Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferroll and Lisa Brownwitz Jailey, we bring you
Speaker 1: insight from the best and economics, finance, investment, and international
Speaker 1: relations to find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg
Speaker 1: dot Com, and of course on the Bloomberg terminal. We
Speaker 1: are hugely advantaged on this Friday. This was not expected.
Speaker 1: Michael Pile will join us. Now, yes he is chief
Speaker 1: economic advisor to the Vice President, but far more this
Speaker 1: is Mike Pile who took all the heritage of Dartmouth economics,
Speaker 1: think the trade of Douglas Irwin and the rest of
Speaker 1: even the modern Blanche Flower macro economic babble, and and
Speaker 1: brought it into a sterling record in Dartmouth economics, including
Speaker 1: winning the Rockefeller Award, hugely coveted onto Black Rock, and
Speaker 1: now again with the Vice President. Mike Pile thrilled on
Speaker 1: this day to have you with us. I'm gonna go
Speaker 1: or my Michael McKee is I'm gonna go with Captain
Speaker 1: Rampod of the Washington Post is which is has got
Speaker 1: to be talk of price controls for this rampant inflation.
Speaker 1: Are you talking about price controls with the Vice President?
Speaker 1: Are you talking with about price controls with the White House?
Speaker 1: So thanks for having me, Tom. I would say the
Speaker 1: President and Vice President have a game plan that we
Speaker 1: are executing around the short term, uh and the long
Speaker 1: term to expand the productive potential of the economy. In
Speaker 1: the short term, that means things like unstartling our supply chains.
Speaker 1: We've been taking actions there around ports, around getting more
Speaker 1: commercial driver's licenses out the door to get truckers on
Speaker 1: the road. Over the medium to long term, obviously, we're
Speaker 1: very focused on things like my conductors and getting investments
Speaker 1: there to build our productive capacity. That's what we're focused
Speaker 1: on here, building that productive capacity out over the short,
Speaker 1: medium and long run. That can be the plans under control.
Speaker 1: But if there is a lack of control due to
Speaker 1: month after month of high inflation, again a word that's
Speaker 1: out there, rampant inflation, I believe from the Financial Times
Speaker 1: Mike Pyle, what this comes down to is do price
Speaker 1: controls work? In your stunning academic career at Dartmouth, did
Speaker 1: you study that price controls can work? So again, I
Speaker 1: would say, you know, our job here is to use
Speaker 1: the tools that we have. We think that those tools
Speaker 1: go to expanding the productive potential, to supply capacity the
Speaker 1: economy in the short term, in the medium term. Uh.
Speaker 1: You know, if you look down Constitution Avenue here the
Speaker 1: Federal Reserve, they have principal responsibility for maintaining full employment
Speaker 1: for stable prices. We are also looking to give them
Speaker 1: the space and the independence they need to take that
Speaker 1: principle responsibility. Our job here is to use the tools
Speaker 1: we have. We think we're doing that around supply chains,
Speaker 1: around calling for and acting on the investments to to
Speaker 1: give this economy room to run, to give the supply
Speaker 1: capacity economy room to run. That's what we're focused on. Mike,
Speaker 1: what do you say to people to say that you
Speaker 1: guys run things too hot? Talk about the Federal Reserve
Speaker 1: and the lack of response we had from the Fed.
Speaker 1: But the argument that you run things too hot, that
Speaker 1: the package you passed when you took over the White
Speaker 1: House was too big for this economy. Yes, it was
Speaker 1: supply constraint, but you fuel demand. And here we are
Speaker 1: at seven point. Do you have an argument for that
Speaker 1: still that stands up? So I'd say two things. I mean, one,
Speaker 1: let's take a step back. UH, this is a historic
Speaker 1: recovery that is ongoing. The fastest GDP growth in forty years,
Speaker 1: and unemployment rate UH now down to four percent, the
Speaker 1: fastest it's dropped on record. UH. Six point six million
Speaker 1: jobs created last year. That is a historic recovery. When
Speaker 1: we look obviously, we're very focused, the President vice president
Speaker 1: very focused on price pressures on the way they pinch
Speaker 1: working families. But we would observe that you know, this
Speaker 1: is a global phenomenon. This is traceable to a global shock,
Speaker 1: the pandemic, and we've seen record inflation in the UK
Speaker 1: and Canada, the highest inflation in Europe in twenty some years. UH,
Speaker 1: this is a global phenomenon. But we want to build
Speaker 1: on the successes that we've had around their recovery. But
Speaker 1: also we're focused in a very laser like way with
Speaker 1: the tools that we have to bring price pressures under
Speaker 1: control to some degree. My that is true to a
Speaker 1: certain extent. Some people would arcum against it. President that
Speaker 1: God herself has said this. She said this yesterday evening
Speaker 1: the U. S economy is overheated. Our economy is far
Speaker 1: from being that. She thinks, it's a very different economy
Speaker 1: in Europe compared to say, the United States, and you
Speaker 1: rattle through those numbers, and we do that as well
Speaker 1: on this program. There's some great numbers out there. The
Speaker 1: automate problem you've got as an administration at the moment,
Speaker 1: as you obviously, the sentiment numbers don't echo it. People
Speaker 1: don't feel good and in the polls the administration is
Speaker 1: rolling over, including for the Vice President. It's been a
Speaker 1: difficult time for her as well. Mike's time on your
Speaker 1: side here going into the midterms. Do you think it is?
Speaker 1: Is the calendar on your side when you look at
Speaker 1: the inflation and the hope that it decelerates its year end.
Speaker 1: So I'm the economics guy, not the politics guys. I'll
Speaker 1: just go straight to the economics. You know. I think
Speaker 1: you heard from the President yesterday in his statement after
Speaker 1: the CPI release. That's something we've been been saying for
Speaker 1: a while. When you look at the vast majority of
Speaker 1: forecasters out there, whether it's the Fed or or the
Speaker 1: private sector, they do see inflation decelerating meaningfully over the
Speaker 1: course of two At the same time, we like, they
Speaker 1: see the labor market remaining strong. So our expectation is
Speaker 1: as we go through two, We're gonna see ongoing strength
Speaker 1: in the labor market. We're going to see inflation decelerate.
Speaker 1: I think you saw the glimmers of that uh in
Speaker 1: the CPI print and the jobs print last week, where
Speaker 1: we saw wages go up by point seven month on month,
Speaker 1: we saw inflation up point six. Obviously that's a firm print,
Speaker 1: but it was indicative of real wage growth. We think
Speaker 1: that as we moved through the year, that's going to improve.
Speaker 1: His wages stay strong, but inflation comes down my pile.
Speaker 1: Thank you. Mike is going to catch up, buddy, Chief
Speaker 1: Economic Advisor to Vice President Karmena Harris. Let's get to
Speaker 1: the perfect ghost Jim's alter Apollo Global Management. John. What's
Speaker 1: so great here out of his dooke economics is the
Speaker 1: immense credit of actually running money. You know, it's a
Speaker 1: path from Smith Berney John that was a small startup
Speaker 1: firm a few years ago on the City Group and
Speaker 1: then onto Apollo. The co president and credit c IO
Speaker 1: joins us right now. He JM. Let's talk about the
Speaker 1: business and then let's get our teeth into markets to
Speaker 1: the business. The inflow is fantastic for the quarter. Looking
Speaker 1: at credit strategies accounting for six of that during the period.
Speaker 1: What's driving that him, Well, we're fortunately we have an
Speaker 1: amazing platform and it was a banner year in every
Speaker 1: aspect of our business. First of all, investrial performance. We
Speaker 1: performed across the firm, from credit to hybrid to pe.
Speaker 1: We deployed a tremendous amount of capital um and certainly
Speaker 1: from all of those metrics, investors do well. And we
Speaker 1: provide solutions for a variety of businesses, so the businesses
Speaker 1: is performing on all cylinders. Twenty one was a banner year,
Speaker 1: as I used that termament in all the economic performance.
Speaker 1: And you know, certainly we've continued to expand our role
Speaker 1: in the infrastructure of the economy. Credit is the lifelood
Speaker 1: of the of the economy. Um, we can talk about
Speaker 1: a variety of the extension. Last time I was now
Speaker 1: we talked about a variety of platforms. Were still expanding
Speaker 1: that area to one of our three big five year
Speaker 1: strategic goals. But um, no, no doubt, twenty one a
Speaker 1: little bit in the rear view mirror. But but it
Speaker 1: was a record year in every aspect for us. You
Speaker 1: know what's terminating in the conversation this morning, it's the
Speaker 1: is a credit you've had from all the banks, five six,
Speaker 1: seven hikes maybe fifty basis points in March. Jim, as
Speaker 1: you follow that conversation, what does it change for you
Speaker 1: for the company, for the business, for what you do
Speaker 1: today today? Well, you know, for us, we play an
Speaker 1: expanding role in in the credit markets, and whether whether
Speaker 1: it's the platforms like an auto fleet finance business like
Speaker 1: wheels Doalin, or an inventory finance of Elian what you
Speaker 1: did with all of those. We are in touch with
Speaker 1: the end user of the end client and power and
Speaker 1: the marketplaces robust, the consumers and relatively strong shape across
Speaker 1: the board. No doubt we're seeing wage and and other
Speaker 1: inflation in the marketplace, but the credit markets are not
Speaker 1: rolling over right now. We're still in historically very low rates.
Speaker 1: The faults are expected to be quite low the next
Speaker 1: six to twelve months. Certainly as you get into twenty
Speaker 1: three and twenty four that may be a different story.
Speaker 1: But we're relatively constructed on the underlying economy, which is
Speaker 1: what you really are investing in when you invest in credit. Jim,
Speaker 1: you're such a student of Wall Street. I've got to
Speaker 1: go to the leverage question. Usually when things blow up
Speaker 1: for Wall Street, American Wall Street and frankly Global Wall Street.
Speaker 1: It's this evil thing, leverage. What's the state of your
Speaker 1: Wall Street right now? Are they exposed with leverage to
Speaker 1: any interst rate dynamics that we could see, you know,
Speaker 1: from in my three plus decades, I'm not seeing on
Speaker 1: the Wall Street participants of size areas where there's a
Speaker 1: complete lack of discipline um and if there is aggressive lending,
Speaker 1: they distribute and syndicate in the manner. So I don't
Speaker 1: see any areas. Certainly, if you look at the leverage
Speaker 1: law market, the high yield market UM, with equity valuations
Speaker 1: so strong, there are a number of spins to talk about,
Speaker 1: you know, loan to value on enterprise values that are
Speaker 1: probably at the extreme level of high um and but
Speaker 1: certainly in most of the things in and our business
Speaker 1: what we do here to follow for our investors and
Speaker 1: for our institutions, we're a senior lender top of the
Speaker 1: capital structure. We actually two or three times. But I'm
Speaker 1: not seeing the big pothole out there, i e. Housing
Speaker 1: or leverage finance that you saw on O eight oh nine.
Speaker 1: With within this then is the wall of money that's
Speaker 1: out there. There was a terrific infrastructure announcement of a
Speaker 1: jillion dollars made a few days ago. I can't remember
Speaker 1: the details, Jim. It becomes a blur. But how do
Speaker 1: you adapt to the unlimited alternative investment wall of money
Speaker 1: that is out there? Well, I think you're you're, you're
Speaker 1: a great question is you evolved? The reality is the
Speaker 1: world is short duration and what I mean by that
Speaker 1: is long dated yield on tension assets. Uh. And there's
Speaker 1: a lot of there's a lot of secular drivers, so
Speaker 1: that the growing wealth a on Asia, the Middle East,
Speaker 1: Latin America, the pensions are actually in good shape. The
Speaker 1: rally in the last or three years have put many
Speaker 1: many pensions around the globe in better shape. And as
Speaker 1: they get to a fund or closer that they want
Speaker 1: to lock in that and they transfer their equity risk
Speaker 1: to more income if you would. So there's no doubt
Speaker 1: if you look at how the role of private credit
Speaker 1: and yield is now a permanent part of investor strategies. Uh.
Speaker 1: Your point is well taken that whether it's in Japan
Speaker 1: when race or basically zero, and Japan Post Bank has
Speaker 1: north of two trillion of assets, they need these type
Speaker 1: of yield strategies. So what Apollo does well in terms
Speaker 1: of responding to that with our type of returns Uh,
Speaker 1: there is an insatiable appetite that exists out there, and
Speaker 1: all we're doing is we are really putting the capital
Speaker 1: from our investors at the intersection of borrowers who are
Speaker 1: need solutions. So it's a it's a trend, and it's great.
Speaker 1: We're very fortunate coming into a business where every day
Speaker 1: the backdrop and the technicals and the tsunami actually get
Speaker 1: better quarter the quarter. Jim gretta catch up, sir, great quarter.
Speaker 1: To appreciate your time on this market as well. What
Speaker 1: a fun time for a lot of people. Jim's outs
Speaker 1: of Apollo Global Management. With us, now we get lucky.
Speaker 1: Mark o'banna, the head of US rate strategy at Bank
Speaker 1: America Global Research, Mark Ethan Harris for the economy team,
Speaker 1: came out with the FED rate cool said seven hikes
Speaker 1: two weeks ago. There's non consensus is consensus now and
Speaker 1: that's changed quickly. Mark, you oversee the Bannan sheet side
Speaker 1: of the call as well. Put it all together for us.
Speaker 1: What's the team looking for now? So kudos to Ethan
Speaker 1: he did have a great call on seven hikes for
Speaker 1: this year. The market style pricing now it seems like
Speaker 1: that's rapidly becoming consensus. There are still questions about whether
Speaker 1: or not the Fed goes fifty in March. We on
Speaker 1: the Riach strategy team have been recommending the client position
Speaker 1: for fifty m We hit our target on that trade
Speaker 1: yesterday and certainly in the market's mind, it seems very
Speaker 1: likely that the Fed's gonna go fifty in March, and
Speaker 1: who knows, maybe even fifty in May as well. UM
Speaker 1: On the balance sheet, UM, we've also been pretty aggressive
Speaker 1: on the timing balance sheet reduction and key teeth. We
Speaker 1: believe that the bounty reduction will start in May and
Speaker 1: it will go pretty aggressively. The federalll likely have one
Speaker 1: hundred billion caps redemption camps on treasuries and mortgages sixty
Speaker 1: billion treasuries forty billion mortgages, and they'll phase into that
Speaker 1: over a three month period. But while they're phasing into
Speaker 1: those caps, they're gonna allow their bill holdings, of which
Speaker 1: they have about three billion, to roll off immediately. So
Speaker 1: what this will mean is that the Fed can shrink
Speaker 1: their balance sheet by over a hundred billion dollars straight
Speaker 1: out of the gate, with the bills coming off and
Speaker 1: those redemption caps gradually phasing in. And according to our numbers,
Speaker 1: we think that the FED will see their bounch sheet
Speaker 1: shrink by a trillion dollars in two. Again, that's a
Speaker 1: trillion dollar in and another trillion in three. So the
Speaker 1: balance sheet reduction is likely to occur quite rapidly. So
Speaker 1: the feed will be technique not only through greate heights
Speaker 1: and the front end of the curve, but they'll also
Speaker 1: be tightening by adding duration risks back into the market
Speaker 1: at the back end of the curve. With the balance
Speaker 1: sheet reduction. Mark stuff, stop stop, let me jump in.
Speaker 1: Seven hikes this year, A trillion dollars of balance sheet
Speaker 1: reduction this year. Not here to say it's wrong, it's
Speaker 1: a cool I want to talk about the cold. What
Speaker 1: on earth does the yield curve look like with all
Speaker 1: of that going on, flat, maybe inverted by the end
Speaker 1: of this year. Um uh. We we think that. Look,
Speaker 1: the back end of the curve only has a limited
Speaker 1: capacity to rise in our few We actually just revised
Speaker 1: our tenure call at the end of the year from
Speaker 1: two percent to two and a quarter my minor adjustment.
Speaker 1: But what we're thinking is that, look, the back end
Speaker 1: of the curve is going to have a hard time
Speaker 1: rising in the face of tightening finance with conditions and
Speaker 1: presumably concerns about slowing economic growth. That's going to keep
Speaker 1: the back end anchor. Meanwhile, the Fed's gonna be raising
Speaker 1: right to the front end pretty aggressively. So we think
Speaker 1: you're gonna be looking at a pancake flat curve twos
Speaker 1: the thirties by the end of the year, with risks
Speaker 1: that it becomes inverted. And we don't think that the
Speaker 1: FED is gonna feel terribly bad about that because they
Speaker 1: have an inflation problem. They need to tighten monetary policy
Speaker 1: pretty quickly, and they need to tighten beyond neutral in
Speaker 1: order to slow demand and get control of the inflation issue. So, Mark,
Speaker 1: if you have an inverted curve forecast by the end
Speaker 1: of this year, are you calling for recession then? So
Speaker 1: we are a forecasters only for a flat curve. We're
Speaker 1: not at the inversion yet, um and we're not calling
Speaker 1: for a recession. But what we are calling for is
Speaker 1: a gradual slowdown in the economy over the remainder of
Speaker 1: this year and into next year. UM, an inverted curve
Speaker 1: doesn't necessarily mean that you're going to be in a
Speaker 1: recession right away. Inverted curves do have a reasonable history
Speaker 1: of preceding recessions, but with long and variable labs, and
Speaker 1: we're not in the recession camp at this point. But
Speaker 1: what we are saying is that the FED has to
Speaker 1: take policy into a place where it becomes tight in
Speaker 1: order to deal with the inflation issue. They've got a
Speaker 1: slow aggregate demand in order to get on handle on inflation,
Speaker 1: and that means that the curve has to be flat
Speaker 1: or possibly inverted. Mark. I don't want to front run
Speaker 1: you or Dr Harris this morning on what Bank of
Speaker 1: America is going to suggest here, but within the talk
Speaker 1: of an emergency meeting and the fundamental idea that that
Speaker 1: threatens central bank credibility. If they have an emergency meeting
Speaker 1: to change your world the balance sheet dynamic, does that
Speaker 1: threaten FED credibility? It's an original effort, an original action.
Speaker 1: Does it? Actually you've FED credibility? So great question. UM,
Speaker 1: there's a lot of chatter in the market right now
Speaker 1: about an inter meeting move, especially following St. Louis FED
Speaker 1: President Pollard's comments yesterday. We think that an inter meeting
Speaker 1: hike is quite unlikely. The FED doesn't typically like to
Speaker 1: surprise the market when they hike. UM. They will follow
Speaker 1: the market in the hiking path, but they typically don't
Speaker 1: like the surprise. And we think that it would it
Speaker 1: would be very unexpected to see the FED deliver an
Speaker 1: intermeding hype, especially since they're just not there. You had
Speaker 1: married Daily on the wires yesterday from the San Francisco
Speaker 1: FED saying that she thinks that a couple of hikes
Speaker 1: this year are appropriate. She's not even sold on fifty,
Speaker 1: never mind an inter meeting hike. And and and Tom,
Speaker 1: I would encourage you and everyone who's listening to pay
Speaker 1: attention at three o'clock today. I know that sounds very specific,
Speaker 1: but it's really important because at three o'clock today, the
Speaker 1: New York FED is scheduled to release it's final purchase calendar.
Speaker 1: The final month of its paper is scheduled to be
Speaker 1: released at three o'clock today. And if the FED releases
Speaker 1: that calendar at three, interesting pretty strong forward guidance that
Speaker 1: they're not going to be doing an intermeding hype. UM.
Speaker 1: So again we would fade the notion of an intermeding hype,
Speaker 1: especially if that calendar publishes as a schedule mark. Is
Speaker 1: there a chance they don't publish that, and just and
Speaker 1: ki right now, there is a chance of that, But
Speaker 1: we don't believe that they're gonna wait until three o'clock
Speaker 1: to surprise the market with that. We do believe that
Speaker 1: if they make the decision to end paper early Cold
Speaker 1: Turkey now, they're probably gonna tell us soon, like within
Speaker 1: the next couple of hours. UM, we'd be surprised if
Speaker 1: they wait until three o'clock to make that announcement. And again, honestly, Jonathan,
Speaker 1: I just don't think that the FED is ready yet
Speaker 1: to signal an intermeding hyke. And that means that they're
Speaker 1: probably going to publish the calendar at three o'clock and
Speaker 1: for Foo to want to play for this intermeting hype,
Speaker 1: and there's a lot of them in the market. Just
Speaker 1: look at the February FED Funds futures contract. It's showing
Speaker 1: rising odds of engineering. If you want to play for
Speaker 1: an engineering hype, we think you're better position to play
Speaker 1: for a seventy five basis point hype in March as
Speaker 1: opposed to an intermeding hype. In February, dear me, Mark
Speaker 1: comes struggling to keep up. So let's go through it together.
Speaker 1: The idea of seven this year, the possibility of maybe
Speaker 1: fifty in March. You and Ethan seemed to be still
Speaker 1: having a discussion about that. We'll see what the outcome is.
Speaker 1: Bannet sheet reduction one trillion this year, one trillion next year.
Speaker 1: Talk to me about destination. Can you put a number
Speaker 1: on that? Because all the calls we're seeing some people
Speaker 1: going to five, some people joining you as seven Goldman
Speaker 1: one of them, they're not moving the terminal rate. They
Speaker 1: ultimately think that we end where they thought we were
Speaker 1: going to win three months ago. Mark, where do you
Speaker 1: think this ends at what number? So the b a
Speaker 1: house called Ethan's call is at the terminal rate between
Speaker 1: two point seven, five and three percent. That's where the
Speaker 1: thinks the real funds rate will end at the end
Speaker 1: of next year. So terminal is going to be about
Speaker 1: neutrals discussing before because the fedest of Titan, Mark, I
Speaker 1: want to go to the history of this. In this
Speaker 1: incredible moment you just described on this Friday morning in
Speaker 1: two thousand twenty two, the late Alan Meltzer of Carnegie
Speaker 1: Mellon wrote an important essay four years before he died,
Speaker 1: this in two thousand thirteen, where he was scathing, as
Speaker 1: you would expect from the conservative over quantitative Quicksand the
Speaker 1: Fed's got a deal with a quantitative Quicksand right now,
Speaker 1: are you suggesting we could see action as early as
Speaker 1: this morning to delay or dismiss the New York FED
Speaker 1: action this afternoon? It's certainly being talked about in the market. Um.
Speaker 1: And the chatter around this was very very high from
Speaker 1: our clients on the trading floor at be a Bey yesterday. Um,
Speaker 1: there's a buzz about that in the market. Really fall
Speaker 1: away um St Louis Fed President Bullard's comments yesterday. But
Speaker 1: to us, look, this three o'clock announcement is a very
Speaker 1: strong signal. It's very strong forward guidance. If it comes
Speaker 1: out as expected, um, then they're not going to go intermeding.
Speaker 1: But if it doesn't, then the odds of that intermeding
Speaker 1: potential hike are going to go up meaningful. We think
Speaker 1: the intermeeding hike is a fade um. And again, if
Speaker 1: you want a position for that for a more aggressive FED,
Speaker 1: we think you're better off paid march up one c
Speaker 1: l I s and maybe driving the Fed to go
Speaker 1: seventy five in their first time. Marcabanna, just unreal, and
Speaker 1: I wish I could take this through the morning. Just fantastic, Marcabanna,
Speaker 1: that of Bank America. We're thrilled to bring you in
Speaker 1: studio for the first time since Nixon was president, well
Speaker 1: not that far back. Tina Fordham joins, us head of
Speaker 1: Global Political Strategy at Evans. Thrilled that you could because
Speaker 1: thank you so much for coming into the studio. Such
Speaker 1: a pleasure to be back on. These are delicate times
Speaker 1: times and that Russia has conveyed a message. There is
Speaker 1: no plans, there's no this. There are talks to the
Speaker 1: north where we're comfortable with the map of Belarus, of
Speaker 1: the northern northeast of Kiev. I should say, in the
Speaker 1: southern parts of the Russian Federation. You have the courage
Speaker 1: to go the other way and look south to the
Speaker 1: naval reality of the Black Sea into this weekend. What
Speaker 1: do we need to know about Russia and Ukraine. Ukraine
Speaker 1: and Russia and the Black Sea. Thanks Tom, It's a
Speaker 1: very important conversation, and I've been talking to investors here
Speaker 1: in New York and also in London where I'm based.
Speaker 1: And uh, you know, the memo is um is becoming
Speaker 1: more more clear on what might happen next. New military
Speaker 1: exercises have started. Uh, they're meant to last for ten days.
Speaker 1: Russia has been very careful to control the narrative and
Speaker 1: always position and moves as within its power as a
Speaker 1: sovereign nation. The troops are stationed, of course on the
Speaker 1: Russian side of the Ukrainian border and and in in Belarus.
Speaker 1: But to block Ukraine's Black Sea access of would be
Speaker 1: regarded as an act of war. And we had strong
Speaker 1: comments from President Biden warning US citizens to to leave Ukraine. Um,
Speaker 1: the tensions are going to ratchet up over the next
Speaker 1: you know, the remaining eight days of these so called
Speaker 1: military exercises. There's so many ways to go here, but
Speaker 1: in the limited time we have, and Gina Martin Adams
Speaker 1: wants to get in as well. I would think of
Speaker 1: James Travitas, with his NATO experience, his Annapolis experience as well.
Speaker 1: Do we have a capability of showing the flag in
Speaker 1: the Black Sea in support of Ukraine? That's one question.
Speaker 1: Another question is whether it be a good idea and
Speaker 1: and you know, in his NATO capacity. Um, of course
Speaker 1: James wouldn't make these comments. But you're starting to hear
Speaker 1: more people articulating Putin's view, which is that NATO's eastward
Speaker 1: expansion is aggressive, that this is provocative, and what this
Speaker 1: is all about. Really, what Putin's doing is testing the
Speaker 1: post war um settlement uh that says that he, you know, she,
Speaker 1: he should be able to operate in his neighborhood. So
Speaker 1: Russia believes in sovereignty, except when it comes to to Ukraine. Tina.
Speaker 1: The natural um tendency of the market is to extrapolate
Speaker 1: any behavior and look for next steps. So my question
Speaker 1: for you is really what would be next presuming we
Speaker 1: do ultimately get an invasion of Ukraine, what will Russia
Speaker 1: do follow to follow that up? Is that the end?
Speaker 1: Is Ukraine really the grand prize here or is there
Speaker 1: something bigger that we should be worried about. Well, I
Speaker 1: wouldn't be so so quick to assume that we are
Speaker 1: going to to see an invasion of Ukraine, right. What
Speaker 1: what we can say is all the preparations are in
Speaker 1: place for a regional war UM in Ukraine. That's not
Speaker 1: the same thing as saying it's inevitable. So I do
Speaker 1: take issues somewhat with those suggesting that that this is
Speaker 1: going to happen. And that's because I think that Putin
Speaker 1: has already managed to achieve quite a bit. Um. You know,
Speaker 1: we just talked about how he's he's got more mind
Speaker 1: share for the Russian position that it should be able
Speaker 1: to do what it wants and its neighborhood without interference
Speaker 1: and these kinds of things, and the idea that NATO
Speaker 1: should should be clearer about its position. Um so d
Speaker 1: escalation on Russia's terms is not impossible, right, as you know,
Speaker 1: I want to talk about what we talked to. The
Speaker 1: wonderful Angelis stand of course, her book Putin's World is
Speaker 1: absolutely definitive, and she moved on as you've moved on
Speaker 1: to a larger global analysis. I'm going to go to Yalta.
Speaker 1: This was a few years ago again on the bottom
Speaker 1: side of Ukraine. It's time completely identified with Joseph Stalin,
Speaker 1: F Dr In Winston Churchill and Professor stant makes very
Speaker 1: clear that we're leading to some new structure of a
Speaker 1: tripolar world of the United States, of Putin and Russia,
Speaker 1: and of ascendant China. As well explained the delicacies of
Speaker 1: the new Russia China relationship. Sure well, huge respect for
Speaker 1: for end listen um of course, and uh, you know,
Speaker 1: I share that analysis. We've not been in a you know,
Speaker 1: the bipolar world for a long time. I'm not sure
Speaker 1: that I'm ready to think about a tripolar world. Russia
Speaker 1: is a spoiler, right It's it has you know, nuclear
Speaker 1: weapons capability, it has a U N. Security Council seat,
Speaker 1: so it's a powerful, um diminishing state. But really it
Speaker 1: is a spoiler. It's a disruptor China and the US.
Speaker 1: The whole decidities trapped that lots of people talk about
Speaker 1: is another question. But what has changed since the statement
Speaker 1: at the Olympics is a more overt kind of cooperation
Speaker 1: between Russia and China. That's important, for example, for the
Speaker 1: future of the of the monetary system um creating parallel institutions.
Speaker 1: I mean, it's not right to focus merely on the
Speaker 1: military manifestation of this power relationship. China speaking up saying
Speaker 1: that that Russia should be allowed to do what it wants.
Speaker 1: Of course relates to Taiwan as well. We were scheduled
Speaker 1: for a three hour conversation, but I'm told we can't
Speaker 1: continue the conversation. Thank you so much for coming and
Speaker 1: please come again as well, and we look forward on
Speaker 1: surveillance of course, to seeing you in our London studio,
Speaker 1: Tina Ford and with Avan Hurston. I really can't say
Speaker 1: enough about the perspective she's given us over the last
Speaker 1: number of days. This is the Bloomberg Surveillance Podcast. Thanks
Speaker 1: for listening. Join us live weekdays from seven to ten
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Speaker 1: keene In. This is Bloomberg