Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and a Marie Hordern. Join us each
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Speaker 2: out with the S and P five hundred, coming off
Speaker 2: its biggest one day lost since August, the Fed delivering
Speaker 2: a twenty five basis point ray cup but dining bad
Speaker 2: expectations for cuts next year. Jim Bianco of Bianco Research writing,
Speaker 2: cutting rates and leaving the door open to more is
Speaker 2: inviting higher inflation expectations, and that is what the market
Speaker 2: is reacting to. Jim joins us now for more. Jim,
Speaker 2: We've got a lot to get through your early reaction
Speaker 2: to yesterday's news conference.
Speaker 3: You know, you have.
Speaker 4: To see it as a continuation of what we've seen
Speaker 4: since September when the Fed cut in September, we were
Speaker 4: at three point sixty on the ten yure note, and
Speaker 4: yields have been going higher and higher and higher. Chairman
Speaker 4: Paul has been asked about this and he's not answered
Speaker 4: the question. He said, they go up, they go down,
Speaker 4: and then he come to yesterday's meeting, which we're referring
Speaker 4: to as.
Speaker 3: A hawkish cut. Let's call it what it is.
Speaker 4: He made a very good case the raise rates yesterday,
Speaker 4: but instead they cut rates. And I think the market
Speaker 4: at every step has been worried about inflation and has
Speaker 4: been rejecting these moves by having yields go up and
Speaker 4: up on the long end of the curve. Why, because
Speaker 4: the economy is growing at its potential. We've got massive
Speaker 4: stimulus coming with the Trump administration. Monetary ease is unnecessary.
Speaker 4: All it's going to do is raise inflation expectations. So
Speaker 4: every time they can cut or talk about cutting, you
Speaker 4: see higher long term yields.
Speaker 2: Jim, what do you think the next move is no move?
Speaker 2: Is it a count a hike?
Speaker 4: I think the next move you're right, is, first of all, it.
Speaker 3: Should be no move.
Speaker 4: Even though Chairman Paul talked about a pause, meaning that
Speaker 4: there's going to be moves in the future, it probably
Speaker 4: should be a hike because if we're talking about where
Speaker 4: neutral is, where is the rate that does not, you know,
Speaker 4: restrain or stimulate the economy. You can make the case
Speaker 4: we arrived at it yesterday and that the amount of restraint,
Speaker 4: as Chairman Paul calls it, doesn't really exist. So therefore
Speaker 4: the next move should probably be a hike. But that's
Speaker 4: going to be intensely political. President Trump wants to fire
Speaker 4: poll President Trump would go crazy if he saw the
Speaker 4: FED raise rates, So they're trying to thread this needle
Speaker 4: from a political standpoint, in my opinion, and they're coming
Speaker 4: up with an answer that is satisfying nobody.
Speaker 5: Jim, do you have a really clear sense And I
Speaker 5: know that you just gave a reason for why the
Speaker 5: market responded the way that it did, But how much
Speaker 5: do you think it had to do with the idea
Speaker 5: that there is this conn about stickiness of inflation And
Speaker 5: how much is it the flipping and the flopping and
Speaker 5: the lack of direction and the lack of understanding what
Speaker 5: models are driving any further FED decisions.
Speaker 4: Oh, I think that you're right that it is a
Speaker 4: flipping and a flopping. We're not exactly sure where they
Speaker 4: are going. We remember in the summer, we got all
Speaker 4: worried about the unemployment rate. As you pointed out, that
Speaker 4: was the basis of the Jackson Hole speech. I happen
Speaker 4: to think that that was all driven by the some
Speaker 4: rule getting triggered, and that that scared the FED and
Speaker 4: that's what got us the fifty basis points. And right
Speaker 4: after that the labor market rebounded, and now we're back
Speaker 4: to inflation.
Speaker 3: So there is no real consensus.
Speaker 4: Add to that, as you've pointed out, there were potentially
Speaker 4: four dissenters at this meeting, although officially there's only been
Speaker 4: one because four of them listed their twenty twenty four
Speaker 4: dots is being unchanged.
Speaker 3: And this is a bed.
Speaker 4: That is probably deeply divided, that don't have a clear
Speaker 4: idea among themselves what they should be doing next.
Speaker 3: And when Chairman Pod.
Speaker 4: Goes out there and tries to tell us that here's
Speaker 4: the policy, there is no policy. There is just you know,
Speaker 4: kind of questions, and there's dissent all over the place,
Speaker 4: and that is showing up in the market.
Speaker 5: In some ways, the fedput has been taken away the
Speaker 5: comfort that at some point the default for this FED
Speaker 5: will be the recalibration to lower rates, because it seems
Speaker 5: like they're very close to that neutral rate. I just
Speaker 5: wonder going forward how much this is a FED that
Speaker 5: welcomes the weakness that we saw yesterday in the market,
Speaker 5: so it actually welcomes some of the sell off that
Speaker 5: takes a bit of the pockets of frosts down a notch.
Speaker 4: Oh. I think that they probably do welcome the idea
Speaker 4: that these frothy markets, especially in post election, especially in
Speaker 4: the more speculative markets like crypto, have been worrisome for
Speaker 4: them and they would like to see them pull down.
Speaker 4: But I don't think they like the idea that these
Speaker 4: frothiness is coming away because everybody's screaming they just made
Speaker 4: au and that's why the frothiness is coming away. But yes,
Speaker 4: I think that in the long run they would probably
Speaker 4: like that. But again, that puts them at odds with
Speaker 4: incoming President Trump because he values or he views his
Speaker 4: success of his administration by rising stock prices, and the
Speaker 4: FED is now probably saying, well, at least we got
Speaker 4: stock prices down and got some of the frost out
Speaker 4: of the market.
Speaker 3: So it's going to be a very tumultuous twenty twenty five.
Speaker 3: If we continue down.
Speaker 2: This path no doctor of Renmac said it. Immediately after
Speaker 2: the news conference yesterday, Jim nol Kim on the program
Speaker 2: and said, this FED is on a collision course with
Speaker 2: the incoming administration. Jim, how do you think that plays
Speaker 2: out through the next twelve months?
Speaker 4: Oh, I think it's it's going to play out, you know,
Speaker 4: not well at all, because I'm going to take Scott Bessett,
Speaker 4: the incoming Treasury Secretary, as his word that there's probably
Speaker 4: going to be a shadow FED. That is the idea
Speaker 4: that they're probably going to nominate Kevin Walsh.
Speaker 3: Early like this summer.
Speaker 4: So we're going to have a FED chairman, we're going
Speaker 4: to have a future FED chairman, and we're going to
Speaker 4: have two people to kind of listen to and that
Speaker 4: we'll add to the confusion as well. So this is
Speaker 4: not going to be something where they're just going to
Speaker 4: clash with the administration. It's going to be open warfare
Speaker 4: and we're going to have probably a potentially a future
Speaker 4: FED chairman to sit there and question what the current
Speaker 4: FED chairman is doing.
Speaker 6: Jim.
Speaker 2: That will not be music to the ears of people
Speaker 2: in Brazil to people in Japan, and by people I
Speaker 2: mean policymakers Dolly Yen right now briefly through one point
Speaker 2: fifty seven. In Brazil, they've got fiscal issues. These issues
Speaker 2: don't help them. In fact, high yields beget high yields. Jim,
Speaker 2: there are certain places in financial markets around the world
Speaker 2: where they feel really stretched. We had someone come on
Speaker 2: the program yesterday Jilly and Manuel have ever Core, a
Speaker 2: man you know well, and he talked about the peak
Speaker 2: in the US dollar being really important to financial markets.
Speaker 2: We've been asking the question how much oxygen is left
Speaker 2: up here for the US dollar?
Speaker 6: Jim?
Speaker 2: How much more stretch can this get?
Speaker 6: Oh?
Speaker 4: I You know, the one thing I've learned about currencies
Speaker 4: is they can go a lot further than people think.
Speaker 4: And as long as US rates continue higher on this
Speaker 4: back of that, the FED is not dealing with an
Speaker 4: inflation problem, or worse, fostering it by continuing to talk
Speaker 4: about cutting rates when.
Speaker 3: It's not necessary.
Speaker 4: Higher interest rates in the US will just continue to
Speaker 4: foster a higher dollar. Now, a higher dollar, you're right,
Speaker 4: means lower emerging market currencies, which means lower developed currencies
Speaker 4: like the end and puts.
Speaker 3: More and more pressure on them.
Speaker 4: And look at what's happening in the global economy X
Speaker 4: the US. You've got countries like Germany, You've got countries
Speaker 4: like China. You got countries like Japan that are already
Speaker 4: struggling right now. Germany might be in recession right now.
Speaker 4: Japan might be in recession right now. China might have
Speaker 4: some of the lowest growth that we've seen in forty years.
Speaker 4: The US is humming along great, But the problem is
Speaker 4: is that as the US hums along, it gets higher
Speaker 4: rates and sucks the dollar in higher. It puts the
Speaker 4: rest of the world under further pressure.
Speaker 5: Jim putting this all together, the rest of the world
Speaker 5: and further pressure the idea that a stronger dollar is
Speaker 5: probably going to inhibit exports from the US potentially the
Speaker 5: growth in certain areas. Did this meeting and the reaction
Speaker 5: to it by the Federal Reserve and buy the markets
Speaker 5: increase the chance of some sort of negative growth shock
Speaker 5: next year despite some of the incoming policies.
Speaker 3: It can.
Speaker 4: I mean, you know, if you go back and you
Speaker 4: look at recent history. Six years ago today was the
Speaker 4: day that Paul had another press conference where there was
Speaker 4: a very bad reaction in the market. That was when
Speaker 4: he announced QT and it was going to be like
Speaker 4: watching pain try, and the market thought it wasn't going
Speaker 4: to be like watching pain try, and it had a
Speaker 4: very toxic reaction to it. Two weeks later we got
Speaker 4: the poll pivot when he went to Atlanta and at
Speaker 4: the NABE conference and basically pulled a piece of paper
Speaker 4: out of his pocket and said, Okay, those policies announced
Speaker 4: two weeks ago, we're going to completely reverse them. So
Speaker 4: maybe we see something like that in the next couple
Speaker 4: of weeks out of him. It would be there's a
Speaker 4: precedent for it that he changes the policy. But if
Speaker 4: he doesn't change the policy, and they continue to talk
Speaker 4: about weakness, worry about the labor market, that they might
Speaker 4: have to cut rates even more next year in the
Speaker 4: face of just raising their inflation expectations, I think we're
Speaker 4: going to see a rocky ride.
Speaker 3: In the markets.
Speaker 2: Jim enjoyed it. Looking forward to covering this with you,
Speaker 2: Jimpianco Bianco Research, and Jim, thanks for everything. In twenty
Speaker 2: twenty four, Francis Donald of RBC writing there is no consensus,
Speaker 2: no conviction in this FMC, so trying to decipher their
Speaker 2: perspective slash bias as a whole is probably a fall's
Speaker 2: errand I'm pleased to say that Francis is with us
Speaker 2: around a table. Francis, good morning.
Speaker 7: Good morning.
Speaker 2: No consensus. Does that make it pretty tricky for the
Speaker 2: Chairman to offer any particular view for twenty.
Speaker 7: Five, very difficult to give his view of what will happen.
Speaker 7: But not only is there not consensus from the Fed
Speaker 7: about what is happening right now and what's going on,
Speaker 7: but where will we be in twelve months. No forecast
Speaker 7: or public or private knows where we're going to be
Speaker 7: in twelve months. We don't know what policies are coming through,
Speaker 7: their magnitudes they're timing, but we do know the direction
Speaker 7: of where things will go, and that is that incremental
Speaker 7: policies will be inflationary and probably drag on growth. And
Speaker 7: this is why I think is this is the problem
Speaker 7: for the Federal Reserve. It's not higher on inflation. The
Speaker 7: Fed is not afraid of high inflation. They know what
Speaker 7: to do. You hike rates or you keep them stable.
Speaker 6: They're not even.
Speaker 7: Afraid of weaker employment, you lower rates. What they're afraid
Speaker 7: of is a stagflationary environment. And if inflation heads upwards
Speaker 7: or is sticky for factors they cannot control supply side
Speaker 7: and the unemployment rate rises, or there's weakness underlying that
Speaker 7: labor market, maybe it doesn't show up in the unemployment rate.
Speaker 7: That is the big problem for the Federal Reserve heading
Speaker 7: into the next twelve month.
Speaker 2: What do they do if that environment did materialize? What's
Speaker 2: the approach to that?
Speaker 7: Well, they'll have to make some big decisions. So we
Speaker 7: heard from fedhair Powell. Hey, we did work heading back
Speaker 7: in twenty eighteen as to the type of inflation we
Speaker 7: should look through, giving themselves some optionality. But this is
Speaker 7: a FED that's going to have to ask itself questions
Speaker 7: over what type of inflation it does respond to supply
Speaker 7: side shocks, geopolitical fragility. These are not interstrate sensitive. So
Speaker 7: a Federal Reserve that talks a lot more about the
Speaker 7: type of inflation they would look through is one that
Speaker 7: might be airing on the growth side. For now, they
Speaker 7: don't have to make that choice because it's really the
Speaker 7: inflation side of the picture. As we just heard, The
Speaker 7: growth side looks on the surface at least to be well.
Speaker 7: I wouldn't be surprised if the FED is also paying
Speaker 7: attention to the unevenness that exists under this economy. We
Speaker 7: talk about K shape with income's high income folks really
Speaker 7: doing a lot better than low income folks shows up
Speaker 7: in that retail sales data. But there's also that K
Speaker 7: shape happening with manufacturing data and services data. This is
Speaker 7: not a simple economy. It's probably not a simple policy response. This,
Speaker 7: I think is underscoring some of that confusion we're hearing
Speaker 7: from the FED chair.
Speaker 5: It raises this question of what kind of goals they have.
Speaker 5: I don't have a clear sense of what the goals
Speaker 5: are in terms of how quickly to get inflation down
Speaker 5: to two percent, terms of how to weigh both the
Speaker 5: inflation reading and the unemployment reading, and what would trigger
Speaker 5: them to make a change. Did you have a clear
Speaker 5: sense of that.
Speaker 7: Well, from their sep or those dots, they say it's
Speaker 7: okay if we wait several years to get back to neutral.
Speaker 7: Okay if we wait several years to get back to
Speaker 7: two percent, And that seems to be okay by them.
Speaker 7: One of the challenges, I think is this unevenness that
Speaker 7: exists under the surface. That unemployment rate is going to
Speaker 7: stay mechanically lower even as the labor market softens. This
Speaker 7: is a demographics story. And if we see deportations on masks,
Speaker 7: that could also contribute to the unemployment rate looking a
Speaker 7: lot better than the health of the underlying labor market.
Speaker 7: So this is a FED that's going to have to
Speaker 7: look beyond its simple mandate price stability and low and
Speaker 7: stable on employment and start asking questions about whether they're
Speaker 7: targeting the right numbers or at least expanding the numbers
Speaker 7: that they're looking at in a more formal setting.
Speaker 5: Does it make you more nervous to own risk, to
Speaker 5: buy risk, to take risk at a time of this
Speaker 5: much uncertainty and a real confusion or at least disagreement
Speaker 5: above FED members, It will make anybody nervous to take risk.
Speaker 7: It will be more difficult for businesses to action on
Speaker 7: plans that they're going to take, or even for households
Speaker 7: to know what will interest rate policy look like moving forward.
Speaker 7: We're talking a lot about the market reaction and the
Speaker 7: idea that there you know, the market has moved to
Speaker 7: two or one cut for next year. That's fine, But
Speaker 7: how many business owners in the United States and globally
Speaker 7: incorporated a tenure above four percent, and we're incorporating the
Speaker 7: idea that actually rate hikes could become part of the conversation.
Speaker 7: I don't believe that this is part of America's planning,
Speaker 7: and more importantly, I don't think it's part of the
Speaker 7: globes plan because let's not forget this week, we have
Speaker 7: China yields collapsing, we have three out of seven g
Speaker 7: seven countries have governments that went through sizable periods of problems,
Speaker 7: and we have, as you know to John, really serious
Speaker 7: geopolitical fragility. This is not a global economy that can
Speaker 7: withstand for five percent rates the same way the US
Speaker 7: economy can. And while the FED will say we're focused
Speaker 7: on our own domestic economy, unfortunately the rest of the
Speaker 7: world is going to be receivers of that FED policy
Speaker 7: as well, and they are not in the same position
Speaker 7: as the American exceptionalists.
Speaker 2: So that in emerging markets yesterday, that's for sure, in
Speaker 2: foreign exchange in the m I'd love your thoughts on
Speaker 2: this whole debate around neutral. Head of this decision, Governor
Speaker 2: Waller came out and said we were some way off neutral.
Speaker 6: We could keep on kind of interest rates.
Speaker 2: I'm paraphrasing but that was the essence of a message
Speaker 2: from the governor. When do you think we are relative
Speaker 2: to neutral and where are they? Because I was pretty
Speaker 2: confused by some of the commentary in the news conference.
Speaker 7: Well, there's certainly this new concept of short term neutral
Speaker 7: versus long term neutral. So where we should be in
Speaker 7: the short term is different than where we should be
Speaker 7: in the long term. I think that's really being fueled
Speaker 7: by the surprisingly massive amount of fiscal spending we I
Speaker 7: think in the general consensus are downplaying just how impactful
Speaker 7: the most amount of spending per GDP that we have
Speaker 7: seen outside of a recession in American history, and this
Speaker 7: is massive, and it's distorting data. And when we talk
Speaker 7: about American exceptionalism, yes we have productivity and AI because
Speaker 7: what a lot of other countries could be growing at
Speaker 7: three percent if they were spending as much as the
Speaker 7: US was spending on the government side as well. So
Speaker 7: that's really distorting short term neutral. But there's a lot
Speaker 7: of concepts being thrown around. In my senses as I
Speaker 7: listen to this, this is a lot of trying to
Speaker 7: find reasons why they can stay on hold. This is
Speaker 7: a fed that wants to stay on hold until they
Speaker 7: get some sort of crack in the data in one
Speaker 7: direction or another, this is probably where they're going to stay.
Speaker 2: Francis is good to say. Always fantastic. Thank you, Francis
Speaker 2: don A.
Speaker 1: Welcome to our audience on Bloomberg Radio and bloomber Television worldwide.
Speaker 1: Mister secretary, thank you very much for being here with you.
Speaker 1: Many ways we could go here, but let's start with Syria.
Speaker 1: And you've described this moment as one of both promise
Speaker 1: and peril.
Speaker 6: That's right.
Speaker 1: You have what seems like a de facto government that
Speaker 1: is a designated terrorist group, and you've said that the
Speaker 1: US has spent in contact with HTS. What specifically have
Speaker 1: they said, I know there are other groups operating in
Speaker 1: the country as well. What have they said about how
Speaker 1: they might govern? If this is how it all shakes out.
Speaker 8: What we've heard them say is positive. The question is
Speaker 8: what are they actually going to do. We brought together
Speaker 8: with Jordan, countries from around the region last week. We
Speaker 8: had Turkey, we had Iraq, we had the Gulf States, Jordan, Egypt,
Speaker 8: European partners, and we came together to set expectations. What
Speaker 8: is the international community, what are the neighbors looking for
Speaker 8: as this transition takes place in Syria, and we all agreed,
Speaker 8: we want to see something that's inclusive, that's non sectarian,
Speaker 8: that respects minorities, women, that deals with any chemical weapons
Speaker 8: that may be remaining in Syria, that doesn't aly with
Speaker 8: ISIS or any of the terrorist groups that are there.
Speaker 8: And the reason that's so important is we want to
Speaker 8: make it clear to HTS and all of the emerging
Speaker 8: authorities that the recognition that they seek, the support that
Speaker 8: they seek and need from the international community, well, there's
Speaker 8: certain expectations that come along with that. And as I said,
Speaker 8: we've heard positive statements coming from mister Jilani, the leader
Speaker 8: of HDS, but what everyone is focused on is what's
Speaker 8: actually happening on the ground.
Speaker 6: What are they doing.
Speaker 8: Are they looking to build a transition in Syria that
Speaker 8: brings everyone in. If they do that, and if they
Speaker 8: meet some of these other tests that the international community
Speaker 8: is looking for them to meet, then I think you
Speaker 8: can see something very positive. And here's what it is.
Speaker 8: For the first time in decades, the people of Syria
Speaker 8: can go forward without a dictator, without a terrorist group
Speaker 8: dominating their lives, without one sect or one group running
Speaker 8: things at the exclusion of others and without foreign power
Speaker 8: calling all the shots. That's the opportunity, but it really
Speaker 8: requires HTS and other groups that are there to move
Speaker 8: forward in this inclusive way.
Speaker 1: You've said that the US wants to help, and I
Speaker 1: look at this country that has a lot of sanctions
Speaker 1: that are residual, A lot of sanctions have been in
Speaker 1: place for decades.
Speaker 6: On Syria.
Speaker 1: Senator Chris Murphy of Connecticut has called for a temporary
Speaker 1: suspension of sanctions. Is that something that you would be
Speaker 1: ammittable to and would that be effective and helping you
Speaker 1: have more engagement with what may be this new government.
Speaker 6: So we're looking at all the authorities we have.
Speaker 8: We're looking at all of the sanctions, not only our own.
Speaker 8: The United Nations has sanctions on HTS, it's leader.
Speaker 6: And I think what we need to see.
Speaker 8: Is actual concrete steps building an inclusive, non sectarian government,
Speaker 8: a transition eventually getting to an election. As we see
Speaker 8: these steps taken, then I think we'll be able to respond,
Speaker 8: others will be able to respond. That's what we'd like
Speaker 8: to do, But we need to see concrete action, not
Speaker 8: simply positive declarations.
Speaker 1: The EUS Chief Diplomat has said, she's sending a senior
Speaker 1: representative to Damascus to talk to this new group, talk
Speaker 1: to this government. Is that something that you would want
Speaker 1: to do, that you can do? Indeed, given the terrorist
Speaker 1: designation the sanctions there, we've.
Speaker 8: Actually been in direct contact with HTS on the ground.
Speaker 8: I can just tell you we've been in direct contact.
Speaker 8: And we're also looking at getting people on the ground
Speaker 8: in Syria. I think it's important to have direct communication.
Speaker 8: It's important to speak as clearly as possible, to listen,
Speaker 8: to make sure that we understand as best we can where.
Speaker 6: They're going and where they want to go. So we'll
Speaker 6: be looking at pursuing that in the coming days.
Speaker 1: Pull back and ask another question about the region. And
Speaker 1: there's been a lot of speculation that a ceasefire deal
Speaker 1: could come together. When President Biden spoke about the deal
Speaker 1: between Israel and Hesbella, and he was asked at the end,
Speaker 1: do you think you can get a ceasefire deal by
Speaker 1: the end of your tenure?
Speaker 6: So he's hoping and praying.
Speaker 1: Is there anything that's happened that gives more grounds for
Speaker 1: hope and prayer going forward?
Speaker 6: Here?
Speaker 8: There is and the reality is we should logically be
Speaker 8: able to get this. And I say that with all
Speaker 8: the caution that comes with that statement, because you know,
Speaker 8: we've been very close before, and we've had these Lucy
Speaker 8: in the football moments where you're just ready to kick
Speaker 8: the football and Lucy pulls it away. But what's changed
Speaker 8: is this, Hamas knows that the cavalryes are not coming
Speaker 8: to the rescue. For months and months and months, it
Speaker 8: hoped it would get a wider war with Hezbollah, with Iran,
Speaker 8: with Iranian aligned groups coming in and creating more problems
Speaker 8: from Israel on more fronts and helping Hamas endor Now, no,
Speaker 8: that's not happening. They know it's not happening because of
Speaker 8: the very important work that was done with us and
Speaker 8: with others dealing with the unprecedented Iranian attacks on Israel,
Speaker 8: dealing with Heswelah. So I think that's concentrated minds among
Speaker 8: Hamas on the.
Speaker 6: Need to complete the steal.
Speaker 8: Having said that, you know, it's always incredibly fraud and
Speaker 8: it's very hard to get decisions made, it's hard to communicate,
Speaker 8: and for all of those reasons, even as close as
Speaker 8: it is, you know it can still move in the
Speaker 8: other direction.
Speaker 6: But we have we've all been.
Speaker 8: We've all been fanning out, working with all of the
Speaker 8: different partners who can make a difference and who may
Speaker 8: have some leverage with communications with Hamas, whether it's Cutter,
Speaker 8: whether it's Egypt, whether it's Turkey.
Speaker 6: Where I was just last week.
Speaker 8: The fundamental question right now is is Hamas finally prepared
Speaker 8: to say yes? And if it does, we get the
Speaker 8: hostages back, we get a cease fire, we get an
Speaker 8: immediate dramatic improvement in the lives of Palestinian children, women
Speaker 8: and men who've been caught in this horrible crossfire since
Speaker 8: October seventh, off a masses making.
Speaker 6: If they really purport to care.
Speaker 8: About the Palestinian people, they will say yes and do it.
Speaker 6: Now.
Speaker 1: Let me ask you about that horrible crossfire, and it's
Speaker 1: something that you've written about in a recent essay for
Speaker 1: Foreign Affair, is the fact that millions have been displaced,
Speaker 1: tens of thousands have been killed. Gaza has been kind
Speaker 1: of reduced to rubble. You've made twelve trips to the region.
Speaker 1: How much regret do you have that kind of sustained
Speaker 1: level of humanitarian aid hasn't made it into Gaza over
Speaker 1: the course of this conflict.
Speaker 6: You know, from day one.
Speaker 8: We've tried to do several things going back to October seventh.
Speaker 8: First to stand resolute with there's real to try to
Speaker 8: make sure that October seventh would never happen again. Second,
Speaker 8: to prevent this war from going wider, because if that happened,
Speaker 8: if other fronts opened up, whether it was with Iran,
Speaker 8: whether it was with Hezbollah, these other groups, more death,
Speaker 8: more destruction, and it would probably prolong what was going on,
Speaker 8: not in Gaza.
Speaker 6: And three to do whatever we could to make sure.
Speaker 8: That people in Gaza were getting the assistance they need,
Speaker 8: We're getting the protections they need, and we have been
Speaker 8: on this virtually every single day, and we've seen moments
Speaker 8: when more assistance was getting through. Then we've seen moments
Speaker 8: where where it's ebbed and flowed. But this has a
Speaker 8: dramatic effect on the lives and livelihoods of people in Gaza.
Speaker 8: The last week or ten days there has been a
Speaker 8: noticeable improvement, but we've seen that before and then we've
Speaker 8: seen it fall off. The best way to finally deal
Speaker 8: with the needs of the people would be down in
Speaker 8: the conflict, would be to get the ceasefire, to get
Speaker 8: the hostages home. That's the best play because you have
Speaker 8: an environment that is unique. You have a population that's
Speaker 8: trapped in Gaza, it doesn't have anywhere to go. In
Speaker 8: most other conflicts, people they can become refugees. That's not
Speaker 8: a good thing, but it's better than being caught in
Speaker 8: the middle of a hot war.
Speaker 6: And also you have an enemy in the case of Amas, that's.
Speaker 8: Fully enmeshed with the civilian population living in and underbuildings,
Speaker 8: apartment buildings.
Speaker 6: Schools, mosques, hospitals.
Speaker 8: That doesn't obviate at all the responsibility that Israel has
Speaker 8: to try to ensure that assistance gets to people who
Speaker 8: need it and that people are protected as best possible,
Speaker 8: and we've been pushing on that every single day. We've
Speaker 8: also seen what's possible if there's real sustained focus on this.
Speaker 8: There was a polio vaccination campaign to make sure that
Speaker 8: little children in Gaza got these vaccines, and it was
Speaker 8: very successful until there's an end of the conflict. What
Speaker 8: we've been trying to impress upon the Israelis is the
Speaker 8: need to bring that same focus in a sustained way
Speaker 8: on getting assistance to people who need it.
Speaker 1: Ask your last question just about the transition that's underway,
Speaker 1: and you've said of this new administration, you want to
Speaker 1: pass the baton to them so they can get off
Speaker 1: and running. Forgive me, but it does seem like they
Speaker 1: are off and running. You had President Electrump meeting in
Speaker 1: France with President Zelensky, President Matcron, He's met with Prime
Speaker 1: Minister Trudeau in Florida. His destiny to be the Special
Speaker 1: Onboard in the Middle East has been in the region
Speaker 1: as well. Does that complicate the work that you are doing,
Speaker 1: having that sort of separate voice, separate foreign policy for
Speaker 1: lack of a better word, in the region while you're
Speaker 1: trying to do your work.
Speaker 8: There's one president of time, one administration at a time.
Speaker 8: But we're in very close contact with the incoming administration.
Speaker 1: I spent a couple of hours feld novel though, and
Speaker 1: we used to talk about the logan actions. It does
Speaker 1: feel like these are different circumstances.
Speaker 6: Look, I think there are few things. I think there
Speaker 6: are a few things going on.
Speaker 8: First, as I said, we've been in very close contact
Speaker 8: with the incoming administration. I've spent a lot of time
Speaker 8: with Senat Rubio and Jake Salton, the National Security Advisor,
Speaker 8: with Mike Waltz, his successor. We've had very good not
Speaker 8: only conversations, but we're trying to make sure that we're
Speaker 8: as coordinated as possible so that they know what we're
Speaker 8: looking at doing in the remaining time that we have.
Speaker 8: I want to be able to hand off to the
Speaker 8: incoming administration the best possible hand to play in all
Speaker 8: of these areas, in all of these challenges, because the
Speaker 8: world doesn't stop just because we're in a political transition.
Speaker 8: It's also normal that countries around the world want to
Speaker 8: hear from the incoming administration. They want to know what
Speaker 8: they can expect and so they can get ready for that.
Speaker 8: As long as we're communicating closely, which we are, and
Speaker 8: as long as we're working to again try to make
Speaker 8: this handoff as effective as possible so that they can
Speaker 8: get moving on the run because there's really no time
Speaker 8: to wait. Then I think that's a good thing and
Speaker 8: look on the Middle East, just to stick with that quickly.
Speaker 8: We've been working very hard to make sure that as
Speaker 8: best we can we put in we actually start to
Speaker 8: implement plans for a better future for the regent or
Speaker 8: if we don't have time to fully do that, to
Speaker 8: be able to hand them off not just getting the
Speaker 8: hostage and cease fire deal, but having a clear plan
Speaker 8: for what follows, a day after plan for Gaza so
Speaker 8: that there's no vacuum that Hamas can refill, that Israel
Speaker 8: can pull out, and you can have Gaza stand up
Speaker 8: for its people. Administration, Security reconstruction, we have done an
Speaker 8: extraordinary amount of work carrying through what President Trump started
Speaker 8: with the Abraham Boards to get a normalization between Israel
Speaker 8: and Saudi Arabia, which would be the biggest game changer
Speaker 8: in the region. And those plans are there and are
Speaker 8: in place and ready to go if we get an
Speaker 8: end to Gaza a conflict there. We've done a lot
Speaker 8: of work on what a pathway to Palestinian state would
Speaker 8: look like. When people are ready for that conversation, they're
Speaker 8: not now. At some point they're going to have to be.
Speaker 8: All of that is ready to be handed over to
Speaker 8: the new administration, and hopefully they'll carry the.
Speaker 6: Ball forward very quickly.
Speaker 1: Before I let you go, you mentioned that normalization deal.
Speaker 1: It was something this administration invested a lot in before
Speaker 1: October seventh. Clear that the conversations has been going on,
Speaker 1: there has been reporting that we're close to a breakthrough
Speaker 1: there is there. Can you shed any lightn serve where
Speaker 1: those conversations stand today.
Speaker 6: So one of the things I look.
Speaker 8: Back on is on October tenth, a year ago, I
Speaker 8: was supposed to go to Saudi Arabia and to Israel
Speaker 8: to work on the Palestinian component of this normalization deal.
Speaker 6: And of course that trip didn't happen because of October seven.
Speaker 8: But even with Gaza, we've continued these conversations. We've continued
Speaker 8: this work, and in terms of the agreements that are
Speaker 8: needed between the United States in Saudi.
Speaker 6: Arabia, they're pretty much ready to go.
Speaker 8: And that would then trigger the normalization between Israel and
Speaker 8: Saudi Arabia. But two things are required to actually get
Speaker 8: that done. One is an end to the conflict in Gaza,
Speaker 8: and two is having a credible pathway toward a Palestinian state.
Speaker 8: As I said, all of the work's been done, and
Speaker 8: hopefully we'll get to that end of conflict in Gaza.
Speaker 8: They'll have to engage the conversation on the answering the
Speaker 8: Palestinian question, but the work is there, and if that happens,
Speaker 8: this transforms the region.
Speaker 6: You have Israel that's integrated in the region, there's.
Speaker 8: A common security architecture to deal with Iran. We saw
Speaker 8: that something we put together embryonically. When Iran attacked Israel
Speaker 8: in an unprecedented way direct attack, we not only for
Speaker 8: the first time participated in Israel's active defense, we brought
Speaker 8: other countries, including countries in the region, into that defense.
Speaker 6: So you can see what's possible in the future.
Speaker 8: But it requires an end to the conflict in Gaza,
Speaker 8: and it requires moving forward on the Palestinians.
Speaker 1: As your secretary, thank you very much. That's a Anthony
Speaker 1: Blnkoln Secretary stage.
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