WEBVTT - Markets React as Israel Strikes Iran 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.160 us live on YouTube. 0:00:27.360 --> 0:00:29.480 I've been anticipating this all morning. 0:00:29.960 --> 0:00:34.760 Tina Fordham is exquisite on our fractured international relations with 0:00:34.840 --> 0:00:39.400 Fordham Global Insight, her academics at Columbia among others, and 0:00:39.440 --> 0:00:41.479 of course her work over the years of the Eurasia 0:00:41.520 --> 0:00:44.040 Group now Fordham Global Foresight. 0:00:44.320 --> 0:00:47.720 Tina, within your wonderful note this morning, you just cut 0:00:47.760 --> 0:00:48.479 to the chase. 0:00:48.760 --> 0:00:53.880 Nuclear states in active conflict is not business as usual? 0:00:54.400 --> 0:00:57.520 How should the White House the State Department? Respond? 0:01:00.040 --> 0:01:05.440 Thanks? Tom. I think that we've got to be very 0:01:05.480 --> 0:01:08.479 focused on the fact that we're not just looking at 0:01:08.959 --> 0:01:13.440 a bold Israeli attack on Iran taking out at least 0:01:13.480 --> 0:01:17.479 twenty of its senior personnel at one time, as well 0:01:17.520 --> 0:01:23.160 as some attacks on nuclear facilities, but the Ukrainian spiderweb attack, 0:01:23.319 --> 0:01:27.720 drone attack deep into Russia, which of course has nuclear capability, 0:01:28.360 --> 0:01:31.679 and the teraf War all happening at the same time. 0:01:32.720 --> 0:01:37.000 For investors that are having flashbacks to the last round 0:01:37.120 --> 0:01:40.600 of Iran Israel tensions in twenty twenty four. We're in 0:01:40.640 --> 0:01:44.080 a really different environment. But I didn't answer your question 0:01:44.160 --> 0:01:46.400 about what the White House and the State Department should do. 0:01:46.720 --> 0:01:51.840 At the moment, it looks like the White House is 0:01:52.320 --> 0:01:56.880 trying to give the impression that they were on board 0:01:56.960 --> 0:02:01.120 with these attacks, when almost every thing that we're hearing 0:02:01.240 --> 0:02:05.560 is that the White House was cautioning Natanaho not to 0:02:05.600 --> 0:02:10.200 go for it. So both Natagnyaho and Zelensky and Ukraine, 0:02:11.400 --> 0:02:14.560 you know, really not heating Washington's warnings. 0:02:15.320 --> 0:02:18.720 So what does that say about our position in the 0:02:18.760 --> 0:02:22.519 world in terms of shaping events that are in our 0:02:22.600 --> 0:02:26.440 best interest, Because, as you mentioned in Ukraine and now 0:02:26.560 --> 0:02:29.920 most recently in the Middle East, it appears that we 0:02:30.240 --> 0:02:32.519 perhaps didn't don't have the influence we once did. 0:02:34.000 --> 0:02:39.160 Well, we don't seem able to deter leaders who are 0:02:39.800 --> 0:02:43.399 willing to take advantage of an opportunistic moment, and that's 0:02:43.440 --> 0:02:46.600 where we are. There is a perceived power vacuum, and 0:02:46.680 --> 0:02:49.400 both Ukraine and Israel, which of course are in very 0:02:49.400 --> 0:02:52.840 different conflicts that I don't mean to draw equivalentss between them, 0:02:53.160 --> 0:02:56.760 but part of being in a geopolitical risk supercycle is 0:02:56.800 --> 0:03:01.480 the notion that the global guardrails which deter more dramatic 0:03:01.960 --> 0:03:06.799 escalations are not working, and so that's where we find ourselves. 0:03:07.040 --> 0:03:09.880 Having said that, of course, the United States has a 0:03:09.919 --> 0:03:14.680 lot of cards. In particular, if Israel wants to you know, 0:03:14.919 --> 0:03:22.160 truly a degrade Iran's nuclear facilities, that will require the 0:03:22.200 --> 0:03:28.280 involvement of US long range bunk or buster bombs if to. 0:03:28.480 --> 0:03:29.040 Ford him with US. 0:03:29.080 --> 0:03:32.440 And we will continue here light economic data posts when 0:03:32.480 --> 0:03:34.760 you will enjoy the Michigan reports that we see here 0:03:34.760 --> 0:03:37.840 at ten am this morning. Thank you so much on 0:03:37.920 --> 0:03:42.000 YouTube of Fiery live chat over these military and political 0:03:42.080 --> 0:03:44.040 moments of the nation. 0:03:45.040 --> 0:03:48.480 Tina, let me ask the question, and you're so wonderfully 0:03:48.520 --> 0:03:50.760 a political I think I can get away with. 0:03:50.760 --> 0:03:54.800 This for our audiences and their politics of say the 0:03:54.880 --> 0:03:58.560 left and the right, of Democrat and Republican. 0:03:59.160 --> 0:04:01.840 This question is going to come up this weekend. 0:04:02.280 --> 0:04:06.000 Are we at this moment because of the unique policy 0:04:06.040 --> 0:04:10.280 and approach of Donald Trump in his second term? Are 0:04:10.280 --> 0:04:14.120 we going to get naval gazing into next week into 0:04:14.240 --> 0:04:19.120 August into twenty twenty six that says we have this 0:04:19.279 --> 0:04:22.840 conflict this war because of President Trump. 0:04:22.880 --> 0:04:25.839 Are we going to get there? Tom? 0:04:26.120 --> 0:04:28.719 I love that question, and you know that I'm not 0:04:28.880 --> 0:04:32.320 afraid of being bold. I mean, I think one of 0:04:32.360 --> 0:04:36.480 the tragedies of the present moment is that every single 0:04:36.600 --> 0:04:41.239 issue that the US is facing is now left coded 0:04:41.279 --> 0:04:44.679 and right coded in a way which is very bad 0:04:44.720 --> 0:04:47.800 for the world and for dealing with threats. I am 0:04:48.040 --> 0:04:50.600 in this role and in this seat because I think 0:04:50.640 --> 0:04:53.960 that in order for commerce and financial markets to function, 0:04:54.320 --> 0:04:59.040 we need safety and stability. And unfortunately, it's very difficult 0:04:59.080 --> 0:05:02.760 to have those convers stations, even on Wall Street anymore, 0:05:03.120 --> 0:05:06.239 without going down some kind of rabbit hole of whether 0:05:06.320 --> 0:05:10.799 one is defending Ukraine policy or is pro or anti Israel, 0:05:11.320 --> 0:05:13.839 when what we really need to be looking at as 0:05:13.839 --> 0:05:17.560 investors is the potential for conflicts to move from regional 0:05:17.600 --> 0:05:21.560 to systemic, to generate shocks from acid prices or to growth. 0:05:21.880 --> 0:05:24.080 And we're not having those conversations anymore. 0:05:24.360 --> 0:05:27.520 Ten fortum, I've stood outside that quiet room at the 0:05:27.520 --> 0:05:30.159 White House down in the basement below the Roosevelt Room, 0:05:30.560 --> 0:05:33.320 where the President will meet with a National Security Council. 0:05:33.360 --> 0:05:35.159 I assume they'll be in that closed you know, the 0:05:35.200 --> 0:05:39.120 famous room in all that, I would suggest we have 0:05:39.160 --> 0:05:44.599 a fractured process under NSC right now, with Marco Rubio 0:05:44.680 --> 0:05:48.680 having was it Paul five jobs, he's mowing the lawn whatever. 0:05:49.240 --> 0:05:52.640 What's going to go on at that eleven am meeting today, Tina. 0:05:52.360 --> 0:05:56.760 Fordham, Yes, eleven Am, no rush, you know it will 0:05:56.760 --> 0:05:59.640 it will have been something like ten hours since the 0:06:00.120 --> 0:06:04.320 bombs first dropped. I think they're going to be playing cleanup, 0:06:04.800 --> 0:06:07.800 to be honest, those warnings from the White House to 0:06:07.880 --> 0:06:12.320 NATANYAHUO were pretty well known in analysts and intelligence circles. 0:06:12.680 --> 0:06:15.360 Now the President has had to come out saying he'd 0:06:15.400 --> 0:06:18.679 been warning Iran all along. I think that's probably true. 0:06:19.240 --> 0:06:24.719 The prospects for diplomacy now are zero between Israel, Iran, 0:06:24.839 --> 0:06:29.159 and the United States. And what we're waiting for again 0:06:29.200 --> 0:06:32.039 in terms of the scale of the response is does 0:06:32.080 --> 0:06:36.920 Iran have anything left to respond with the one hundred 0:06:37.000 --> 0:06:40.640 or sore drones that were launched seem to have been intercepted. 0:06:41.000 --> 0:06:44.200 And how much further we're will Israel go. I've seen 0:06:44.240 --> 0:06:48.159 some estimates twelve days and then going further. And will 0:06:48.200 --> 0:06:52.760 the US actively get involved providing that kind of support 0:06:52.800 --> 0:06:55.080 I mentioned. I don't think the White house will want 0:06:55.120 --> 0:06:55.680 to go there. 0:06:56.640 --> 0:07:01.279 Tina, You've recently published some work entitled ever going back 0:07:01.480 --> 0:07:04.320 to Normal, and that was before the last twelve hours. 0:07:04.320 --> 0:07:06.320 What do you mean by we're never going back to normal? 0:07:07.880 --> 0:07:12.160 Well, I put this report together developing an evidence space 0:07:12.280 --> 0:07:16.600 to really try to assess whether we are indeed experiencing 0:07:16.640 --> 0:07:19.880 more geopolitical risks or not. And this speaks to Tom's 0:07:19.880 --> 0:07:23.160 earlier point, which is basically, is this the fault of 0:07:23.200 --> 0:07:26.280 the Trump administration. The answer is no, We've seen an 0:07:26.280 --> 0:07:30.520 acceleration of geopolitical risk. Events they started to pick up 0:07:30.560 --> 0:07:33.560 in the aftermath of the global financial crisis around about 0:07:33.640 --> 0:07:38.600 twenty ten, really accelerated, whether measured by trade in tariffs, 0:07:38.640 --> 0:07:42.240 or cyber attacks or conflicts. Lots of different variables that 0:07:42.240 --> 0:07:46.920 we looked at. But again it's that combination of more guardrails, sorry, 0:07:46.920 --> 0:07:52.200 more drivers of geopolitical risk and weaker guard rails, diplomacy norms, 0:07:53.120 --> 0:07:56.200 even just you know, the deterrence factor when those things 0:07:56.240 --> 0:07:59.240 break down. We're seeing a lot of nations willing to 0:07:59.280 --> 0:07:59.880 take chance. 0:08:00.680 --> 0:08:03.960 Tina, Thank you so much, Rave Reviews for the quality 0:08:03.960 --> 0:08:06.680 of his conversation on YouTube LiveChat. Thank you so much, 0:08:06.760 --> 0:08:08.440 gentlemen and gentle ladies. 0:08:08.440 --> 0:08:08.680 For that. 0:08:08.800 --> 0:08:11.720 Tina Fordham is with Fordham Global Insight. 0:08:17.800 --> 0:08:21.360 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:08:21.440 --> 0:08:24.600 weekday afternoons from seven to ten am Eastern Listen on 0:08:24.680 --> 0:08:28.320 Applecarplay and Android Auto with the Bloomberg Business app, or 0:08:28.480 --> 0:08:30.560 watch us live on YouTube right now. 0:08:30.600 --> 0:08:32.680 We are honored to bring you. As Paul mentioned, a 0:08:32.800 --> 0:08:36.480 marine mcmulroy, co founder of the Lobo Institute, the former 0:08:36.640 --> 0:08:40.920 Deputy Assistant Secretary of Defense for the Middle East. Make 0:08:40.960 --> 0:08:43.000 if I get out a map of the forty to 0:08:43.000 --> 0:08:47.360 fifty thousand Americans at some nineteen sites in the Middle East, 0:08:48.000 --> 0:08:51.520 with a substantial presence in Kuwait, don de behrein to 0:08:51.559 --> 0:08:55.240 cut her over to the United Arab Emirates strapped across 0:08:55.280 --> 0:08:56.319 the Persian Gulf. 0:08:56.760 --> 0:09:00.760 What is the risk to American military personnel at this moment? 0:09:03.280 --> 0:09:06.800 Good to be with you all again. Obviously a big 0:09:06.840 --> 0:09:10.280 concern around stated essentially that if they were attacked, that 0:09:10.320 --> 0:09:14.640 they would go after US personnel and facilities. That would 0:09:14.640 --> 0:09:17.160 be a huge strategic mistake. That's one of the reasons 0:09:17.200 --> 0:09:19.800 why I think Secretary of Rubio made it clear that 0:09:19.920 --> 0:09:23.800 this was a unilateral attack Byron not by the United States, 0:09:24.120 --> 0:09:26.520 So they would be drawing the United States into a 0:09:26.559 --> 0:09:30.160 conflict that they're already having with Israel. So they would 0:09:30.520 --> 0:09:33.640 be fighting a regional superpower, if you will, plus US. 0:09:34.440 --> 0:09:37.520 So I don't think they will. Hopefully they will have 0:09:38.480 --> 0:09:41.520 better ideas and not do that. But if they did, 0:09:42.040 --> 0:09:44.880 I think we have done everything we can to mitigate 0:09:44.920 --> 0:09:47.560 that threat, to get people out that don't need to 0:09:47.559 --> 0:09:50.280 be there, and of course bring in air and missile 0:09:50.280 --> 0:09:53.040 defense systems, which is the most likely way they would 0:09:53.040 --> 0:09:55.839 attack us. To defend these positions. 0:09:55.760 --> 0:09:59.320 Mick, I don't want to go back to Eisenhower or 0:09:59.360 --> 0:10:04.320 to nineteen seventy ninety either, but the absolute memory of 0:10:04.440 --> 0:10:08.920 pros like you is the absolutely stunning war on the 0:10:08.920 --> 0:10:12.720 border of Iraq and Iran in the Iran in the 0:10:12.800 --> 0:10:18.600 nineteen eighties that colors everything about Persia about Iran. They 0:10:18.640 --> 0:10:22.880 don't have that capability for large war like they did 0:10:22.880 --> 0:10:24.640 in the middle nineteen eighties, do. 0:10:24.600 --> 0:10:29.959 They They do not, And of course this is after 0:10:30.120 --> 0:10:34.000 multiple attacks by Israel on Iran that have been mitigating 0:10:34.040 --> 0:10:39.199 their air missile defense systems, their ability to launch cruise missiles, 0:10:39.200 --> 0:10:43.280 ballistic missiles and produce them. So this is something I 0:10:43.280 --> 0:10:46.160 think Israel took the opportunity to mitigate, not just their 0:10:46.240 --> 0:10:49.800 nuclear facilities, let's remember that's what we're talking about, but 0:10:49.840 --> 0:10:54.360 they also went after their ballistic missile launch sites, manufacturing centers, 0:10:54.679 --> 0:11:00.160 air bases, military bases, and essentially eliminated their entire general 0:11:00.440 --> 0:11:04.600 staff Major General Bulgary On down, essentially their joint chiefs 0:11:04.640 --> 0:11:08.360 of staff and the entire staff was eliminated, plus most 0:11:08.400 --> 0:11:12.480 of their senior nuclear scientists. They took every opportunity with this, 0:11:12.600 --> 0:11:15.840 and say it might actually last up to two weeks, 0:11:16.160 --> 0:11:16.880 so this might not. 0:11:16.880 --> 0:11:17.920 Be over, Mick. 0:11:18.000 --> 0:11:21.439 Let's talk about timing. Why do you believe Israel acted now? 0:11:23.960 --> 0:11:27.280 There's some speculation they were concerned about the agreement that 0:11:27.360 --> 0:11:30.360 the United States in Iran looked like they might be 0:11:30.400 --> 0:11:33.760 willing to agree to, which would have been very similar 0:11:34.160 --> 0:11:36.120 at least from what we see in reporting as the 0:11:36.160 --> 0:11:40.480 twenty fifteen JCPOA, the one that the United States unitedly 0:11:40.600 --> 0:11:43.640 withdrew from in twenty eighteen, and something that I think 0:11:43.760 --> 0:11:47.720 Israel found to be unacceptable. It would have allowed some 0:11:47.920 --> 0:11:52.280 type of richment in Iran to continue. Some would say 0:11:52.320 --> 0:11:55.040 that that's why they did it. There might have been intelligence. 0:11:55.080 --> 0:11:56.760 I'm not aware of it, but of course because I 0:11:56.760 --> 0:11:59.280 don't have access to it, that they were getting closer 0:11:59.320 --> 0:12:02.079 to a nuclear weapon and that was the trigger point 0:12:02.640 --> 0:12:06.080 for Israel. But certainly I think the United States would 0:12:06.120 --> 0:12:09.240 have rather seen a nuclear agreement, a new one that 0:12:09.280 --> 0:12:11.920 both parties could agree to oran in the United States, 0:12:12.400 --> 0:12:14.600 rather than see this escalate and to it could be 0:12:14.800 --> 0:12:18.000 a long term conflict that could continue to escalate nck. 0:12:18.080 --> 0:12:20.199 What does this say about the role of the United 0:12:20.200 --> 0:12:22.840 States in this region at this particular time. We know 0:12:22.840 --> 0:12:27.079 that the Trump administration was pushing for a diplomatic resolution and 0:12:27.280 --> 0:12:29.760 maybe a nuclear deal, and there were planned talks this 0:12:29.880 --> 0:12:32.360 weekend and then this happened, So what does that say 0:12:32.360 --> 0:12:34.000 about the US role here? 0:12:36.400 --> 0:12:38.319 So I agree, I agree with the premise that this 0:12:39.120 --> 0:12:41.200 was something the US did not want to see. They 0:12:41.240 --> 0:12:43.959 wanted to see a nuclear agreement that would have been 0:12:44.040 --> 0:12:48.240 acceptable to US, perhaps a slightly better for US than 0:12:48.320 --> 0:12:50.880 the twenty fifteen So politically. 0:12:50.760 --> 0:12:52.640 It would have it would have landed well. 0:12:53.200 --> 0:12:56.120 But that's unlikely to happen now. The Iman meetings that 0:12:56.160 --> 0:12:59.600 were set for Sunday or completely off and there's literally 0:12:59.640 --> 0:13:01.240 no chance that we're going to get back to that 0:13:01.320 --> 0:13:03.840 place and back around made it clear that if their 0:13:03.880 --> 0:13:07.480 facilities would ever attacked, that they would spend all of 0:13:07.559 --> 0:13:09.840 their effort trying to get to a nuclear weapon. So 0:13:09.920 --> 0:13:12.640 that's another concern that we have. The United States, of course, 0:13:12.679 --> 0:13:14.280 does not want to see another war start in the 0:13:14.280 --> 0:13:17.000 Middle East. That's not in anybody's interest, certainly not the 0:13:17.000 --> 0:13:20.400 countries of the Middle East. So hopefully we can play 0:13:20.440 --> 0:13:23.520 a role that de escalates this as quickly as possible. 0:13:24.000 --> 0:13:25.960 One way to do so, of course, is to protect 0:13:26.559 --> 0:13:30.280 Israel if they see a large amount of incoming missiles 0:13:30.320 --> 0:13:32.680 and drones like they saw back in October. 0:13:32.800 --> 0:13:33.520 We welcome all of. 0:13:33.520 --> 0:13:36.520 You across the nation with us now. McMurray. Rebecca Patterson 0:13:36.559 --> 0:13:39.719 will be with us here in a bit again. Our 0:13:39.760 --> 0:13:44.160 team led by Ethan Bronner in Tel Aviv monitoring each 0:13:44.240 --> 0:13:47.959 moment of this. We've had reports recently of continued attacks. 0:13:48.000 --> 0:13:51.600 We'll have to get more verification of that. Mcmurroy, I 0:13:51.640 --> 0:13:54.360 have a presidential tweet in front of me. It is 0:13:54.440 --> 0:13:58.120 too long to waste time with precious time with I 0:13:58.120 --> 0:14:01.840 should say, but to end the presidential tweet, Iran must 0:14:01.880 --> 0:14:05.440 make a deal before there is nothing left and say 0:14:05.520 --> 0:14:09.400 what was once known as the Iranian Empire. No more death, 0:14:09.480 --> 0:14:13.080 no more destruction, all caps. Just do it before it's 0:14:13.120 --> 0:14:17.240 too late. God bless you all. With great respect from 0:14:17.240 --> 0:14:22.000 the Arc of Dwight David Eisenhower out to President Obama. 0:14:22.440 --> 0:14:23.040 Mick Molroy. 0:14:23.120 --> 0:14:27.640 Do we have a coherent Middle East policy at this moment? 0:14:30.920 --> 0:14:33.240 It does not appear that we are actually running the 0:14:33.240 --> 0:14:36.760 show when it comes to this, and less one believes 0:14:36.800 --> 0:14:39.760 that this was to force around to the table. I 0:14:39.760 --> 0:14:43.640 think that's very unlikely that they. I mean, this was 0:14:44.040 --> 0:14:47.440 a complete disaster for Iran. They have been shown that 0:14:47.520 --> 0:14:51.120 they have almost no ability to defend themselves. For them 0:14:51.160 --> 0:14:53.240 to then come to the table and come to an 0:14:53.280 --> 0:14:57.280 agreement with the US would be the ultimate humiliation. They 0:14:57.320 --> 0:15:00.520 will have to respond to this attack, and they will 0:15:00.640 --> 0:15:03.720 likely not want to have any discussions going forward. They 0:15:03.760 --> 0:15:05.440 have made it clear that they're now will try to 0:15:05.480 --> 0:15:09.280 get to a nuclear weapon. The US, of course, will 0:15:09.280 --> 0:15:12.600 always play a key and vital part of the Middle East. 0:15:13.320 --> 0:15:15.320 It is in our own interest to do so, and 0:15:15.880 --> 0:15:18.640 I think ultimately if we can get this back on track, 0:15:18.680 --> 0:15:20.360 it would be in our interests as well as Iran 0:15:20.400 --> 0:15:23.040 and all that countries in the region. Do have a 0:15:23.120 --> 0:15:26.040 diplomatic resolution, and if that means a new nuclear agreement, 0:15:26.320 --> 0:15:28.840 that would be good. It's very difficult to see how 0:15:28.840 --> 0:15:31.200 we can get there from here right now. 0:15:31.600 --> 0:15:33.440 Mick, Within Iran, do we have a sense of You 0:15:33.440 --> 0:15:36.600 mentioned the senior leadership was dealt a big, big blow 0:15:36.600 --> 0:15:39.400 in this attack here. How about just the leadership, the 0:15:39.440 --> 0:15:43.080 political leadership in Iran? How stable is that given you know, 0:15:43.120 --> 0:15:45.840 this really a surprising attack here. 0:15:48.280 --> 0:15:49.800 Well, this is one of the reasons why I think 0:15:49.840 --> 0:15:53.600 Prime Minister Nan Yahoo came out and said this was 0:15:53.600 --> 0:15:56.000 the time, This was the time for the Iranian people 0:15:56.000 --> 0:15:59.360 to rise up against the Iranian regime which has done 0:15:59.400 --> 0:16:03.960 nothing to help them because of their near continuous desire 0:16:04.040 --> 0:16:07.320 to be at constant war with their neighbors. Of course, 0:16:07.400 --> 0:16:10.720 they support all the proxies that continuously attack not only 0:16:10.800 --> 0:16:13.400 Israel but the United States. Up until nine to eleven, 0:16:13.760 --> 0:16:17.240 Hesbolo was the biggest killer of Americans, the biggest terrorist 0:16:17.320 --> 0:16:20.880 organization killer of Americans. So they caused this, and now 0:16:20.920 --> 0:16:24.320 they've come home to you know, to roost, so to speak. 0:16:24.880 --> 0:16:27.760 Whether they can change that in or on this this 0:16:28.000 --> 0:16:31.680 is their opportunity. The leadership has been decimated. They are 0:16:31.760 --> 0:16:36.200 obviously in very direk the economic situation will have to 0:16:36.240 --> 0:16:38.400 see it has to be organic, I think for it 0:16:38.520 --> 0:16:41.160 to take take hold. But they are in a very 0:16:41.160 --> 0:16:43.400 bad place and we have to see whether they have 0:16:43.440 --> 0:16:46.200 the capacity istry around that is unclear. 0:16:46.480 --> 0:16:48.440 Make We hope to speak to you next week with 0:16:48.520 --> 0:16:50.800 the Lobo Institute and of course his service to the 0:16:50.840 --> 0:16:54.760 Pentagon and the United States Marines. Mcmulroy starts us off 0:16:54.800 --> 0:16:57.600 this morning. Futures negative sixty or the vix out, two 0:16:57.680 --> 0:17:00.760 big figures as Paul mentioned over twenty twenty point one 0:17:00.960 --> 0:17:05.760 five brent crewed seventy four dollars seventy seven cents up 0:17:05.760 --> 0:17:06.280 per barrel. 0:17:06.480 --> 0:17:06.920 Too short. 0:17:06.920 --> 0:17:09.359 A visit this morning with Rebecca Patterson with a consul 0:17:09.440 --> 0:17:13.200 and foreign relations, a student of the Litmus paper of 0:17:13.280 --> 0:17:16.320 the system the currency. 0:17:16.359 --> 0:17:18.200 This is an upset. 0:17:18.560 --> 0:17:23.760 This is a continued cacophony of events that we see. 0:17:24.359 --> 0:17:28.280 We clearly have a threatened dollar down ten percent. How 0:17:28.320 --> 0:17:31.160 does this add to the burden of a weaker dollar. 0:17:33.359 --> 0:17:36.199 I think what we're seeing overnight in this morning is 0:17:36.280 --> 0:17:40.520 some very modest dollar strength the DXY Dollar Index modest 0:17:40.560 --> 0:17:43.040 and I expected it right, and you're seeing a bigger 0:17:43.080 --> 0:17:46.080 reaction in gold. You're seeing a reaction in the Swiss 0:17:46.080 --> 0:17:51.560 frank so other quote unquote safe havens, some fall in 0:17:52.280 --> 0:17:55.760 ten year bond yields, although not much. Again, so I 0:17:55.800 --> 0:17:58.520 think even though we are getting the typical flight to 0:17:58.600 --> 0:18:02.160 safety reaction in market that we've seen sadly too many 0:18:02.160 --> 0:18:05.480 times over our careers, the fact that the dollar rally 0:18:05.520 --> 0:18:09.080 is so muted, I think tom speaks to what's happening 0:18:09.160 --> 0:18:10.240 with the dollar more broadly. 0:18:10.280 --> 0:18:10.960 Now, thank you. 0:18:11.520 --> 0:18:16.320 So, Global Wall Street waking up to this news just 0:18:16.400 --> 0:18:18.800 another issue. I'm not going to call it a headwind 0:18:18.800 --> 0:18:21.240 per se, but another issue for Global Wall Strate and 0:18:21.240 --> 0:18:24.639 global investors to deal with. How to historically, how have 0:18:24.720 --> 0:18:27.800 you kind of viewed some of these global tensions and 0:18:27.880 --> 0:18:30.159 how it informs your investment outlook. 0:18:30.280 --> 0:18:33.040 Yeah, I mean, as horrible as these events are from 0:18:33.080 --> 0:18:36.720 a humanitarian point of view, I think for financial markets 0:18:37.000 --> 0:18:39.760 you always go back to what is going to be 0:18:39.880 --> 0:18:43.600 the global or regional economic impact, and in this case, 0:18:44.080 --> 0:18:48.160 it's looking at what will hire crude oil prices and 0:18:48.200 --> 0:18:52.000 gas natural gas prices due to the global economy. What 0:18:52.080 --> 0:18:56.800 will potentially a slowdown in international flights. Do we see 0:18:56.800 --> 0:18:59.359 that in the airline stocks today and can there be 0:18:59.480 --> 0:19:02.960 contagious So the marker I'd be watching is an escalation 0:19:03.080 --> 0:19:05.560 in this conflict. If the Strait of horn Moots would 0:19:05.600 --> 0:19:09.000 be the red line. If we see any attempt to 0:19:09.080 --> 0:19:13.720 close the strait. That hurts Iran itself because it needs 0:19:13.720 --> 0:19:16.760 to ship its energy out of there, especially to China, 0:19:16.840 --> 0:19:18.879 but it hurts everyone and that would be a big 0:19:18.960 --> 0:19:22.560 stagflationary step forward if it happens. I think probably a 0:19:22.600 --> 0:19:25.159 low probability, but you need to keep an eye out 0:19:25.200 --> 0:19:25.560 for it. 0:19:25.880 --> 0:19:28.600 With your work with JPM Morgan and of course with Bridgewater. 0:19:28.680 --> 0:19:31.360 Back to City Road in London, I'm going to say 0:19:31.400 --> 0:19:35.120 there's a conceit that the United States is distant from 0:19:35.160 --> 0:19:38.280 all this. There's two oceans in the way. It's in 0:19:38.359 --> 0:19:41.720 bred in our culture to say it's their problem and 0:19:41.800 --> 0:19:45.560 their problem is continental Europe and over to the United Kingdom. 0:19:46.000 --> 0:19:50.000 With your global work that you've done over the years, Rebecca, 0:19:50.480 --> 0:19:54.200 how does this affect Europe? In London more so? Now? 0:19:54.240 --> 0:19:59.200 To me, they're shockingly close to the Greater Persian Gulf absolutely. 0:19:59.240 --> 0:20:03.159 I mean they rely on oil and energy imports a 0:20:03.200 --> 0:20:07.120 lot more than the US. We're self sufficient effectively and energy, 0:20:07.480 --> 0:20:09.560 So they're going to be much more vulnerable to that 0:20:09.800 --> 0:20:12.920 as well as just trade between the Middle East and Europe. 0:20:13.080 --> 0:20:16.680 But I do think the US is more vulnerable than 0:20:16.680 --> 0:20:20.080 normal right now because even though the hard data, so 0:20:20.160 --> 0:20:22.639 to speak, the economy in the US is moderating but 0:20:22.720 --> 0:20:26.760 still solid, you do have this heightened level of uncertainty 0:20:26.800 --> 0:20:30.439 among businesses in particular. You're just adding more fuel to 0:20:30.480 --> 0:20:33.920 that fire with this. If you want business activity to pause, 0:20:34.600 --> 0:20:36.159 this is going to contribute to that. 0:20:36.240 --> 0:20:40.480 Paul publishing last night, Michael Ferole JP Morgan models out 0:20:40.480 --> 0:20:44.120 to Q four Q four of this year. JP Morgan 0:20:44.200 --> 0:20:48.679 is modeling a sub one percent GDP for that quarter. 0:20:48.880 --> 0:20:52.119 So, Rebecca, given what Thomas just mentioning that about slow 0:20:52.160 --> 0:20:57.280 in growth but not recessionary scenarios, what does that suggest 0:20:57.280 --> 0:21:00.000 to you for investors where they should be maybe position 0:21:00.240 --> 0:21:01.399 in this slower growth world. 0:21:01.480 --> 0:21:01.680 Yeah. 0:21:01.720 --> 0:21:04.600 I mean we've seen this trend already this year, but 0:21:04.680 --> 0:21:07.399 I think it continues that large cap stocks that are 0:21:07.440 --> 0:21:11.160 more able to weather these storms outperform small caps, which 0:21:11.240 --> 0:21:14.439 need that sick locality, that momentum plus lower rates to 0:21:14.480 --> 0:21:17.119 really outperform. So you want to be in large caps, 0:21:17.160 --> 0:21:19.879 and you probably want to keep quote unquote barbelling your 0:21:19.920 --> 0:21:23.880 portfolio in that both within stocks have the consumer staples, 0:21:23.920 --> 0:21:26.600 have the save stocks, but then have some tech to 0:21:26.680 --> 0:21:29.040 play the long term AI theme. And if there's no 0:21:29.200 --> 0:21:33.040 turn in consumer sentiment and then globally, I'm pounding my 0:21:33.080 --> 0:21:35.760 fist on the table on this one. Gold keeps going higher. 0:21:35.880 --> 0:21:36.560 Thank you, Tom. 0:21:37.080 --> 0:21:39.160 I've been bullish on gold for a couple of years, 0:21:39.200 --> 0:21:42.520 and this is yet another reason, sadly that you want 0:21:42.520 --> 0:21:45.280 to keep in that even it's up thirty percent year today. 0:21:45.200 --> 0:21:47.600 Such a pro gold up thirty six dollars thirty four 0:21:47.600 --> 0:21:51.639 to thirty eight. One final question Kindeth Pollock and Ambassador 0:21:51.760 --> 0:21:56.440 Shapiro published this morning at the Console and Foreign Relations 0:21:56.440 --> 0:22:00.920 in Foreign Affairs magazine. When those fancy people in international 0:22:00.960 --> 0:22:03.520 relations talk to a market. 0:22:03.160 --> 0:22:06.280 Beast like you, what do they ask you? 0:22:06.280 --> 0:22:08.560 You know, I've really enjoyed being part of the Council 0:22:08.560 --> 0:22:11.280 on Foreign Relations to try to tie the policy and 0:22:11.359 --> 0:22:14.760 economics with the financial markets because they all affect each other. 0:22:15.280 --> 0:22:18.399 In fact, we had an event yesterday on foreign direct 0:22:18.400 --> 0:22:20.720 investment to the United States and what some of the 0:22:20.840 --> 0:22:23.600 uncertainty we're living through, what some of the policies could 0:22:23.640 --> 0:22:27.800 do to foreign direct investments so they're thinking about the 0:22:27.800 --> 0:22:33.600 policy of Commerce Secretary Lutenux FastTrack proposal. I'm thinking about 0:22:33.760 --> 0:22:36.800 if we have less FDI to the US. FDI today 0:22:37.200 --> 0:22:40.159 accounts for about eight million jobs and about a quarter 0:22:40.200 --> 0:22:44.920 of all US manufacturing jobs. If FDI slows because of 0:22:45.119 --> 0:22:48.520 global policy concerns, how does that feed through to our 0:22:48.560 --> 0:22:52.360 equity market, to household wealth, to the dollar. So I'm 0:22:52.440 --> 0:22:55.320 trying to square that circle at the Council on Foreign 0:22:55.359 --> 0:22:57.960 Relations and learning a lot from my colleagues. 0:22:58.000 --> 0:23:00.159 Frankly, Rebecca, thank you so much, Thank you, thank you 0:23:00.240 --> 0:23:02.960 so much for coming in early this morning. Ms Patterson 0:23:03.000 --> 0:23:05.439 with the Console and Foreign Relations as a senior fellow, 0:23:05.840 --> 0:23:09.920 and of course heard years i should say, with Bridgewater 0:23:10.320 --> 0:23:12.520 and with JP Morgan and bestmer Trust as well. 0:23:12.920 --> 0:23:16.800