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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferroll and Lisa Brownwitz Jailey, we bring you

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Speaker 1: insight from the best and economics, finance, investment, and international

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Speaker 1: relations to find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg

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Speaker 1: dot Com, and of course on the Bloomberg terminal. We

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Speaker 1: are hugely advantaged on this Friday. This was not expected.

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Speaker 1: Michael Pile will join us. Now, yes he is chief

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Speaker 1: economic advisor to the Vice President, but far more this

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Speaker 1: is Mike Pile who took all the heritage of Dartmouth economics,

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Speaker 1: think the trade of Douglas Irwin and the rest of

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Speaker 1: even the modern Blanche Flower macro economic babble, and and

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Speaker 1: brought it into a sterling record in Dartmouth economics, including

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Speaker 1: winning the Rockefeller Award, hugely coveted onto Black Rock, and

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Speaker 1: now again with the Vice President. Mike Pile thrilled on

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Speaker 1: this day to have you with us. I'm gonna go

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Speaker 1: or my Michael McKee is I'm gonna go with Captain

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Speaker 1: Rampod of the Washington Post is which is has got

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Speaker 1: to be talk of price controls for this rampant inflation.

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Speaker 1: Are you talking about price controls with the Vice President?

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Speaker 1: Are you talking with about price controls with the White House?

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Speaker 1: So thanks for having me, Tom. I would say the

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Speaker 1: President and Vice President have a game plan that we

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Speaker 1: are executing around the short term, uh and the long

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Speaker 1: term to expand the productive potential of the economy. In

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Speaker 1: the short term, that means things like unstartling our supply chains.

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Speaker 1: We've been taking actions there around ports, around getting more

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Speaker 1: commercial driver's licenses out the door to get truckers on

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Speaker 1: the road. Over the medium to long term, obviously, we're

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Speaker 1: very focused on things like my conductors and getting investments

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Speaker 1: there to build our productive capacity. That's what we're focused

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Speaker 1: on here, building that productive capacity out over the short,

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Speaker 1: medium and long run. That can be the plans under control.

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Speaker 1: But if there is a lack of control due to

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Speaker 1: month after month of high inflation, again a word that's

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Speaker 1: out there, rampant inflation, I believe from the Financial Times

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Speaker 1: Mike Pyle, what this comes down to is do price

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Speaker 1: controls work? In your stunning academic career at Dartmouth, did

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Speaker 1: you study that price controls can work? So again, I

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Speaker 1: would say, you know, our job here is to use

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Speaker 1: the tools that we have. We think that those tools

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Speaker 1: go to expanding the productive potential, to supply capacity the

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Speaker 1: economy in the short term, in the medium term. Uh.

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Speaker 1: You know, if you look down Constitution Avenue here the

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Speaker 1: Federal Reserve, they have principal responsibility for maintaining full employment

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Speaker 1: for stable prices. We are also looking to give them

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Speaker 1: the space and the independence they need to take that

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Speaker 1: principle responsibility. Our job here is to use the tools

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Speaker 1: we have. We think we're doing that around supply chains,

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Speaker 1: around calling for and acting on the investments to to

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Speaker 1: give this economy room to run, to give the supply

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Speaker 1: capacity economy room to run. That's what we're focused on. Mike,

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Speaker 1: what do you say to people to say that you

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Speaker 1: guys run things too hot? Talk about the Federal Reserve

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Speaker 1: and the lack of response we had from the Fed.

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Speaker 1: But the argument that you run things too hot, that

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Speaker 1: the package you passed when you took over the White

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Speaker 1: House was too big for this economy. Yes, it was

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Speaker 1: supply constraint, but you fuel demand. And here we are

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Speaker 1: at seven point. Do you have an argument for that

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Speaker 1: still that stands up? So I'd say two things. I mean, one,

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Speaker 1: let's take a step back. UH, this is a historic

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Speaker 1: recovery that is ongoing. The fastest GDP growth in forty years,

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Speaker 1: and unemployment rate UH now down to four percent, the

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Speaker 1: fastest it's dropped on record. UH. Six point six million

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Speaker 1: jobs created last year. That is a historic recovery. When

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Speaker 1: we look obviously, we're very focused, the President vice president

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Speaker 1: very focused on price pressures on the way they pinch

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Speaker 1: working families. But we would observe that you know, this

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Speaker 1: is a global phenomenon. This is traceable to a global shock,

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Speaker 1: the pandemic, and we've seen record inflation in the UK

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Speaker 1: and Canada, the highest inflation in Europe in twenty some years. UH,

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Speaker 1: this is a global phenomenon. But we want to build

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Speaker 1: on the successes that we've had around their recovery. But

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Speaker 1: also we're focused in a very laser like way with

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Speaker 1: the tools that we have to bring price pressures under

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Speaker 1: control to some degree. My that is true to a

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Speaker 1: certain extent. Some people would arcum against it. President that

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Speaker 1: God herself has said this. She said this yesterday evening

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Speaker 1: the U. S economy is overheated. Our economy is far

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Speaker 1: from being that. She thinks, it's a very different economy

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Speaker 1: in Europe compared to say, the United States, and you

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Speaker 1: rattle through those numbers, and we do that as well

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Speaker 1: on this program. There's some great numbers out there. The

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Speaker 1: automate problem you've got as an administration at the moment,

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Speaker 1: as you obviously, the sentiment numbers don't echo it. People

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Speaker 1: don't feel good and in the polls the administration is

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Speaker 1: rolling over, including for the Vice President. It's been a

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Speaker 1: difficult time for her as well. Mike's time on your

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Speaker 1: side here going into the midterms. Do you think it is?

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Speaker 1: Is the calendar on your side when you look at

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Speaker 1: the inflation and the hope that it decelerates its year end.

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Speaker 1: So I'm the economics guy, not the politics guys. I'll

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Speaker 1: just go straight to the economics. You know. I think

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Speaker 1: you heard from the President yesterday in his statement after

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Speaker 1: the CPI release. That's something we've been been saying for

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Speaker 1: a while. When you look at the vast majority of

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Speaker 1: forecasters out there, whether it's the Fed or or the

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Speaker 1: private sector, they do see inflation decelerating meaningfully over the

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Speaker 1: course of two At the same time, we like, they

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Speaker 1: see the labor market remaining strong. So our expectation is

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Speaker 1: as we go through two, We're gonna see ongoing strength

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Speaker 1: in the labor market. We're going to see inflation decelerate.

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Speaker 1: I think you saw the glimmers of that uh in

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Speaker 1: the CPI print and the jobs print last week, where

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Speaker 1: we saw wages go up by point seven month on month,

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Speaker 1: we saw inflation up point six. Obviously that's a firm print,

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Speaker 1: but it was indicative of real wage growth. We think

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Speaker 1: that as we moved through the year, that's going to improve.

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Speaker 1: His wages stay strong, but inflation comes down my pile.

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Speaker 1: Thank you. Mike is going to catch up, buddy, Chief

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Speaker 1: Economic Advisor to Vice President Karmena Harris. Let's get to

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Speaker 1: the perfect ghost Jim's alter Apollo Global Management. John. What's

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Speaker 1: so great here out of his dooke economics is the

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Speaker 1: immense credit of actually running money. You know, it's a

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Speaker 1: path from Smith Berney John that was a small startup

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Speaker 1: firm a few years ago on the City Group and

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Speaker 1: then onto Apollo. The co president and credit c IO

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Speaker 1: joins us right now. He JM. Let's talk about the

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Speaker 1: business and then let's get our teeth into markets to

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Speaker 1: the business. The inflow is fantastic for the quarter. Looking

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Speaker 1: at credit strategies accounting for six of that during the period.

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Speaker 1: What's driving that him, Well, we're fortunately we have an

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Speaker 1: amazing platform and it was a banner year in every

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Speaker 1: aspect of our business. First of all, investrial performance. We

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Speaker 1: performed across the firm, from credit to hybrid to pe.

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Speaker 1: We deployed a tremendous amount of capital um and certainly

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Speaker 1: from all of those metrics, investors do well. And we

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Speaker 1: provide solutions for a variety of businesses, so the businesses

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Speaker 1: is performing on all cylinders. Twenty one was a banner year,

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Speaker 1: as I used that termament in all the economic performance.

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Speaker 1: And you know, certainly we've continued to expand our role

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Speaker 1: in the infrastructure of the economy. Credit is the lifelood

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Speaker 1: of the of the economy. Um, we can talk about

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Speaker 1: a variety of the extension. Last time I was now

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Speaker 1: we talked about a variety of platforms. Were still expanding

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Speaker 1: that area to one of our three big five year

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Speaker 1: strategic goals. But um, no, no doubt, twenty one a

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Speaker 1: little bit in the rear view mirror. But but it

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Speaker 1: was a record year in every aspect for us. You

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Speaker 1: know what's terminating in the conversation this morning, it's the

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Speaker 1: is a credit you've had from all the banks, five six,

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Speaker 1: seven hikes maybe fifty basis points in March. Jim, as

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Speaker 1: you follow that conversation, what does it change for you

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Speaker 1: for the company, for the business, for what you do

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Speaker 1: today today? Well, you know, for us, we play an

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Speaker 1: expanding role in in the credit markets, and whether whether

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Speaker 1: it's the platforms like an auto fleet finance business like

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Speaker 1: wheels Doalin, or an inventory finance of Elian what you

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Speaker 1: did with all of those. We are in touch with

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Speaker 1: the end user of the end client and power and

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Speaker 1: the marketplaces robust, the consumers and relatively strong shape across

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Speaker 1: the board. No doubt we're seeing wage and and other

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Speaker 1: inflation in the marketplace, but the credit markets are not

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Speaker 1: rolling over right now. We're still in historically very low rates.

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Speaker 1: The faults are expected to be quite low the next

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Speaker 1: six to twelve months. Certainly as you get into twenty

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Speaker 1: three and twenty four that may be a different story.

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Speaker 1: But we're relatively constructed on the underlying economy, which is

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Speaker 1: what you really are investing in when you invest in credit. Jim,

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Speaker 1: you're such a student of Wall Street. I've got to

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Speaker 1: go to the leverage question. Usually when things blow up

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Speaker 1: for Wall Street, American Wall Street and frankly Global Wall Street.

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Speaker 1: It's this evil thing, leverage. What's the state of your

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Speaker 1: Wall Street right now? Are they exposed with leverage to

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Speaker 1: any interst rate dynamics that we could see, you know,

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Speaker 1: from in my three plus decades, I'm not seeing on

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Speaker 1: the Wall Street participants of size areas where there's a

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Speaker 1: complete lack of discipline um and if there is aggressive lending,

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Speaker 1: they distribute and syndicate in the manner. So I don't

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Speaker 1: see any areas. Certainly, if you look at the leverage

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Speaker 1: law market, the high yield market UM, with equity valuations

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Speaker 1: so strong, there are a number of spins to talk about,

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Speaker 1: you know, loan to value on enterprise values that are

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Speaker 1: probably at the extreme level of high um and but

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Speaker 1: certainly in most of the things in and our business

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Speaker 1: what we do here to follow for our investors and

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Speaker 1: for our institutions, we're a senior lender top of the

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Speaker 1: capital structure. We actually two or three times. But I'm

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Speaker 1: not seeing the big pothole out there, i e. Housing

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Speaker 1: or leverage finance that you saw on O eight oh nine.

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Speaker 1: With within this then is the wall of money that's

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Speaker 1: out there. There was a terrific infrastructure announcement of a

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Speaker 1: jillion dollars made a few days ago. I can't remember

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Speaker 1: the details, Jim. It becomes a blur. But how do

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Speaker 1: you adapt to the unlimited alternative investment wall of money

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Speaker 1: that is out there? Well, I think you're you're, you're

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Speaker 1: a great question is you evolved? The reality is the

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Speaker 1: world is short duration and what I mean by that

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Speaker 1: is long dated yield on tension assets. Uh. And there's

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Speaker 1: a lot of there's a lot of secular drivers, so

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Speaker 1: that the growing wealth a on Asia, the Middle East,

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Speaker 1: Latin America, the pensions are actually in good shape. The

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Speaker 1: rally in the last or three years have put many

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Speaker 1: many pensions around the globe in better shape. And as

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Speaker 1: they get to a fund or closer that they want

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Speaker 1: to lock in that and they transfer their equity risk

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Speaker 1: to more income if you would. So there's no doubt

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Speaker 1: if you look at how the role of private credit

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Speaker 1: and yield is now a permanent part of investor strategies. Uh.

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Speaker 1: Your point is well taken that whether it's in Japan

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Speaker 1: when race or basically zero, and Japan Post Bank has

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Speaker 1: north of two trillion of assets, they need these type

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Speaker 1: of yield strategies. So what Apollo does well in terms

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Speaker 1: of responding to that with our type of returns Uh,

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Speaker 1: there is an insatiable appetite that exists out there, and

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Speaker 1: all we're doing is we are really putting the capital

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Speaker 1: from our investors at the intersection of borrowers who are

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Speaker 1: need solutions. So it's a it's a trend, and it's great.

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Speaker 1: We're very fortunate coming into a business where every day

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Speaker 1: the backdrop and the technicals and the tsunami actually get

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Speaker 1: better quarter the quarter. Jim gretta catch up, sir, great quarter.

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Speaker 1: To appreciate your time on this market as well. What

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Speaker 1: a fun time for a lot of people. Jim's outs

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Speaker 1: of Apollo Global Management. With us, now we get lucky.

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Speaker 1: Mark o'banna, the head of US rate strategy at Bank

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Speaker 1: America Global Research, Mark Ethan Harris for the economy team,

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Speaker 1: came out with the FED rate cool said seven hikes

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Speaker 1: two weeks ago. There's non consensus is consensus now and

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Speaker 1: that's changed quickly. Mark, you oversee the Bannan sheet side

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Speaker 1: of the call as well. Put it all together for us.

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Speaker 1: What's the team looking for now? So kudos to Ethan

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Speaker 1: he did have a great call on seven hikes for

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Speaker 1: this year. The market style pricing now it seems like

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Speaker 1: that's rapidly becoming consensus. There are still questions about whether

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Speaker 1: or not the Fed goes fifty in March. We on

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Speaker 1: the Riach strategy team have been recommending the client position

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Speaker 1: for fifty m We hit our target on that trade

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Speaker 1: yesterday and certainly in the market's mind, it seems very

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Speaker 1: likely that the Fed's gonna go fifty in March, and

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Speaker 1: who knows, maybe even fifty in May as well. UM

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Speaker 1: On the balance sheet, UM, we've also been pretty aggressive

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Speaker 1: on the timing balance sheet reduction and key teeth. We

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Speaker 1: believe that the bounty reduction will start in May and

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Speaker 1: it will go pretty aggressively. The federalll likely have one

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Speaker 1: hundred billion caps redemption camps on treasuries and mortgages sixty

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Speaker 1: billion treasuries forty billion mortgages, and they'll phase into that

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Speaker 1: over a three month period. But while they're phasing into

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Speaker 1: those caps, they're gonna allow their bill holdings, of which

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Speaker 1: they have about three billion, to roll off immediately. So

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Speaker 1: what this will mean is that the Fed can shrink

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Speaker 1: their balance sheet by over a hundred billion dollars straight

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Speaker 1: out of the gate, with the bills coming off and

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Speaker 1: those redemption caps gradually phasing in. And according to our numbers,

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Speaker 1: we think that the FED will see their bounch sheet

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Speaker 1: shrink by a trillion dollars in two. Again, that's a

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Speaker 1: trillion dollar in and another trillion in three. So the

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Speaker 1: balance sheet reduction is likely to occur quite rapidly. So

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Speaker 1: the feed will be technique not only through greate heights

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Speaker 1: and the front end of the curve, but they'll also

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Speaker 1: be tightening by adding duration risks back into the market

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Speaker 1: at the back end of the curve. With the balance

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Speaker 1: sheet reduction. Mark stuff, stop stop, let me jump in.

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Speaker 1: Seven hikes this year, A trillion dollars of balance sheet

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Speaker 1: reduction this year. Not here to say it's wrong, it's

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Speaker 1: a cool I want to talk about the cold. What

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Speaker 1: on earth does the yield curve look like with all

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Speaker 1: of that going on, flat, maybe inverted by the end

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Speaker 1: of this year. Um uh. We we think that. Look,

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Speaker 1: the back end of the curve only has a limited

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Speaker 1: capacity to rise in our few We actually just revised

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Speaker 1: our tenure call at the end of the year from

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Speaker 1: two percent to two and a quarter my minor adjustment.

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Speaker 1: But what we're thinking is that, look, the back end

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Speaker 1: of the curve is going to have a hard time

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Speaker 1: rising in the face of tightening finance with conditions and

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Speaker 1: presumably concerns about slowing economic growth. That's going to keep

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Speaker 1: the back end anchor. Meanwhile, the Fed's gonna be raising

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Speaker 1: right to the front end pretty aggressively. So we think

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Speaker 1: you're gonna be looking at a pancake flat curve twos

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Speaker 1: the thirties by the end of the year, with risks

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Speaker 1: that it becomes inverted. And we don't think that the

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Speaker 1: FED is gonna feel terribly bad about that because they

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Speaker 1: have an inflation problem. They need to tighten monetary policy

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Speaker 1: pretty quickly, and they need to tighten beyond neutral in

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Speaker 1: order to slow demand and get control of the inflation issue. So, Mark,

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Speaker 1: if you have an inverted curve forecast by the end

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Speaker 1: of this year, are you calling for recession then? So

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Speaker 1: we are a forecasters only for a flat curve. We're

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Speaker 1: not at the inversion yet, um and we're not calling

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Speaker 1: for a recession. But what we are calling for is

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Speaker 1: a gradual slowdown in the economy over the remainder of

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Speaker 1: this year and into next year. UM, an inverted curve

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Speaker 1: doesn't necessarily mean that you're going to be in a

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Speaker 1: recession right away. Inverted curves do have a reasonable history

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Speaker 1: of preceding recessions, but with long and variable labs, and

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Speaker 1: we're not in the recession camp at this point. But

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Speaker 1: what we are saying is that the FED has to

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Speaker 1: take policy into a place where it becomes tight in

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Speaker 1: order to deal with the inflation issue. They've got a

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Speaker 1: slow aggregate demand in order to get on handle on inflation,

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Speaker 1: and that means that the curve has to be flat

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Speaker 1: or possibly inverted. Mark. I don't want to front run

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Speaker 1: you or Dr Harris this morning on what Bank of

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Speaker 1: America is going to suggest here, but within the talk

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Speaker 1: of an emergency meeting and the fundamental idea that that

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Speaker 1: threatens central bank credibility. If they have an emergency meeting

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Speaker 1: to change your world the balance sheet dynamic, does that

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Speaker 1: threaten FED credibility? It's an original effort, an original action.

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Speaker 1: Does it? Actually you've FED credibility? So great question. UM,

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Speaker 1: there's a lot of chatter in the market right now

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Speaker 1: about an inter meeting move, especially following St. Louis FED

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Speaker 1: President Pollard's comments yesterday. We think that an inter meeting

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Speaker 1: hike is quite unlikely. The FED doesn't typically like to

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Speaker 1: surprise the market when they hike. UM. They will follow

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Speaker 1: the market in the hiking path, but they typically don't

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Speaker 1: like the surprise. And we think that it would it

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Speaker 1: would be very unexpected to see the FED deliver an

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Speaker 1: intermeding hype, especially since they're just not there. You had

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Speaker 1: married Daily on the wires yesterday from the San Francisco

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Speaker 1: FED saying that she thinks that a couple of hikes

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Speaker 1: this year are appropriate. She's not even sold on fifty,

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Speaker 1: never mind an inter meeting hike. And and and Tom,

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Speaker 1: I would encourage you and everyone who's listening to pay

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Speaker 1: attention at three o'clock today. I know that sounds very specific,

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Speaker 1: but it's really important because at three o'clock today, the

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Speaker 1: New York FED is scheduled to release it's final purchase calendar.

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Speaker 1: The final month of its paper is scheduled to be

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Speaker 1: released at three o'clock today. And if the FED releases

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Speaker 1: that calendar at three, interesting pretty strong forward guidance that

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Speaker 1: they're not going to be doing an intermeding hype. UM.

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Speaker 1: So again we would fade the notion of an intermeding hype,

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Speaker 1: especially if that calendar publishes as a schedule mark. Is

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Speaker 1: there a chance they don't publish that, and just and

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Speaker 1: ki right now, there is a chance of that, But

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Speaker 1: we don't believe that they're gonna wait until three o'clock

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Speaker 1: to surprise the market with that. We do believe that

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Speaker 1: if they make the decision to end paper early Cold

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Speaker 1: Turkey now, they're probably gonna tell us soon, like within

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Speaker 1: the next couple of hours. UM, we'd be surprised if

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Speaker 1: they wait until three o'clock to make that announcement. And again, honestly, Jonathan,

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Speaker 1: I just don't think that the FED is ready yet

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Speaker 1: to signal an intermeding hyke. And that means that they're

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Speaker 1: probably going to publish the calendar at three o'clock and

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Speaker 1: for Foo to want to play for this intermeting hype,

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Speaker 1: and there's a lot of them in the market. Just

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Speaker 1: look at the February FED Funds futures contract. It's showing

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Speaker 1: rising odds of engineering. If you want to play for

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Speaker 1: an engineering hype, we think you're better position to play

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Speaker 1: for a seventy five basis point hype in March as

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Speaker 1: opposed to an intermeding hype. In February, dear me, Mark

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Speaker 1: comes struggling to keep up. So let's go through it together.

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Speaker 1: The idea of seven this year, the possibility of maybe

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Speaker 1: fifty in March. You and Ethan seemed to be still

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Speaker 1: having a discussion about that. We'll see what the outcome is.

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Speaker 1: Bannet sheet reduction one trillion this year, one trillion next year.

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Speaker 1: Talk to me about destination. Can you put a number

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Speaker 1: on that? Because all the calls we're seeing some people

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Speaker 1: going to five, some people joining you as seven Goldman

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Speaker 1: one of them, they're not moving the terminal rate. They

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Speaker 1: ultimately think that we end where they thought we were

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Speaker 1: going to win three months ago. Mark, where do you

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Speaker 1: think this ends at what number? So the b a

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Speaker 1: house called Ethan's call is at the terminal rate between

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Speaker 1: two point seven, five and three percent. That's where the

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Speaker 1: thinks the real funds rate will end at the end

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Speaker 1: of next year. So terminal is going to be about

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Speaker 1: neutrals discussing before because the fedest of Titan, Mark, I

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Speaker 1: want to go to the history of this. In this

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Speaker 1: incredible moment you just described on this Friday morning in

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Speaker 1: two thousand twenty two, the late Alan Meltzer of Carnegie

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Speaker 1: Mellon wrote an important essay four years before he died,

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Speaker 1: this in two thousand thirteen, where he was scathing, as

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Speaker 1: you would expect from the conservative over quantitative Quicksand the

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Speaker 1: Fed's got a deal with a quantitative Quicksand right now,

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Speaker 1: are you suggesting we could see action as early as

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Speaker 1: this morning to delay or dismiss the New York FED

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Speaker 1: action this afternoon? It's certainly being talked about in the market. Um.

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Speaker 1: And the chatter around this was very very high from

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Speaker 1: our clients on the trading floor at be a Bey yesterday. Um,

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Speaker 1: there's a buzz about that in the market. Really fall

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Speaker 1: away um St Louis Fed President Bullard's comments yesterday. But

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Speaker 1: to us, look, this three o'clock announcement is a very

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Speaker 1: strong signal. It's very strong forward guidance. If it comes

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Speaker 1: out as expected, um, then they're not going to go intermeding.

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Speaker 1: But if it doesn't, then the odds of that intermeding

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Speaker 1: potential hike are going to go up meaningful. We think

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Speaker 1: the intermeeding hike is a fade um. And again, if

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Speaker 1: you want a position for that for a more aggressive FED,

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Speaker 1: we think you're better off paid march up one c

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Speaker 1: l I s and maybe driving the Fed to go

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Speaker 1: seventy five in their first time. Marcabanna, just unreal, and

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Speaker 1: I wish I could take this through the morning. Just fantastic, Marcabanna,

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Speaker 1: that of Bank America. We're thrilled to bring you in

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Speaker 1: studio for the first time since Nixon was president, well

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Speaker 1: not that far back. Tina Fordham joins, us head of

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Speaker 1: Global Political Strategy at Evans. Thrilled that you could because

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Speaker 1: thank you so much for coming into the studio. Such

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Speaker 1: a pleasure to be back on. These are delicate times

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Speaker 1: times and that Russia has conveyed a message. There is

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Speaker 1: no plans, there's no this. There are talks to the

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Speaker 1: north where we're comfortable with the map of Belarus, of

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Speaker 1: the northern northeast of Kiev. I should say, in the

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Speaker 1: southern parts of the Russian Federation. You have the courage

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Speaker 1: to go the other way and look south to the

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Speaker 1: naval reality of the Black Sea into this weekend. What

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Speaker 1: do we need to know about Russia and Ukraine. Ukraine

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Speaker 1: and Russia and the Black Sea. Thanks Tom, It's a

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Speaker 1: very important conversation, and I've been talking to investors here

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Speaker 1: in New York and also in London where I'm based.

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Speaker 1: And uh, you know, the memo is um is becoming

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Speaker 1: more more clear on what might happen next. New military

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Speaker 1: exercises have started. Uh, they're meant to last for ten days.

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Speaker 1: Russia has been very careful to control the narrative and

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Speaker 1: always position and moves as within its power as a

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Speaker 1: sovereign nation. The troops are stationed, of course on the

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Speaker 1: Russian side of the Ukrainian border and and in in Belarus.

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Speaker 1: But to block Ukraine's Black Sea access of would be

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Speaker 1: regarded as an act of war. And we had strong

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Speaker 1: comments from President Biden warning US citizens to to leave Ukraine. Um,

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Speaker 1: the tensions are going to ratchet up over the next

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Speaker 1: you know, the remaining eight days of these so called

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Speaker 1: military exercises. There's so many ways to go here, but

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Speaker 1: in the limited time we have, and Gina Martin Adams

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Speaker 1: wants to get in as well. I would think of

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Speaker 1: James Travitas, with his NATO experience, his Annapolis experience as well.

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Speaker 1: Do we have a capability of showing the flag in

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Speaker 1: the Black Sea in support of Ukraine? That's one question.

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Speaker 1: Another question is whether it be a good idea and

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Speaker 1: and you know, in his NATO capacity. Um, of course

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Speaker 1: James wouldn't make these comments. But you're starting to hear

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Speaker 1: more people articulating Putin's view, which is that NATO's eastward

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Speaker 1: expansion is aggressive, that this is provocative, and what this

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Speaker 1: is all about. Really, what Putin's doing is testing the

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Speaker 1: post war um settlement uh that says that he, you know, she,

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Speaker 1: he should be able to operate in his neighborhood. So

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Speaker 1: Russia believes in sovereignty, except when it comes to to Ukraine. Tina.

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Speaker 1: The natural um tendency of the market is to extrapolate

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Speaker 1: any behavior and look for next steps. So my question

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Speaker 1: for you is really what would be next presuming we

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Speaker 1: do ultimately get an invasion of Ukraine, what will Russia

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00:24:42,480 --> 00:24:45,640
Speaker 1: do follow to follow that up? Is that the end?

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00:24:45,720 --> 00:24:49,200
Speaker 1: Is Ukraine really the grand prize here or is there

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00:24:49,240 --> 00:24:52,399
Speaker 1: something bigger that we should be worried about. Well, I

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00:24:52,400 --> 00:24:55,520
Speaker 1: wouldn't be so so quick to assume that we are

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00:24:55,600 --> 00:25:00,119
Speaker 1: going to to see an invasion of Ukraine, right. What

436
00:25:00,119 --> 00:25:03,280
Speaker 1: what we can say is all the preparations are in

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00:25:03,359 --> 00:25:08,000
Speaker 1: place for a regional war UM in Ukraine. That's not

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00:25:08,080 --> 00:25:10,399
Speaker 1: the same thing as saying it's inevitable. So I do

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00:25:10,760 --> 00:25:14,479
Speaker 1: take issues somewhat with those suggesting that that this is

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00:25:14,520 --> 00:25:17,199
Speaker 1: going to happen. And that's because I think that Putin

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00:25:17,240 --> 00:25:21,000
Speaker 1: has already managed to achieve quite a bit. Um. You know,

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00:25:21,040 --> 00:25:24,000
Speaker 1: we just talked about how he's he's got more mind

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00:25:24,040 --> 00:25:26,480
Speaker 1: share for the Russian position that it should be able

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Speaker 1: to do what it wants and its neighborhood without interference

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00:25:30,680 --> 00:25:33,639
Speaker 1: and these kinds of things, and the idea that NATO

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00:25:33,680 --> 00:25:38,280
Speaker 1: should should be clearer about its position. Um so d

447
00:25:38,600 --> 00:25:44,359
Speaker 1: escalation on Russia's terms is not impossible, right, as you know,

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00:25:44,480 --> 00:25:46,080
Speaker 1: I want to talk about what we talked to. The

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00:25:46,119 --> 00:25:48,920
Speaker 1: wonderful Angelis stand of course, her book Putin's World is

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00:25:48,960 --> 00:25:51,680
Speaker 1: absolutely definitive, and she moved on as you've moved on

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Speaker 1: to a larger global analysis. I'm going to go to Yalta.

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Speaker 1: This was a few years ago again on the bottom

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Speaker 1: side of Ukraine. It's time completely identified with Joseph Stalin,

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00:26:02,960 --> 00:26:07,200
Speaker 1: F Dr In Winston Churchill and Professor stant makes very

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00:26:07,200 --> 00:26:10,960
Speaker 1: clear that we're leading to some new structure of a

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00:26:11,040 --> 00:26:15,440
Speaker 1: tripolar world of the United States, of Putin and Russia,

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00:26:15,880 --> 00:26:20,040
Speaker 1: and of ascendant China. As well explained the delicacies of

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Speaker 1: the new Russia China relationship. Sure well, huge respect for

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00:26:24,640 --> 00:26:28,679
Speaker 1: for end listen um of course, and uh, you know,

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00:26:28,760 --> 00:26:31,199
Speaker 1: I share that analysis. We've not been in a you know,

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00:26:32,240 --> 00:26:35,560
Speaker 1: the bipolar world for a long time. I'm not sure

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00:26:36,280 --> 00:26:40,200
Speaker 1: that I'm ready to think about a tripolar world. Russia

463
00:26:40,280 --> 00:26:43,320
Speaker 1: is a spoiler, right It's it has you know, nuclear

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00:26:43,359 --> 00:26:46,919
Speaker 1: weapons capability, it has a U N. Security Council seat,

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00:26:47,000 --> 00:26:51,080
Speaker 1: so it's a powerful, um diminishing state. But really it

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00:26:51,160 --> 00:26:55,280
Speaker 1: is a spoiler. It's a disruptor China and the US.

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Speaker 1: The whole decidities trapped that lots of people talk about

468
00:26:58,560 --> 00:27:01,560
Speaker 1: is another question. But what has changed since the statement

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00:27:01,560 --> 00:27:06,560
Speaker 1: at the Olympics is a more overt kind of cooperation

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00:27:06,720 --> 00:27:10,119
Speaker 1: between Russia and China. That's important, for example, for the

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00:27:10,160 --> 00:27:15,359
Speaker 1: future of the of the monetary system um creating parallel institutions.

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00:27:15,440 --> 00:27:19,159
Speaker 1: I mean, it's not right to focus merely on the

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00:27:19,240 --> 00:27:26,119
Speaker 1: military manifestation of this power relationship. China speaking up saying

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00:27:26,160 --> 00:27:29,440
Speaker 1: that that Russia should be allowed to do what it wants.

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00:27:29,480 --> 00:27:33,000
Speaker 1: Of course relates to Taiwan as well. We were scheduled

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Speaker 1: for a three hour conversation, but I'm told we can't

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Speaker 1: continue the conversation. Thank you so much for coming and

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00:27:38,640 --> 00:27:40,879
Speaker 1: please come again as well, and we look forward on

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00:27:40,920 --> 00:27:43,120
Speaker 1: surveillance of course, to seeing you in our London studio,

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00:27:43,480 --> 00:27:45,680
Speaker 1: Tina Ford and with Avan Hurston. I really can't say

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00:27:45,760 --> 00:27:48,720
Speaker 1: enough about the perspective she's given us over the last

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00:27:48,840 --> 00:27:52,680
Speaker 1: number of days. This is the Bloomberg Surveillance Podcast. Thanks

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00:27:52,680 --> 00:27:56,000
Speaker 1: for listening. Join us live weekdays from seven to ten

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00:27:56,080 --> 00:28:00,560
Speaker 1: am Eastern on Bloomberg Radio and on Bloomberg Television each

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00:28:00,640 --> 00:28:04,280
Speaker 1: day from six to nine a m. For insight from

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00:28:04,280 --> 00:28:08,840
Speaker 1: the best in economics, finance, investment, and international relations. And

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00:28:08,920 --> 00:28:14,119
Speaker 1: subscribe to the Surveillance podcast on Apple Podcasts, SoundCloud, Bloomberg

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00:28:14,119 --> 00:28:17,440
Speaker 1: dot com, and of course on the terminal. I'm Tom

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00:28:17,560 --> 00:28:19,840
Speaker 1: keene In. This is Bloomberg