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

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Speaker 1: with Jonathan Ferroll and Lisa Brownwitz Jay Leie, we bring

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

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Speaker 1: international relations. Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg

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Speaker 1: dot com, and of course, on the Bloomberg Terminal. John

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Speaker 1: Rinning joins US now chief Economic Advisor at Bring Capital. John,

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Speaker 1: so many people come on the show and talk about

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Speaker 1: the prospect of a policy mistake. John, You've repeated it

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Speaker 1: a few times. You think the mistake has already been made. Well,

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Speaker 1: the mistake was made last year. And the good news

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Speaker 1: is even if the fetes not explicitly recognizing it's mistake.

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Speaker 1: Treating inflation more as to use the kid's book, a

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Speaker 1: series of unfortunate events, with the latest swamp being the

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Speaker 1: commodity price impact a rising gradually Ukraine War. The origins

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Speaker 1: of the inflation was the Fed's monetary largest continuing to

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Speaker 1: ease as the economy recovered, continuing to say inflation was

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Speaker 1: just reopening a handful of commodities. It got broader based.

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Speaker 1: They pivoted in December. They took a big step last

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Speaker 1: week and on Monday with the chairman's speech to the

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Speaker 1: National Association the Business Economists. And now they're saying they'll

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Speaker 1: do what they have to do, But the problem is

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Speaker 1: they're going to have to do a lot more than

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Speaker 1: they would have had to do had they not eased

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Speaker 1: so much as the economy was getting better. Jim Billard

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Speaker 1: came on the show with Mike McKee. I'm sure you

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Speaker 1: caught some of that exchange John just yesterday, and he

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Speaker 1: talked up and the tightening cycle there and the soft

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Speaker 1: landing that he says they achieved. Can you give me

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Speaker 1: an idea of the kind of tightening cycle you're expecting, John,

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Speaker 1: and what informs that view? Well, I think this is

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Speaker 1: quite difficult because the FED shifted to this average inflation

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Speaker 1: targeting framework with backward looking metro for adjusting interest rates

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Speaker 1: that lift off, and we have way overshot any backward

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Speaker 1: looking inflation average, way overshot. Two. The current inflation rate

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Speaker 1: in CPI terms is almost a percent and will go

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Speaker 1: higher in all likelihood in March. So we don't have

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Speaker 1: the framework from the Fed as to how they are

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Speaker 1: going to calibrate their policy response to the inflation problem.

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Speaker 1: The fact of the matter is inflation is so much

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Speaker 1: higher than the level of interest rates that real interest

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Speaker 1: rates are more negative than they have been. So we

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Speaker 1: don't know how much of the inflation is transitory to

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Speaker 1: use that band word now, in the sense of as

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Speaker 1: the supply side gets better, supply chains improved, and that

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Speaker 1: comes down and how much is underlying? And I think

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Speaker 1: that the underlying inflation measures suggest the underlying inflation rates

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Speaker 1: somewhere between three and four percent looking at various Federal

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Speaker 1: reserve measures. So how does the fedgether? I think the

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Speaker 1: logic now since the markets there of making a few

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Speaker 1: one or two bigger moves they did fifties and one

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Speaker 1: seventy five back. Um, I think that logic is there

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Speaker 1: be since since the market is essentially moving to pricing that.

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Speaker 1: And then the question is the balance sheet. They have

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Speaker 1: to get the balance sheet down, and I think they

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Speaker 1: have to move fairly decisively on the balance sheet. And

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Speaker 1: that's going to be the next thing we'll hear us

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Speaker 1: in the Fed minutes and then uh the early May

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Speaker 1: f one CEA meeting, how they're actually going to work

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Speaker 1: the balance sheet? Now, I'm gonna ask a really basic question, John,

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Speaker 1: because we've talked this morning about how financial conditions have

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Speaker 1: actually been loosening after FED Shair J. Powell speech last week.

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Speaker 1: How does tightening FED policy actually bring down inflation? Well,

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Speaker 1: first of all, you have to say, if financial conditions

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Speaker 1: are easing, and this is a point that I know, Jonathan,

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Speaker 1: you discussed with my colleague contrad the quadras, if financial

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Speaker 1: conditions are easing, how is policy being tightened? So right

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Speaker 1: now we're not even close to beginning to tighten policy. Now,

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Speaker 1: I will say that the inflation process is a difficult

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Speaker 1: one to understand. After all, the Federals didn't even see

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Speaker 1: this coming. Um, they said, inflation dynamics don't change on

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Speaker 1: the dime, but they but they have. But if we

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Speaker 1: don't do something, then, as we had in the late

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Speaker 1: sixties and early seventies, these inflation expectations become embedded. And

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Speaker 1: the more embedded inflation expectations are, the harder it is

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Speaker 1: to get inflation down. So there's a signaling effect. There's

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Speaker 1: a simple effect is starting to take liquidity out of

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Speaker 1: the financial system. And there's the effect of making the

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Speaker 1: cost of money uh actually something other than zero. We're

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Speaker 1: massively negative in real terms. And all of those things

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Speaker 1: are part of the process, somewhat mysterious, but part of

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Speaker 1: the process of bringing inflation down. And if we if

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Speaker 1: it's not about meat packers, it's not about what companies

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Speaker 1: are doing in terms of refining the oil and passing

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Speaker 1: on gasoline causes. It's not about that. At its heart,

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Speaker 1: it's about monastory conditions which are far, far, far too loose.

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Speaker 1: To be more blunt, John, do you have faith that

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Speaker 1: the FED, based in the market response, based on the

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Speaker 1: actions they've announced, will be able to control inflation or

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Speaker 1: do you think that it is unavoidable that we're gonna

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Speaker 1: get a hard landing based in the fact that they're

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Speaker 1: going to have to tighten vastly more than some people

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Speaker 1: are expecting. Well, I think there was a significant risk

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Speaker 1: of a hard landing. And let's since we're being blunt,

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Speaker 1: let's say the word recession. Um. I don't think this year,

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Speaker 1: I don't think next year. But at some point, um,

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Speaker 1: the monastory conditions are going to be inconsistent with the

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Speaker 1: public expectations. Because if you're going to get underlying inflation

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Speaker 1: down to two and everybody is transacting on the assumpt

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Speaker 1: and that that somewhere between three and four percent, which

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Speaker 1: is where I think the public and corporate inflation expectations

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Speaker 1: are and the underlying price dynamics are. Then it's that

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Speaker 1: misalignment of the FED subjective and the public's expectations that

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Speaker 1: result in in the hard landing. Um the plane of

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Speaker 1: the FED talks, the plane of the FED talks, The

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Speaker 1: more decisive they are early, the better the risk that

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Speaker 1: we avoid the hard landing going. The FED historically and

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Speaker 1: even in the case, ended up doing too much too late,

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Speaker 1: and that is one of the histories of monetary policy interventions.

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Speaker 1: So now we're we've got this backward looking framework the

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Speaker 1: FED used, They're not talking about trying to balance aggregate

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Speaker 1: demand and aggregate supply, and the looking at the inflation

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Speaker 1: rate and their inflation forecaster probably too low for the

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Speaker 1: next three years. So does the FED then continue to

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Speaker 1: raise rates much better, to move more decisively sooner even better?

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Speaker 1: But without the time machine, we can't do this to

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Speaker 1: have not eased so much in the first place. So

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Speaker 1: John is effectively what you're saying that there's not a

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Speaker 1: binary outcome here of either the FED tightening so aggressively

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Speaker 1: to get inflation under control that it ultimately does cause

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Speaker 1: a recession or not tightening aggressively enough and letting inflation

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Speaker 1: run too hot for longer. There is some form of

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Speaker 1: middle ground, there might be, but that's like trying to

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Speaker 1: land on the aircraft carrier at night with all your

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Speaker 1: infer all your navigation systems out. I mean you can

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Speaker 1: pull it off. Maybe the greater risk in the short

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Speaker 1: run as we have hotter inflation and then more of

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Speaker 1: a monetary policy response. And let's face it, the Fetter

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Speaker 1: signaled an enormous shift in the monastary policy response from

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Speaker 1: December when they pivoted to three rate hikes to March

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Speaker 1: when they indicated that seven rate hikes and a balance

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Speaker 1: heat adjustment at least an equivalent of another quarter point

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Speaker 1: high would be appropriate for this year. And that's fine,

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Speaker 1: it's great. Get interest rates of actually back to two

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Speaker 1: percent by the end of the year. The problem is

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Speaker 1: the inflation rates running eight percent. So that's not even

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Speaker 1: beginning to get policy tight and that's the problem here.

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Speaker 1: The problem is and and so it's not the favor

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Speaker 1: rate hikes that cause recession. It's the FEDS easing so

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Speaker 1: much last year that there has allowed these inflation expectations

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Speaker 1: to build up The problem is to get down to

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Speaker 1: tups and inflation. You have to bring those inflation expectations down,

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Speaker 1: and that's as our experience from the late sixties or

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Speaker 1: early seventies, that's very difficult. But if you let it

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Speaker 1: run out of hand too far, then you end up

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Speaker 1: with the Vulcar style situation and the Federal Reserve doing

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Speaker 1: really doing whatever it takes at that time. That that

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Speaker 1: ended up in a very very deep recession two and

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Speaker 1: a very very strong dollar back to where we started.

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Speaker 1: Jump the mistake already made John, thank you, but a

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Speaker 1: fantastic catch. Howhether he has been too long John running

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Speaker 1: there of bring capital m Christmas Rankie Joyces now co

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Speaker 1: chief investment Officer RICKA. Belly Funds. Chris, let's start right there.

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Speaker 1: Why are we rallying in the face of what we're

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Speaker 1: seeing play out in this bond market. Well, I think

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Speaker 1: there's an element of sell the news on two fronts. Obviously,

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Speaker 1: you've got the FED move which was probably amongst the

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Speaker 1: most telegraphed in history, and then the war which was

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Speaker 1: also pretty well telegraphed. And um, so you know, maybe

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Speaker 1: things are not as bad as we first thought. But

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Speaker 1: in addition to that I hate to echo consensus. I

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Speaker 1: don't mind echoing Lisa, but it's Tina. It's there is

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Speaker 1: no alternative to to US equities. And when you think

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Speaker 1: about all the pressures in the world, there are a

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Speaker 1: few better places to put your money than the SMP

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Speaker 1: and then ASTAC, which are dominated by five or six

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Speaker 1: companies that have fortress balance sheets, pricing power, little or

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Speaker 1: no exposure to Russia and Ukraine. Chris does Tina work

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Speaker 1: does there is no alternative work when you have an

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Speaker 1: actual recession and fundamentals that start to erode. Yeah, I

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Speaker 1: think one of the one of the things that will

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Speaker 1: be different this time is those fang companies. I've gotten

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Speaker 1: so big that they're no longer quite as a cyclicals

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Speaker 1: as they once were. In other words, the cyclical the

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Speaker 1: secular growth won't necessarily overcome the cyclical pressures that Google

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Speaker 1: and Facebook and others that live off an advertising face.

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Speaker 1: So so that's going to be I think a surprise

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Speaker 1: for some people. But other than that, Yeah, Listen, if

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Speaker 1: we enter a recession, it's it's probably not good for

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Speaker 1: any company in the A or around the world. But

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Speaker 1: you've got to put your money somewhere and treasury is

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Speaker 1: probably not still not a great place to do that. Okay,

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Speaker 1: So that's kind of the larger cap thang names, Chris,

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Speaker 1: what about elsewhere within growth? Is there anywhere that may

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Speaker 1: be safe to be where could play a little bit

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Speaker 1: of defense. Yeah, So I think there's gonna be a

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Speaker 1: shakeout amongst some of these profitless growth companies. And of

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Speaker 1: course that's we're value investors, and that's I'm talking to

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Speaker 1: my book. That's not where we play. You know, some

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Speaker 1: some of the broken growth companies are are going to

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Speaker 1: survive and do well and kind of have some deja

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Speaker 1: vud to two thousand in that respect. But again, we're

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Speaker 1: we're pretty focused on domestic companies, cash flow generators with

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Speaker 1: pricing power industries like waste collection, broadband, luxury goods, and

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Speaker 1: that's where we're Uh, that's where we have always invested in,

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Speaker 1: and that's where we continue to find value. Chris is

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Speaker 1: a bet on luxury goods, still a big bet on China.

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Speaker 1: Has that changed it? So? Yeah? Of course? Uh, and

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Speaker 1: to a less your extent Russia and you've you've seen

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Speaker 1: that reflected in some of the some of the names.

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Speaker 1: But you know, I look at a name like Diagio,

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Speaker 1: which sort of a luxury goods coming. I don't know,

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Speaker 1: I don't know what whether you like Kettle or Bullet

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Speaker 1: or Johnny Walker, but you know those are those are

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Speaker 1: pretty resilient brands, and they benefit, by the way, to

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Speaker 1: a certain extent from reopening, which is still going strong

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Speaker 1: as people returned to on premise bars Chris, what's the

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Speaker 1: warning sign to you that perhaps you should rethink the

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Speaker 1: thesis and perhaps the consensus is wrong, well wrong in

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Speaker 1: which direction, I guess is always the question that you

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Speaker 1: have to ask. I mean, there there are uh some

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Speaker 1: very positive outcomes in here which you could see a

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Speaker 1: result in a in a melt up. Again, I think

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Speaker 1: that's a pretty low probability on the side. You know,

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Speaker 1: we could get a recession. We're gonna get a recession

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Speaker 1: at some point in the next few years. The question

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Speaker 1: is when. And um, you know again we're not once

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Speaker 1: the time in the market and go to cash. And

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Speaker 1: you know, obviously, if you stayed invested two years ago,

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Speaker 1: almost exactly two years ago we were at the bottom

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Speaker 1: of the SNP, you did pretty well. And I think

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Speaker 1: it's the same case here. There's a man in cash

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Speaker 1: who would actually have known every single brand that you've

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Speaker 1: recommend it there and he's not here today. Chris, I'm

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Speaker 1: sure he's really upset. Christopher Ranchi there of Belly Funds, Chris,

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Speaker 1: thank you. Gag Chountry, the head of Ice Shares America's

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Speaker 1: investment strategy a black rock, Gagy Mock. It's a meant

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Speaker 1: to anticipate. Perhaps on Wednesday they's got some clarity about

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Speaker 1: the future plans of the FED, and that's why we've

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Speaker 1: got some form of a snap back rally. What are

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Speaker 1: your thoughts, CarKey, and what's happening with this equity market

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Speaker 1: versus what we've seen in bonds. Sure, good morning, thanks

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Speaker 1: for having me. So going into the FED meeting on Wednesday,

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Speaker 1: if someone had told all of us, everyone that watches

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Speaker 1: the market, that the FED would be aggressively hawkish, and

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Speaker 1: then follow up again on Monday at the name conference

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Speaker 1: sounding even more hawkish and using the word expeditiously as

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Speaker 1: opposed to steadily when they describe their rate path, and

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Speaker 1: then if you looked at what the equity market, especially

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Speaker 1: the growthier parts of the equity market, would do, I

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Speaker 1: think we'd all be surprised not to mention that there's

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Speaker 1: a backdrop of a war, there's high inflation. Um, So

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Speaker 1: there are some movements in the markets that don't make

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Speaker 1: a whole lot of sense, but I think it's telling

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Speaker 1: us something. I do think that this move in equities

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Speaker 1: is telling us perhaps that the Fed is not going

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Speaker 1: to be able to go as much as they what

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Speaker 1: is currently being priced in, and also as much as

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Speaker 1: they're indicating to us, or at least that's how I'm

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Speaker 1: reading it. Let's go derivative. Then, if markets are treating

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Speaker 1: this as though the Fed can't raise rates that much,

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Speaker 1: does that actually give the Fed the ability to raise

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Speaker 1: rates that much in order to convince markets, Yes, we

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Speaker 1: will go that way. I mean, look, we have to

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Speaker 1: think about why they want to raise rates, right, So

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Speaker 1: we know that they're obviously staring at a close to

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Speaker 1: eight percent headline CPI at the face, but we also

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Speaker 1: know the mathematics of CPI just because of the way

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Speaker 1: base effects are going to turn out by the middle

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Speaker 1: of the year, there are going to be many reasons

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Speaker 1: to believe that inflation is going to come back down

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Speaker 1: from this very high level that we're going to hold

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Speaker 1: on a couple of months. So you're basically edifying transitory.

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Speaker 1: I'm sorry to cut you off, but hold on a second.

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Speaker 1: You're in camp transitory still you think that story is

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Speaker 1: not dead. I was never in camp transitory, and not

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Speaker 1: in camp transitory even now. But I'm just saying that

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Speaker 1: today's levels are not going to be at the persistent

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Speaker 1: and facial is still going to be high. Don't get

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Speaker 1: me wrong, We're not going to go back to pre

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Speaker 1: pandemic levels for a very very long time. But much

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Speaker 1: of the inflation that we're seeing now is actually being

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Speaker 1: caused by the supply side, not by the demand side.

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Speaker 1: So if you're looking at food prices, if you're looking

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Speaker 1: at energy prices, if you're looking at auto prices, some

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Speaker 1: of these are running at significantly higher levels than we've

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Speaker 1: seen in the past, and they are related to supply

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Speaker 1: chain disruptions or supply disruptions, not just supply chain disruptions.

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Speaker 1: And I don't know that the FED raising by two

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Speaker 1: hundred basis points is really going to make a dent

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Speaker 1: on auto supply or food prices or energy prices. Well,

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Speaker 1: speaking of those higher commodity prices, care given how far

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Speaker 1: they have run up, and you're indicating that some of

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Speaker 1: that will begin to normalize. Is it too late to

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Speaker 1: start trying to play the derivative that in the equity

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Speaker 1: market being an energy getting into materials at this point?

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Speaker 1: Mm hmmm. Um. So, you know, we've been talking about

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Speaker 1: sort of the value and quality Barbell sort of from

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Speaker 1: the beginning of the year, in fact even from the

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Speaker 1: middle of last year, and we've been telling our investors

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Speaker 1: that they should be focusing on some of those value

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Speaker 1: sectors of the market, the financials, obviously, energies, and Barbell

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Speaker 1: that with quality companies to U a L is a

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Speaker 1: ticker that gives you access to that and those are

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Speaker 1: again companies that do well have better pricing power in

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Speaker 1: a rising prices, rising inflationary environment. Now, going back to

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Speaker 1: your earlier question around how can you play that despite

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Speaker 1: the rise up in energy prices and the rise up

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Speaker 1: in commodity prices, one of the things that I think

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Speaker 1: investors should continue to focus on is actually using commodities

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Speaker 1: as a hedge. And we've talked about the need to

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Speaker 1: hedge for inflation. Like I said earlier, we're not in

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Speaker 1: the transitory camp at all. You need to be thinking

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Speaker 1: about hedging inflation in a multi asset fashion. You know,

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Speaker 1: I've been here before, and I've talked about TIPS. Tips

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Speaker 1: have obviously had an incredible run. I think now is

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Speaker 1: the time, and it's perhaps been a time for UM

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Speaker 1: some time now to add commodities as well. And again

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Speaker 1: this is where we think a diversified basket of commodities

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Speaker 1: make a lot of sense, like CEOMT. And again this

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Speaker 1: is not just a energy price story. Obviously we've seen

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Speaker 1: that rally over. I think this is much more around

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Speaker 1: food prices, agricultural prices, about industrial metals, precious metals, all

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Speaker 1: of these which are having some supply and demand imbalances

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Speaker 1: as well as structurally there's a reason to own them

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Speaker 1: going forward, given the transition to net zero CAR, is

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Speaker 1: there any reason right now to own longer data treasuries UM?

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Speaker 1: I'd say that if you are a pension client and

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Speaker 1: you're looking at your funded status, and you have had

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Speaker 1: a huge improvement in your funded status, then yes, to

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Speaker 1: de risk, maybe you want to be owning UH and

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Speaker 1: your treasuries at two thirty six as opposed to just

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Speaker 1: a few weeks ago. But outside of that, outside of

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Speaker 1: actually needing it for your liabilities, I think you know,

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Speaker 1: interest rates are still going to move higher, especially in

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Speaker 1: the longer end of the curve, so that ten plus sector. Um,

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Speaker 1: so I don't think so. No, I think I think

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Speaker 1: that if you have the liability needs, then yes, but

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Speaker 1: outside of that, I don't think so. However, I will

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Speaker 1: say that the front end of the market, and again, um,

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Speaker 1: you know, I started off by saying that the you know,

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Speaker 1: I don't think the FED will be able to go

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Speaker 1: as much as what's priced into the market, which means

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Speaker 1: that the front end is reaching some exciting levels. So

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Speaker 1: if you've been sitting in cash and you're looking to

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Speaker 1: step out, sort of that zero to three are part

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Speaker 1: of the treasury curve is beginning to look rather attractive

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Speaker 1: at close to twenty. Thank you, as always, CarKey Channgry

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Speaker 1: there of blank rock. Typically when a president goes abroad

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Speaker 1: in a moment like this one, he goes with some deliverables.

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Speaker 1: Anyone with any kind of interest in foreign diplomacy knows

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Speaker 1: that a lot of this is orchestrated. And this is

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Speaker 1: exactly what our next guest says. Here's the quote. Presidential

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Speaker 1: trips are usually planned months in advance and are orchestrated

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Speaker 1: down to the final detail. But this one, there is

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Speaker 1: a bit more uncertainty. The author of that line that

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Speaker 1: quote is said Boltanski, the director of policy research at

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Speaker 1: bt I g ISAAC. How strange is this to go

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Speaker 1: to Europe in a moment like this one without deliverables.

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Speaker 1: It's abnormal to say the least. I mean these things,

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Speaker 1: as you know, we're usually planned down to the most

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Speaker 1: minute detail where the little flags go, and there are

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Speaker 1: months of negotiations over the community case that are produced.

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Speaker 1: But this time is different, and the president is going

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Speaker 1: in without as much normal planning as we've seen in

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Speaker 1: the past, which adds some uncertainly. And I think that

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Speaker 1: the biggest issue, at least for me, is what is

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Speaker 1: this actually going to do to the overall negotiations overall landscape,

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Speaker 1: whether it's with Russia or the conversation regarding energy And

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Speaker 1: at the moment, given that there's no foreshadowing of what's

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Speaker 1: coming out of there, I think there's some question for

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Speaker 1: the investment community as we're all assuming there are note that,

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Speaker 1: of course, of course, there might be something happening that

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Speaker 1: we just haven't heard about. They might be planning for something.

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Speaker 1: What we have seen over the last few weeks, in fact,

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Speaker 1: the last few months is when the Vice president has

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Speaker 1: gone on these trips to Europe. A lot of people

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Speaker 1: have considered them to be a total failure because she's

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Speaker 1: gone with no deliverables. Now, often when we have events

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Speaker 1: like this, we talk about what does success look like.

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Speaker 1: I don't know, its sounds cliche, but it's important. What

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Speaker 1: is success for this president on this trip? Yeah? Look,

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Speaker 1: this is This is statecraft at the highest level and

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Speaker 1: its diplomacy um in its purest form. And the way

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Speaker 1: that I think about that is diplomacy is the art

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Speaker 1: of letting someone else have your way, right. And I

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Speaker 1: think that the President is going to Europe in the

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Speaker 1: hopes of getting European countries to band together and show

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Speaker 1: a unified front. And I think that that will come

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Speaker 1: in really three forms. Number one is a reaffirmation of

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Speaker 1: the commitment to NATO, and I think that that's one

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Speaker 1: of the easier parts of this whole trip that can

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Speaker 1: come in the form of a speech and other commitments

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Speaker 1: that I think we'll see right away. Um. The second

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Speaker 1: part is a European USA statement on China. Can they

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Speaker 1: find key similar language regarding the stance on China's support

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Speaker 1: of Russia and can they warn China against actually supporting

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Speaker 1: Russia either militarily or economically in a way that doesn't

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Speaker 1: push China further into Russia's camp. And then the biggest one,

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Speaker 1: in the most difficult one, and the one that I

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Speaker 1: don't think we're going to have an easy answer for,

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Speaker 1: is energy. I don't think that there is a clean

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Speaker 1: clear wind given some of the differing views over Russia's energy, Isaac,

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Speaker 1: how important will it be to gauge what the potential

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Speaker 1: red lines are that Russia would cross and what the

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Speaker 1: potential NATO response would be to those, And I'm thinking

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Speaker 1: about chemical or biological weapons or you know, as some

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Speaker 1: people postulate, perhaps even down the line nukes. Yeah. Look,

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Speaker 1: I think that at least for this summit, they're gonna

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Speaker 1: avoid using redline um commentary. I think that this is

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Speaker 1: about building a multilateral, unified for front around NATO, saying

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Speaker 1: that NATO sovereign countries will have the support of all

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Speaker 1: other NATO members, And frankly, I think they're going to

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Speaker 1: avoid some of the more red line esque rhetoric regarding

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Speaker 1: certain levels of chemical weapon usage or weapons of mass

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Speaker 1: destruction or even cyber warfare, because there hasn't been enough

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Speaker 1: groundwork done yet on the diplomacy side to have definitive

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Speaker 1: red lines like that. And that's part of the problem

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Speaker 1: with going into meetings like this without the months of

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Speaker 1: due diligence and planning and talked that are normal, Isaac.

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Speaker 1: How much leverage has the US and it's broader alliance

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Speaker 1: is lost for when they're trying to get the Kremlin

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Speaker 1: to change its behavior by from saying from the beginning

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Speaker 1: we will not be putting boots on the ground that

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Speaker 1: used to force is not on the table. Is it

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Speaker 1: so much about what the West is willing to do

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Speaker 1: or what it is not willing to do. Yeah, Look,

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Speaker 1: I think one of the storylines here is is that

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Speaker 1: our limitations are going to be on display as well. Right,

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Speaker 1: We're going to hear a lot about unity and and

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Speaker 1: a concrete solidification of the NATO alliance in Article five,

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Speaker 1: and that's going to be very important. But I think

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Speaker 1: we're also going to see clear and start repose some

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Speaker 1: of our limitations. And here I'm talking about a reaffirmation

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Speaker 1: that we're not going to be part of the imposition

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Speaker 1: of a note fly zone, that we are going to

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Speaker 1: remain cautious about transferring Soviet era fighter jets because the

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Speaker 1: fear of escalation is part of the less calculus here.

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Speaker 1: President Biden and Europe and everyone who is in a

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Speaker 1: position of power in the Western Anti war Alliance is

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Speaker 1: deeply concerned that if they go one step too far,

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Speaker 1: there will be an escalation that will lead to World

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Speaker 1: War three. And that has been part of the calculus

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Speaker 1: from the beginning. It's going to remain part of the calculus,

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Speaker 1: especially during this trip. Isa said, wonderful to catch out

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Speaker 1: with the AXA as Oiseu. I said Boltanski that if

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Speaker 1: fat C I j. This is the Bloomberg Surveillance Podcast.

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Speaker 1: Thanks for listening. Join us live weekdays from seven to

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Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television

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Speaker 1: subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg

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Speaker 1: Keene and this is Bloomberg