WEBVTT - Stocks Near All-Time High on Iran Peace Prospects 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.320 --> 0:00:29.920 Dan Kurnet where this is now founder's CEO at Macro 0:00:30.040 --> 0:00:35.640 Risk Advisors. He is the surveillance Greek letter authority. Okay, 0:00:35.680 --> 0:00:37.760 so let's have some can we just some math this 0:00:37.800 --> 0:00:38.319 early in the. 0:00:38.240 --> 0:00:39.120 Morning, Let's give a show. 0:00:39.159 --> 0:00:41.800 Let's go there s equals VOT plus one a f 0:00:41.880 --> 0:00:44.400 GT squared. Okay, this is the way it is, folks. 0:00:44.560 --> 0:00:48.320 It's physics envy. That's all this finance stuff up is 0:00:48.440 --> 0:00:52.360 ding kurrent. The rated change is the delta. The rated 0:00:52.479 --> 0:00:55.760 change of the rated change is the gamma. The gamma 0:00:55.840 --> 0:01:00.400 on the Vicks is off the chart. How do you 0:01:00.440 --> 0:01:02.720 go from thirty one to eighteen in the vix? What 0:01:02.840 --> 0:01:03.640 is that signal? 0:01:04.600 --> 0:01:06.520 Well, you give the President of the United States a 0:01:06.560 --> 0:01:10.640 Twitter account and allow him to escalate and de escalate 0:01:10.680 --> 0:01:14.559 through tweet. Perhaps there's a new Greek called tweet gamma, 0:01:14.640 --> 0:01:18.440 which is you've just got to follow truth. Social you 0:01:18.680 --> 0:01:23.440 have to appreciate the uniqueness of this specific risk event. 0:01:24.080 --> 0:01:26.800 Kevin Wirsch once told me, if you've seen one financial crisis, 0:01:27.080 --> 0:01:30.600 you've seen one financial crisis. There is commonality, but they're 0:01:30.600 --> 0:01:34.000 all unique. A decade ago was Brexit and we were 0:01:34.080 --> 0:01:37.240 following British poundvall. Right, now it's crude and that's the 0:01:37.280 --> 0:01:42.360 epicenter of every single correlation out there. It drives the VIX, 0:01:42.440 --> 0:01:45.360 it drives the move index, the S and P, credit spreads, 0:01:45.760 --> 0:01:47.040 and Trump drives crude. 0:01:47.200 --> 0:01:50.080 Speak to Global Wall Street right now, listening across the nation, 0:01:50.200 --> 0:01:53.640 around the world, Dean current, We've had a short cover, 0:01:54.160 --> 0:01:57.240 we've had an OMG, you were going up cover. What 0:01:57.440 --> 0:01:59.680 is the positioning right now that you see? 0:01:59.760 --> 0:02:03.720 Yeah, it's an incredibly important question, and it's very difficult 0:02:03.720 --> 0:02:08.280 to disentangle what's going on oftentimes, because of course there 0:02:08.320 --> 0:02:11.120 is a ceasefire, there is some kind of green shoots 0:02:11.160 --> 0:02:14.040 of good news. You wouldn't see crude fall by as 0:02:14.120 --> 0:02:18.000 much as it has unless you'd seen that. And yet 0:02:18.240 --> 0:02:20.960 markets have got a lot of mechanical trades that live 0:02:21.000 --> 0:02:25.560 and breathe within them. There's a CTA trading strategy, Commodity 0:02:25.560 --> 0:02:28.920 Trading Advisors, which essentially got very short on the way down, 0:02:29.560 --> 0:02:34.280 and then as the ceasefire prospects emerged, they had to rebuy. 0:02:34.440 --> 0:02:37.359 So that was a lot of fuel adding to the market. 0:02:37.440 --> 0:02:40.400 If you bought hedges a couple of weeks ago, you 0:02:40.480 --> 0:02:43.160 bought them at a very high VIX. They were expensive hedges, 0:02:43.639 --> 0:02:46.160 and they're going to lose value very fast because as 0:02:46.160 --> 0:02:51.280 you reference Tom, the VIX has fallen fast. It's not 0:02:51.320 --> 0:02:54.720 just fallen, it's fallen fast. So if you've along these hedges, you've. 0:02:54.520 --> 0:02:55.280 Got to get out of the way. 0:02:55.280 --> 0:02:57.680 If you want to retain any value for that insurance, 0:02:57.880 --> 0:02:59.960 you got to sell it fast, because the market's going 0:03:00.120 --> 0:03:03.440 up and imply volatilities going down to double whammy against 0:03:03.520 --> 0:03:06.680 you if you want to keep some value. That also 0:03:06.840 --> 0:03:09.440 adds fuel to the fire because when you sell a 0:03:09.440 --> 0:03:12.280 put that you own, someone's got to buy stock. That's 0:03:12.320 --> 0:03:14.880 the hedge. And again, all of these things have happened 0:03:14.919 --> 0:03:17.080 all at once, and so what I would just say 0:03:17.120 --> 0:03:20.959 is I kind of caution the interpretation that, Okay, the 0:03:21.040 --> 0:03:23.839 vis is way back down, and that means that there's 0:03:23.840 --> 0:03:26.720 a lot of optimism on the ceasefire. I think there's some, 0:03:27.200 --> 0:03:30.560 but we've got to respect the positioning that got kind 0:03:30.600 --> 0:03:34.560 of re orchestrated as a result of the ceasefire as well. 0:03:34.800 --> 0:03:36.880 Dean, when you're talking to your clients right now, do 0:03:36.920 --> 0:03:39.880 you feel like they're looking to buy protection or they 0:03:39.960 --> 0:03:41.360 looking to maybe buy some risk. 0:03:41.200 --> 0:03:45.120 Here, Well, I think it's kind of a both, right. 0:03:45.240 --> 0:03:48.120 You can't get away from the SMP as a benchmark. 0:03:48.400 --> 0:03:52.560 We're basically back up. We're really round tripped from seven thousand. 0:03:52.640 --> 0:03:53.640 On the future as well. 0:03:53.800 --> 0:03:57.040 Yeah, we're really exactly where we were on the eve 0:03:57.200 --> 0:04:00.280 of the war. And for folks who are managing capital, 0:04:00.640 --> 0:04:02.920 the risk of falling behind is a real thing, right, 0:04:02.960 --> 0:04:06.360 So the SMP is this benchmark that you really have 0:04:06.400 --> 0:04:09.520 to be careful not to underperform. So, yes, they are 0:04:10.320 --> 0:04:14.840 rewaiting now if they're listening to us, they're also looking 0:04:14.920 --> 0:04:19.000 at the prospects for owning insurance. That's really what the 0:04:19.040 --> 0:04:21.279 VIC is. It's a proxy for the price. Really have 0:04:21.320 --> 0:04:24.039 a five percent one month put on the S and 0:04:24.040 --> 0:04:26.240 P five percent out of the money, and that's going 0:04:26.320 --> 0:04:29.240 to cost just something like fifty five basis points. Right now, 0:04:29.640 --> 0:04:31.000 I think that's a really good deal. 0:04:31.080 --> 0:04:33.400 I was going to say, is that is that expensive 0:04:33.480 --> 0:04:35.279 or not? It seem it's. 0:04:35.240 --> 0:04:38.920 Right back to where we were on February twenty six, 0:04:38.960 --> 0:04:41.800 in fact, the day before the war. This put now 0:04:41.880 --> 0:04:44.520 costs twenty five percent less than it did, ok. I 0:04:44.640 --> 0:04:46.960 find that hard to square. I think that the last 0:04:47.040 --> 0:04:50.720 two months have added to the totality of uncertainty that 0:04:50.760 --> 0:04:51.920 investors are up against. 0:04:52.880 --> 0:04:56.039 Traders want to go into the weekend with risk because, 0:04:56.160 --> 0:04:59.159 as you mentioned, we're just one social media post away 0:04:59.200 --> 0:05:03.320 from armageddon or just one way or the other, positive 0:05:03.400 --> 0:05:06.000 or negative. I'm not sure. So what a trader do 0:05:06.520 --> 0:05:07.479 kind of towards the end of. 0:05:07.440 --> 0:05:09.720 The week, Yeah, I think, well, so there was a 0:05:09.760 --> 0:05:12.600 little bit of a trend where the Thursdays and Fridays 0:05:12.600 --> 0:05:15.680 were bad returns and then Monday, Tuesday, Wednesdays were good returns. 0:05:15.839 --> 0:05:17.720 I think we're a little bit away from that right now. 0:05:17.760 --> 0:05:20.120 And I think what we have to recognize is that 0:05:20.520 --> 0:05:23.400 there does seem to be a motivation for Trump to 0:05:23.920 --> 0:05:26.520 try to, you know, kind of tie things up into 0:05:26.520 --> 0:05:28.800 Clare victory, and that's the strategy. And I think we 0:05:28.880 --> 0:05:31.280 have to, you know, recognize that a real. 0:05:31.240 --> 0:05:33.440 Treat for global Wall Street. Here at the seven o'clock hour, 0:05:33.520 --> 0:05:36.200 we start strong Dean at Current with his founder chief 0:05:36.240 --> 0:05:40.200 executive officer at Macro Risk Advisors. I make jokes about it, 0:05:40.240 --> 0:05:42.599 but it's it's all Greek to say that, let's do 0:05:42.640 --> 0:05:45.240 a book pause here so that I'm here one day 0:05:45.240 --> 0:05:47.320 in the combine. You know. It's sort of like Game 0:05:47.320 --> 0:05:50.640 of Thrones. It's like in season three, that big tall tower. 0:05:50.760 --> 0:05:53.960 That's what Bloomberg's like. Somebody comes up a minion. There's 0:05:53.960 --> 0:05:57.680 someone upstairs to meet you, and he's very strange. I 0:05:57.760 --> 0:06:00.000 go to the escalator and look up, and I'm almost 0:06:00.240 --> 0:06:06.039 in tears. It's Sheldon Leytenberg, who invented the Bible on options. 0:06:06.120 --> 0:06:08.880 I kid you not. He's got the short sleeve white 0:06:08.920 --> 0:06:13.360 astronaut shirt like an Apollo thirteen with the fourteen pencils 0:06:13.360 --> 0:06:17.840 in the plastic container. Explain to the kids right now 0:06:17.880 --> 0:06:20.880 some of them pass CFA or announced two days ago, 0:06:21.240 --> 0:06:24.920 some of them flunked. Explain the value of learning the 0:06:24.960 --> 0:06:27.080 first seven Greek letters in finance. 0:06:27.160 --> 0:06:30.640 Well, I think I'll quote Annie Duke's the famous poker 0:06:30.640 --> 0:06:33.880 player hook book, Thinking in bets. We all think in bets, 0:06:33.920 --> 0:06:36.800 we all think in probabilities. And I think that's if 0:06:36.839 --> 0:06:38.480 you're trained in the options market. 0:06:38.760 --> 0:06:39.560 There's a couple of things. 0:06:39.560 --> 0:06:41.840 One is that there's the physics side, the heat equation 0:06:42.520 --> 0:06:45.080 and all the fancy math and greeks that come out 0:06:45.120 --> 0:06:47.800 of that. That's fun and interesting, and I think it 0:06:48.080 --> 0:06:52.760 provides you with a framework to think about relative prices, 0:06:52.920 --> 0:06:56.200 arbitrage type prices. So that's the first thing. The second 0:06:56.200 --> 0:07:00.800 thing is markets are strange sometimes and they can get 0:07:00.920 --> 0:07:05.000 very far away from the physical sciences. Interpretation of black 0:07:05.040 --> 0:07:06.920 shows you have to be very careful. And you've seen 0:07:07.520 --> 0:07:10.080 a lot of folks, brilliant folks like long term Capital 0:07:10.080 --> 0:07:12.720 blow up with the model being gospel. 0:07:12.840 --> 0:07:15.600 So let's go to chapter fourteen. Nobody reads it theta. 0:07:15.800 --> 0:07:19.160 That's where I live the DX folks in the calculus. 0:07:19.240 --> 0:07:22.480 Theta to me is the most understood thing here. Explain 0:07:22.760 --> 0:07:27.360 if a pro has a bad the vix is moved, 0:07:27.440 --> 0:07:31.720 they have to rehedge, explain how they handle the data, 0:07:32.120 --> 0:07:35.760 which costs money. That's the biggest problem. Nobody ever says 0:07:35.800 --> 0:07:38.320 this in the media. It costs money to hedge. 0:07:38.560 --> 0:07:41.920 Yes, So the first The best feature imbedded in an 0:07:41.920 --> 0:07:44.000 option contract is that it gives you the right to 0:07:44.080 --> 0:07:47.960 change your mind. Wall Street is a you know, it 0:07:48.000 --> 0:07:50.400 doesn't really give out free lunches at all, and so 0:07:50.600 --> 0:07:53.160 it charges you for the right to change your mind. 0:07:53.160 --> 0:07:53.880 That's important. 0:07:54.200 --> 0:07:57.400 And the charge Tom is theta. Meaning if you own 0:07:57.440 --> 0:08:00.440 an option contract and you're all jazzed up about hedging 0:08:00.480 --> 0:08:03.080 and you think the market's going to fall fast and 0:08:03.160 --> 0:08:06.760 nothing happens one day that goes by, is the theta. 0:08:06.800 --> 0:08:09.880 That's the time decay. So all lseqel that option contract 0:08:10.200 --> 0:08:12.400 is going to be less worth less tomorrow than it 0:08:12.480 --> 0:08:15.640 is today. That's the theta. And what you're balancing that 0:08:15.720 --> 0:08:19.560 against is the level of churn, the movement in the market, 0:08:19.840 --> 0:08:22.320 because the movement is what allows you to make money 0:08:22.360 --> 0:08:25.680 on theta's inverse, which is the gamma, right, that's the 0:08:25.760 --> 0:08:28.600 rate of change that you can monetize, and that's what 0:08:28.640 --> 0:08:32.360 you're balancing. It's the time decay versus your ability to 0:08:32.400 --> 0:08:34.640 make money trading when you own options. 0:08:34.720 --> 0:08:36.800 Paul, should we move on? Please? 0:08:37.160 --> 0:08:37.800 Thank you? 0:08:37.800 --> 0:08:39.360 You brought up theta exactly. 0:08:39.840 --> 0:08:43.160 Tom asked word see over the last six seven weeks 0:08:43.160 --> 0:08:45.880 with this war here, how would your characterize the trading 0:08:45.960 --> 0:08:50.120 in the market. It didn't feel panicky to me. Yes, 0:08:50.160 --> 0:08:52.000 we had the vics kind of push out that close 0:08:52.040 --> 0:08:54.520 to thirty, but it didn't feel panick. What did you 0:08:54.520 --> 0:08:55.720 see in the marketplace, Well. 0:08:55.559 --> 0:08:58.240 If you look at the results from the big banks, 0:08:58.880 --> 0:09:02.240 the trading was fast and furious, you know, all things consider, 0:09:02.360 --> 0:09:04.559 this is a fascinating event to study. 0:09:04.880 --> 0:09:05.480 The vics I. 0:09:05.400 --> 0:09:07.160 Think on an intro day basis got as high as 0:09:07.160 --> 0:09:10.480 thirty one tie, but during the tariff tantrum last year 0:09:10.520 --> 0:09:13.240 it got to fifty five, so that was considerably hard 0:09:13.559 --> 0:09:16.680 and the drawdown was considerably greater last year. What you 0:09:16.760 --> 0:09:20.280 do see in these sort of more macro events, where 0:09:20.320 --> 0:09:23.720 again crude is the epicenter and the linkage has become prominent, 0:09:23.880 --> 0:09:27.000 is a move towards index and ETF trading. Right, so 0:09:27.160 --> 0:09:32.240 there was much less discussion around the AI trade over 0:09:32.280 --> 0:09:34.800 the last couple of weeks. That's maybe going to come 0:09:34.840 --> 0:09:37.959 back into you know, into view because earnings are coming. 0:09:38.640 --> 0:09:42.400 But people were very furiously trading macro instruments and that's 0:09:42.400 --> 0:09:44.560 going to lead to options and ATFS. 0:09:44.360 --> 0:09:46.400 We are now getting you right into the teeth of 0:09:46.400 --> 0:09:49.320 the earning season. When you talk to your clients, are 0:09:49.360 --> 0:09:51.480 they pretty constructive on the earnings out look here and 0:09:51.840 --> 0:09:53.560 the ability for earnings to support this market? 0:09:53.920 --> 0:09:57.040 I think that's definitely been the playbook. At every turn, 0:09:57.120 --> 0:10:02.040 we find a way to for the hyperscalers to increase 0:10:02.080 --> 0:10:05.280 their capex and even at a high bar, to report 0:10:05.320 --> 0:10:06.240 incredible earnings. 0:10:06.320 --> 0:10:09.080 Okay, let's do that. Let's get away from derivative madness. 0:10:09.160 --> 0:10:11.480 I keep mentioning this, folks. There are these two guys, 0:10:11.600 --> 0:10:15.560 Merton and Medigliani. They could execute the double play like nobody. 0:10:15.880 --> 0:10:20.920 But the answer is bonds is a substitute for capex. 0:10:21.120 --> 0:10:24.880 Worry if they just issue the bonds five and seven 0:10:24.920 --> 0:10:30.480 times over subscribe their profit making companies. Who cares about 0:10:30.480 --> 0:10:34.199 the capex given the marginal thirty to fifty billion dollar 0:10:34.800 --> 0:10:36.000 bond issuance. 0:10:36.440 --> 0:10:39.000 Yeah, I think I think you're correct. What I would 0:10:39.040 --> 0:10:42.680 just say is that the bar gets so high quarter 0:10:42.760 --> 0:10:45.920 after quarter after quarter. Right, there's no doubt that in 0:10:46.000 --> 0:10:49.080 Nvidia is going to report that they've made a tremendous 0:10:49.160 --> 0:10:53.000 amount of money, as and Meta and Amazon and Microsoft 0:10:53.040 --> 0:10:55.360 are going to say the same. However, and you know, 0:10:55.400 --> 0:10:58.760 we can use Microsoft as an example. It's an interesting 0:10:58.800 --> 0:11:01.320 one to look at because the way the options market 0:11:01.360 --> 0:11:05.600 prices that particular earnings. And you can see this little 0:11:05.600 --> 0:11:08.160 plug here on the E r N page of Bloomberg. 0:11:08.240 --> 0:11:11.560 You could see the one day implied move that the 0:11:11.679 --> 0:11:14.640 market is ascribing to the earning state, and that's about 0:11:14.679 --> 0:11:20.080 six percent. That's really really high for Microsoft, and it 0:11:20.320 --> 0:11:24.920 speaks to the angst around software right the Again, this 0:11:25.040 --> 0:11:27.520 is where the bar gets so high and then you 0:11:27.600 --> 0:11:32.520 start to you know, impose slightly different assumptions, slightly less 0:11:32.520 --> 0:11:36.200 optimistic assumptions, and suddenly you're dealing with a you know, 0:11:36.200 --> 0:11:36.960 a negative results. 0:11:36.920 --> 0:11:39.880 It's a math guy like you have a buy on Microsoft. 0:11:41.679 --> 0:11:45.240 I have a hold on Microsoft, as in hold the spy, 0:11:45.559 --> 0:11:47.760 and it's a part of the spy, not really doing 0:11:47.800 --> 0:11:49.920 single stocks as much. 0:11:50.280 --> 0:11:52.520 It's like, you know, it's like he's working for a 0:11:52.600 --> 0:11:56.400 mutual fund. You what you need is a carefully balanced. 0:11:55.920 --> 0:11:59.200 Portfolio exactly, Dean. What are you looking for here for 0:11:59.240 --> 0:12:01.840 the next direction move for this market? Do you think? 0:12:02.080 --> 0:12:02.280 Yeah? 0:12:02.320 --> 0:12:07.960 I think probably more than anything, consolidation with the you know, 0:12:07.960 --> 0:12:11.240 we just have to be incredibly mindful of what we've 0:12:11.280 --> 0:12:15.000 just gone through and that and this is not any 0:12:15.080 --> 0:12:16.280 Trump arrangement syndrome. 0:12:16.280 --> 0:12:18.280 It's just to notice things. 0:12:19.000 --> 0:12:21.400 You've got to notice a Twitter account that's moving markets 0:12:21.400 --> 0:12:24.559 in a way that doesn't feel really constructive. I think 0:12:24.600 --> 0:12:28.480 we're supposed to also look at the inflation side of things. 0:12:28.480 --> 0:12:31.559 That's a new new sort of thing that's been introduced. 0:12:32.400 --> 0:12:35.400 But at the end of the day, the earnings engine 0:12:35.400 --> 0:12:38.000 of the S and P is what empowers everything. If 0:12:38.040 --> 0:12:41.040 that can hold up, then we may just move on 0:12:41.200 --> 0:12:43.280 from geopolitical conflict decurrent. 0:12:43.440 --> 0:12:48.160 Thank you so much, really appreciate this morning. Stay with us. 0:12:48.400 --> 0:12:51.640 More from Bloomberg Surveillance coming up after this. 0:12:58.880 --> 0:13:02.480 You're listening to the Boomberg Surveillance Podcast. Catch us Live 0:13:02.520 --> 0:13:05.680 weekday afternoons from seven to ten am Eastern Listen on 0:13:05.760 --> 0:13:09.440 Applecarplay and Android Otto with the Bloomberg Business app, or 0:13:09.600 --> 0:13:11.080 watch us live on YouTube. 0:13:11.480 --> 0:13:16.120 Patrick Murphy is an earned authority. Is far more than 0:13:16.160 --> 0:13:19.800 a former Undersecretary of the Army service to the nation. 0:13:21.040 --> 0:13:26.760 He is geopolitical Advisory Hillcoke Global. Patrick. Did you study 0:13:26.800 --> 0:13:30.360 blockades when you were in service? Did you study them 0:13:30.480 --> 0:13:35.239 in forms of military school? How does Patrick Murphy discuss 0:13:35.400 --> 0:13:36.680 a given blockade? 0:13:37.760 --> 0:13:39.600 Of course, I listen, you had to talk about it, 0:13:39.679 --> 0:13:42.240 and you know, you learn about what we did, and 0:13:42.280 --> 0:13:44.640 then during a Cuban missile crisis, you know kind of 0:13:44.640 --> 0:13:46.400 what started that. But as you know, I taught at 0:13:46.440 --> 0:13:48.520 West point for years, and I still lecture at the 0:13:48.640 --> 0:13:51.680 US Army War College. You had to know all the 0:13:51.720 --> 0:13:55.920 demands domains of warfare, you know, land, sea, air space, 0:13:56.000 --> 0:13:58.319 and cyber. So you know, that's what we try and 0:13:58.400 --> 0:14:02.520 do at HOKO Advisory HOCO Global for our advisory group. 0:14:02.559 --> 0:14:05.200 And I tell you the world has never been as 0:14:05.360 --> 0:14:07.360 bald as it is right now, at least it feels 0:14:07.360 --> 0:14:07.720 that way. 0:14:07.880 --> 0:14:10.720 You know. I look at this and I fall by 0:14:10.840 --> 0:14:14.960 Patrick on my deep military career Russell Kroll and Master 0:14:15.040 --> 0:14:19.520 in Commander, the Patrick O'Brien movie of the Napoleonic Wars. 0:14:19.640 --> 0:14:23.400 This is a Napoleonic Wars AXIOS has today. That's seventy 0:14:23.440 --> 0:14:28.640 five percent of casualties Ukraine, Russia are from drones. Patrick 0:14:28.760 --> 0:14:32.280 Murphy on a blockade in an age of drones. 0:14:34.440 --> 0:14:37.480 Yeah, well, listen, I let's hope that there's not swarm 0:14:37.560 --> 0:14:40.240 drones going after you know, our troops that are over there, 0:14:40.280 --> 0:14:42.960 because as you know, we've had the largest US military 0:14:43.000 --> 0:14:46.400 build up in that region since before the Iraq War, 0:14:46.440 --> 0:14:49.440 which I served in Darni invasion. And you know, it's 0:14:49.440 --> 0:14:52.160 already cost you know, when you think about Tom Today's 0:14:52.200 --> 0:14:54.840 tax day, it's cost the micro tax payer by the 0:14:54.920 --> 0:14:57.360 end of this month, two months of the war, forty 0:14:57.440 --> 0:14:58.720 two billion dollars. 0:14:58.720 --> 0:14:59.360 And that's from the. 0:14:59.680 --> 0:15:04.120 Pen and Budget Model Office at Penn Wharton where I teach. 0:15:04.320 --> 0:15:08.160 So you know, that's why a lot of Americans are saying, Hey, 0:15:08.160 --> 0:15:11.400 you promised me one thing, no new wars, and you 0:15:11.440 --> 0:15:15.560 gave me this. You promised me less inflation. It's gone up. 0:15:16.120 --> 0:15:18.000 And you know, I tried to be four point two 0:15:18.040 --> 0:15:23.000 percent gas prices over dollar. And that's why, you know, 0:15:23.280 --> 0:15:28.880 for US looking and advising industry, they want certainty. And 0:15:28.880 --> 0:15:32.000 that's why not just the American people, but Wall Street 0:15:32.440 --> 0:15:36.080 and business across American this world are pretty frustrated by 0:15:36.160 --> 0:15:36.800 what they're seeing. 0:15:37.280 --> 0:15:37.680 Patrick. 0:15:38.480 --> 0:15:41.840 You know, the air offensive against Iran has been extraordinarily 0:15:41.880 --> 0:15:46.080 and extraordinarily effective. But I think what we've all learned 0:15:46.120 --> 0:15:48.600 over you know, the last thirty forty fifty years, there's 0:15:48.600 --> 0:15:52.120 always so much air strikes can do here. What do 0:15:52.120 --> 0:15:54.520 you think the next step should be for the US here? 0:15:54.600 --> 0:15:58.560 I mean there's additional talks today of maybe extending the ceasefire. 0:15:59.440 --> 0:16:01.440 What do you think is is the best off ramp here? 0:16:02.360 --> 0:16:02.560 Yeah? 0:16:02.600 --> 0:16:05.360 Well, listen, that's those of us who've seen war and 0:16:05.400 --> 0:16:07.600 I've lost nineteen men of my unit, and evasion in 0:16:07.640 --> 0:16:13.920 Iraq do not want war. We'rethy, reluctant warriors. It's always 0:16:14.000 --> 0:16:16.600 the last line of defense. It's also a failure of diplomacy. 0:16:17.040 --> 0:16:23.920 So let's hope that we then restart new negotiations. Obviously, Pakistan, Turkey, 0:16:23.960 --> 0:16:27.600 i'mon and now China are trying to broker that and 0:16:27.680 --> 0:16:30.080 get that back on the table after the first twenty 0:16:30.120 --> 0:16:33.680 one hours didn't go well last weekend. And by the way, 0:16:33.680 --> 0:16:36.800 there's also negotiations as we know in Washington, d C. 0:16:36.960 --> 0:16:41.560 Right now, between Levenon and Israel. So it's a fragile ceasefire. 0:16:42.120 --> 0:16:45.920 But those of us who understand warfare understand that, you know, 0:16:46.040 --> 0:16:52.520 you cannot have regime change with just airpower. We knew 0:16:52.520 --> 0:16:55.600 that months ago, right and anyone that understands bilt their 0:16:55.640 --> 0:17:01.280 history and as commanded that understands it wasn't gonna happen. 0:17:01.720 --> 0:17:05.200 And you know, the Iranian regime is still in place. 0:17:05.200 --> 0:17:08.560 Obviously we took out their top leaders, but the toll 0:17:08.680 --> 0:17:11.640 Son is now George. He's even more radical. He lost 0:17:11.680 --> 0:17:15.679 his wife, he lost his son, and that's why a 0:17:15.720 --> 0:17:18.159 lot of folks are clamoring to say, how are we 0:17:18.200 --> 0:17:20.720 going to bring this to as you said, an elegant 0:17:20.800 --> 0:17:24.080 solution at elgon end here where we protect their interest, 0:17:24.560 --> 0:17:28.280 have the straight flowing again because of you know, our 0:17:28.400 --> 0:17:32.760 greatest allies get like you look at South Creage, you 0:17:32.800 --> 0:17:33.520 look at Japan. 0:17:34.000 --> 0:17:34.800 Seventy percent of the. 0:17:34.760 --> 0:17:37.560 Oil comes from the Strait, and so a lot of 0:17:37.560 --> 0:17:40.120 phrasey asking America to figure this out real quick. 0:17:40.760 --> 0:17:42.359 I got to get this in. I've only got a 0:17:42.440 --> 0:17:45.879 minute and a half. I'm so sorry, sir your comments 0:17:46.320 --> 0:17:51.720 and the firing of General George General Smith, General C. Q. 0:17:51.960 --> 0:17:55.720 Brown Jr. And for that matter, Admiral Franchetti as well. 0:17:56.040 --> 0:17:58.320 What are we doing with our top brass. 0:17:59.800 --> 0:18:04.760 Well, unfortunately, a lot of great public servants that have 0:18:04.800 --> 0:18:07.280 warn o'clock this country been let go. It reminds me 0:18:07.440 --> 0:18:10.480 of when we fired the Secretary of the Army, Eric 0:18:10.480 --> 0:18:13.480 Schecky before the Iraq work because he spoke truth to 0:18:13.560 --> 0:18:15.880 power and before that war. 0:18:16.680 --> 0:18:18.160 And I will. 0:18:18.000 --> 0:18:21.240 Tell you I am a big believer Tom and suing 0:18:21.359 --> 0:18:24.000 leadership over military should be that way. But at the 0:18:24.040 --> 0:18:26.520 same time, you know, as someone who helped lead the army, 0:18:26.840 --> 0:18:29.879 you have to listen to military experts and you have 0:18:29.960 --> 0:18:33.359 to listen, and God gave us all two eyes, two ears, 0:18:33.400 --> 0:18:36.080 and only one mouthful reason. And I feel like they're 0:18:36.119 --> 0:18:39.080 listening only for the They're already listening for what they 0:18:39.119 --> 0:18:43.800 want to hear. And patriots like Randy George Iraq, Afghanistan Vetcher, 0:18:43.920 --> 0:18:47.119 West Point graduate, c Q. Brown, the Chairman of the 0:18:47.200 --> 0:18:49.600 Joint Chiefs of Staff, and so many others have been 0:18:49.680 --> 0:18:52.159 let go. And a lot of us who've worn the 0:18:52.160 --> 0:18:55.719 cloth of our country. Are you know, one eyebrow up 0:18:55.720 --> 0:18:58.000 saying what the hell is gone down there? 0:18:58.640 --> 0:18:58.920 Washington? 0:18:59.000 --> 0:18:59.200 D C. 0:18:59.440 --> 0:19:01.520 Patrick got a run and Paul and I got to run. 0:19:01.560 --> 0:19:03.560 But thank you so much for your time and your 0:19:03.760 --> 0:19:07.800 public service. It's odd I find Patrick Murphy, that sparta 0:19:07.880 --> 0:19:09.920 who drives the whole ship here. He said the same 0:19:09.960 --> 0:19:12.480 thing to me the other day. Hey stupid, you got 0:19:12.480 --> 0:19:16.159 two ears in one mouth. Fix it. Mister Murphy is 0:19:16.160 --> 0:19:20.040 with Hillco a Global and of course the former Undersecretary 0:19:20.119 --> 0:19:25.680 of the Army. We greatly appreciate his support. Stay with us. 0:19:25.880 --> 0:19:29.120 More from Bloomberg Surveillance coming up after this. 0:19:36.359 --> 0:19:39.960 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:19:40.040 --> 0:19:43.560 weekday afternoons from seven to ten am. Eastern Listen on Apple, 0:19:43.600 --> 0:19:46.919 Karplay and Android Otto with the Bloomberg Business app, or 0:19:47.080 --> 0:19:48.679 watch us live on YouTube. 0:19:48.840 --> 0:19:51.520 She is Wolf Research always a help to us to 0:19:51.600 --> 0:19:54.880 fed asides and lots of other good economic Stephanie roth 0:19:54.960 --> 0:19:59.000 darkins the door today. Can you make a GDP estimate? Now? 0:19:59.480 --> 0:20:01.920 Yeah, you ken, I mean you have to make some assumptions, right, 0:20:02.000 --> 0:20:03.679 So we're assuming that at some point in the next 0:20:03.760 --> 0:20:06.760 couple of weeks that the war ends, and I mean 0:20:06.800 --> 0:20:08.160 both sides seem to want to get to a deal 0:20:08.200 --> 0:20:10.760 despite them being relatively far apart. What you're seeing so 0:20:10.840 --> 0:20:13.880 far is that there's there's no real negative impact on consumption. 0:20:14.040 --> 0:20:16.680 You're hearing across the board from companies, the credit card 0:20:16.720 --> 0:20:18.600 data that spending is pretty solid. 0:20:19.040 --> 0:20:22.359 There is cattle a record high that does a dend consumption. 0:20:23.480 --> 0:20:25.919 I mean, there are parts of the inflation bucket that 0:20:25.960 --> 0:20:28.640 are elevated, but so far and spending has been solid. 0:20:28.760 --> 0:20:32.680 Returned to surveillance. Steakhouse correspondent Paul Sweeney, where's your tip 0:20:32.720 --> 0:20:36.280 point on a steak menu item? Is it seventy bucks? 0:20:36.280 --> 0:20:37.240 You go? I'm not paying that. 0:20:38.880 --> 0:20:41.119 I think I represent the market. There isn't one. I 0:20:41.119 --> 0:20:43.440 don't eat it. That often. But I'm going i will 0:20:43.440 --> 0:20:45.520 find myself in a steakhouse. I'm getting a New York strip. 0:20:45.800 --> 0:20:48.440 I'm not getting you don't have a price resistance point, 0:20:48.440 --> 0:20:50.000 but I don't know that often. So it's to me 0:20:50.080 --> 0:20:51.399 every time I walk into a steak house, it's a 0:20:51.440 --> 0:20:51.960 special event. 0:20:52.119 --> 0:20:54.639 So God, Lisa Mateo's not here. He has had steak 0:20:54.720 --> 0:20:57.480 in thirty years. Paul Sweety was Stephanie Row. 0:20:57.640 --> 0:21:00.280 So we're Stephanie. Where do you think we may see 0:21:00.560 --> 0:21:04.800 some of the spillover of now seven weeks of work, 0:21:05.000 --> 0:21:07.840 higher energy costs. Will we see it in inflation? Will 0:21:07.880 --> 0:21:09.960 we see it in slower economic growth? Where do you 0:21:10.000 --> 0:21:11.200 think we'll see it? If anywhere? 0:21:11.400 --> 0:21:14.080 Yeah, So far, the March inflation data have been a 0:21:14.080 --> 0:21:16.639