1
00:00:05,120 --> 00:00:09,200
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

2
00:00:09,240 --> 00:00:13,200
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you

3
00:00:13,320 --> 00:00:18,600
Speaker 1: insight from the best and economics, finance, investment, and international relations.

4
00:00:18,960 --> 00:00:23,840
Speaker 1: Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot Com,

5
00:00:23,920 --> 00:00:31,520
Speaker 1: and of course, on the Bloomberg terminal. David folks Landa

6
00:00:31,680 --> 00:00:34,320
Speaker 1: joins us just to say he's chief economist of Deutsche Bank.

7
00:00:34,680 --> 00:00:38,199
Speaker 1: Barely describes his contribution to economics, and I think of

8
00:00:38,240 --> 00:00:41,520
Speaker 1: Michael Dooley, David folks Landau and Peter Garber and their

9
00:00:41,560 --> 00:00:46,400
Speaker 1: important research on intervention of two decades ago. Dfl you

10
00:00:46,560 --> 00:00:50,159
Speaker 1: and others at Deutsche Bank are talking very seriously about

11
00:00:50,159 --> 00:00:54,200
Speaker 1: a need to intervene here the weak euro intervention of

12
00:00:54,240 --> 00:00:57,720
Speaker 1: another time and place was eighty five cents ninety cents.

13
00:00:58,280 --> 00:01:03,560
Speaker 1: Now you're talking intervention one ten. Why is that, Well,

14
00:01:03,600 --> 00:01:07,959
Speaker 1: it's a question of how to control inflation without doing

15
00:01:08,000 --> 00:01:12,080
Speaker 1: too much damage, and there the easiest way and the

16
00:01:12,160 --> 00:01:16,200
Speaker 1: most effective way to do that would be for the

17
00:01:16,240 --> 00:01:19,880
Speaker 1: European Central Bank to raise rates, or to find some

18
00:01:19,920 --> 00:01:24,440
Speaker 1: way of talking rates up and indicating that that's what

19
00:01:24,480 --> 00:01:29,400
Speaker 1: they will do. You will recall that when they went

20
00:01:29,959 --> 00:01:35,280
Speaker 1: negative in two thousand and fourteen, the dollar appreciated from

21
00:01:35,440 --> 00:01:37,760
Speaker 1: somewhere around one three six to one ten in a

22
00:01:37,840 --> 00:01:42,480
Speaker 1: matter of nine months. And so any move now to

23
00:01:42,640 --> 00:01:44,960
Speaker 1: increase rates and to the signal that they will be

24
00:01:45,000 --> 00:01:50,400
Speaker 1: going positive would precipitate a very very quick dollars appreciation,

25
00:01:50,440 --> 00:01:53,280
Speaker 1: which would re cost be great for inflation within within Europe,

26
00:01:53,680 --> 00:01:56,000
Speaker 1: which will be one of the main problems they will

27
00:01:56,040 --> 00:01:58,520
Speaker 1: have given what's in the pipeline. Now, let's go to

28
00:01:58,560 --> 00:02:01,320
Speaker 1: Rudiger Dornbush and can Ago if they would suggest and

29
00:02:01,880 --> 00:02:05,920
Speaker 1: less coordinated intervention will not be effective. Do you see

30
00:02:05,960 --> 00:02:09,960
Speaker 1: this as a singular EU effort or would it be coordinated?

31
00:02:11,280 --> 00:02:12,959
Speaker 1: There is not a chance in the world that we

32
00:02:13,000 --> 00:02:15,680
Speaker 1: will get it coordinated intervention, even in times like this

33
00:02:15,800 --> 00:02:19,359
Speaker 1: with the door in Europe's on Europe's doorstep, those days

34
00:02:19,360 --> 00:02:24,120
Speaker 1: are gone, I think not. Even the direct intervention for

35
00:02:24,160 --> 00:02:27,200
Speaker 1: the sake of getting moving the change is something that

36
00:02:27,240 --> 00:02:29,160
Speaker 1: I think the ECP would do. It's more a question

37
00:02:29,160 --> 00:02:34,959
Speaker 1: of indicating concern and changing the tonality around that rather

38
00:02:35,000 --> 00:02:37,440
Speaker 1: than direct intervention. I think that's just not in the

39
00:02:37,480 --> 00:02:39,400
Speaker 1: cars right now. So what would they have to say

40
00:02:39,400 --> 00:02:41,840
Speaker 1: I mean, is this basically them coming out and saying,

41
00:02:41,840 --> 00:02:43,800
Speaker 1: there are no great hikes on the horizon, We're going

42
00:02:43,840 --> 00:02:46,520
Speaker 1: to continue all of our emergency purchases in full for

43
00:02:46,560 --> 00:02:48,960
Speaker 1: a prolonged period of time and we have your back.

44
00:02:49,160 --> 00:02:51,400
Speaker 1: Is that basically the idea, and that would weaken the currency,

45
00:02:51,400 --> 00:02:55,240
Speaker 1: It wouldn't necessarily strengthen it. So what could they even say? No?

46
00:02:55,480 --> 00:02:56,880
Speaker 1: I think they would have to go back to the

47
00:02:56,960 --> 00:02:59,919
Speaker 1: narrative of saying that we will raise rates this year

48
00:03:00,040 --> 00:03:03,160
Speaker 1: because the inflation is our top priority and there our

49
00:03:03,200 --> 00:03:07,359
Speaker 1: main objective, and that that will be reflected hopefully in

50
00:03:07,400 --> 00:03:10,360
Speaker 1: their inflation forecast. And we have inflation in Europe somewhere

51
00:03:10,400 --> 00:03:12,240
Speaker 1: around six and a half per cent for this year,

52
00:03:12,760 --> 00:03:17,119
Speaker 1: and that number just cannot stand without being being confronted

53
00:03:17,160 --> 00:03:19,800
Speaker 1: with the policy tradition to admit that they will undoubtedly

54
00:03:20,240 --> 00:03:23,359
Speaker 1: and say that we will now think start thinking about

55
00:03:23,919 --> 00:03:26,320
Speaker 1: moving this year and rather than pushing it further out,

56
00:03:27,240 --> 00:03:30,359
Speaker 1: and then what would that be enough? Though, David, And

57
00:03:30,680 --> 00:03:32,400
Speaker 1: the reason why I asked this is because we've got

58
00:03:32,400 --> 00:03:35,120
Speaker 1: an increasing number of analysts and economists coming on and

59
00:03:35,160 --> 00:03:37,880
Speaker 1: saying we're getting to the point where central banks lack

60
00:03:38,000 --> 00:03:42,120
Speaker 1: the ability to really influence inflation and even growth, given

61
00:03:42,160 --> 00:03:44,760
Speaker 1: some of the exogenous shocks. Do you think that that

62
00:03:44,800 --> 00:03:48,280
Speaker 1: will actually make a difference, a sort of tighter verbiage

63
00:03:48,280 --> 00:03:50,800
Speaker 1: at least from the ECB at a time when the

64
00:03:50,800 --> 00:03:54,080
Speaker 1: economy is getting hammered by some of the pressures from

65
00:03:54,080 --> 00:03:57,440
Speaker 1: the from the invasion. There's no doubt if it went

66
00:03:57,560 --> 00:04:01,440
Speaker 1: for the exchange rate that the raising rates themselves, it

67
00:04:01,480 --> 00:04:04,240
Speaker 1: would feed slowly through the economy, of course, to impact

68
00:04:04,320 --> 00:04:07,320
Speaker 1: on demand, impact on credit availability, and things like that,

69
00:04:07,440 --> 00:04:10,480
Speaker 1: but the exchange rate impact will be dramatic and it

70
00:04:10,480 --> 00:04:12,960
Speaker 1: will be fast. So that's why I said at the

71
00:04:13,000 --> 00:04:15,960
Speaker 1: outset that the best tool for them available is to

72
00:04:16,120 --> 00:04:18,040
Speaker 1: talk up the exchange it as best as they can.

73
00:04:18,080 --> 00:04:21,919
Speaker 1: They will do that by giving the market greatest certainty

74
00:04:22,040 --> 00:04:25,359
Speaker 1: and greater conviction that they will raise rates and that

75
00:04:25,440 --> 00:04:27,800
Speaker 1: they will think in terms of moving towards a positive

76
00:04:27,839 --> 00:04:31,560
Speaker 1: depot rate this year or certainly very early next year.

77
00:04:31,960 --> 00:04:35,120
Speaker 1: That's certainty is important, and I think that you would

78
00:04:35,120 --> 00:04:37,960
Speaker 1: see an immediately beneficial effect for the exchange rate, and

79
00:04:38,080 --> 00:04:40,719
Speaker 1: immediate feed through through inflation would make it much easier

80
00:04:40,760 --> 00:04:44,080
Speaker 1: for them to macro manage the economy. David ruled a

81
00:04:44,120 --> 00:04:47,520
Speaker 1: one thirteen brent crude to one thirteen as well, that's

82
00:04:47,560 --> 00:04:50,680
Speaker 1: just by convenience. And the answer is these are shocks

83
00:04:50,680 --> 00:04:53,839
Speaker 1: to the system as they filter through to the balance

84
00:04:53,920 --> 00:04:57,640
Speaker 1: sheets into the right downs to come. Is commercial banking

85
00:04:57,800 --> 00:05:02,000
Speaker 1: in Europe at risk? No, not at all. I think

86
00:05:02,040 --> 00:05:05,320
Speaker 1: commercial banking in Europe has improved tremendously in terms of

87
00:05:05,680 --> 00:05:08,760
Speaker 1: quality of balance sheet, quality of earnings, so I don't

88
00:05:08,760 --> 00:05:11,880
Speaker 1: think that's an issue now. Clearly, like any other industry,

89
00:05:13,200 --> 00:05:16,559
Speaker 1: these shocks will affect the banking system, but in terms

90
00:05:16,600 --> 00:05:19,839
Speaker 1: of a serious impairment, I don't think that's an issue.

91
00:05:20,240 --> 00:05:22,920
Speaker 1: But but basically, the two big forces in Europe right now.

92
00:05:23,000 --> 00:05:27,960
Speaker 1: One of them is the inflationary impact of the oil price.

93
00:05:28,080 --> 00:05:30,200
Speaker 1: Energy price increases and what that will do to to

94
00:05:30,400 --> 00:05:33,760
Speaker 1: aggregate demand to production manufacturing, and so that's clearly a

95
00:05:33,760 --> 00:05:35,960
Speaker 1: big shock. But on the other hand, you have to

96
00:05:36,040 --> 00:05:40,800
Speaker 1: remember there's also a massive positive demand shock coming from

97
00:05:40,800 --> 00:05:43,719
Speaker 1: the rearmament in Europe, in particularly in Germany. We're talking

98
00:05:43,720 --> 00:05:46,719
Speaker 1: about a hundred billion, not all in one year obviously,

99
00:05:47,320 --> 00:05:50,239
Speaker 1: but the amounts of money that are now in play,

100
00:05:50,440 --> 00:05:53,760
Speaker 1: particularly the early disbursed of the quick dist perseman coming

101
00:05:53,760 --> 00:05:57,960
Speaker 1: out of the europe European funds as such that this

102
00:05:58,040 --> 00:06:00,520
Speaker 1: is a very serious stimulus. So these are the two forces.

103
00:06:00,560 --> 00:06:03,240
Speaker 1: On the one hand, you have the deflationary force coming

104
00:06:03,279 --> 00:06:05,479
Speaker 1: from an energy price increase. On the other hand, you

105
00:06:05,520 --> 00:06:10,640
Speaker 1: have the estimuative force coming from the fiscal expenditure, which

106
00:06:10,680 --> 00:06:13,240
Speaker 1: is which is close to as much as the Americans did,

107
00:06:13,320 --> 00:06:16,680
Speaker 1: not quite but but it's a very very significant impulse.

108
00:06:16,960 --> 00:06:20,680
Speaker 1: What is the significance of euro one sixteen long ago,

109
00:06:20,839 --> 00:06:23,040
Speaker 1: far away, and you were directly involved with this was

110
00:06:23,080 --> 00:06:26,120
Speaker 1: the pricing of a euro in a much more peaceful,

111
00:06:26,160 --> 00:06:29,599
Speaker 1: maybe an ancient time as well. If we see intervention,

112
00:06:29,680 --> 00:06:33,240
Speaker 1: if we balance off against strong dollar, it's not night,

113
00:06:33,640 --> 00:06:36,599
Speaker 1: it's not the financial crisis as well. Here we are

114
00:06:37,240 --> 00:06:44,640
Speaker 1: at one eleven. Is one sixteen the fair value of euro? No? Uh. Ultimately,

115
00:06:45,480 --> 00:06:50,800
Speaker 1: once the ECB indicates incredibly that it will move positive

116
00:06:50,800 --> 00:06:54,040
Speaker 1: on a depo rate and that increases, we would expect

117
00:06:54,080 --> 00:06:56,919
Speaker 1: the euro to go right through one twenty into the

118
00:06:56,920 --> 00:06:58,640
Speaker 1: one thirties. So it will be it will be a

119
00:06:58,720 --> 00:07:01,320
Speaker 1: dramatic change, just the way it happened in two thousand

120
00:07:01,440 --> 00:07:04,400
Speaker 1: fourteen on the other way around. UH. And that's something

121
00:07:04,440 --> 00:07:06,919
Speaker 1: we're quite confident about. So there's nothing there's nothing special

122
00:07:06,960 --> 00:07:09,880
Speaker 1: about one sixteen and it is in fact, there are

123
00:07:09,960 --> 00:07:12,400
Speaker 1: a lot higher than that, regardless of what the e

124
00:07:12,560 --> 00:07:15,600
Speaker 1: c B does. Your comments on fiscal spending, and frankly

125
00:07:15,640 --> 00:07:19,600
Speaker 1: Germany's pledged to actually meet that two or more target

126
00:07:19,640 --> 00:07:22,680
Speaker 1: for military spending is really notable. Do you think that

127
00:07:22,720 --> 00:07:25,640
Speaker 1: because of some of these fiscal expenditures that talks of

128
00:07:25,680 --> 00:07:31,440
Speaker 1: stagflation in Europe are perhaps overblown? Yes, they're definitely overblown.

129
00:07:33,200 --> 00:07:35,280
Speaker 1: I think that when I look at the press and

130
00:07:35,400 --> 00:07:40,560
Speaker 1: I listened to what everybody's saying, the the impact of

131
00:07:41,240 --> 00:07:44,600
Speaker 1: that additional expenditure will be quite dramatic because it will

132
00:07:44,600 --> 00:07:48,200
Speaker 1: support manufacturing all across Era, and it will be spend

133
00:07:48,320 --> 00:07:51,600
Speaker 1: very widely. And also and also the money is coming

134
00:07:51,640 --> 00:07:54,760
Speaker 1: out of the Recovery and Resilience Fund, the quick distperson

135
00:07:54,880 --> 00:07:57,400
Speaker 1: is there. For instance, Italy is already on the way

136
00:07:57,400 --> 00:08:01,880
Speaker 1: to spending six billions just for income maintence to to

137
00:08:01,960 --> 00:08:05,840
Speaker 1: cope with gas price increases, that is income immediately, and

138
00:08:05,920 --> 00:08:11,080
Speaker 1: so we will see a big, big impulse, fiscal impulse

139
00:08:11,160 --> 00:08:13,600
Speaker 1: coming from that. So yeah, so my senses, I do

140
00:08:13,680 --> 00:08:18,600
Speaker 1: not expect that the Ukraine and and the subsequent price

141
00:08:18,640 --> 00:08:22,400
Speaker 1: increases in oil and gas and commodities agricultural as well,

142
00:08:22,960 --> 00:08:28,760
Speaker 1: will have more than half a percent impact on the

143
00:08:28,800 --> 00:08:31,840
Speaker 1: European on growth within the Eurozone, not much more than that.

144
00:08:31,920 --> 00:08:34,600
Speaker 1: What would have to happen, What would have to happen, David,

145
00:08:35,120 --> 00:08:37,120
Speaker 1: for for you to rethink that, for you to think

146
00:08:37,160 --> 00:08:40,600
Speaker 1: that perhaps the impact of higher commodity costs will have

147
00:08:40,679 --> 00:08:44,080
Speaker 1: a greater effect on the prospects of growth. There is

148
00:08:44,120 --> 00:08:47,360
Speaker 1: a seven d pound gorilla in the room, and that

149
00:08:47,559 --> 00:08:51,479
Speaker 1: is if not stream one the gas pipeline gets disrupted

150
00:08:51,640 --> 00:08:55,280
Speaker 1: in otherwids, if either the Europeans are no longer able

151
00:08:55,320 --> 00:08:58,080
Speaker 1: to want to buy buy the gas or from Russia

152
00:08:58,440 --> 00:09:01,800
Speaker 1: or Russia or Russia custom of either way, that will

153
00:09:01,880 --> 00:09:04,880
Speaker 1: be a very very significant chock now Europe, Europe gets

154
00:09:05,679 --> 00:09:10,400
Speaker 1: it's a gas from Russia, Germany more. If that gets

155
00:09:10,400 --> 00:09:12,400
Speaker 1: cut off, then you will have to see some form

156
00:09:12,400 --> 00:09:17,240
Speaker 1: of prioritization. Households come first, industry comes last, and you

157
00:09:17,280 --> 00:09:19,320
Speaker 1: will have a very serious recession in that case. So

158
00:09:19,440 --> 00:09:21,240
Speaker 1: that I think is something that you can sort of

159
00:09:21,280 --> 00:09:24,240
Speaker 1: see it playing into the market now. Some people and

160
00:09:24,240 --> 00:09:28,480
Speaker 1: and and what my drive this is, surprisingly enough, is

161
00:09:28,520 --> 00:09:32,280
Speaker 1: a social media This is the first war major war

162
00:09:32,440 --> 00:09:35,360
Speaker 1: that we see all around the world and social media.

163
00:09:35,760 --> 00:09:39,520
Speaker 1: The Russians attack Kiev, which they will shortly and other cities.

164
00:09:39,960 --> 00:09:43,480
Speaker 1: Everything that goes on, you will find their per video

165
00:09:44,640 --> 00:09:48,199
Speaker 1: around the world. That will create enormous pressure to stop

166
00:09:48,240 --> 00:09:51,960
Speaker 1: buying oil and gas from Russia. And and if that

167
00:09:52,040 --> 00:09:54,360
Speaker 1: gets cut off, and then I think we will see

168
00:09:54,559 --> 00:09:57,720
Speaker 1: much more significant impact in Europe than we've seen so far. David,

169
00:09:57,920 --> 00:10:00,679
Speaker 1: Thank you, sir. As always, David focused land that of

170
00:10:00,760 --> 00:10:03,880
Speaker 1: Deutsche Banks. I'm really important points on Europe and the risks,

171
00:10:03,960 --> 00:10:12,920
Speaker 1: the tail risk around the story at the moment. Laurence

172
00:10:12,920 --> 00:10:15,920
Speaker 1: Somers joins us. He is at Harvard University and of

173
00:10:15,920 --> 00:10:20,280
Speaker 1: course the former Secretary Treasury of the United States. Professor Somers,

174
00:10:20,280 --> 00:10:22,679
Speaker 1: thank you so much for joining this morning. I want

175
00:10:22,679 --> 00:10:25,480
Speaker 1: to go back to mc chesney, Martin, and Truman. I

176
00:10:25,520 --> 00:10:28,240
Speaker 1: want to go back to mc chesney, Martin and Johnson.

177
00:10:28,360 --> 00:10:31,240
Speaker 1: In war, what should a chairman of the Federal Reserve

178
00:10:31,320 --> 00:10:35,000
Speaker 1: System do in a time of crisis? In war? Stay

179
00:10:35,040 --> 00:10:41,000
Speaker 1: on plan or amend to the politicians. Let me just

180
00:10:41,160 --> 00:10:45,040
Speaker 1: first say that I was very proud of our president

181
00:10:45,240 --> 00:10:48,600
Speaker 1: last night. I thought the way in which he spoke

182
00:10:48,679 --> 00:10:53,520
Speaker 1: to the stakes of what we're involved in in Ukraine,

183
00:10:54,280 --> 00:10:56,959
Speaker 1: what we're involved in, and what the obligation of the

184
00:10:57,040 --> 00:11:00,960
Speaker 1: United States is to uphold world warder at a moment

185
00:11:01,080 --> 00:11:08,480
Speaker 1: like this was profoundly important and profoundly inspiring. It We're

186
00:11:08,480 --> 00:11:12,600
Speaker 1: gonna talk about economic and uh financial stuff in just

187
00:11:12,679 --> 00:11:15,840
Speaker 1: a minute, uh Tom, and I'm happy to do that.

188
00:11:16,400 --> 00:11:24,000
Speaker 1: But the real stakes ari in freedom, in the maintenance

189
00:11:24,240 --> 00:11:31,480
Speaker 1: of civilization, in the resistance uh to naked aggression, and

190
00:11:31,600 --> 00:11:34,040
Speaker 1: history is going to remember that a lot longer than

191
00:11:34,080 --> 00:11:37,800
Speaker 1: it's going to remember anything. With the FED funds rate, Larry,

192
00:11:37,800 --> 00:11:39,480
Speaker 1: I think a lot of people would agree with you.

193
00:11:39,679 --> 00:11:41,760
Speaker 1: I'm sorry, so sorry, but to follow on to really

194
00:11:41,800 --> 00:11:44,000
Speaker 1: get to the FED funds rate, you know, what is

195
00:11:44,040 --> 00:11:47,360
Speaker 1: the cost the US is willing to bear when you

196
00:11:47,440 --> 00:11:50,200
Speaker 1: talk about exactly preserving those freedoms, and then the Fed's

197
00:11:50,320 --> 00:11:52,640
Speaker 1: role in trying to tamp down if they already missed

198
00:11:52,640 --> 00:11:56,480
Speaker 1: the boat on that, I think the FED has been

199
00:11:56,600 --> 00:11:59,520
Speaker 1: very late. I think it's been way behind the curve.

200
00:12:00,240 --> 00:12:02,640
Speaker 1: And I think one of the reasons why it's costly

201
00:12:02,679 --> 00:12:06,360
Speaker 1: when you're behind the curve is that sometimes you can

202
00:12:06,400 --> 00:12:10,000
Speaker 1: get shocks that make it harder for you to act.

203
00:12:10,760 --> 00:12:13,920
Speaker 1: But I don't think the FED has any alternative now

204
00:12:14,559 --> 00:12:20,560
Speaker 1: but to mount a strong response to inflation at a

205
00:12:20,679 --> 00:12:24,360
Speaker 1: time when I think we are at or over the

206
00:12:24,480 --> 00:12:31,640
Speaker 1: brink of a spiral of rising inflation UH breaking out.

207
00:12:32,240 --> 00:12:38,079
Speaker 1: You're seeing that in the numbers for expected inflation over

208
00:12:38,160 --> 00:12:41,320
Speaker 1: the next year or over the next couple of years.

209
00:12:41,800 --> 00:12:44,800
Speaker 1: The place you're seeing it most clearly is in the

210
00:12:44,840 --> 00:12:49,800
Speaker 1: wage data and the data on vacancies, which are pointing

211
00:12:49,880 --> 00:12:54,920
Speaker 1: to wage inflation at close to six percent and pressures

212
00:12:55,000 --> 00:13:00,320
Speaker 1: for that to accelerate. And I think that knee to

213
00:13:00,360 --> 00:13:05,920
Speaker 1: be ringing all the alarm bells at UH the FED.

214
00:13:06,440 --> 00:13:09,280
Speaker 1: So I think there's much more risk of the FED

215
00:13:09,400 --> 00:13:13,000
Speaker 1: doing too little than there is of the FED doing

216
00:13:13,400 --> 00:13:17,680
Speaker 1: UH too much at a moment UH like this. I

217
00:13:17,720 --> 00:13:24,040
Speaker 1: think the Fed's obsession with a high pressure economy was

218
00:13:25,559 --> 00:13:29,960
Speaker 1: way excessive because they didn't think about how pressured an

219
00:13:30,000 --> 00:13:32,120
Speaker 1: economy we were going to be able to have over

220
00:13:32,160 --> 00:13:37,320
Speaker 1: the longer term. And I think the next recession probably

221
00:13:37,440 --> 00:13:42,440
Speaker 1: has mistaken monetary policy written all over it. Larry, there

222
00:13:42,559 --> 00:13:45,920
Speaker 1: is a discussion about this before the invasion of Ukraine

223
00:13:45,960 --> 00:13:49,280
Speaker 1: by Russia, that perhaps the FED was way too late

224
00:13:49,320 --> 00:13:52,000
Speaker 1: and had to move very quickly. Now, the suggestion coming

225
00:13:52,040 --> 00:13:54,480
Speaker 1: from markets is that even if the FED moves quickly,

226
00:13:54,480 --> 00:13:56,760
Speaker 1: it's not going to matter in terms of staving off

227
00:13:57,080 --> 00:13:59,600
Speaker 1: a near term recession. It's not going to matter in

228
00:13:59,679 --> 00:14:02,560
Speaker 1: terms of landing this economy in a more controlled way.

229
00:14:03,000 --> 00:14:09,600
Speaker 1: Do you agree with that sentiment. I think the difficulty

230
00:14:09,679 --> 00:14:13,600
Speaker 1: of getting a soft landing where we both brought inflation

231
00:14:13,760 --> 00:14:18,960
Speaker 1: down and we brought and we avoided recession was always

232
00:14:19,080 --> 00:14:23,160
Speaker 1: very difficult, and I think with ten dollar oil it

233
00:14:23,320 --> 00:14:28,720
Speaker 1: is uh that much more difficult. And so I think

234
00:14:28,760 --> 00:14:32,800
Speaker 1: we're gonna have to if we want to bring down inflation,

235
00:14:33,520 --> 00:14:37,000
Speaker 1: uh and we don't have a financial accident, We're going

236
00:14:37,080 --> 00:14:41,760
Speaker 1: to need to see interest rates higher than the FED

237
00:14:41,960 --> 00:14:46,640
Speaker 1: war markets are now priced, are now pricing in Larry

238
00:14:46,720 --> 00:14:49,880
Speaker 1: David focused Landow, of course, of the academics of Duley

239
00:14:49,920 --> 00:14:53,840
Speaker 1: Focus Landown. Garber in a Deutsche Bank now is suggesting

240
00:14:53,920 --> 00:14:57,600
Speaker 1: that EU will need intervention to see strong dollar become

241
00:14:57,640 --> 00:15:00,000
Speaker 1: a weaker dollars worried about two weeks of a year

242
00:15:00,240 --> 00:15:03,360
Speaker 1: as well. He made very clear that this time around

243
00:15:03,480 --> 00:15:07,200
Speaker 1: it is a less than coordinated intervention. Can a singular

244
00:15:07,320 --> 00:15:12,840
Speaker 1: intervention work at any time in place. I don't think

245
00:15:12,840 --> 00:15:19,440
Speaker 1: the track record on currency interventions is very encouraging. I don't.

246
00:15:19,480 --> 00:15:23,560
Speaker 1: I don't envision that you're likely to see uh currency

247
00:15:23,640 --> 00:15:28,000
Speaker 1: intervention by the United States to weaken uh the dollar,

248
00:15:28,240 --> 00:15:32,640
Speaker 1: Nor is that something that I would uh advocate UH

249
00:15:32,960 --> 00:15:39,360
Speaker 1: very much. UH. The contrary, I suspect that Europe's gonna

250
00:15:39,680 --> 00:15:43,480
Speaker 1: that the more relevant tool is uh the use of

251
00:15:43,520 --> 00:15:48,040
Speaker 1: monetary policy rather than currency intervention. Professor Summers, thank you

252
00:15:48,080 --> 00:15:51,280
Speaker 1: so much, the former Secretary of Treasury of the United States,

253
00:15:51,400 --> 00:15:59,760
Speaker 1: Lawrence Summers always from Harvard, Silbert de Gallo, and John.

254
00:15:59,760 --> 00:16:02,200
Speaker 1: What joy to have ALBERTA gool in the studios with us,

255
00:16:02,200 --> 00:16:04,320
Speaker 1: A real symbol of the end of the pandemic, a

256
00:16:04,400 --> 00:16:07,400
Speaker 1: gentleman of Europe is public service to Italy and the Navy.

257
00:16:07,480 --> 00:16:10,800
Speaker 1: And a guy who knows it's priced up and yield down.

258
00:16:10,960 --> 00:16:12,920
Speaker 1: John a friend, How better back. I didn't even know

259
00:16:13,000 --> 00:16:14,400
Speaker 1: he was here in New York until I saw him

260
00:16:14,400 --> 00:16:16,080
Speaker 1: in a commercial break. How better good to see you.

261
00:16:16,440 --> 00:16:18,800
Speaker 1: Let's just start with a massive distication we've seen in

262
00:16:18,840 --> 00:16:22,400
Speaker 1: this European credit market recently. The extent of destruction you've

263
00:16:22,400 --> 00:16:25,400
Speaker 1: seen in the market Albetta and where you've been taking opportunities,

264
00:16:25,400 --> 00:16:30,200
Speaker 1: where you've been taking some purchases in this is a

265
00:16:30,240 --> 00:16:32,800
Speaker 1: bear market, it's a high ball environment. We want to

266
00:16:32,880 --> 00:16:35,760
Speaker 1: be preserving capital and we want to be in companies

267
00:16:35,800 --> 00:16:39,160
Speaker 1: that have government support or shareholder support. Now, the good

268
00:16:39,200 --> 00:16:43,120
Speaker 1: thing is there are regions of the world which are

269
00:16:43,160 --> 00:16:47,240
Speaker 1: in a defense mode in towards state capitalism. Europe has

270
00:16:47,280 --> 00:16:49,960
Speaker 1: supported companies during COVID and we'll continue to do so

271
00:16:50,560 --> 00:16:53,480
Speaker 1: during the next months. So you know, there are names

272
00:16:53,560 --> 00:16:56,880
Speaker 1: that in the in the travel sector, in the industrial

273
00:16:56,920 --> 00:16:59,800
Speaker 1: sector that go down, but then they have sovereign support

274
00:17:00,000 --> 00:17:02,040
Speaker 1: and those are big opportunities and they yield a lot

275
00:17:02,040 --> 00:17:04,760
Speaker 1: more than inflation. You know, think about also the banks.

276
00:17:05,320 --> 00:17:09,040
Speaker 1: So we are buying in these sectors. We were very

277
00:17:09,040 --> 00:17:11,840
Speaker 1: cautious at the beginning of the year and we're buying slowly.

278
00:17:12,840 --> 00:17:16,960
Speaker 1: The weak spot continues to be emerging markets. And when

279
00:17:17,040 --> 00:17:19,880
Speaker 1: people see the FED, you know, doing less, I think

280
00:17:19,880 --> 00:17:22,439
Speaker 1: that's wrong. The FED will continue to tackle inflation that

281
00:17:22,480 --> 00:17:26,439
Speaker 1: will continue to hurt emerging markets together with political and

282
00:17:26,480 --> 00:17:28,920
Speaker 1: geopolitical risk. Better just to pick up on what you

283
00:17:29,000 --> 00:17:31,199
Speaker 1: were talking about and where you're buying, do you do

284
00:17:31,280 --> 00:17:33,760
Speaker 1: that throughout the whole of Europe. Is the revis towards

285
00:17:33,800 --> 00:17:36,400
Speaker 1: a particular part of Europe? How do you think about that?

286
00:17:37,720 --> 00:17:41,359
Speaker 1: We are doing it across However, there are countries in

287
00:17:41,400 --> 00:17:44,760
Speaker 1: the world there are more vulnerable to high commodity prices

288
00:17:45,200 --> 00:17:48,520
Speaker 1: and high energy. So you know, Southern Europe is more vulnerable.

289
00:17:48,600 --> 00:17:53,280
Speaker 1: But outside of the Western European countries, you know, you've

290
00:17:53,320 --> 00:17:55,560
Speaker 1: got Turkey, You've got Egypt, There's a lot of countries

291
00:17:55,560 --> 00:17:59,840
Speaker 1: that are more vulnerable, and um in emerging markets, you

292
00:18:00,000 --> 00:18:02,600
Speaker 1: would say that there's still a mine field. There's still

293
00:18:02,640 --> 00:18:05,600
Speaker 1: a lot of a lot of countries that are going

294
00:18:05,640 --> 00:18:08,560
Speaker 1: to be affected by the combination of high energy prices

295
00:18:08,560 --> 00:18:12,240
Speaker 1: and higher interest rates in the US and a stronger dollar.

296
00:18:12,359 --> 00:18:15,560
Speaker 1: So we're very very cautious there, and we are using

297
00:18:15,720 --> 00:18:19,280
Speaker 1: limited dry powder at this stage. We expect a little

298
00:18:19,280 --> 00:18:21,719
Speaker 1: bit more volatilely later in the year. Alberta, you were

299
00:18:21,720 --> 00:18:23,520
Speaker 1: saying that the FED is still going to high rates

300
00:18:23,520 --> 00:18:26,280
Speaker 1: as much as perhaps people have previously thought, because inflation

301
00:18:26,359 --> 00:18:28,440
Speaker 1: is still very much an issue. Is it the same

302
00:18:28,480 --> 00:18:30,800
Speaker 1: story for the e c B. E c B is

303
00:18:30,880 --> 00:18:34,400
Speaker 1: likely to step back, perhaps only do one hike this year.

304
00:18:34,840 --> 00:18:37,600
Speaker 1: They clearly have a closer issue. But also inflation in

305
00:18:37,640 --> 00:18:40,560
Speaker 1: Europe is a lot more driven by energy, So half

306
00:18:40,560 --> 00:18:43,080
Speaker 1: of the you know, five percent inflation in Europe comes

307
00:18:43,119 --> 00:18:46,359
Speaker 1: from energy. In the US, you know, it's around one

308
00:18:46,440 --> 00:18:49,000
Speaker 1: third of the seven and a half percent CPI year

309
00:18:49,040 --> 00:18:51,880
Speaker 1: on year that comes from energy at least so far.

310
00:18:52,000 --> 00:18:57,000
Speaker 1: So European inflation can still be you know, deemed more transitory.

311
00:18:57,040 --> 00:18:59,080
Speaker 1: But in the US, you know, there's rents, there is

312
00:18:59,480 --> 00:19:01,639
Speaker 1: a serve dess in wages, so it's a kind of

313
00:19:01,640 --> 00:19:04,320
Speaker 1: a different problem here. Does that make you in general

314
00:19:04,440 --> 00:19:09,080
Speaker 1: more bullish ironically on European corporate debt, on European rates

315
00:19:09,080 --> 00:19:12,520
Speaker 1: simply because you have the e c B benchmark at

316
00:19:12,520 --> 00:19:15,120
Speaker 1: a time when the FED is going in the opposite direction.

317
00:19:16,000 --> 00:19:18,920
Speaker 1: That's exactly right. We're in a in the context of

318
00:19:18,960 --> 00:19:21,840
Speaker 1: a bear market for bonds. The place to hide, the

319
00:19:22,280 --> 00:19:25,320
Speaker 1: least bad place to hide is still Europe. And within that,

320
00:19:25,640 --> 00:19:28,719
Speaker 1: in the credit market, you can still find companies and

321
00:19:28,800 --> 00:19:31,879
Speaker 1: sectors that have sovereign support, so you get a less

322
00:19:31,880 --> 00:19:34,199
Speaker 1: howkish e c B and then you get some sovereign

323
00:19:34,200 --> 00:19:37,800
Speaker 1: support for example, to French companies or two UK companies,

324
00:19:37,800 --> 00:19:41,040
Speaker 1: So there are some places to hide in Europe, where

325
00:19:41,080 --> 00:19:43,400
Speaker 1: you are where you want to be kosherous. The most

326
00:19:43,480 --> 00:19:46,520
Speaker 1: is still in e M in my opinion, because you

327
00:19:46,640 --> 00:19:49,600
Speaker 1: have compounded effect of higher commodity prices, which is bad

328
00:19:49,640 --> 00:19:51,760
Speaker 1: for some EM countries, and then you have a stronger

329
00:19:51,800 --> 00:19:55,000
Speaker 1: dollar and higher fed rates. Bet so you mentioned the

330
00:19:55,040 --> 00:19:57,520
Speaker 1: federal reserve. You think they still hike Most people have

331
00:19:57,560 --> 00:20:00,080
Speaker 1: seen as the case. Whether it's own, it's about how

332
00:20:00,119 --> 00:20:01,680
Speaker 1: far they can actually push it. The e c B

333
00:20:02,640 --> 00:20:04,760
Speaker 1: is it even part of the conversation for twenty two anymore?

334
00:20:04,800 --> 00:20:08,080
Speaker 1: As far as you're concerned, it's possibly the one hike

335
00:20:08,119 --> 00:20:10,960
Speaker 1: in in two dozens and twenty two. It really depends

336
00:20:11,000 --> 00:20:14,120
Speaker 1: on how long this lasts. European countries have around five

337
00:20:14,160 --> 00:20:17,879
Speaker 1: months of gas supply of gas reserves, so you know,

338
00:20:17,920 --> 00:20:22,159
Speaker 1: if it's if the conflict in Russia Ukraine is a

339
00:20:22,160 --> 00:20:25,560
Speaker 1: matter of weeks, then you know we could still see

340
00:20:25,560 --> 00:20:28,680
Speaker 1: you know, positive growth and more physical spending. Think about

341
00:20:28,720 --> 00:20:31,359
Speaker 1: Germany up in the defense spending, so it will become

342
00:20:31,400 --> 00:20:33,920
Speaker 1: a reflationary environment which is positive, and the c B

343
00:20:34,280 --> 00:20:37,720
Speaker 1: will have to hike if the last months instead of week,

344
00:20:38,080 --> 00:20:40,199
Speaker 1: If if the war is not over by the summer,

345
00:20:40,440 --> 00:20:42,920
Speaker 1: then we're really looking at um. You know, much lower

346
00:20:42,960 --> 00:20:45,359
Speaker 1: growth in Europe. Let me got a big problem gas

347
00:20:45,440 --> 00:20:48,400
Speaker 1: right now by more than thirty percent in Europe. I better.

348
00:20:48,440 --> 00:20:50,159
Speaker 1: It's great to see. You've got to catch out, buddy,

349
00:20:50,280 --> 00:20:53,119
Speaker 1: hopefully next time in the different circumstances to have a

350
00:20:53,160 --> 00:21:01,119
Speaker 1: more broader conversation about this market. We have done everything

351
00:21:01,160 --> 00:21:04,080
Speaker 1: we can to bring you informed gas on these many

352
00:21:04,160 --> 00:21:08,000
Speaker 1: topics of war, and an informed GAS on oil, on

353
00:21:08,160 --> 00:21:12,680
Speaker 1: supply demand and indeed on international trade. Is Amrita Sand,

354
00:21:12,760 --> 00:21:16,600
Speaker 1: founder of Energy Aspects, out with a spectacular note on

355
00:21:16,680 --> 00:21:20,159
Speaker 1: the realities of what we're reporting. Em Rita sent, I

356
00:21:20,240 --> 00:21:23,880
Speaker 1: learned a long, long time ago to have immense respect

357
00:21:23,960 --> 00:21:27,560
Speaker 1: for the trust of the system, and that trust is

358
00:21:27,600 --> 00:21:31,680
Speaker 1: the basic idea of letters of credit. Tell me how

359
00:21:31,840 --> 00:21:35,720
Speaker 1: letters of credit are going to work now, next week

360
00:21:35,920 --> 00:21:39,240
Speaker 1: into April or to the point of backgradation that John

361
00:21:39,240 --> 00:21:43,200
Speaker 1: Farrell just talked about. Yeah, it's the best question I've

362
00:21:43,200 --> 00:21:46,560
Speaker 1: been asked. I'll tell you that much. Come because you know,

363
00:21:46,600 --> 00:21:49,359
Speaker 1: the problem is exactly like you said, there is no

364
00:21:49,560 --> 00:21:53,119
Speaker 1: letters of credit right now. No nobody is willing to

365
00:21:53,400 --> 00:21:57,479
Speaker 1: issue refiners any bias with letters of credit because of

366
00:21:57,520 --> 00:22:00,560
Speaker 1: the banking uncertainty now what does it looked like in

367
00:22:00,600 --> 00:22:03,000
Speaker 1: a week's time. It's hard for me to say. However,

368
00:22:03,160 --> 00:22:06,320
Speaker 1: I will say this, the US in particular, but even

369
00:22:06,359 --> 00:22:10,920
Speaker 1: some European countries are fearing oil prices gas prices being

370
00:22:10,960 --> 00:22:12,800
Speaker 1: so high it is going to hurt the economy, so

371
00:22:12,840 --> 00:22:15,919
Speaker 1: they want to carve out exemptions. They need to be

372
00:22:16,040 --> 00:22:19,560
Speaker 1: very specific and clear about these exemptions. Once those exemptions

373
00:22:19,640 --> 00:22:24,159
Speaker 1: are announced, then letters of credit can resume again with

374
00:22:24,440 --> 00:22:27,840
Speaker 1: those certain banks and you can see some trade startup.

375
00:22:27,920 --> 00:22:31,520
Speaker 1: But right now it's complete paralysis and RATA in the

376
00:22:31,560 --> 00:22:34,320
Speaker 1: mad time OPEC plus decreeing to raise all output by

377
00:22:34,400 --> 00:22:39,360
Speaker 1: drum roll, four hundred thousand bowers a day in April

378
00:22:39,400 --> 00:22:42,160
Speaker 1: according to a delicate I mean that's nothing. I'm rata

379
00:22:42,320 --> 00:22:45,480
Speaker 1: have a blast on Bloomberg opinion saying the situation called

380
00:22:45,480 --> 00:22:50,200
Speaker 1: for emergency measures. What are those emergency measures? Yes, the

381
00:22:50,280 --> 00:22:52,119
Speaker 1: four on a thousand, and we all know that in

382
00:22:52,240 --> 00:22:54,359
Speaker 1: reality is going to be half of that, because most

383
00:22:54,400 --> 00:22:58,400
Speaker 1: of these countries don't have the spec capacity well emergency measures.

384
00:22:58,440 --> 00:23:02,320
Speaker 1: We saw the idea releasing sixty million barrels of spr

385
00:23:02,560 --> 00:23:06,000
Speaker 1: yesterday night and prices rallied by six dollars on the

386
00:23:06,000 --> 00:23:09,000
Speaker 1: back of that news just tells you. I've been talking

387
00:23:09,000 --> 00:23:11,160
Speaker 1: to traders and they're like, well, if you really wanted

388
00:23:11,160 --> 00:23:13,960
Speaker 1: to make a difference, you needed two hundred million barrels.

389
00:23:14,440 --> 00:23:17,200
Speaker 1: So that's not happening because we don't have that much oil.

390
00:23:17,640 --> 00:23:20,080
Speaker 1: What's the pricing mechanism here? I'm readA You've got some

391
00:23:20,119 --> 00:23:22,680
Speaker 1: people saying this is a completely type market where people

392
00:23:22,720 --> 00:23:26,160
Speaker 1: can't get physically physical delivery, and other people saying there

393
00:23:26,160 --> 00:23:28,520
Speaker 1: are some oil companies that are taking advantage of this

394
00:23:28,680 --> 00:23:33,320
Speaker 1: and kicking up pricing. Which is it? It's the former.

395
00:23:33,440 --> 00:23:36,160
Speaker 1: I mean, look, yes, it's not that the oil isn't there.

396
00:23:36,200 --> 00:23:38,680
Speaker 1: The Russian oil is there, but if you don't want

397
00:23:38,680 --> 00:23:41,159
Speaker 1: to touch it, then you don't have that oil. I

398
00:23:41,200 --> 00:23:44,920
Speaker 1: think it's very important to understand, particularly for Europe, this

399
00:23:45,000 --> 00:23:48,000
Speaker 1: is very short haul barrels. Now, if Europe needs to

400
00:23:48,040 --> 00:23:50,880
Speaker 1: go and get something to substitute for Russian oil, say

401
00:23:50,960 --> 00:23:53,160
Speaker 1: let's say they get US oil or West African oil,

402
00:23:53,359 --> 00:23:56,160
Speaker 1: the sailing time is a lot longer, so they will

403
00:23:56,200 --> 00:23:59,680
Speaker 1: be left with the period of no oil coming to Europe.

404
00:24:00,080 --> 00:24:02,800
Speaker 1: And that's why you're going to get refinery suffering. That's

405
00:24:02,800 --> 00:24:07,840
Speaker 1: why the ultimate solver mechanism is high prices demand has

406
00:24:07,880 --> 00:24:09,359
Speaker 1: to come down. Well, but I'm real to the reason

407
00:24:09,359 --> 00:24:11,840
Speaker 1: why I ask is because people have been arguing, for

408
00:24:11,840 --> 00:24:15,200
Speaker 1: for example, the US to support the shale industry, to

409
00:24:15,240 --> 00:24:18,840
Speaker 1: support the local the domestic energy industry, and other people

410
00:24:18,880 --> 00:24:20,479
Speaker 1: have come out and pointed out, you know what, they

411
00:24:20,480 --> 00:24:24,159
Speaker 1: could actually increase production dramatically. They're just not doing it

412
00:24:24,240 --> 00:24:28,520
Speaker 1: yet on their own volition. What's your view on that? Again,

413
00:24:28,560 --> 00:24:30,879
Speaker 1: I mean, it's a tricky one because, yes, they are

414
00:24:30,920 --> 00:24:34,640
Speaker 1: not doing it because shareholders are making them return money

415
00:24:34,760 --> 00:24:38,400
Speaker 1: right to them because they've been lost making for a decade. Yes,

416
00:24:38,440 --> 00:24:42,400
Speaker 1: absolutely right, But they are also uh getting or they're

417
00:24:42,400 --> 00:24:44,800
Speaker 1: trying to send the signal to the Biden administration because

418
00:24:44,960 --> 00:24:49,200
Speaker 1: the Biden administration ultimately wants to transition to a green

419
00:24:49,280 --> 00:24:51,359
Speaker 1: energy and a lot of the measures more medium to

420
00:24:51,440 --> 00:24:54,560
Speaker 1: measures that they are taking doesn't encourage a lot of

421
00:24:54,600 --> 00:24:57,520
Speaker 1: really in the US. And that's the conversation they want

422
00:24:57,560 --> 00:24:59,720
Speaker 1: to have, saying, Okay, if we're gonna drill right now,

423
00:25:00,080 --> 00:25:02,320
Speaker 1: get more oil out, but we also want that certainty

424
00:25:02,320 --> 00:25:04,680
Speaker 1: that we can continue doing that in the medium tum

425
00:25:04,800 --> 00:25:07,800
Speaker 1: and reads. What you just said is so so important,

426
00:25:07,840 --> 00:25:13,760
Speaker 1: just moments ago. Essentially what you said is spring in reverse.

427
00:25:14,320 --> 00:25:16,520
Speaker 1: And I remember when Jeff Curry of Goldman came on

428
00:25:16,800 --> 00:25:20,600
Speaker 1: with Tom and I on radio and he said, basically,

429
00:25:20,640 --> 00:25:23,639
Speaker 1: we need to breach storage capacity. And once we've done that,

430
00:25:23,720 --> 00:25:26,359
Speaker 1: you could see negative prices and everyone was like, wow, negative,

431
00:25:26,359 --> 00:25:29,119
Speaker 1: that's ridiculous. And then we had negative prices. That's what's happened.

432
00:25:29,480 --> 00:25:31,560
Speaker 1: You need to reverse engineer that for me? And how

433
00:25:31,640 --> 00:25:36,520
Speaker 1: me understand down, Rita, if it's spring reverse, how high

434
00:25:36,560 --> 00:25:40,480
Speaker 1: decrude prices need to go to destroy demand? How much

435
00:25:40,520 --> 00:25:44,840
Speaker 1: more higher from here can they go? That's exactly it.

436
00:25:44,920 --> 00:25:49,600
Speaker 1: This is COVID and reverse accurate. We have never tested this.

437
00:25:49,960 --> 00:25:53,000
Speaker 1: We went two hundred and forty seven two thousand and eight.

438
00:25:53,320 --> 00:25:56,400
Speaker 1: That's not what killed the market. It was a credit crisis.

439
00:25:56,800 --> 00:26:00,760
Speaker 1: We can easily breach hundred and fifty. We have genuinely

440
00:26:00,840 --> 00:26:03,879
Speaker 1: never tested what price do we need to be okay?

441
00:26:03,960 --> 00:26:07,480
Speaker 1: If the economy is okay to really curtail global growth?

442
00:26:07,520 --> 00:26:10,359
Speaker 1: We could be really talking about numbers. We've you know,

443
00:26:10,800 --> 00:26:13,800
Speaker 1: one s. You could get to be picking a number

444
00:26:13,880 --> 00:26:16,400
Speaker 1: right now, John, can we go nerd here? I think

445
00:26:16,400 --> 00:26:19,920
Speaker 1: we're trying right now? Is oil a gift and good

446
00:26:22,280 --> 00:26:26,520
Speaker 1: big chunk. If it is, we've never tested it. Yes,

447
00:26:26,560 --> 00:26:29,720
Speaker 1: we've never tested it, and it's in elastic. Right, you're

448
00:26:29,720 --> 00:26:32,760
Speaker 1: coming out of COVID. You still want to travel? John?

449
00:26:32,800 --> 00:26:34,639
Speaker 1: You like that? Just like that. I mean that the

450
00:26:34,720 --> 00:26:38,360
Speaker 1: numbers on sight, it's what we could be testing here.

451
00:26:38,880 --> 00:26:40,840
Speaker 1: And Rate said, we need to continue this conversation, come

452
00:26:40,880 --> 00:26:50,920
Speaker 1: back soon, thank you, and descent of energy aspects now

453
00:26:50,960 --> 00:26:53,640
Speaker 1: on our politics and particularly the pass forward for very

454
00:26:53,720 --> 00:26:56,840
Speaker 1: much his Democratic Party, Howard Dean is whether us. He

455
00:26:57,000 --> 00:27:00,119
Speaker 1: is a former presidential candidate. Dr Dean is chair of

456
00:27:00,119 --> 00:27:03,399
Speaker 1: the Democratic National Committee and his skied every black Diamond

457
00:27:03,400 --> 00:27:08,320
Speaker 1: at Killington, Vermont. We welcome him, uh this morning. Yeah, Well,

458
00:27:08,440 --> 00:27:12,240
Speaker 1: I want to go away from the normal political talk, Howard,

459
00:27:12,240 --> 00:27:14,960
Speaker 1: and I want to ask you a difficult question. You

460
00:27:15,080 --> 00:27:18,280
Speaker 1: and I grew up with John Stennis. We grew up

461
00:27:18,280 --> 00:27:21,960
Speaker 1: with Democratic Southern senators were in a war. We have

462
00:27:22,000 --> 00:27:25,560
Speaker 1: a wartime president. How does the Democratic Party get the

463
00:27:25,600 --> 00:27:29,800
Speaker 1: military back? I'm not worry. I don't think we I

464
00:27:29,840 --> 00:27:32,040
Speaker 1: think we have the military back. I think the vast

465
00:27:32,080 --> 00:27:35,000
Speaker 1: majority of military people do not believe we should live

466
00:27:35,000 --> 00:27:38,000
Speaker 1: in a fascist society. And I think the leadership of

467
00:27:38,040 --> 00:27:40,240
Speaker 1: the military is doing a great job. I think both

468
00:27:40,240 --> 00:27:44,320
Speaker 1: thought they did a great job resisting trump craziness. So

469
00:27:44,440 --> 00:27:46,520
Speaker 1: I'm not the least bit worried about the military. I'm

470
00:27:46,520 --> 00:27:48,399
Speaker 1: worried about the people who are driving around in the

471
00:27:48,440 --> 00:27:52,560
Speaker 1: trucks and clogging up the works and just talking about

472
00:27:52,600 --> 00:27:56,440
Speaker 1: neo Nazi ideology on the floor of Congress. How does

473
00:27:56,440 --> 00:28:00,879
Speaker 1: the Democratic Party and particularly newer candidates come on in

474
00:28:00,920 --> 00:28:04,120
Speaker 1: the quarters maybe in the coming years. How do they

475
00:28:04,240 --> 00:28:08,920
Speaker 1: fight off these autocratic tendencies. How do the Democrats collalesce

476
00:28:09,080 --> 00:28:13,520
Speaker 1: around a middle message. Well, that's the key question. Um, look,

477
00:28:13,720 --> 00:28:17,360
Speaker 1: I think they re message. I don't. I thought, Biden,

478
00:28:17,680 --> 00:28:20,359
Speaker 1: whatever you have happened to think about this particular issue.

479
00:28:20,760 --> 00:28:22,879
Speaker 1: I thought one of the great lines in Biden's speech

480
00:28:22,960 --> 00:28:25,440
Speaker 1: last night was we don't want to defund the police.

481
00:28:25,520 --> 00:28:28,200
Speaker 1: We want to fund the police. And what he means

482
00:28:28,240 --> 00:28:31,280
Speaker 1: by that is we do need police reform, absolutely. But

483
00:28:31,840 --> 00:28:35,440
Speaker 1: Eric Adams is mayor today in New York City because

484
00:28:35,880 --> 00:28:39,040
Speaker 1: he because most of the people in the community that

485
00:28:39,120 --> 00:28:43,600
Speaker 1: voted for him most enthusiastically, which is particularly black immigrants,

486
00:28:44,120 --> 00:28:47,480
Speaker 1: do not want to defund the police. So I think

487
00:28:47,480 --> 00:28:50,040
Speaker 1: Biden hit all the high notes yesterday as I was

488
00:28:50,080 --> 00:28:52,480
Speaker 1: we were driving around before the program, I think people

489
00:28:52,520 --> 00:28:55,160
Speaker 1: have low expectations. I thought it was one of the

490
00:28:55,160 --> 00:28:57,680
Speaker 1: best day of this Union's addresses that I've seen in

491
00:28:57,680 --> 00:29:02,560
Speaker 1: the last twenty years. Aheads being, I apologize for interrupting.

492
00:29:02,880 --> 00:29:04,640
Speaker 1: You know, you're saying he hit all the high points,

493
00:29:04,800 --> 00:29:07,600
Speaker 1: and he did of the Democratic Party and what he

494
00:29:07,640 --> 00:29:09,720
Speaker 1: wants to sort of push forward in his agenda. But

495
00:29:09,840 --> 00:29:13,360
Speaker 1: right now, there is one conversation that is dominating American

496
00:29:13,360 --> 00:29:15,680
Speaker 1: families and it is inflation. It is what they spend

497
00:29:15,880 --> 00:29:18,360
Speaker 1: when they go to the store. It is only exacerbated

498
00:29:18,440 --> 00:29:21,760
Speaker 1: by the Russian invasion of Ukraine with gas prices. And

499
00:29:21,840 --> 00:29:24,360
Speaker 1: yet the message has been, you know, keep going with

500
00:29:24,400 --> 00:29:26,920
Speaker 1: some of these plans and eventually it'll work its way out.

501
00:29:27,320 --> 00:29:29,840
Speaker 1: Do you think that the Democratic Party needs to go

502
00:29:30,000 --> 00:29:35,040
Speaker 1: further with respect to supporting national domestic oil producers and

503
00:29:35,080 --> 00:29:38,800
Speaker 1: refiners to try to give them more support to increase

504
00:29:38,960 --> 00:29:42,880
Speaker 1: the domestic production to isolate Russia. No, the problem is

505
00:29:42,920 --> 00:29:45,160
Speaker 1: not domestic production. We actually, as you well known, in

506
00:29:45,200 --> 00:29:47,760
Speaker 1: this country, produce more oil than we use. The problem

507
00:29:47,840 --> 00:29:50,000
Speaker 1: is it get it gets sent all over in the

508
00:29:50,040 --> 00:29:51,840
Speaker 1: world market. We're probably gonna have to figure out a

509
00:29:51,880 --> 00:29:55,360
Speaker 1: way to keep that here. Look, we've been practicing modern

510
00:29:55,400 --> 00:29:57,480
Speaker 1: monetary theory, whether you like it or not, for the

511
00:29:57,560 --> 00:30:01,440
Speaker 1: last fifteen years. The Republicans, who probably don't know what

512
00:30:01,480 --> 00:30:06,320
Speaker 1: monetary modern monetary theory is, have been practicing a big

513
00:30:06,360 --> 00:30:09,040
Speaker 1: time run the deficit up as high as you possibly like. Well,

514
00:30:09,040 --> 00:30:12,520
Speaker 1: when you do that, and what monetary modern, modern monetary

515
00:30:12,560 --> 00:30:16,000
Speaker 1: theory says is that inflation is the problem, and that

516
00:30:16,200 --> 00:30:18,200
Speaker 1: is what we're hitting now. We're gonna have to raise

517
00:30:18,280 --> 00:30:21,280
Speaker 1: interest rates and there's no nice way to say this, um,

518
00:30:21,320 --> 00:30:24,840
Speaker 1: but the the oil market, you know, this is all

519
00:30:24,920 --> 00:30:28,000
Speaker 1: short term stuff. Uh, And I think trying to tackle

520
00:30:28,040 --> 00:30:30,640
Speaker 1: the oil market and bring oil prices down by doing

521
00:30:30,640 --> 00:30:34,760
Speaker 1: anything other than reducing removing oil from the um from

522
00:30:34,840 --> 00:30:38,000
Speaker 1: the reserves and putting putting that in the market is silly.

523
00:30:38,480 --> 00:30:40,120
Speaker 1: But we're not going to go our way out of this.

524
00:30:40,320 --> 00:30:42,440
Speaker 1: And that's that seems to be a one line that

525
00:30:42,480 --> 00:30:44,880
Speaker 1: the party seems to be taking. You have other members

526
00:30:44,960 --> 00:30:48,680
Speaker 1: of the Democratic Party, including Joe Mansion of West Virginia,

527
00:30:48,760 --> 00:30:50,640
Speaker 1: coming out and saying, actually, this was the way that

528
00:30:50,680 --> 00:30:53,000
Speaker 1: we need to go. I'm just wondering if there are

529
00:30:53,000 --> 00:30:56,240
Speaker 1: other concrete steps to take so that some of these shocks.

530
00:30:56,280 --> 00:30:58,600
Speaker 1: Because the price increase that we've seen in oil has

531
00:30:58,640 --> 00:31:00,560
Speaker 1: been a shock, the price increase that we've seen in

532
00:31:00,560 --> 00:31:04,200
Speaker 1: wheat is increasingly becoming a shock. These are major issues

533
00:31:04,240 --> 00:31:06,880
Speaker 1: for the global economy. At what point you have to

534
00:31:06,920 --> 00:31:09,040
Speaker 1: say we have to take an immediate reaction to this.

535
00:31:10,440 --> 00:31:13,160
Speaker 1: We are taking an immediate reaction. Look, there is a

536
00:31:13,200 --> 00:31:16,720
Speaker 1: war going on, and the war is being conducted by

537
00:31:16,920 --> 00:31:19,480
Speaker 1: one of the biggest oil powers in the world against

538
00:31:19,560 --> 00:31:21,400
Speaker 1: one of the biggest grain producers in the world. What

539
00:31:21,480 --> 00:31:24,680
Speaker 1: do you expect The solution to this is a deal

540
00:31:24,760 --> 00:31:26,880
Speaker 1: with Putin? And I think Biden is doing a great

541
00:31:26,960 --> 00:31:31,200
Speaker 1: job doing that. Governor Dean, the junior senator from Vermont,

542
00:31:31,440 --> 00:31:34,400
Speaker 1: is eighty. He will enjoy his eighty first birthday here

543
00:31:34,480 --> 00:31:38,320
Speaker 1: in September. The Democrats are about to lose this, that,

544
00:31:38,480 --> 00:31:40,800
Speaker 1: and something else in Washington. I'll let you and the

545
00:31:40,880 --> 00:31:45,000
Speaker 1: experts decide what it is. How far his Senator Sanders

546
00:31:45,080 --> 00:31:50,520
Speaker 1: in the Liberals overreached um. Look, I think the biggest

547
00:31:50,560 --> 00:31:54,480
Speaker 1: problem with the so called left is not that they're wrong,

548
00:31:54,840 --> 00:31:58,280
Speaker 1: it's that they can't get their messaging straight. And one

549
00:31:58,320 --> 00:32:03,239
Speaker 1: of the interesting things. Is this a over medicare for all? Um,

550
00:32:03,320 --> 00:32:05,520
Speaker 1: we should have medicare for all, but we should have

551
00:32:05,560 --> 00:32:07,880
Speaker 1: medicare for all who wanted you. This is the most

552
00:32:07,920 --> 00:32:11,200
Speaker 1: libertarian country in the face of the earth, and that

553
00:32:11,240 --> 00:32:13,640
Speaker 1: includes left, right or center. People don't like to be

554
00:32:13,680 --> 00:32:15,440
Speaker 1: told what to do. They like to be given their

555
00:32:15,440 --> 00:32:19,400
Speaker 1: own choices, so we often do the right thing. We

556
00:32:19,520 --> 00:32:22,040
Speaker 1: need a system of universal healthcare that works. Is our

557
00:32:22,080 --> 00:32:24,840
Speaker 1: healthcare system is absolutely broken in terms of it's in

558
00:32:24,920 --> 00:32:27,080
Speaker 1: terms of the way that we spend money and who

559
00:32:27,160 --> 00:32:29,280
Speaker 1: has to pay for that and suffer as a result.

560
00:32:29,680 --> 00:32:34,160
Speaker 1: But the fact is you cannot message a package that

561
00:32:34,240 --> 00:32:39,040
Speaker 1: alienates a significant portion of American people. And that's our problem.

562
00:32:39,040 --> 00:32:41,000
Speaker 1: Our problem is not what we don't know what to do.

563
00:32:41,280 --> 00:32:44,200
Speaker 1: Our problems. We insist, or at least on the left side,

564
00:32:44,680 --> 00:32:48,000
Speaker 1: which I count myself on on many issues. We insist

565
00:32:48,080 --> 00:32:49,760
Speaker 1: on messaging it in such a way that we hit

566
00:32:49,760 --> 00:32:51,760
Speaker 1: people over the head with it, and that conveys the

567
00:32:51,760 --> 00:32:53,680
Speaker 1: message that we're smarter than you are. And that's one

568
00:32:53,720 --> 00:32:56,280
Speaker 1: of the reasons that people like Trump, who are completely

569
00:32:56,360 --> 00:33:00,280
Speaker 1: unqualified to be anything uh managed to win. But because

570
00:33:00,440 --> 00:33:05,800
Speaker 1: we alienate people, we can't alienate we can't alienate ordinary Americans.

571
00:33:05,880 --> 00:33:07,800
Speaker 1: We have to stop doing that. Well, how a daint

572
00:33:07,800 --> 00:33:10,280
Speaker 1: don't you need to refresh if the senators then, because

573
00:33:10,280 --> 00:33:12,520
Speaker 1: there's a lot of sentences to speak that way when

574
00:33:12,560 --> 00:33:15,800
Speaker 1: you I'm for term limits, I'm for term limits in

575
00:33:15,840 --> 00:33:17,760
Speaker 1: the United States Senate. I think it's worked well in

576
00:33:17,800 --> 00:33:19,840
Speaker 1: the presidency, and I think we ought to limit terms

577
00:33:19,840 --> 00:33:22,400
Speaker 1: to at maximum three terms six year terms in the Senate.

578
00:33:22,680 --> 00:33:24,600
Speaker 1: We have to limit terms in the House. Look, the

579
00:33:24,600 --> 00:33:27,600
Speaker 1: political institutions in the democracy are always far behind where

580
00:33:27,600 --> 00:33:29,960
Speaker 1: the public is. That's the nature of democracies that the

581
00:33:30,000 --> 00:33:32,720
Speaker 1: public runs the place. But there's no organized way for

582
00:33:32,760 --> 00:33:35,040
Speaker 1: them to do that other than through the political process.

583
00:33:35,520 --> 00:33:37,960
Speaker 1: When you have a party that doesn't give a damn

584
00:33:37,960 --> 00:33:39,640
Speaker 1: what happens to the country as long as they are

585
00:33:39,640 --> 00:33:42,200
Speaker 1: in power and willing to cheat on the voting uh

586
00:33:42,240 --> 00:33:46,320
Speaker 1: and and and refuse to confirm the president's most basic appointments,

587
00:33:46,480 --> 00:33:48,800
Speaker 1: that is a democracy that doesn't work. And the way

588
00:33:48,840 --> 00:33:51,120
Speaker 1: to do that is to limit people's terms so there's

589
00:33:51,120 --> 00:33:54,040
Speaker 1: no more incentive to do all this gerrymatting, mannering, and

590
00:33:54,080 --> 00:33:57,480
Speaker 1: all this crazy stuff so that the democracy works again.

591
00:33:57,520 --> 00:33:59,800
Speaker 1: And that's and I've I've thrown up my hands. I

592
00:33:59,800 --> 00:34:01,920
Speaker 1: think we need term limits in the worst way, and

593
00:34:02,000 --> 00:34:04,520
Speaker 1: to including term limits on the Supreme Court, which is

594
00:34:04,560 --> 00:34:06,840
Speaker 1: now nothing but a bunch of partisan hacks. If three

595
00:34:06,880 --> 00:34:09,800
Speaker 1: of themselves admitted how it, would you have said that

596
00:34:09,960 --> 00:34:12,799
Speaker 1: if there was a majority for people with more of

597
00:34:12,840 --> 00:34:15,799
Speaker 1: the old views, I would have said that if you

598
00:34:15,880 --> 00:34:18,520
Speaker 1: get a Senate that's completely out of touch with where

599
00:34:18,520 --> 00:34:21,160
Speaker 1: the rest of America is, and when you're having people

600
00:34:21,200 --> 00:34:24,720
Speaker 1: who are ninety years old running for re election in Iowa,

601
00:34:24,760 --> 00:34:26,799
Speaker 1: which is just ridiculous. We had a nice he wrote,

602
00:34:26,840 --> 00:34:29,560
Speaker 1: speak for the House last night, didn't we? Yes, we did,

603
00:34:29,600 --> 00:34:32,480
Speaker 1: and I stick to my guns. Term limps are good

604
00:34:32,480 --> 00:34:35,319
Speaker 1: for everybody, both Democrats and Republicans, and we need them

605
00:34:35,520 --> 00:34:38,560
Speaker 1: how it dained. Thank you, sir, Gonna catch up. This

606
00:34:38,600 --> 00:34:42,400
Speaker 1: is the Bloomberg Surveillance Podcast. Thanks for listening. Join us

607
00:34:42,480 --> 00:34:46,200
Speaker 1: live weekdays from seven to ten am Eastern on Bloomberg

608
00:34:46,320 --> 00:34:50,120
Speaker 1: Radio and on Bloomberg Television each day from six to

609
00:34:50,280 --> 00:34:54,920
Speaker 1: nine am for insight from the best in economics, finance, investment,

610
00:34:55,080 --> 00:35:00,120
Speaker 1: and international relations. And subscribe to the Surveillance podcast on

611
00:35:00,200 --> 00:35:03,960
Speaker 1: Apple podcast, SoundCloud, Bloomberg dot Com, and of course on

612
00:35:04,080 --> 00:35:10,320
Speaker 1: the terminal. I'm Tom keene In. This is Bloomberg. M