WEBVTT - Facts and Logic are Now Partisan, Gideon Says 0:00:00.120 --> 0:00:13.880 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jelie. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:30.360 Bloomberg dot Com, and of course, on the Bloomberg. This 0:00:30.520 --> 0:00:34.239 is Bloomberg Surveillance with Jonathan Faraoh and Tom McKeene. The 0:00:34.360 --> 0:00:38.280 SMP five hundred heading for a fourth straight week of gains, 0:00:38.320 --> 0:00:40.280 but a little bit of weakness emerging in the past 0:00:40.320 --> 0:00:43.560 few days, sparks some would say, by jitters around tax 0:00:43.600 --> 0:00:46.240 cuts and whether the GOP has the votes to get 0:00:46.280 --> 0:00:48.640 this done next week. As far as futures are concerned, 0:00:48.680 --> 0:00:51.480 this Friday morning, a little bit firmer at five points 0:00:51.520 --> 0:00:54.960 on the SMP five hundred, positive sixty two points on 0:00:55.040 --> 0:00:57.640 the doubt in the bondom market. It's as you were, 0:00:57.920 --> 0:01:00.960 incredibly tight trading ranges through the year and over the 0:01:01.040 --> 0:01:03.320 last month as well. Somewhere in the two thirties were 0:01:03.400 --> 0:01:05.959 up another basis point at two thirty six on a 0:01:06.040 --> 0:01:07.959 US ten year. At the front end of the curve 0:01:07.959 --> 0:01:10.080 on a US two year, we are trading at one 0:01:10.120 --> 0:01:14.080 point eight two percent. Confidence that growth will improve and 0:01:14.160 --> 0:01:17.400 inflation will stay low, shared by most investors and central 0:01:17.400 --> 0:01:20.679 bankers are like going into ten. And in the FX market, 0:01:20.720 --> 0:01:22.479 it's just a story of dollar witness through the year 0:01:22.480 --> 0:01:25.360 and on the session as well, with one exception some 0:01:25.720 --> 0:01:29.640 dollar strength against the pound. Even as European leaders vote 0:01:29.680 --> 0:01:33.240 to go to Phase two of Brexit negotiations, the cable 0:01:33.360 --> 0:01:35.760 rate on the back fot south of one thirty four. 0:01:35.760 --> 0:01:38.360 At one thirty three ninety two, we're down a third 0:01:38.400 --> 0:01:40.440 of one percent for the year so far. Tho, it 0:01:40.480 --> 0:01:44.880 has been the pain trade of seventeen. All the ingredients 0:01:45.080 --> 0:01:48.360 for a year of dollar strength, rate hikes, better growth, 0:01:48.360 --> 0:01:52.160 pushing through fiscal stimulus seemingly, and yet we grind towards 0:01:52.240 --> 0:01:54.720 one of the worst years for the green back in 0:01:54.720 --> 0:01:59.680 a decade. To discuss Bob sinch Amherst Pierpont global strategist, 0:01:59.760 --> 0:02:02.680 Bob a man that has followed the FX market four decades, 0:02:02.840 --> 0:02:05.400 we have not seen a year like this for quite 0:02:05.400 --> 0:02:07.200 a while for the US dollar. Yet we had the 0:02:07.240 --> 0:02:10.520 recipe and the ingredients for a year that should have 0:02:10.560 --> 0:02:13.040 been good. What happened? You know? I think the markets 0:02:13.080 --> 0:02:15.840 discounted a lot of this. Remember the dollar had a 0:02:16.000 --> 0:02:18.160 huge run up from the election to the end of 0:02:18.160 --> 0:02:20.400 the year, and in fact peaked right around the year end. 0:02:20.480 --> 0:02:23.360 So you know, when we do these annual comparisons, we 0:02:23.400 --> 0:02:26.320 will be comparing the dollar move this year to just 0:02:26.400 --> 0:02:28.920 about its peak at the end of December of of 0:02:29.040 --> 0:02:31.960 last year. Uh And I think the market just got 0:02:32.000 --> 0:02:35.160 two builed up um on US growth earlier in the year. 0:02:35.200 --> 0:02:39.079 They got two builed up on on higher US interest rates, 0:02:39.200 --> 0:02:41.880 and two bowled up on the dollar. And so the 0:02:41.880 --> 0:02:45.560 the year was really one of trying to digest those 0:02:45.600 --> 0:02:49.960 long positions um and And I think also, you know, 0:02:50.000 --> 0:02:52.040 one of the big disappointments I think if you look 0:02:52.080 --> 0:02:54.640 at the year as a whole, is that the US 0:02:54.720 --> 0:02:58.320 trade balance and therefore current account balance hasn't really improved 0:02:58.320 --> 0:03:02.400 all that much, even though we're almost at balance in 0:03:02.440 --> 0:03:05.600 the oil trade balance for the US. So you know, 0:03:05.639 --> 0:03:07.800 the US trade balance and oil had gotten out to 0:03:07.840 --> 0:03:10.600 his wide is about forty billion dollars during the peak, 0:03:10.639 --> 0:03:13.920 and oil prices it's down down to less than five billion. 0:03:14.520 --> 0:03:17.000 Yet the total trade balances is why as it's ever been, 0:03:17.040 --> 0:03:20.040 which means we have records record deficit in the non 0:03:20.040 --> 0:03:22.360 oil trade balance. So I think that there were some 0:03:22.400 --> 0:03:25.760 expectations that trade would improve because of the U S 0:03:25.800 --> 0:03:30.040 improvement in the oil balance. There were expectations that, um, 0:03:30.560 --> 0:03:34.960 you know, that the markets would would embrace um, these reforms. 0:03:34.960 --> 0:03:37.880 In the US, it embraced growth, and I think a 0:03:37.880 --> 0:03:40.080 lot of it just got discounted in that big run 0:03:40.160 --> 0:03:42.200 up in the dollar in November and December. We've been 0:03:42.240 --> 0:03:46.160 digesting ever since. So if we think about excessive bullishness 0:03:46.160 --> 0:03:48.560 in the dollar at the end of two thousand and 0:03:48.720 --> 0:03:52.040 uh and sixteen and the response that we saw in 0:03:52.080 --> 0:03:55.840 two thousand seventeen of disappointment, you sort of look around 0:03:55.840 --> 0:03:58.720 and say, well, where's the greatest optimism right now in 0:03:58.840 --> 0:04:02.480 terms of market action in price action, it's bitcoin. So 0:04:02.520 --> 0:04:04.280 you're wonder where the bitcoin is going to be the 0:04:04.320 --> 0:04:07.160 disappointment of two thousand and eight. Maybe we're gonna spend 0:04:07.160 --> 0:04:09.200 a little bit more time talking about the fundamentals in 0:04:09.200 --> 0:04:11.520 this tax plan and where the GOP is at. I 0:04:11.560 --> 0:04:14.840 want to talk tactically just ahead of and you mentioned 0:04:14.880 --> 0:04:18.400 some of the positioning going into this year. Everyone seemingly 0:04:18.720 --> 0:04:20.599 on the one side of the boat for dollar strength, 0:04:20.640 --> 0:04:22.359 and you were wondering where the marginal bar was going 0:04:22.400 --> 0:04:25.400 to come through come from when net lungs was so big. 0:04:25.920 --> 0:04:28.240 What does the positioning look like coming into next year now, Bob, 0:04:29.040 --> 0:04:32.599 you know the market's a bit a bit underweighted on dollars, 0:04:32.960 --> 0:04:35.800 I think, a little bit overweighted on the euro, overweight 0:04:35.839 --> 0:04:38.680 on the Euro. But I don't think the positions are 0:04:38.720 --> 0:04:42.600 as extreme as we've seen because we just haven't seen 0:04:42.640 --> 0:04:45.360 the results this year in currency trading. We haven't seen 0:04:45.400 --> 0:04:48.679 the results in trading in a lot of the commodity markets. 0:04:49.200 --> 0:04:50.839 So I don't think going into the end of the 0:04:50.880 --> 0:04:54.160 year we have big, big positioning. But if we do, um, 0:04:54.440 --> 0:04:57.200 I think the one that's been embraced is euro strength 0:04:57.279 --> 0:04:59.880 because of the strength of the economy and that filtering through. 0:05:00.040 --> 0:05:02.320 You didn't mention that you had such great helpa. You're 0:05:02.360 --> 0:05:06.120 into the year. Happened about October. Packed it and I'm 0:05:06.160 --> 0:05:09.000 sure Bob sent you with this with AMers Uh Pure 0:05:09.000 --> 0:05:12.680 of Bloomberg Surveillance. This morning. Good morning, brought you by Investco. 0:05:12.760 --> 0:05:17.160 Investco dedicated to delivering an investment experience that can help 0:05:17.200 --> 0:05:20.080 you get more out of life. Learn more at investco 0:05:20.160 --> 0:05:24.480 dot com slash more out of life. What's the number 0:05:24.480 --> 0:05:28.200 one mistake, Bob sinch that people make when they bet 0:05:28.200 --> 0:05:31.000 on the dollar. We say the dollar, but you got 0:05:31.000 --> 0:05:34.640 to do the dollar against something else to make any money. 0:05:34.680 --> 0:05:39.120 What's the rookie mistake in a belief on dollars stronger 0:05:39.240 --> 0:05:42.600 or for that matter, dollar weaker. You know. I think 0:05:42.640 --> 0:05:45.279 that that we've been in a in a in an 0:05:45.279 --> 0:05:49.440 exchange rate market that's been dominated by capital flows for 0:05:49.440 --> 0:05:52.520 for a couple of decades now. And one thing that 0:05:52.560 --> 0:05:55.280 I think did come through in two thousand and seventeen 0:05:56.040 --> 0:05:59.680 UM is that current account balances still matter, and so 0:06:00.080 --> 0:06:03.320 big current account surplus in Japan, big current accounts surplus 0:06:03.320 --> 0:06:06.920 and the Eurozone, those currencies held up pretty well during 0:06:06.920 --> 0:06:09.560 the year. And as I said, big current account deficit 0:06:09.600 --> 0:06:14.000 in the US that requires continuing capital inflows into the US. 0:06:14.760 --> 0:06:17.120 If that's going to happen in two thousand and eighteen, 0:06:17.120 --> 0:06:19.279 and I think it will, I think it's not going 0:06:19.320 --> 0:06:21.520 to be because US short term rates go up. I 0:06:21.520 --> 0:06:24.080 think it's gonna it will be driven by long term 0:06:24.120 --> 0:06:27.120 US rates going higher. So I think that the dollars 0:06:27.200 --> 0:06:29.719 fortunes in two thousand and eighteen are similar to the 0:06:29.760 --> 0:06:33.920 bond market's fortunes, obviously inversely related to the bond market 0:06:33.960 --> 0:06:37.120 fortune fortunes and and I think one of the key 0:06:37.160 --> 0:06:39.839 issues will be to see whether US bond yields rise 0:06:40.480 --> 0:06:43.520 as the FED gets out of the way UM in 0:06:43.640 --> 0:06:46.800 terms of beginning to to sell bonds. At the same time, 0:06:46.839 --> 0:06:50.320 the deficit projections get get moved higher. Uh. And the 0:06:50.400 --> 0:06:52.880 question is, well, that creates some some congestion in the 0:06:52.920 --> 0:06:54.800 bond market. So what we've got to think about and 0:06:54.800 --> 0:06:58.600 then is structural forces reassertting themselves. That means stronger Euro, stronger, 0:06:58.680 --> 0:07:02.400 Swissy stronger, and weak compound and we could dollarways that 0:07:02.440 --> 0:07:04.800 how we've got to think about get ten next year. Well, 0:07:04.839 --> 0:07:08.280 I think that's what drove this year. I think that 0:07:08.320 --> 0:07:11.160 the markets were all boiled up on the cyclical story 0:07:11.200 --> 0:07:14.000 at the end of two thousand sixteen, and when the 0:07:14.040 --> 0:07:17.600 cyclical story didn't continue to drive those capital flows, we 0:07:17.640 --> 0:07:21.560 went back to um you know, the underlying current account balances. 0:07:21.560 --> 0:07:23.240 And I think that's what helped the end and the 0:07:23.240 --> 0:07:27.560 Euro this year. The question will become do those capital 0:07:27.600 --> 0:07:30.920 flows become bigger again in two thousand eighteen. And I 0:07:30.960 --> 0:07:33.240 think the driver of that is not short term rates 0:07:33.240 --> 0:07:34.800 and the FED. I think the driver of that is 0:07:34.800 --> 0:07:37.720 bonn yields, and so it's really dependent upon bon yields. 0:07:37.800 --> 0:07:39.720 We think bon yields are going higher in eighteen in 0:07:39.720 --> 0:07:42.280 the two thou eighteen in the US. To me, this 0:07:42.400 --> 0:07:46.520 is absolutely fascinating. As you say, there's almost a zeitgeist 0:07:46.680 --> 0:07:49.520 rain which is the theme for next year? Do they 0:07:49.560 --> 0:07:53.080 ever work out? Does the beliefs that John and I 0:07:53.160 --> 0:07:56.920 read about and typically, Yeah, I was gonna say, I mean, 0:07:56.920 --> 0:07:59.880 the dollar is going to be stronger, Trump won US ascendant. 0:08:00.240 --> 0:08:03.560 That worked out. But right now, whatever you read across 0:08:03.680 --> 0:08:06.760 all the literature, are you sitting there is a grizzled 0:08:06.760 --> 0:08:09.400 Bob since you're going are you guys kidding me? Yeah? 0:08:09.400 --> 0:08:11.800 I mean I think that that there is some pressure 0:08:12.080 --> 0:08:14.520 on people who are deeply involved in the business to 0:08:14.560 --> 0:08:17.160 come up with these ideas for the year. You know, 0:08:17.880 --> 0:08:21.240 the Trump trade, the higher US interest rates, fiscal stimulus, 0:08:21.600 --> 0:08:23.680 that all did drive the dollar. It drove it for 0:08:23.720 --> 0:08:27.400 eight weeks in November and December of two thousand and sixteen. 0:08:28.240 --> 0:08:30.960 And the problem is by that time everybody was on 0:08:31.000 --> 0:08:33.360 the trade in the position, Bob, we don't care. Here's 0:08:33.360 --> 0:08:37.319 what we care about. Pharaoh's so large, John, Pharaoh is 0:08:37.360 --> 0:08:41.480 now so large at Bloomberg that his entire compensation package 0:08:41.600 --> 0:08:44.960 is hedged. The problem is John's going back to London 0:08:45.040 --> 0:08:47.800 for the holidays to see mom, you know, and the 0:08:47.840 --> 0:08:51.640 rest of it can what sterling level does he need 0:08:52.120 --> 0:08:54.560 to live large in the United Kingdom in the next 0:08:54.600 --> 0:08:57.520 two weeks? You know, I think he's doing okay at 0:08:57.840 --> 0:09:02.360 one thirty. I don't. He's an unhappy camper full disclosure 0:09:02.360 --> 0:09:07.840 here funded in dollars and saying absolutely naked with no hedges. Okay, 0:09:08.120 --> 0:09:12.160 So as I'm going back into the UK, we're going 0:09:12.400 --> 0:09:15.400 pure on hedge dollars back into sterling. You know. The 0:09:15.440 --> 0:09:18.240 other issue is when Jonathan goes home, does he actually 0:09:18.240 --> 0:09:21.360 pay for anything? You know, I mean everybody's going to 0:09:21.440 --> 0:09:25.880 be paying for hands price on the Bloomberg as I see, 0:09:25.880 --> 0:09:30.480 it's nice spot price at the terminal at JFK. Was 0:09:30.559 --> 0:09:33.240 walking down thread Needle Street down towards our new office, 0:09:33.320 --> 0:09:35.560 and they like they bow, they do the head the 0:09:35.600 --> 0:09:39.240 tap thing from medieval England. When he walks by, what's 0:09:39.240 --> 0:09:42.600 your call on sterling for next year? Boring? You killed 0:09:42.600 --> 0:09:46.240 it this year? Full disclosure, Yeah, we had it was okay. 0:09:46.000 --> 0:09:48.880 I think it's relatively boring. You know. One of the 0:09:48.920 --> 0:09:52.600 things that I think may surprise us in in in 0:09:52.720 --> 0:09:57.040 the in two thousand and eighteen is the Brexit negotiations. 0:09:57.200 --> 0:09:59.440 I don't think they're going to be as difficult for 0:09:59.480 --> 0:10:02.880 the UK a on a relative basis as they were 0:10:02.960 --> 0:10:06.199 in Phase one. Look in Phase one, the the EU 0:10:06.400 --> 0:10:09.560 leadership had very little to give up, and this was 0:10:09.840 --> 0:10:12.680 primarily about how much money the UK was going to 0:10:12.720 --> 0:10:14.480 pay to get out of the deal. And so I 0:10:14.520 --> 0:10:17.640 think that that the EU leaders didn't have a lot 0:10:17.679 --> 0:10:21.600 of disagreement. I come back to the fact that that 0:10:21.679 --> 0:10:24.880 the EU has is a major exporter to the u K. 0:10:25.760 --> 0:10:28.000 And that creates a lot more strength for the UK 0:10:28.120 --> 0:10:32.360 and the trade negotiations than people generally perceive pay upon. 0:10:32.440 --> 0:10:50.480 The global strategist Gideon Rose with us with a really 0:10:50.920 --> 0:10:55.800 interesting and emotional issue of foreign affairs. The Undead Passed 0:10:55.880 --> 0:11:02.360 with two actual plaques from Auschwitz, was very, very very 0:11:02.840 --> 0:11:06.560 emotional cover. John Ferro, you look through it and you 0:11:06.640 --> 0:11:09.480 go to the challenges of the Middle East that are 0:11:10.000 --> 0:11:13.040 spoken of within the Undead Past getting and I'm thinking 0:11:13.040 --> 0:11:15.920 about the United States State Department in the era of 0:11:15.960 --> 0:11:19.040 the reluctant hedge him on what that means for the 0:11:19.040 --> 0:11:21.880 Middle East. So basically there's a big picture and the details. 0:11:21.880 --> 0:11:24.840 The big picture is we're getting a preview of what 0:11:24.960 --> 0:11:29.680 a post American world would look like. Um the essentially 0:11:29.720 --> 0:11:31.840 the United States. It's almost like we're in the Iliad 0:11:32.000 --> 0:11:34.760 and where the Greeks and the United States is Achilles, 0:11:34.920 --> 0:11:38.640 and essentially we're sulking in our tent. We walked off 0:11:38.679 --> 0:11:42.640 the battlefield, and the enemy, the Trojans, are winning because 0:11:42.640 --> 0:11:46.040 we're basically not fighting. And the question now is you 0:11:46.160 --> 0:11:49.240 have in Saudi Arabia interesting developments where there's both internal 0:11:49.280 --> 0:11:53.960 reform but also a regional uh a regional Hedgeman trying 0:11:53.960 --> 0:11:56.559 to be born. You have Iran doing the same thing 0:11:56.559 --> 0:11:58.680 in reverse from the north and the Gulf. You have 0:11:58.960 --> 0:12:02.200 Syria in which we've not only defeated Isis on one hand, 0:12:02.240 --> 0:12:04.880 but also the Russians have basically helped a sad win. 0:12:05.320 --> 0:12:09.280 So you're entering a new phase in Syria. And all 0:12:09.360 --> 0:12:13.400 this is playing out with essentially the US completely distracted, 0:12:13.480 --> 0:12:17.120 having no essential state department, no diplomatic apparatus, uh AT 0:12:17.120 --> 0:12:19.520 a half hearted attempt to do a piece deal, but 0:12:19.559 --> 0:12:21.520 with things like the move of the embassy to Jerusalem, 0:12:21.520 --> 0:12:23.320 there's no possible way you're gonna get a piece deal. 0:12:23.640 --> 0:12:27.200 So essentially the Middle East is working on its own 0:12:27.280 --> 0:12:30.480 dynamics going forward in interesting ways with stuff happening. In 0:12:30.520 --> 0:12:32.840 the United States is sort of watching from the sidelines, 0:12:32.960 --> 0:12:36.320 and nobody is quite sure just how long the unraveling 0:12:36.320 --> 0:12:38.520 will continue and if and when the US will ever 0:12:38.559 --> 0:12:40.720 come back to the diplomatic game. Gidion. We have an 0:12:40.720 --> 0:12:43.960 emerging alliance as this is happening, one that many years 0:12:43.960 --> 0:12:46.720 ago people might not have expected. Emerging alliance between Saudi 0:12:46.720 --> 0:12:50.240 Arabia and Israel, with the bond, the glue keeping those 0:12:50.240 --> 0:12:53.880 two together, a will and effort, the objective to to 0:12:53.960 --> 0:12:56.760 isolate Iran. How is this going to evolve in the 0:12:56.800 --> 0:13:01.320 coming year? Well, I mean essentially, Uh, you have guards, 0:13:01.480 --> 0:13:04.120 you know, guardians of the old order that are essentially 0:13:04.120 --> 0:13:07.280 happy with the status quo, Israel and Saudi Arabia, which 0:13:07.320 --> 0:13:10.600 actually are strong in their position and actually care about it, 0:13:10.640 --> 0:13:13.760 and Iran, which is trying to make inroads and essentially 0:13:13.840 --> 0:13:16.079 counter them and with its own allies. So you're having 0:13:16.120 --> 0:13:19.880 kind of regional teams pick sides, uh. And what the 0:13:19.920 --> 0:13:24.199 Saudis and the uh Israelis are happy about. What this administration. 0:13:24.280 --> 0:13:26.800 Is they felt the Obama administration was almost moving to 0:13:26.840 --> 0:13:29.080 be neutral between them and the Saudis, and now they're 0:13:29.080 --> 0:13:31.959 happy that the Trump administration is backing them. But the 0:13:32.040 --> 0:13:35.040 question in the long run is Israel and Saudi Arabia 0:13:35.080 --> 0:13:37.160 are not enough to make a Middle East policy with 0:13:37.240 --> 0:13:40.120 and they're actually uh gonna be. You need to have 0:13:40.200 --> 0:13:44.440 some way of bringing Iran into the negotiations and stabilizing 0:13:44.480 --> 0:13:46.800 the situation in some way, and the question of what 0:13:46.880 --> 0:13:49.000 happens with the future of the Iran nuclear deal is 0:13:49.000 --> 0:13:51.160 actually crucial and interest So, Gideon, as you think about 0:13:51.160 --> 0:13:54.320 the Middle East right now, there are several hot spots Yemen, 0:13:55.080 --> 0:13:57.719 Lebanon emerging so in the last couple of months much 0:13:57.760 --> 0:14:00.320 more so, and Syria as well. As you look at 0:14:00.320 --> 0:14:03.080 this evolving relationship between the saud East Israel, and there 0:14:03.080 --> 0:14:06.800 are oppositions wereran, Which region, which area of the Middle 0:14:06.800 --> 0:14:10.400 East You're most concerned about things bubbling over? Well, Syria 0:14:10.640 --> 0:14:13.400 is always has been in the last several years, the 0:14:14.600 --> 0:14:18.480 potential for regional conflagration. Um now we're moving into an 0:14:18.520 --> 0:14:21.240 interesting area there because we're not quite sure what's going 0:14:21.280 --> 0:14:26.080 to happen with a post Isis. But strengthened Assad regime 0:14:26.120 --> 0:14:28.440 and what will the future of Syria look like. Uh, 0:14:28.560 --> 0:14:31.320 that has potential. Yemen's a terrible tragedy, but I don't 0:14:31.320 --> 0:14:33.280 see it blowing up. The really interesting thing is the 0:14:33.320 --> 0:14:36.880 Saudi Iranian relationship. And also, frankly, it would be interesting 0:14:36.880 --> 0:14:39.680 to see if there are any repercussions between what happens 0:14:39.760 --> 0:14:46.280 in the American domestic political situation and the Middle Eastern situation, because, uh, 0:14:46.360 --> 0:14:49.920 the the the Saudias are close allies of the Trump 0:14:49.960 --> 0:14:52.520 administration as well as the Israelis, and if the Trump 0:14:52.520 --> 0:14:56.880 administration finds itself in real troubles in that could be 0:14:56.880 --> 0:14:59.840 a problematic for Middle Eastern diplomacy. Were the Middle Eastern 0:15:00.000 --> 0:15:03.480 plomacy and we all have, I mean literally, folks. The 0:15:03.560 --> 0:15:08.160 evening of September eleven, I picked up eight hundred pages 0:15:08.280 --> 0:15:11.640 of Albert Harani and as one volume, the History of 0:15:11.680 --> 0:15:14.560 the Arab People. That's a true story. I picked it 0:15:14.640 --> 0:15:17.560 up that evening and ran through it in about three months, 0:15:17.600 --> 0:15:21.520 two months. Maybe we all have our legacy knowledge of 0:15:21.600 --> 0:15:25.440 the Middle East. Gideon Rose, those books are old news. 0:15:26.080 --> 0:15:31.360 What's the new book being written? Now? What's what's the zeit? 0:15:31.480 --> 0:15:35.400 Guys that you would recommend we learn about about this 0:15:35.560 --> 0:15:39.160 new Middle East. It's a fascinating question. Basically, when you're 0:15:39.160 --> 0:15:41.200 looking at the Middle East, you always have to remember 0:15:41.240 --> 0:15:44.280 the past because you want to understand the problems and 0:15:44.320 --> 0:15:46.560 the motivations of the different actors. But you have to 0:15:46.600 --> 0:15:49.400 get past and transcend the past so that actually you 0:15:49.400 --> 0:15:51.880 can focus in the future. I think the question of 0:15:51.920 --> 0:15:55.880 whether we can actually create some kind of balance between 0:15:55.920 --> 0:15:59.560 the Saudias and the Iranians in which their regional rivalry 0:15:59.680 --> 0:16:03.920 can can be stabilized without destroying the region, where they 0:16:03.920 --> 0:16:07.360 can compete in a structure that for regional influence that 0:16:07.520 --> 0:16:10.520 is not destructive to everything around it. That will be 0:16:10.560 --> 0:16:13.200 the key question. I've had the privilege of meeting three 0:16:13.520 --> 0:16:16.960 of Faisal's immediate and directs, and it's what I believe 0:16:16.960 --> 0:16:19.800 it was maybe a brother, I'll be honest, I can't remember. 0:16:19.880 --> 0:16:27.880 And it's completely authentic tribal Aristocaracratic royal Middle East heritage. 0:16:27.920 --> 0:16:30.320 And we all were weaned on Lawrence of Arabian all 0:16:30.360 --> 0:16:34.600 of our false mythologies. This new guy is trying to 0:16:34.680 --> 0:16:38.200 get them away from that. How do you do that 0:16:38.240 --> 0:16:41.160 within a tribal legacy? I I find it fascinating. So 0:16:41.200 --> 0:16:43.720 what's happening with the Mohammed bin Salman in Saudi Arabia? 0:16:43.920 --> 0:16:49.040 Fantastic reform UH moves, but where it's actually going? Is 0:16:49.080 --> 0:16:52.400 this just an increased play for personal power and control? 0:16:52.640 --> 0:16:54.920 And what does he want to do with the power 0:16:54.960 --> 0:16:57.360 when he has it? Does he want to liberalize Saudi Arabia? 0:16:57.480 --> 0:16:59.080 Are we talking? Look at me? What's gonna happen with 0:16:59.200 --> 0:17:02.720 energy markets? With happened with religious extremism and control there? 0:17:03.000 --> 0:17:05.440 And foreign policy? It's actually really interesting because he's trying 0:17:05.440 --> 0:17:07.639 to It seems like he's trying to do interesting things domestically, 0:17:07.840 --> 0:17:09.959 but he's also been a strapper US on foreign policy 0:17:10.000 --> 0:17:11.600 and the m in side of things has not worked 0:17:11.600 --> 0:17:13.800 well at all. So the end, what will happen with 0:17:13.880 --> 0:17:16.720 Mohammed bin Salmans Saudi Arabia going forward is a really 0:17:16.720 --> 0:17:19.240 interesting question. Some people would argue Gideon that this is 0:17:19.240 --> 0:17:22.439 a power graph under the veil of reform, and there 0:17:22.440 --> 0:17:26.920 are still significant doubts whether he can really contain Wahabism 0:17:27.240 --> 0:17:30.280 in Saudi Arabia? Can he really do that? When he 0:17:30.320 --> 0:17:32.560 talks about a moderate Islam, I don't think of what 0:17:32.680 --> 0:17:38.000 hobbyism is that Uh look, any of these religions has 0:17:38.840 --> 0:17:42.520 variants that can be more militant or more pacific, and 0:17:42.600 --> 0:17:46.080 there's plenty of room for political authorities in a place 0:17:46.080 --> 0:17:49.720 like Saudi Arabia to shade the coverage and interpretation into 0:17:49.840 --> 0:17:52.560 various kinds of quiescence or not. Religious wise, So if 0:17:52.560 --> 0:17:54.919 he wanted to do some reform, he could, but we 0:17:55.040 --> 0:17:57.000 just don't know. And one of the things we'll all 0:17:57.040 --> 0:17:59.320 be watching is to see not just how the power 0:17:59.520 --> 0:18:02.639 play works out internally, but what the fruits of it 0:18:02.680 --> 0:18:04.399 are in terms of what does he do with the 0:18:04.440 --> 0:18:06.679 power position that he has consolidated. So, given what does 0:18:06.680 --> 0:18:11.640 success look like for MBS, success would look like maintaining 0:18:12.359 --> 0:18:15.800 domestic power, having sent a clear message that he won't 0:18:15.840 --> 0:18:19.760 tolerate opposition to his policies, and then some kind of 0:18:19.800 --> 0:18:22.440 attempt to gradually reform to be able to take the 0:18:22.520 --> 0:18:25.520 kingdom strengths, stabilize it, and move it forward into the 0:18:25.520 --> 0:18:28.040 twenty one century with a different kind of model that's 0:18:28.080 --> 0:18:32.600 more adapted to the future of the Middle East, energy wise, socially, religiously, etcetera. 0:18:32.640 --> 0:18:35.880 That's a big challenge, and uh, we don't know whether 0:18:35.920 --> 0:18:37.840 he can pull it off, find a question. This has 0:18:37.840 --> 0:18:41.960 been wonderful getting rose. What's your challenge with foreign affairs? Folks. 0:18:41.960 --> 0:18:44.360 I'm gonna make this simple, John, help me here, because 0:18:44.359 --> 0:18:46.120 I don't know if I have the pricing right. It's 0:18:46.119 --> 0:18:49.359 a price of two Manhattan's. Maybe it's a price of 0:18:49.400 --> 0:18:52.479 to Gibson's. Our our challenge is pretty simple. Actually, we 0:18:52.600 --> 0:18:56.159 are essentially shock troops of the Enlightenment. Our goal is 0:18:56.200 --> 0:18:59.800 simply to apply reason to public policy for the public benefit, 0:18:59.880 --> 0:19:02.359 to provide a forum for serious discussion of real issues. 0:19:02.520 --> 0:19:05.159 And this whole question of fake news, the whole question 0:19:05.200 --> 0:19:08.119 of trying to undermine standards of truth. That's the biggest 0:19:08.119 --> 0:19:11.680 single challenge, because it doesn't matter about which political side 0:19:11.720 --> 0:19:14.000 you're on. There should be as as Dan pat Monehan 0:19:14.080 --> 0:19:15.679 used to say, you can have the right to your 0:19:15.680 --> 0:19:18.119 own opinions, but not your own facts. And that's the 0:19:18.160 --> 0:19:20.159 biggest challenge we're in is that now facts and the 0:19:20.200 --> 0:19:22.679 logic themselves are creating a part of the environment on 0:19:22.720 --> 0:19:25.640 behalf of all the foreign affairs and counts on forign relations. 0:19:25.680 --> 0:19:28.880 What's the print subscription dynamic right now? To do this year? 0:19:28.960 --> 0:19:31.120 We're actually doing pretty well. We're up over a couple 0:19:31.160 --> 0:19:33.760 hundred thousand and you could basically subscribe anyway you want. 0:19:33.800 --> 0:19:37.280 Go to Foreign Affairs dot com and we're seeing a 0:19:37.320 --> 0:19:41.439 resurgence of journalism. Let me give you the real sales 0:19:41.520 --> 0:19:46.240 job here, folks. The Prince subscription has adult larger font 0:19:46.400 --> 0:19:50.159 you can actually read the damn thing. Two, you get 0:19:50.200 --> 0:19:54.359 a subscription for Foreign Affairs for the mouthy brat you 0:19:54.480 --> 0:19:58.240 have at home who's an undergraduate somewhere. You get on 0:19:58.280 --> 0:20:01.119 the subscription and you say, you don't get the Daily Pharaoh. 0:20:01.119 --> 0:20:03.359 You get a daily or weekly. Do understand that that 0:20:03.440 --> 0:20:05.240 kind of magazine is going to make the mouthy brand 0:20:05.320 --> 0:20:07.760 in the family even mouth yet it is, that's true. 0:20:08.160 --> 0:20:10.480 But you get on the subscription and you say you 0:20:10.560 --> 0:20:12.919 must read one article or you don't get the allowance 0:20:13.200 --> 0:20:16.000 to go to Florida for winter break. Hopefully it's not spinach, 0:20:16.040 --> 0:20:18.080 and hopefully they're already reading an online and using it 0:20:18.119 --> 0:20:21.760 for their debate teams and other kinds of preparation. But together, 0:20:21.840 --> 0:20:23.840 you're doing the digital and you're doing the producing Foreign 0:20:23.840 --> 0:20:27.520 Affairs magazine. You're end of my sales pitch. Joe Biden's 0:20:27.600 --> 0:20:31.560 in it some really interesting cross political analysis. The Undead 0:20:31.600 --> 0:20:46.560 Past John Farrell what's the one thing you see on 0:20:46.560 --> 0:20:48.399 the data screen here, I just say a week, a 0:20:48.480 --> 0:20:50.399 dollar that's just struggling to get a bit, not just 0:20:50.440 --> 0:20:53.359 today but throughout the whole of Tom and I know 0:20:53.400 --> 0:20:54.880 we've talked about this a lot in the last couple 0:20:54.920 --> 0:20:56.879 of days, but really, as we round out the year 0:20:56.880 --> 0:21:00.159 and look at and with a prestigious guest next to 0:21:00.240 --> 0:21:02.560 us as well, that's what I'm thinking about. What went 0:21:02.600 --> 0:21:05.000 wrong with the call for a stronger dollar this year? 0:21:06.320 --> 0:21:11.200 To bring him in, bring him involved. I don't know 0:21:11.240 --> 0:21:14.440 what's wrong with Tom Key this morning. I'm worried about Steelers, 0:21:14.480 --> 0:21:19.919 Patriots data CEO and founder. Yes, it's always great to 0:21:19.920 --> 0:21:22.360 catch up with you. Tax cutter set to go through, 0:21:22.440 --> 0:21:25.840 Fiscal stimulus is set to happen, g d P is exalerating, 0:21:25.920 --> 0:21:29.080 great hikes are going to continue through this year through 0:21:29.119 --> 0:21:32.800 next year. What's the dollar doing down here? Well, so 0:21:33.280 --> 0:21:35.960 I think when when you look at the dollar, it 0:21:36.000 --> 0:21:38.800 tends to move in cycles, and we had a really 0:21:38.840 --> 0:21:41.879 big dollar strengthening cycle from the summer of two thousand 0:21:42.000 --> 0:21:45.560 fourteen too January this year, depending on how you counted, 0:21:46.280 --> 0:21:48.320 and once you had one of these really big movement 0:21:48.359 --> 0:21:51.080 becomes hard to just to sustain the gains, and you 0:21:51.160 --> 0:21:55.640 need to have like continuously good news. And this year 0:21:55.640 --> 0:21:57.119 we've we've had a lot of good news, but a 0:21:57.119 --> 0:21:59.920 lot of us priced in and early in the year 0:22:00.720 --> 0:22:03.119