WEBVTT - Bloomberg Surveillance TV: August 19, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:36.960 Terminal and the Bloomberg Business app. So here's the latest. 0:00:37.120 --> 0:00:39.080 All eyes on fetched J. Powell, as he said to 0:00:39.080 --> 0:00:41.880 speak Friday from Jackson Hole, the focus turning from when 0:00:42.159 --> 0:00:43.839 to how big and how many rate cuts the Fed 0:00:43.880 --> 0:00:47.040 actually delivers. Cassiberrow of JP Morgan assea management rights in 0:00:47.080 --> 0:00:50.239 the following simple policy rules would suggest the Fed could 0:00:50.280 --> 0:00:52.720 have already started easing by now. This was true even 0:00:52.760 --> 0:00:55.480 before the last jobs report, but further confirmed by the 0:00:55.480 --> 0:00:59.120 most recent CPI report risk reward favors owning some duration 0:00:59.200 --> 0:01:02.040 in portfolios. As we approach the star of the Fed's 0:01:02.160 --> 0:01:05.399 easing cycle, Cassie joined us now for more. A Cassi 0:01:05.480 --> 0:01:08.600 language is really important you say easing, some people might 0:01:08.640 --> 0:01:11.800 say removing restriction. Are you talking about a shift towards 0:01:11.800 --> 0:01:13.720 accommodation of the feder reserve? 0:01:14.400 --> 0:01:18.039 Well, I think you are rightfully so picking up on 0:01:18.080 --> 0:01:20.800 a little bit of a differentiation. So when I say easing, 0:01:20.959 --> 0:01:23.440 I think the FED in their mind, views that as 0:01:23.760 --> 0:01:28.479 reducing policy restrictiveness. But I think when I look at 0:01:28.520 --> 0:01:34.000 the environment more holistically, putting aside the conflicting noise that 0:01:34.040 --> 0:01:36.440 we're hearing in terms of the labor market and the consumer, 0:01:36.600 --> 0:01:38.880 is it really weak or is it really strong? I 0:01:38.880 --> 0:01:42.560 think the inflation backdrop alone at this point probably justifies 0:01:43.480 --> 0:01:46.600 at least one hundred basis points of rate cuts. Not immediately, 0:01:47.240 --> 0:01:49.280 but I think a policy rate closer to three and 0:01:49.280 --> 0:01:51.560 a half to four percent is probably where we should 0:01:51.600 --> 0:01:54.640 be trending, just based on the inflation data alone. And 0:01:54.680 --> 0:01:59.480 that's because inflation is coming down. It's more broad based, 0:02:00.240 --> 0:02:03.440 just concentrated in two categories at this point, shelter. 0:02:03.240 --> 0:02:04.000 And auto insurance. 0:02:04.040 --> 0:02:05.520 Let's get into that a little bit more, sort of 0:02:05.520 --> 0:02:07.320 set the stage for the economic bankdrop, and then we'll 0:02:07.320 --> 0:02:10.240 get into the market call the breadth of the decline 0:02:10.240 --> 0:02:12.880 in inflation. How encouraging has that been for you? Where 0:02:12.960 --> 0:02:15.040 is shelter? Is that still a sticking point? 0:02:15.360 --> 0:02:16.720 It has been very encouraging. 0:02:16.760 --> 0:02:18.920 I mean so if you think about the inflation or 0:02:18.960 --> 0:02:21.680 disinflation that we saw last year, it was primarily a 0:02:21.720 --> 0:02:25.640 goods story and that was the low hanging fruit. What 0:02:25.680 --> 0:02:29.680 we've seen more recently is that the inflation or disinflation 0:02:29.880 --> 0:02:34.679 has broadened out and it's now included the services category, 0:02:34.919 --> 0:02:37.240 now the shelter category. I know there's a lot of 0:02:37.280 --> 0:02:39.440 hemming and hawing over is it coming down? 0:02:39.480 --> 0:02:41.480 Is it coming down fast enough? But you know, I 0:02:41.560 --> 0:02:43.280 look at it. I look at the year over your rate. 0:02:43.320 --> 0:02:46.119 It's down three hundred or three hundred basis points three 0:02:46.160 --> 0:02:47.799 percent over the last year. 0:02:48.240 --> 0:02:49.520 It's coming down, and I. 0:02:49.440 --> 0:02:52.919 Think it will probably continue to normalize over time. Two 0:02:53.080 --> 0:02:55.600 levels more consistent with pre COVID, which is where the 0:02:55.639 --> 0:02:58.960 majority of the CPI basket is already trading. 0:02:59.280 --> 0:03:02.360 You've been talking to about this for many months. Basically 0:03:02.440 --> 0:03:04.000 the rest of the markets come on board with you, 0:03:04.360 --> 0:03:06.480 and it seems like this is now consensus and the 0:03:06.480 --> 0:03:08.840 market is pricing this an already and some would argue 0:03:09.040 --> 0:03:13.000 has already moved for the Federal Reserve, which hasn't moved, 0:03:13.040 --> 0:03:17.320 and yet effective rates have essentially dropped that much. How 0:03:17.360 --> 0:03:20.160 disruptive would it be if FED chair Jpewell doesn't lean 0:03:20.280 --> 0:03:22.799 into the rate cuts that are being priced into the. 0:03:22.720 --> 0:03:24.080 Market in his speech on Friday. 0:03:24.240 --> 0:03:27.080 Yeah, that's a really good question, because you know, I 0:03:27.160 --> 0:03:31.200 look at the moves and yields this year, right, and 0:03:31.560 --> 0:03:33.359 they've all been driven by data. 0:03:33.840 --> 0:03:36.400 Not one has been driven by FED speak. 0:03:36.880 --> 0:03:39.960 It's you know, it's the data that's driving the market's 0:03:40.000 --> 0:03:42.400 reassessment of how many rate cuts need. 0:03:42.240 --> 0:03:43.040 To be done this year. 0:03:43.280 --> 0:03:45.680 And earlier in the year, when there was concern about 0:03:45.720 --> 0:03:48.480 reacceleration risk and there were a couple hot inflation prints, 0:03:48.520 --> 0:03:50.960 the market priced out rate cuts. 0:03:51.000 --> 0:03:52.520 They didn't need FED speak to do that. 0:03:52.880 --> 0:03:55.240 So I guess where I'm circling back to is when 0:03:55.280 --> 0:03:59.600 I think about Jackson Hole and what share Palel's responsibility is. 0:04:00.040 --> 0:04:01.920 You know, I think what we're going to hear from 0:04:01.960 --> 0:04:05.520 him is that he is comfortable with the inflation backdrop. 0:04:05.840 --> 0:04:08.480 This is an environment where the FED can start removing 0:04:08.600 --> 0:04:10.160 policy restrictiveness. 0:04:10.480 --> 0:04:12.400 But I don't think he is going to. 0:04:12.400 --> 0:04:16.440 Be particularly explicit about how many rate cuts that will 0:04:16.480 --> 0:04:19.200 be or how far they need to go. I think 0:04:19.200 --> 0:04:21.080 that they're going to kind of continue to let the 0:04:21.120 --> 0:04:22.279 market do that work for. 0:04:22.160 --> 0:04:24.400 Them, So, in other words, he's not going to lean 0:04:24.440 --> 0:04:27.080 into it one way or another, Which raises this question 0:04:27.160 --> 0:04:29.800 about the theme of the actual conference, which is reassessing 0:04:29.800 --> 0:04:33.560 the effectiveness and transmission of monetary policy. How effective and 0:04:33.600 --> 0:04:36.840 how much control do they have over the transmission of 0:04:36.880 --> 0:04:40.000 this monetary policy If all of the moves this year 0:04:40.080 --> 0:04:42.279 have not been driven by their rhetoric, have been driven 0:04:42.279 --> 0:04:43.520 by data. 0:04:43.120 --> 0:04:46.240 Right, well, I mean, I think that's because we've moved 0:04:46.279 --> 0:04:50.080 out of an era of true reliance on forward guidance. 0:04:50.080 --> 0:04:52.400 If you think about what forward guidance was and why 0:04:52.440 --> 0:04:54.880 it was created, it was created for an environment of 0:04:54.880 --> 0:04:57.920 the zero lower bound, right It was when we cut 0:04:57.960 --> 0:05:01.120 to zero and we still needed to be even more accommodative, 0:05:01.320 --> 0:05:03.799 and we had no tools left, and we've tried quantitative 0:05:03.880 --> 0:05:05.960 using one, two three, What else can we do? 0:05:06.400 --> 0:05:09.320 Well, we can try to just jobble in the markets. 0:05:09.120 --> 0:05:13.000 And continue to promise them low rates for longer. The 0:05:13.120 --> 0:05:15.960 environment we're in right now is not really an environment 0:05:16.000 --> 0:05:19.760 of extraordinary policy where the forward guidance that we need 0:05:20.120 --> 0:05:23.160 is that type of forward guidance, And so I think 0:05:23.200 --> 0:05:26.640 that the environment that we're in is one rightfully sell 0:05:26.680 --> 0:05:29.800 where you know, the forward guidance is not what's most relevant. 0:05:29.839 --> 0:05:32.360 What's most relevant is where we are in the business cycle. 0:05:32.440 --> 0:05:35.760 And to be frank, you know, we're all learning that together, 0:05:35.960 --> 0:05:38.480 including the Federal Reserve members as they watch the data. 0:05:38.600 --> 0:05:40.120 Kelsey, when you were talking about the data and the 0:05:40.120 --> 0:05:42.839 market moving data dependent, that's because the FED told them 0:05:43.000 --> 0:05:45.240 they were so data dependent. So it comes from the 0:05:45.240 --> 0:05:48.559 FED basically saying we're so data dependent, the market should 0:05:48.560 --> 0:05:51.720 be data dependent. Does j Pell need to almost take 0:05:51.760 --> 0:05:54.160 a step back on that when he talks and said 0:05:54.560 --> 0:05:57.680 this week at Jackson Hall before the potential cut or 0:05:58.120 --> 0:06:00.920 keeping policy in line us back on the market, you 0:06:00.960 --> 0:06:02.279 shouldn't be so data dependent. 0:06:03.000 --> 0:06:06.160 So I do think there's probably an opportunity. 0:06:05.480 --> 0:06:09.159 For him to use words such as gradual to describe 0:06:09.160 --> 0:06:14.240 the easing cycle. So he is likely aware that commentators 0:06:14.240 --> 0:06:17.159 in the media and financial market participants have been talking 0:06:17.160 --> 0:06:20.440 about the need for intra meeting cuts after the July 0:06:20.680 --> 0:06:24.240 jobs report, the need for potentially fifty basis point rate cuts. 0:06:24.400 --> 0:06:27.520 I think the data he's seeing on a mosaic basis 0:06:27.600 --> 0:06:31.680 is probably not suggesting a need to be that quick 0:06:32.360 --> 0:06:35.240 to move. And so while I think he wants to 0:06:35.279 --> 0:06:40.400 communicate that they have the capacity to be quick if necessary. 0:06:40.240 --> 0:06:42.000 The current environment is one where. 0:06:41.880 --> 0:06:45.280 They can adjust slowly and recognize that in the event 0:06:45.320 --> 0:06:47.919 that something goes wrong, we're in a great position to 0:06:48.000 --> 0:06:50.880 respond because we're not near the zero lour a bound. 0:06:50.920 --> 0:06:53.640 We have five hundred basis points of policy space. And 0:06:54.279 --> 0:06:56.719 that's also you know, I think what the bond market 0:06:56.760 --> 0:06:59.080 is picking up and while while yields are coming down, 0:06:59.120 --> 0:07:00.640 spreads are also stacking very well. 0:07:00.520 --> 0:07:03.280 Continued, I just want to say this upfront present company excluded. 0:07:03.720 --> 0:07:06.120 The last year has been dominated on this program by 0:07:06.120 --> 0:07:08.680 a bunch of people trying to sell some bond funds 0:07:09.080 --> 0:07:11.400 and to get out of cash. And I hear it 0:07:11.440 --> 0:07:13.600 again now, sort of scaring people out of cash, to 0:07:13.640 --> 0:07:16.040 say the rate cuts are coming, extend duration, get out 0:07:16.040 --> 0:07:19.240 of money market funds. Why is now the right time 0:07:19.320 --> 0:07:22.080 to do that? Because I've seen headfake after head fake 0:07:22.160 --> 0:07:24.360 over the last twelve months, when people have given up, 0:07:24.360 --> 0:07:27.160 say five point five percent, and rushed out to buy 0:07:27.240 --> 0:07:29.760 duration when they maybe didn't need to. Why is now 0:07:29.760 --> 0:07:31.160 the right time? Why is now different? 0:07:31.520 --> 0:07:34.720 Well, I mean I was just looking at the numbers myself, 0:07:34.800 --> 0:07:39.120 and you know, I said, you know, normally the conventional 0:07:39.120 --> 0:07:41.920 wisdom is once the FED is start is done hiking, 0:07:42.000 --> 0:07:44.520 which was back in July last year, it's time to 0:07:44.600 --> 0:07:47.600 start extending duration. If you were to have moved just 0:07:47.840 --> 0:07:50.400 a little bit of that cash into one to five 0:07:50.480 --> 0:07:53.880 year high high quality corporate credit, so one to five 0:07:53.960 --> 0:07:56.680 year investment great credit, you would beat two hundred basis 0:07:56.680 --> 0:07:58.840 points ahead of cash at this point thirteen months later. 0:07:59.080 --> 0:08:01.239 So I think it proves the and is actually already there. 0:08:02.240 --> 0:08:04.320 And that's before the fat has even started cutting. 0:08:05.360 --> 0:08:08.920 Cassy Barrow of JP Morgan Accent Management defending the sales 0:08:08.920 --> 0:08:20.760 pitch of the last eighteen months. So here's the latest 0:08:20.920 --> 0:08:23.600 the US dollar extending losses as traders away. Comments from 0:08:23.600 --> 0:08:27.080 fenchair J Powe from Jackson Hole on Friday, Expectations for 0:08:27.120 --> 0:08:29.680 a September FED rate cut happen to push the Bloomberg 0:08:29.680 --> 0:08:32.160 Dollar Index to its lowest level since March of this year. 0:08:32.440 --> 0:08:34.640 Steve England are a standard chartered right in the following. 0:08:34.640 --> 0:08:37.480 We now expect three twenty five basis point cuts from 0:08:37.480 --> 0:08:39.840 the FMC for the rest of twenty four. We also 0:08:39.880 --> 0:08:42.600 expect steeper rate cuts in the first half of twenty five, 0:08:42.880 --> 0:08:46.280 totaling seventy five basis points in Q one and fifty 0:08:46.320 --> 0:08:49.959 basis points in Q two. Steve joined us. Now for more. Steve, 0:08:50.120 --> 0:08:51.920 welcome to the program, and let's start right there with 0:08:51.960 --> 0:08:53.840 your calls for three cuts this year and one hundred 0:08:53.880 --> 0:08:55.960 and twenty five basis points in the first half of 0:08:56.000 --> 0:08:58.520 twenty twenty five. Can you help pass and our audience 0:08:58.600 --> 0:09:01.599 understand whether that's an adjustment based on falling inflation or 0:09:01.640 --> 0:09:04.960 whether that's a shift to accommodation to confront weak growth. 0:09:06.640 --> 0:09:11.520 More the first if we really see weak growth, you know, 0:09:11.600 --> 0:09:12.920 which is not our baseline. 0:09:13.000 --> 0:09:14.840 But you know, fifties learned the picture. 0:09:14.920 --> 0:09:18.360 The fifty story is very you know, a typical recession 0:09:18.480 --> 0:09:19.720 fall off, a cliff story. 0:09:20.520 --> 0:09:22.439 We don't expect that, so we have twenty five. 0:09:22.520 --> 0:09:24.800 So I think as we get into twenty twenty five, 0:09:26.240 --> 0:09:30.160 with the unemployment rate drifting up and inflation getting closer 0:09:30.200 --> 0:09:34.800 to target, all the considerations of you know, how tight 0:09:35.320 --> 0:09:38.600 should real interest rates be matter, So that's why we 0:09:38.640 --> 0:09:42.040 think that they'll be able to cut more aggressively and 0:09:42.160 --> 0:09:45.160 bring the FED funds closer to neutral in the first half. 0:09:45.800 --> 0:09:47.760 I think the Fed would prefer not to do it 0:09:48.480 --> 0:09:51.360 in twenty twenty four because they want to be sure 0:09:51.760 --> 0:09:55.120 we're still on track for you know, getting target inflation, 0:09:55.200 --> 0:09:57.520 and they want to be sure if they do a fifty, 0:09:57.559 --> 0:10:00.839 that the economy is in dire straits. But by twenty 0:10:00.880 --> 0:10:03.760 twenty five they will be more confident that they can 0:10:03.840 --> 0:10:05.160 do in isolated fifty. 0:10:05.200 --> 0:10:06.839 We don't think it's going to be too many of them. 0:10:07.000 --> 0:10:09.320 See if there are two very different conversations, though, there 0:10:09.360 --> 0:10:12.119 is a key distinction, and you've drawn it, the conversation 0:10:12.240 --> 0:10:16.080 about removing restrictiveness and a conversation about shifting towards accommodation. 0:10:16.600 --> 0:10:18.480 What does the dollar look like? How does it trade 0:10:18.720 --> 0:10:20.160 in one back drop versus the other? 0:10:21.559 --> 0:10:24.600 Yes, the dollar is kind of interesting. You know. We 0:10:24.720 --> 0:10:27.520 thought that the dollar because. 0:10:27.240 --> 0:10:30.720 We're we're at saying twenty five basis points, the market 0:10:30.760 --> 0:10:32.920 was somewhere between twenty five and fifty and q four, 0:10:33.080 --> 0:10:35.840 So as the market pulled back from those rate kind 0:10:35.880 --> 0:10:38.000 of expectations, we thought the dollar would strengthen. 0:10:38.480 --> 0:10:41.080 What we've seen so far is. 0:10:40.960 --> 0:10:43.800 That the asset markets and the currency markets are paying 0:10:43.840 --> 0:10:49.320 attention to the abrilliance that you're seeing in equities, and 0:10:49.840 --> 0:10:53.080 you know, that's kind of been driving the dollar weaker, 0:10:53.559 --> 0:10:57.280 even though the interest rates move. Interest rate moves have 0:10:57.360 --> 0:10:59.520 been more in favor of the dollar than against it. 0:10:59.760 --> 0:11:02.120 We have to see if that persists. There's still a 0:11:02.160 --> 0:11:04.920 long way to go before we entirely get rid of 0:11:05.000 --> 0:11:08.000 the you know, one hundred basis points, you know, get 0:11:08.000 --> 0:11:10.600 back to seventy five that we expect. So we as 0:11:10.600 --> 0:11:13.400 a baseline, we still think the dollar could much stronger. 0:11:13.520 --> 0:11:16.240 But twenty twenty five we think will be a week. 0:11:16.160 --> 0:11:19.360 Dollar year, because that will be you know, all systems 0:11:19.400 --> 0:11:21.520 go to basically get back to neutral. 0:11:21.840 --> 0:11:25.200 The Fed will converge with everybody else in rates terms. 0:11:25.400 --> 0:11:27.800 Does it bother you Steve's that the bond market disagrees 0:11:27.840 --> 0:11:31.040 with itself. That essentially, you have FED fund's futures talking 0:11:31.040 --> 0:11:33.599 about your view of things, two hundred basis points of 0:11:33.679 --> 0:11:36.040 rate cuts by the end of next year, but then 0:11:36.080 --> 0:11:38.320 you've got a two year trading at four percent. I mean, 0:11:38.480 --> 0:11:40.760 you start talking about the dollar before you even get there. 0:11:41.120 --> 0:11:42.640 The market can't agree with itself. 0:11:44.559 --> 0:11:47.480 Well, I never asked the market to be entirely consistent 0:11:47.520 --> 0:11:49.480 because there are different segments in the market. 0:11:49.559 --> 0:11:51.760 But you know, the two years is. 0:11:51.760 --> 0:11:56.160 Kind of you know, pricing in that FED fund saved 0:11:56.160 --> 0:11:58.480 by the end of twenty twenty five, beginning of twenty 0:11:58.520 --> 0:12:01.160 twenty six will be around three percent. 0:12:01.679 --> 0:12:03.560 We're now at five and change. 0:12:03.240 --> 0:12:06.160 So the two years sort of averaging you know, where 0:12:06.160 --> 0:12:08.520 we are going to be versus where we are now. 0:12:09.760 --> 0:12:11.280 You know. But I would say this, and I think 0:12:11.320 --> 0:12:12.360 this is really important. 0:12:12.720 --> 0:12:15.560 If it does turn out that we're in a typical recession, 0:12:15.600 --> 0:12:17.760 that you know, all the saw rules charts that on 0:12:17.880 --> 0:12:23.480 unemployment that everybody was pulling out, that this economy follows 0:12:23.800 --> 0:12:29.000 the contours of a typical recession, the market is way 0:12:29.000 --> 0:12:31.520 off base because FED will take real rates to zero, 0:12:31.679 --> 0:12:34.000 may be negative, so that would mean like a two 0:12:34.040 --> 0:12:37.600 percent FED funds rate or even below. I think right 0:12:37.640 --> 0:12:42.800 now the market is pricing in a very comfortable sluggishness 0:12:43.679 --> 0:12:46.440 in the US economy that you know, mostly twenty five 0:12:46.480 --> 0:12:48.160 basis point cuts can deal with. 0:12:48.600 --> 0:12:51.839 If it turns out that's not the case, you know. 0:12:51.840 --> 0:12:54.200 We're mispriced, and we could go back to the early 0:12:54.240 --> 0:12:58.560 August world where you know, equities are mispriced because the 0:12:58.600 --> 0:13:01.800 economy is a lot weaker, and fixed income is mispriced 0:13:01.920 --> 0:13:04.240 because the cuts are going to have to be a 0:13:04.240 --> 0:13:06.160 lot deeper than you know, what's. 0:13:06.000 --> 0:13:06.680 Priced in now. 0:13:07.160 --> 0:13:09.840 This is a question going forward, and John was alluding 0:13:09.880 --> 0:13:12.640 to it, the idea of dollar weakness or dollar strength 0:13:12.840 --> 0:13:15.400 depending on what kind of rate cuts there are. I'm 0:13:15.400 --> 0:13:19.160 wondering how much some of the dislocations, or some of 0:13:19.200 --> 0:13:23.800 the overweights on the dollar versus the yen or things 0:13:23.840 --> 0:13:27.040 like that, how much those carry trades are really flushed 0:13:27.040 --> 0:13:29.000 out of the system last week, giving more of a 0:13:29.040 --> 0:13:32.080 clean slate that will lead to more controlled moves, the 0:13:32.080 --> 0:13:33.920 same kind of violence that we saw. 0:13:35.920 --> 0:13:38.720 You know, from the indications, we have certainly. 0:13:40.040 --> 0:13:43.280 What you call fast money hedge funds, you know, high 0:13:43.320 --> 0:13:47.480 frequency traders. They got out of their long dollar positions 0:13:47.640 --> 0:13:50.079 very very quickly, so the market is pretty clean. There 0:13:50.080 --> 0:13:53.200 could be a few segments of the market where they're 0:13:53.240 --> 0:13:57.280 catching up, but I think that the you know, positioning 0:13:57.400 --> 0:14:00.600 is much much lower than it was two weeks ago 0:14:00.640 --> 0:14:02.680 or even a week ago, and it's certainly not in 0:14:02.800 --> 0:14:06.240 terms of dollar longs, those have kind of disappeared. 0:14:06.440 --> 0:14:08.560 Steve, just quickly, are you satisfied on the morning bight 0:14:08.600 --> 0:14:10.920 this morning that we have broken the correlation between the 0:14:11.040 --> 0:14:13.959 Japanese yen and what happens with risk given the equities 0:14:14.000 --> 0:14:16.320 holding up okay this morning, even with a much stronger 0:14:16.600 --> 0:14:17.280 Japanese yen. 0:14:19.280 --> 0:14:21.600 I'll say this, I never thought that the end trade 0:14:21.680 --> 0:14:23.760 was driving global risk. 0:14:24.000 --> 0:14:26.560 It did drive Asian FX. 0:14:26.600 --> 0:14:29.960 I mean that's why you know all Asian currencies are strong, 0:14:31.080 --> 0:14:33.800 and it did drive the unlined. But I think that 0:14:33.880 --> 0:14:38.080 the big equity market moves that we saw and the 0:14:38.440 --> 0:14:41.080 big fixed income moves that we saw were driven by 0:14:41.120 --> 0:14:42.480 recession fears. 0:14:42.560 --> 0:14:43.720 And those could come back. 0:14:43.800 --> 0:14:45.840 It's not our baseline, but those could come back if 0:14:45.840 --> 0:14:48.800 it turns out that the unemployment rate keeps throwing up 0:14:48.800 --> 0:14:50.600 by two tens of a percent of the months, and 0:14:51.200 --> 0:14:52.680 so we're not out of the woods yet. 0:14:53.320 --> 0:14:55.400 We'll be playing this game again on September six. Looking 0:14:55.400 --> 0:14:57.760 forward to it, Steve, Thank you, sir, Steve England have 0:14:57.840 --> 0:15:10.320 standard shouted Secretary of State Anthony Blinkett arriving at Tel 0:15:10.320 --> 0:15:13.800 Aviv as Israel and Hamas truce talk stall yet again. 0:15:14.040 --> 0:15:17.240 Senior Advisor to the President for Energy and Investment Amas Hogstein, 0:15:17.240 --> 0:15:19.640 playing a key role in these intensions in the Mid 0:15:19.760 --> 0:15:22.080 East for the Band and administration. He joins us now 0:15:22.080 --> 0:15:24.440 as great to see you. Widely regarded as one of 0:15:24.480 --> 0:15:27.880 the President's most trusted security advisors. You were in Beirut, 0:15:27.960 --> 0:15:29.720 I believe in the last week as well. Can you 0:15:29.720 --> 0:15:31.640 set the States Rusk just help explain to us where 0:15:31.680 --> 0:15:34.880 talks aren't currently both between Lebanon and Israel, and what's 0:15:34.880 --> 0:15:36.520 happening currently in the Gaza strip as well. 0:15:37.120 --> 0:15:37.320 Well. 0:15:37.320 --> 0:15:40.240 First, good to be here. Thank you for having me. Yeah, 0:15:40.280 --> 0:15:43.000 I was in Beirut last week. We had obviously rising 0:15:43.120 --> 0:15:49.520 tensions and escalation of different reprisals and different threats across 0:15:49.560 --> 0:15:55.040 the region. The President had ordered large parts of military 0:15:55.680 --> 0:15:59.240 US military to the region, and of course diplomacy to 0:15:59.320 --> 0:16:01.680 commence as well to be able to reduce tensions. The 0:16:01.680 --> 0:16:04.520 most important thing that President's focused on now that we 0:16:04.600 --> 0:16:07.720 want to achieve is a ceasefire agreement that brings the 0:16:07.760 --> 0:16:12.760 hostages home finally to their families, brings relief to civilians 0:16:12.760 --> 0:16:15.200 in Gaza, and sets the stage to end this war. 0:16:15.360 --> 0:16:17.240 That's the most important thing. So the talks in Doha 0:16:17.360 --> 0:16:21.600 last week, talks continue right now. As you said, Secretary 0:16:21.640 --> 0:16:25.040 blink In is in the region in Israel today and 0:16:25.640 --> 0:16:29.160 I take issue with stall. I think that the press 0:16:29.200 --> 0:16:33.280 wants to have some you know, there's movement every single day, 0:16:33.400 --> 0:16:36.400 But these are very serious discussions that will continue over 0:16:36.400 --> 0:16:37.200 the next several days. 0:16:37.280 --> 0:16:39.320 We'll educate us where has there been movement. 0:16:39.920 --> 0:16:42.360 Well, I can't, obviously for obvious reasons, can't. 0:16:42.160 --> 0:16:44.920 Go into the details of where the of the details 0:16:44.960 --> 0:16:50.040 of the talks. But they are progressing things. That's why 0:16:50.040 --> 0:16:52.960 Secretary blink In is there and the work will continue. 0:16:52.960 --> 0:16:56.920 This never happens overnight, but I'm confident that will continue 0:16:56.920 --> 0:16:59.080 to push as hard as we all can. And when 0:16:59.120 --> 0:17:02.120 it comes to Lebanon, look, we had a ratching up 0:17:02.120 --> 0:17:05.200 of escalation. We're trying to bring some of that down. 0:17:05.960 --> 0:17:08.960 I was there really to talk to folks about how 0:17:08.960 --> 0:17:12.680 do we think about the day after and and talk 0:17:12.720 --> 0:17:16.400 about bringing some normal sense of normalcy for Lebanon. Look, 0:17:16.480 --> 0:17:18.640 Lebanon is at at at a war that I think 0:17:18.640 --> 0:17:22.960 it's people don't want that they didn't that neither side 0:17:23.040 --> 0:17:29.640 really started. Hasbela decided to join the conflict on October eighth. 0:17:28.680 --> 0:17:30.800 And we've been in a tit for tat ever since. 0:17:31.160 --> 0:17:33.600 So it's really important that is a critical piece not 0:17:33.640 --> 0:17:37.240 to allow to escalate, as it has ramifications for the 0:17:37.280 --> 0:17:37.879 rest of the region. 0:17:37.920 --> 0:17:39.760 Well, almost you spent a lot of time with Lebanon 0:17:39.800 --> 0:17:42.840 Speaker of the Parliament, who's very close to Hesbelah, What 0:17:42.880 --> 0:17:45.280 did he tell you about Hesbela's intentions when it comes 0:17:45.280 --> 0:17:45.800 to Israel. 0:17:46.920 --> 0:17:49.680 Well, A, as you know, Hisabella and Israel have gone 0:17:49.920 --> 0:17:52.639 on rounds of conflict over the last several decades on 0:17:53.240 --> 0:17:54.160 every several years. 0:17:54.440 --> 0:17:55.800 We've had relative quiet. 0:17:55.600 --> 0:17:59.480 Since the two thousand and six conflict ended and through 0:17:59.520 --> 0:18:02.880 the Security Council Resolution seventeen oh one, it has never 0:18:02.880 --> 0:18:05.760 really been implemented by either side. So we need to 0:18:05.800 --> 0:18:08.000 get to another point. I think the Speaker as well 0:18:08.040 --> 0:18:10.840 as most Lebanese people, they just want this to end. 0:18:11.000 --> 0:18:12.640 They don't understand why they're at war. 0:18:12.760 --> 0:18:16.240 Well, what tools does the US actually have to pressure Lebanon. 0:18:17.240 --> 0:18:20.600 Well, again, we can talk about what does the what 0:18:20.640 --> 0:18:23.280 does it look like to end not only this round, 0:18:23.680 --> 0:18:27.320 but to put things in place that will create stability 0:18:27.320 --> 0:18:30.440 for the long term and bring economic growth and stability 0:18:30.480 --> 0:18:32.840 and prosperity in Lebanon. It's one of the most used 0:18:32.840 --> 0:18:34.199 to be one of the most successful countries. 0:18:34.240 --> 0:18:35.199 Today. They went into the. 0:18:35.280 --> 0:18:38.800 Total blackout the other day because they lost the last 0:18:39.080 --> 0:18:42.200 fuel in their power plants. I mean, this is a 0:18:42.240 --> 0:18:44.800 country that should be prosperous. So that's the kind of 0:18:44.840 --> 0:18:46.600 things that the United States and our allies can do, 0:18:47.000 --> 0:18:48.760 and I think the people of Lebanon want that we 0:18:48.880 --> 0:18:50.639 have to get past this. One of the things that 0:18:50.680 --> 0:18:52.800 will make it a lot easier to do that, of course, 0:18:52.880 --> 0:18:53.840 is the ceasefire in Gaza. 0:18:53.920 --> 0:18:56.479 Okay, so let's talk about the ceasefire in Gaza. The 0:18:56.520 --> 0:18:59.240 President said potentially this could be a way to halt 0:18:59.520 --> 0:19:02.120 Oran from retaliating. Iran has come out overnight and said 0:19:02.160 --> 0:19:04.520 that's not true. We're going to retaliate. Do you view 0:19:04.560 --> 0:19:07.720 these talks which Secretary Blinkn is talking about last ditch, 0:19:07.760 --> 0:19:11.960 final effort basically this week, as halting an Iranian retaliation 0:19:12.119 --> 0:19:15.399 or does the administration still expect Iran to retaliate? 0:19:15.880 --> 0:19:18.920 Well, I think the President has made clear his expectations 0:19:18.960 --> 0:19:22.080 when he gave orders for the US military to do 0:19:22.720 --> 0:19:25.320 take several actions to be able to defend both Israel 0:19:25.320 --> 0:19:30.280 and the region from a potential retaliation from Iran. We 0:19:30.359 --> 0:19:34.520 don't believe Iran retaliate period, but we want to de escalate, 0:19:35.320 --> 0:19:39.199 and that's why the US military is there. But at 0:19:39.200 --> 0:19:42.399 the same time, we are focusing on the diplomatic effort 0:19:42.400 --> 0:19:46.400 diplomatic push. And that's why Bill Burns Brett McGirk were 0:19:46.400 --> 0:19:49.800 in Cairo and Doha last week. Why Secretary Blincoln is 0:19:50.600 --> 0:19:53.600 in the region today and in meeting. 0:19:53.320 --> 0:19:55.000 With prime minis. And it's in now just today. 0:19:55.680 --> 0:19:59.600 The United States put down a draft on Friday, So 0:19:59.640 --> 0:20:01.920 we're working with the parties to be able to get 0:20:01.920 --> 0:20:02.479