, and this is just that over and over again.

643
00:35:43,480 --> 00:35:44,920
Speaker 9: I do think that there's going to be some to that.

644
00:35:45,000 --> 00:35:47,000
Speaker 9: A lot of this is going to be driven basically

645
00:35:47,000 --> 00:35:50,040
Speaker 9: by how smart the Iranians are. If I were the Iranians,

646
00:35:50,080 --> 00:35:51,960
Speaker 9: I would be like I'm going to I'll launch some drones,

647
00:35:51,960 --> 00:35:54,839
Speaker 9: I'll launch the missiles, and then I'll play the victim here, right,

648
00:35:54,840 --> 00:35:57,080
Speaker 9: I got I got to ride this out for four months,

649
00:35:57,680 --> 00:35:59,000
Speaker 9: and I get to trade with the rest of the

650
00:35:59,040 --> 00:36:00,200
Speaker 9: world a much better.

651
00:36:00,600 --> 00:36:01,879
Speaker 2: Four months is not that long.

652
00:36:01,920 --> 00:36:03,600
Speaker 9: And if the Audians are smart enough to say, I

653
00:36:03,719 --> 00:36:04,239
Speaker 9: will take the.

654
00:36:04,239 --> 00:36:07,040
Speaker 3: Hit a amount of time, you got to come back

655
00:36:07,080 --> 00:36:09,600
Speaker 3: next week. I really I think our audience really wants

656
00:36:09,640 --> 00:36:12,319
Speaker 3: to hear this. You know, folks on international relations, we're

657
00:36:12,360 --> 00:36:14,600
Speaker 3: trying to look at the market with futures.

658
00:36:14,239 --> 00:36:15,239
Speaker 2: Negative fifty four.

659
00:36:15,680 --> 00:36:18,480
Speaker 3: But this is the extraordinary times for all of you,

660
00:36:18,520 --> 00:36:20,839
Speaker 3: whatever your political presentation.

661
00:36:21,000 --> 00:36:22,840
Speaker 2: We welcome all of you on YouTube.

662
00:36:23,280 --> 00:36:27,120
Speaker 3: Subscribe to Bloomberg Podcast. Professor mccuinde, Thank you so much.

663
00:36:27,160 --> 00:36:30,560
Speaker 3: Got to mccuinde, professor Eale University and writing.

664
00:36:30,239 --> 00:36:31,240
Speaker 4: For Bloomberk Opinion.

665
00:36:31,880 --> 00:36:35,760
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

666
00:36:35,800 --> 00:36:39,120
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

667
00:36:39,239 --> 00:36:42,200
Speaker 1: with the Bloomberg Business app. You can also listen live

668
00:36:42,280 --> 00:36:45,840
Speaker 1: on Amazon Alexa from our flagship New York station, Just

669
00:36:45,920 --> 00:36:49,759
Speaker 1: Say Alexa Play Bloomberg eleven thirty joining.

670
00:36:49,480 --> 00:36:53,880
Speaker 3: Us at this moment will be Matt Zetti and Eric Stein.

671
00:36:53,920 --> 00:36:56,960
Speaker 3: Mett Zetti with Deutsche Bank. Now they're chief kind of

672
00:36:56,960 --> 00:36:59,240
Speaker 3: asstilled that he could be with us this morning.

673
00:36:59,760 --> 00:37:02,080
Speaker 2: I think the worst job on Wall Street this.

674
00:37:01,960 --> 00:37:04,840
Speaker 3: Morning is Brett Ryan, because you're going to turn to

675
00:37:04,880 --> 00:37:07,840
Speaker 3: your colleague Brett Ryan and say, we have to blow

676
00:37:07,960 --> 00:37:12,040
Speaker 3: up the weekend research report around the cacophony of our

677
00:37:12,120 --> 00:37:16,640
Speaker 3: domestic relations. You are a soul of Los Angeles. What

678
00:37:16,760 --> 00:37:19,440
Speaker 3: we see within our politics. I believe we have a

679
00:37:19,480 --> 00:37:22,880
Speaker 3: parade this weekend and now we have a true war

680
00:37:23,320 --> 00:37:28,320
Speaker 3: without question in the levant. What's the Deutsche Bank thrust

681
00:37:28,520 --> 00:37:31,960
Speaker 3: within your conference call this morning to publish for Monday.

682
00:37:32,600 --> 00:37:34,719
Speaker 10: Yeah, you know, I think you know, as we think

683
00:37:34,719 --> 00:37:37,200
Speaker 10: about the FED and we think about the economy, what

684
00:37:37,280 --> 00:37:40,400
Speaker 10: we are seeing now is overlaying another meaningful supply shock

685
00:37:40,680 --> 00:37:43,319
Speaker 10: on the economy at a time where I think policymakers,

686
00:37:43,360 --> 00:37:45,640
Speaker 10: the FED you certainly would not like to see another

687
00:37:45,719 --> 00:37:47,320
Speaker 10: supply shock hitting any economy.

688
00:37:47,320 --> 00:37:50,280
Speaker 2: Does that embed inflation higher? Is that the summary of it?

689
00:37:50,280 --> 00:37:50,680
Speaker 7: It does?

690
00:37:51,560 --> 00:37:53,360
Speaker 10: I mean, it's another one that I think, you know,

691
00:37:53,400 --> 00:37:55,560
Speaker 10: the FED would kind of quote unquote like to look through.

692
00:37:56,120 --> 00:37:59,440
Speaker 10: But at the same time, we know, especially inflation expectations

693
00:37:59,440 --> 00:38:02,239
Speaker 10: are very sense to oil prices and gas prices. You know,

694
00:38:02,280 --> 00:38:04,480
Speaker 10: it's at the forefront of consumers. So you know, we'll

695
00:38:04,480 --> 00:38:06,160
Speaker 10: see what the University of Michigan says today, but I

696
00:38:06,160 --> 00:38:08,200
Speaker 10: think more important will be what it says at the

697
00:38:08,280 --> 00:38:10,799
Speaker 10: end of the month and the next month, because the

698
00:38:10,840 --> 00:38:13,640
Speaker 10: FED is quite sensitive to inflation expectations, not just universe

699
00:38:13,680 --> 00:38:15,959
Speaker 10: to Michigan, but these other measures, and they are all

700
00:38:16,040 --> 00:38:18,640
Speaker 10: highly sensitive to oil and gas prices. I think that's

701
00:38:18,640 --> 00:38:19,960
Speaker 10: the key consideration for the best just.

702
00:38:19,880 --> 00:38:21,440
Speaker 5: Over the past couple of days, is CPI and a

703
00:38:21,440 --> 00:38:24,319
Speaker 5: PPI data to just at least for now and maybe

704
00:38:24,320 --> 00:38:28,600
Speaker 5: even looking back a month, inflation is not there, at

705
00:38:28,680 --> 00:38:30,239
Speaker 5: least maybe to the levels some people thought.

706
00:38:30,280 --> 00:38:33,000
Speaker 7: Is that was that helpful the last couple days that data.

707
00:38:33,160 --> 00:38:34,640
Speaker 10: I think it is helpful, but I also kind of

708
00:38:34,640 --> 00:38:36,120
Speaker 10: want to take a step back, right. I think we

709
00:38:36,480 --> 00:38:39,040
Speaker 10: get focused on very short term trends. The last one

710
00:38:39,120 --> 00:38:41,480
Speaker 10: or two data points, and certainly the last three data

711
00:38:41,480 --> 00:38:43,319
Speaker 10: points for core CPI and core PC I think are

712
00:38:43,320 --> 00:38:45,960
Speaker 10: going to look pretty subdued. But the first two months

713
00:38:45,960 --> 00:38:48,279
Speaker 10: of the year we're very strong. So if you annulyze

714
00:38:48,320 --> 00:38:49,960
Speaker 10: over the first five months of the year for core PC,

715
00:38:50,480 --> 00:38:53,920
Speaker 10: we're basically printed two point nine percent. There's a lot

716
00:38:53,920 --> 00:38:56,279
Speaker 10: of residual seasonality in the data, and so I think

717
00:38:56,280 --> 00:38:58,239
Speaker 10: the FED is probably not going to emphasize one or

718
00:38:58,239 --> 00:38:59,879
Speaker 10: two data points. I think they're going to look at

719
00:39:00,280 --> 00:39:03,319
Speaker 10: stronger inflation to start the year. They're going to look

720
00:39:03,320 --> 00:39:06,120
Speaker 10: at stilly anticipated rise in inflation driven by tariffs and

721
00:39:06,120 --> 00:39:09,560
Speaker 10: oil prices ahead, and I would anticipate that their messaging

722
00:39:09,640 --> 00:39:11,680
Speaker 10: messaging doesn't really change all that much next week.

723
00:39:12,239 --> 00:39:14,279
Speaker 5: So what are the key data points here do you

724
00:39:14,280 --> 00:39:16,480
Speaker 5: think for this economy that you're focusing on again? Now

725
00:39:16,480 --> 00:39:18,600
Speaker 5: we have to kind of think about higher energy prices,

726
00:39:18,640 --> 00:39:21,520
Speaker 5: perhaps for a longer period than maybe we had initially thought.

727
00:39:21,800 --> 00:39:23,800
Speaker 5: What are the key drivers for you that you're looking

728
00:39:23,840 --> 00:39:26,080
Speaker 5: at and to get a sense of this economy here.

729
00:39:26,560 --> 00:39:29,200
Speaker 10: I think for the market and for us, it's two things.

730
00:39:29,320 --> 00:39:33,160
Speaker 10: One it's the labor market and is that really weakening

731
00:39:33,520 --> 00:39:36,160
Speaker 10: materially or not. I think you got a job report

732
00:39:36,440 --> 00:39:38,520
Speaker 10: last week that that was resilient in many ways. It

733
00:39:38,600 --> 00:39:42,120
Speaker 10: was not overly robust, But when you look at measures

734
00:39:42,160 --> 00:39:44,399
Speaker 10: of labor market slack, they're basically stable over the past

735
00:39:44,400 --> 00:39:47,520
Speaker 10: six to nine months, the unemployment rate, quits rate U six,

736
00:39:47,640 --> 00:39:49,640
Speaker 10: everything that you would look at, but you do see

737
00:39:49,640 --> 00:39:52,319
Speaker 10: some creep higher and continuing jobless claims, and that can

738
00:39:52,360 --> 00:39:54,440
Speaker 10: be a worry. So that whether or not that continues

739
00:39:54,520 --> 00:39:56,879
Speaker 10: is the first data point, and then the second one

740
00:39:56,920 --> 00:39:58,719
Speaker 10: is over the next seven months, do we get clear

741
00:39:58,760 --> 00:40:01,279
Speaker 10: evidence of the tariff effaccident. I think that'll be a

742
00:40:01,360 --> 00:40:02,560
Speaker 10: very important driver of the market.

743
00:40:02,600 --> 00:40:05,160
Speaker 3: Matt Leaztti with US Deutsche Bank. Can we continue here

744
00:40:05,200 --> 00:40:09,279
Speaker 3: with conversation linking in economics, finance, investment into as I

745
00:40:09,280 --> 00:40:13,440
Speaker 3: said earlier, fractured international relations. In the last five minutes,

746
00:40:13,480 --> 00:40:17,160
Speaker 3: the tape turns around a bit, goes the other way,

747
00:40:17,200 --> 00:40:20,040
Speaker 3: with the VIX again over twenty futures negative fifty seven,

748
00:40:20,120 --> 00:40:22,839
Speaker 3: down futures negative four to twenty five. The VIX now

749
00:40:22,880 --> 00:40:26,960
Speaker 3: extends out round it down negative one point two percent.

750
00:40:27,440 --> 00:40:31,839
Speaker 3: Brent crewed, the global oil price seven point four percent move,

751
00:40:31,880 --> 00:40:36,280
Speaker 3: American oil eight percent move on Brent seventy four dollars

752
00:40:36,320 --> 00:40:36,960
Speaker 3: fifty cents.

753
00:40:37,040 --> 00:40:41,759
Speaker 5: Well, Matt, given all the teriff related uncertainty that's been

754
00:40:41,760 --> 00:40:45,120
Speaker 5: in the market, the consumer seems to be hanging in

755
00:40:45,160 --> 00:40:47,400
Speaker 5: there in terms of spending, and so on.

756
00:40:47,520 --> 00:40:49,080
Speaker 7: How do you view the consumer these days.

757
00:40:49,320 --> 00:40:51,759
Speaker 10: I think from an aggregate perspective, it makes a lot

758
00:40:51,800 --> 00:40:53,560
Speaker 10: of sense that they're hanging in there. You know, if

759
00:40:53,600 --> 00:40:56,600
Speaker 10: you look at aggregate income growth from last week's job support,

760
00:40:56,640 --> 00:40:58,919
Speaker 10: it's up five percent in nominal terms year on year.

761
00:40:59,719 --> 00:41:01,880
Speaker 10: With that kind of income growth, it would be surprising

762
00:41:01,920 --> 00:41:05,439
Speaker 10: to see the consumer softening materially. The saving rate earlier

763
00:41:05,480 --> 00:41:08,000
Speaker 10: this year had actually creeped up to five percent, which

764
00:41:08,040 --> 00:41:10,200
Speaker 10: is relatively high compared to what we've been over the

765
00:41:10,200 --> 00:41:13,280
Speaker 10: past several months. We got the flow funds data yesterday

766
00:41:13,360 --> 00:41:15,799
Speaker 10: about net worth and income that remains in your record

767
00:41:15,880 --> 00:41:18,719
Speaker 10: high levels. If you look at kind of liabilities or

768
00:41:18,719 --> 00:41:22,279
Speaker 10: debt relative income, taking out the pandemic, we're at the

769
00:41:22,280 --> 00:41:25,680
Speaker 10: lowest level since the nineteen nineties. Really, those are all

770
00:41:25,719 --> 00:41:28,120
Speaker 10: metrics which from an aggregate perspective would tell you, yes,

771
00:41:28,160 --> 00:41:32,200
Speaker 10: there's uncertainty and there's concerns, but the aggregates that kind

772
00:41:32,239 --> 00:41:34,360
Speaker 10: of go into the US consumer are all pretty resilient

773
00:41:34,360 --> 00:41:34,680
Speaker 10: at the moment.

774
00:41:34,760 --> 00:41:36,279
Speaker 3: But this is our heart of the matter and really

775
00:41:36,320 --> 00:41:39,000
Speaker 3: harkens back, folks. It seems ages ago, I think it

776
00:41:39,040 --> 00:41:41,840
Speaker 3: was four or five days ago. I'll give the ft credit.

777
00:41:41,920 --> 00:41:47,120
Speaker 3: Somebody had the non aggregated consumer spending of America where

778
00:41:47,120 --> 00:41:50,960
Speaker 3: the upper fancy people like Lisa Matteo, they're spending over.

779
00:41:50,880 --> 00:41:54,520
Speaker 2: Fifty percent of our income. That's shocking. It used to

780
00:41:54,600 --> 00:41:58,839
Speaker 2: be twenty something percent. We're not aggregate America.

781
00:41:58,880 --> 00:42:01,279
Speaker 3: How do you pull off that X exercise on your

782
00:42:01,320 --> 00:42:02,480
Speaker 3: Excel spreadsheets?

783
00:42:02,480 --> 00:42:05,680
Speaker 10: Look, you're absolutely right, you know, the aggregate picture does

784
00:42:05,719 --> 00:42:09,680
Speaker 10: not give you the distributional picture. And I think one

785
00:42:09,680 --> 00:42:11,440
Speaker 10: of the clearest data points that I see from that

786
00:42:11,560 --> 00:42:13,239
Speaker 10: is the FED has this shed survey and they go

787
00:42:13,280 --> 00:42:14,920
Speaker 10: on and they ask, you know, if you were to

788
00:42:15,680 --> 00:42:19,120
Speaker 10: have to finance a four or five hundred dollars expense, how.

789
00:42:19,000 --> 00:42:19,960
Speaker 7: Would you be able to do it?

790
00:42:20,400 --> 00:42:22,439
Speaker 10: And it's you know, roughly half of the population would

791
00:42:22,480 --> 00:42:25,600
Speaker 10: have to borrow in order to finance that. And so

792
00:42:25,640 --> 00:42:27,400
Speaker 10: I think that is a data point which tells you

793
00:42:27,440 --> 00:42:31,080
Speaker 10: that there is clear distributional issues. From the Fed's perspective,

794
00:42:31,680 --> 00:42:34,680
Speaker 10: they are worried about the aggregate picture, the labor market

795
00:42:34,760 --> 00:42:37,960
Speaker 10: and inflation because they can't really impact the distributional items.

796
00:42:38,280 --> 00:42:39,319
Speaker 7: Fiscal policy can.

797
00:42:39,600 --> 00:42:42,879
Speaker 10: And as we looked forward to this one big beautiful bill,

798
00:42:43,239 --> 00:42:46,000
Speaker 10: the distributional assessment of that is that you actually hurt

799
00:42:46,040 --> 00:42:48,440
Speaker 10: the bottom part of the income distribution, given what's happening

800
00:42:48,440 --> 00:42:50,680
Speaker 10: with medicaid and snap in those items.

801
00:42:50,719 --> 00:42:53,200
Speaker 3: I got to squeeze this in here, Ken Rogoff, in

802
00:42:53,239 --> 00:42:55,480
Speaker 3: my Book of the Summer, two thirds of the way

803
00:42:55,480 --> 00:42:58,520
Speaker 3: through the book comes to a complete halt as he

804
00:42:58,640 --> 00:43:03,000
Speaker 3: goes over the Deutsche Bank researcher David folkerts landou Garber

805
00:43:03,440 --> 00:43:03,920
Speaker 3: and Dowley.

806
00:43:04,120 --> 00:43:06,000
Speaker 10: So I've been reading that book in anticipation that this

807
00:43:06,080 --> 00:43:07,160
Speaker 10: question would come up.

808
00:43:07,320 --> 00:43:09,400
Speaker 2: Oh did you I did? Yes, look at that, Lisa,

809
00:43:09,480 --> 00:43:10,760
Speaker 2: I mean you scaled out period.

810
00:43:11,000 --> 00:43:14,719
Speaker 3: Explain to our audience what David folkerts Lando did in

811
00:43:14,800 --> 00:43:17,440
Speaker 3: economics that Ken Rogof thinks is so important.

812
00:43:17,480 --> 00:43:19,000
Speaker 7: Look, Tom, I have to be honest.

813
00:43:19,200 --> 00:43:21,000
Speaker 10: I've come on this program a lot over the past

814
00:43:21,040 --> 00:43:22,800
Speaker 10: several years and you often bring this up, and I

815
00:43:22,800 --> 00:43:25,960
Speaker 10: don't think I fully realized how influential that paper was

816
00:43:26,040 --> 00:43:27,040
Speaker 10: until kind of reading.

817
00:43:26,800 --> 00:43:31,520
Speaker 2: Through Ken, I need to move the euro.

818
00:43:31,640 --> 00:43:33,759
Speaker 3: It's got to go on my resume, continuing, Yeah, what

819
00:43:33,840 --> 00:43:34,640
Speaker 3: did DFL do?

820
00:43:34,840 --> 00:43:35,239
Speaker 7: Look at it?

821
00:43:35,239 --> 00:43:38,560
Speaker 10: It's it's what they were calling the Brenton Woods Program

822
00:43:38,600 --> 00:43:41,520
Speaker 10: Brentwoods two, and it was, you know, a focus on

823
00:43:41,600 --> 00:43:45,400
Speaker 10: global capital flows as being a really critical driver for

824
00:43:46,080 --> 00:43:49,640
Speaker 10: bond markets and interest rates and and FX. And it

825
00:43:49,680 --> 00:43:54,520
Speaker 10: was a precursor to Ben Bernanke's Global Savings Squad discussions

826
00:43:54,520 --> 00:43:56,960
Speaker 10: in the mid two thousands. And the idea was the

827
00:43:57,080 --> 00:43:59,600
Speaker 10: US was running these very large trade deficits and current

828
00:43:59,600 --> 00:44:02,520
Speaker 10: account deficits and that was leading to a recycling of

829
00:44:02,520 --> 00:44:05,560
Speaker 10: funds back into the US economy, particularly in bond markets,

830
00:44:05,600 --> 00:44:06,680
Speaker 10: keeping term premia low.

831
00:44:07,000 --> 00:44:07,200
Speaker 2: Right.

832
00:44:07,880 --> 00:44:10,719
Speaker 10: And you know, I think that was I really grew

833
00:44:10,760 --> 00:44:13,640
Speaker 10: to appreciate how influential that that research was just because

834
00:44:13,680 --> 00:44:14,080
Speaker 10: of time.

835
00:44:14,360 --> 00:44:17,560
Speaker 3: Slam it forward to your colleague George Sarahvellos. Are you

836
00:44:17,560 --> 00:44:21,240
Speaker 3: guys modeling a further ten percent decline a US dollar?

837
00:44:22,120 --> 00:44:22,480
Speaker 2: We are?

838
00:44:22,719 --> 00:44:25,360
Speaker 10: And I think if you just kind of bring that forward,

839
00:44:25,680 --> 00:44:27,799
Speaker 10: the discussion now is if we are really going to

840
00:44:27,840 --> 00:44:30,920
Speaker 10: be bringing down trade deficits over time, there is going

841
00:44:31,000 --> 00:44:33,600
Speaker 10: to be less global funds to.

842
00:44:33,320 --> 00:44:34,439
Speaker 7: Flow back into the US.

843
00:44:34,680 --> 00:44:38,560
Speaker 2: Eric stein is head, That's good, okay.

844
00:44:38,680 --> 00:44:41,240
Speaker 10: And so that I mean higher term premia, higher estremia

845
00:44:41,239 --> 00:44:42,880
Speaker 10: across the US assets, including bonds.

846
00:44:43,000 --> 00:44:45,879
Speaker 3: Thank you for you get an A plus for studying ROGU.

847
00:44:46,040 --> 00:44:49,360
Speaker 2: Thank you, Matt Lozetti, thank you so much greatly. Appreciated.

848
00:44:49,360 --> 00:44:51,439
Speaker 2: Doctor Lozetti is with Deutsche Bank.

849
00:44:51,960 --> 00:44:56,799
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,

850
00:44:56,920 --> 00:45:01,200
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

851
00:45:01,320 --> 00:45:04,799
Speaker 1: seven to ten am Eastern on Bloomberg dot com, the

852
00:45:04,880 --> 00:45:08,920
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

853
00:45:08,920 --> 00:45:12,319
Speaker 1: can also watch us live every weekday on YouTube and

854
00:45:12,520 --> 00:45:14,240
Speaker 1: always on the Bloomberg terminal