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

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Speaker 1: with Jonathan Ferrell and Lisa Brownowitz Jaily. We bring you

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

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Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com,

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Speaker 1: and of course on the Bloomberg Terminent. This is a joy,

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Speaker 1: not that it t And Bremer, president founder of You

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Speaker 1: Raise Your Group. I'm going to read you a single

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Speaker 1: sentence from December of this year. If Putin doesn't get

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Speaker 1: concessions from the US lead West, he is likely to

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Speaker 1: act one of the top risks for Dr Bremer. And

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Speaker 1: as you Raise your Group and he joins us here

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Speaker 1: this morning, Ian, I want to frame forward with you.

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Speaker 1: I want to get without the breaking news that you've

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Speaker 1: been on all weekend, the end of the free market.

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Speaker 1: One of your books talks about that adjustment from free

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Speaker 1: market to some form of new capitalism. What does President

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Speaker 1: Putin or whoever's after Putin, What does their free market,

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Speaker 1: what does their business structure, what does their command economy

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Speaker 1: look like in two or three years? Well, it's not

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Speaker 1: our target. I mean we talk about Putin as if

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Speaker 1: he's a global pariah. UM. That's of course not true,

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Speaker 1: because it's a G zero world. You can't make someone

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Speaker 1: a global paria. But he is a pria in terms

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Speaker 1: of the advanced industrial economies of the world, the G

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Speaker 1: seven as it were. So what does that mean? Well,

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Speaker 1: when you have the Chinese government saying that the relationship

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Speaker 1: with Russia is like a rock UH, that means that

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Speaker 1: you're going to see a far more integration of Russia

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Speaker 1: UH into the Chinese economic network, both in terms of

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Speaker 1: the technology that supports the military industrial complex for Russia,

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Speaker 1: of the financial transactions that allow them to function as

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Speaker 1: UM an advanced economy UM, and of course also the

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Speaker 1: energy flows and infrastructure that will need to be built,

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Speaker 1: not just in terms of oil production and next fort

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Speaker 1: also eventually for gas. They'll be moving towards China to

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Speaker 1: Russia will also be working with a lot of other

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Speaker 1: developing countries around the world, the Gulf States, India, Brazil,

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Speaker 1: China is going to be absolutely critical for the Russian

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Speaker 1: How do we adapt? How do we move from two

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Speaker 1: thousand and eight in Bucharest, NATO, where Gates and Rice

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Speaker 1: begged the United States to not sell democracy to the

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Speaker 1: Far East of of of Europe. How do we adapt

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Speaker 1: to a new regime? Were just maybe possibly we can't

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Speaker 1: sell democracy twenty four seven. Yeah, the fact that the

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Speaker 1: American model of democracy is seen by China as pasted

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Speaker 1: seld and they're going to be the largest economy in

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Speaker 1: the world, means that we're in a hybrid system. It's competitive.

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Speaker 1: The big question I have here is not about the

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Speaker 1: tilt of Russia, because Russia, of course, we've been steadily

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Speaker 1: losing for decades now. It's rather whether or not new technologies,

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Speaker 1: which are top down the data and surveillance economy, actually

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Speaker 1: facilitates authoritarian consolidation and also undermined civil society in ways

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Speaker 1: that can't be redressed. Back in two thousand and eight,

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Speaker 1: technology was something we thought of as supporting democracy and

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Speaker 1: undermining authoritarian states. Think about how it was the Soviet

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Speaker 1: Union collapse. Think about the Arab Spring and the Colored revolutions. Well,

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Speaker 1: those are all quaint and in the back view mirror

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Speaker 1: right now. Instead, technology is what allows the Chinese to

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Speaker 1: repress a million leaguers and it doesn't lead to any

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Speaker 1: demonstrations on the ground. Why because they can monitor and

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Speaker 1: police the behavior of every single citizen. If the Russians

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Speaker 1: can do that. If other smaller economies can do that,

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Speaker 1: that's a big challenge to American democracy. And a lot

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Speaker 1: of people right now are hoping for the bandwidth to

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Speaker 1: worry about selling democracy. Right now, people are worried about

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Speaker 1: selling wheat. They are worried about selling nickel and aluminum

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Speaker 1: and corn and soybean oil. And what we are seeing

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Speaker 1: right now is China coming out over the weekend and

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Speaker 1: saying that domesticizing food production is an issue of national security.

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Speaker 1: We have heard from the US supply chain security is

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Speaker 1: a national security issue. How much are we seeing a

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Speaker 1: pivot point moving to the mass deglobalization of our economy. Well,

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Speaker 1: I mean, I'm glad you brought up grain in particular,

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Speaker 1: when you have um, the largest grain producer in the world,

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Speaker 1: invading the fifth largest grain producer in the world, one

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Speaker 1: would think you're going to have big food problems. And

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Speaker 1: certainly coming off the pandemic where extreme poverty after decreasing

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Speaker 1: for decades is going up in the next twelve months,

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Speaker 1: this is going to be absolutely critical and you're gonna

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Speaker 1: see a spike in starvation around the world. Yes, in Afghanistan,

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Speaker 1: but also across sub Saharan Africa, and when you have

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Speaker 1: pigs in Europe and the United States UH fighting for

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Speaker 1: grain supply UH, that will allow wealthy people in the

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Speaker 1: world to eat the meat that they want, competing with

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Speaker 1: people in poor and the poorest countries in the world

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Speaker 1: that can't buy that grain for themselves. You can see

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Speaker 1: that the globalization of the world that had been leading

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Speaker 1: to an increased global middle class is now unwinding, especially

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Speaker 1: on the back of this crisis, which, frankly, I mean

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Speaker 1: the the U the Russia Ukraine invasion is going to

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Speaker 1: be worse for global poverty in my view. Um, then

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Speaker 1: when all is said and done, than the pandemic has

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Speaker 1: been and that's a pretty traumatic statement. How will this

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Speaker 1: conflict rearrange the economic outlook as we know it? Um,

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Speaker 1: it's going to increase inequality because you know, when you

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Speaker 1: have massive supply chain challenges and when you have energy

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Speaker 1: price spikes, it doesn't affect nearly as much the wealthy

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Speaker 1: around the world, who have the ability to move their assets,

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Speaker 1: they have the ability to change their lives. Who gets

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Speaker 1: really stuffed. The advanced economies can do more even to

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Speaker 1: help support their poor and middle income economies, But the

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Speaker 1: emerging markets have vastly more debt on their books after

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Speaker 1: the last two years of crisis and now don't have

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Speaker 1: any more flexibility to help their populations. But this is

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Speaker 1: a massive shock um to their imports coming down the pike. Okay,

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Speaker 1: not for the major commodity producers who benefit for higher prices.

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Speaker 1: But you're up, You're on the other side that trade.

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Speaker 1: You're gonna be hurt dramatically coming out of this. And

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Speaker 1: Dr Bremer, let's steal something from Freed Cicaria here, and

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Speaker 1: let's talk about not the post American world, but the

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Speaker 1: post putent world. I read a lot this weekend on

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Speaker 1: Mr Putin's inner circle, his defense minister who never served

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Speaker 1: as a professional army guy, etcetera. What does the post world? What?

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Speaker 1: What does the post putent world look like for Russia?

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Speaker 1: But we'd have no idea if it's gonna be in

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Speaker 1: twenty years or in twenty days. Uh. It's important to

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Speaker 1: recognize that the likelihood of removing Putin from power is

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Speaker 1: extremely low until the moment that it happens, and so

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Speaker 1: it's not very useful to speculate on when it could happen.

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Speaker 1: But it's important to understand that the pressure is there, um.

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Speaker 1: And of course that leads to more erratic behavior domestically

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Speaker 1: for Putin himself, who in the last week has been

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Speaker 1: taking all sorts of measures to create a North Korea

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Speaker 1: style police state. That just doesn't work well for a

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Speaker 1: country of relatively educated one fifty million digitally literate Russians. Um.

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Speaker 1: And you know, it's true that the average Russian believes

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Speaker 1: what the Russian state media is putting out um, but

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Speaker 1: a lot of urban, younger Russians do not. And the

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Speaker 1: ten thousand Russians that have already been arrested um for

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Speaker 1: a non violent protests against the war. As the economy

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Speaker 1: starts to literally implode in the coming days and you

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Speaker 1: don't find goods on shelves and you have to rash

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Speaker 1: and people don't get their wages, some of those are

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Speaker 1: gonna turn violent, and the Russians are gonna repress it.

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Speaker 1: So we have to at least consider that. You know,

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Speaker 1: one of the only ways this potentially gets resolved in

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Speaker 1: the near term is if you have a dramatic discontinuity

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Speaker 1: in Russia itself. And uh, that's that's a very hard

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Speaker 1: thing to plan for in a country with five thousand

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Speaker 1: nuclear weapons and thank you. Let's look at the equity

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Speaker 1: markets now. A briefing with Lori Calvacina, head of US

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Speaker 1: equity strategy at RBC Capital Markets. Laura, I want to

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Speaker 1: rip up the script here. You have the advantage of

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Speaker 1: one h Croft. She is absolutely exquisite on commodities. How

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Speaker 1: are you folding the analysis of Halima Croft into your

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Speaker 1: equity work? All right, well, thanks for having me as

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Speaker 1: always in look, I am very fortunate to be working

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Speaker 1: with Helima these days. And you know that, you know

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Speaker 1: the drill tom in December, they start trotting out all

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Speaker 1: the strategies to do panels and I was fortunate to

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Speaker 1: be on a number of these with Halima, and she

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Speaker 1: had been warning us that there was going to be

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Speaker 1: a problem with Russia and Ukraine to start the year.

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Speaker 1: You know, Frankly, I think a lot of market participants

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Speaker 1: were not listening to her. And it's not that we

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Speaker 1: necessarily grasped how bad this was going to be in

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Speaker 1: the moment that we did have an inkling that this

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Speaker 1: was coming. So as I've been able to operate through

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Speaker 1: this environment, I feel fortunate that you know, I have

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Speaker 1: not necessarily been as reactive to the news as some

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Speaker 1: other market. How you change I mean we got we

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Speaker 1: just short on Tom, Lauria, how many have you change

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Speaker 1: your allocation given the outfrontedness you've got with Helma Croft. Well, look,

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Speaker 1: we stuck with our energy overweight, even though we were

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Speaker 1: getting a little bit nervous frankly on how bullish everybody

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Speaker 1: had become. So we did stick with that. That's been fortunate.

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Speaker 1: It's been one of the best performing sectors to start

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Speaker 1: the year. Um. We've also been talking about how we

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Speaker 1: expected the market to sort of pivot back towards growth

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Speaker 1: stocks later this year, and one of the reasons for

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Speaker 1: that is we thought economic growth expectations, we're going to

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Speaker 1: start focusing on a return to trent. We thought that

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Speaker 1: would happen in I think this crisis raises the risk

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Speaker 1: that we bring that economic projection, that raining and of

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Speaker 1: economic expectations in a little bit earlier than anticipated. Secular

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Speaker 1: growth stocks tend to do well when the economy is cool,

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Speaker 1: so that has helped us sort of stay very steady

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Speaker 1: in some of those sector allocations we had to start

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Speaker 1: the year. Lauria, is this a bible dip? I don't

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Speaker 1: know if you necessarily want to buy it today. And

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Speaker 1: the framework we've used is that we view this as

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Speaker 1: a growth stare, something that doesn't necessarily push us into

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Speaker 1: a recession that makes everyone feel like we're gonna hit one.

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Speaker 1: And if you look at growth scare pricing, it can

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Speaker 1: take the S and P five hundred down to round thirty.

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Speaker 1: In the short term, growth scarce tend to see markets

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Speaker 1: fall fourteen pie to trump. We simply haven't done that yet,

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Speaker 1: despite how terrible the sentiment has done. Laura, you said

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Speaker 1: that it can make everyone feel like we're going to

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Speaker 1: into a recession even though we're not, and that's been

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Speaker 1: sort of the tipping point of a lot of strategists

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Speaker 1: whether this is or isn't a recessionary event. What are

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Speaker 1: you looking at it for? The resilience that could potentially

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Speaker 1: tip over should the commodity surge continue. So look, I think,

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Speaker 1: you know, maybe the silver lining of coming out of

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Speaker 1: this hand down and I use that in quotes with

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Speaker 1: a bit of irony, but we've all got this arsenal

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Speaker 1: of high frequency economic barometers that we've been living and

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Speaker 1: breathing for the last couple of years because of COVID,

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Speaker 1: and I'm peeping a very close eye on those. Right now.

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Speaker 1: We're still seeing improving trends and open table dining, flyne

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Speaker 1: return to work is still in the process of recovering

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Speaker 1: and has a way to go, but none of these

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Speaker 1: are shining any signs of slowing down right now, Lisa.

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Speaker 1: So I think we have to keep an eye on

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Speaker 1: the resiliency of the consumer in here and what or

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Speaker 1: not that holds up. Laurie, this question might sound counterintuitive

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Speaker 1: of first approach. I just wonder how nuance this might be.

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Speaker 1: Is there a point where crude goes so high that

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Speaker 1: energy equity stopped going high with it. I think it's

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Speaker 1: it's a point at which the market starts to sense

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Speaker 1: out demand destruction. And I don't think there are any

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Speaker 1: easy answers to that question in terms of where that

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Speaker 1: exact level is. Frankly, we would have thought we would

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Speaker 1: have already seen it by now. Um. I think that

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Speaker 1: we have to sort of counterbalance the oil price impact

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Speaker 1: with the psychological impact of reopening, and many consumers very

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Speaker 1: eager to get back to their lives. We're seeing that resilience,

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Speaker 1: We're seeing that eagerness to get back to normal dominating

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Speaker 1: in the data right now. There will eventually probably be

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Speaker 1: a point at which that won't hold up. But all

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Speaker 1: I can tell you today John is we haven't hit

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Speaker 1: it yet. Laurie, Thank you, Laurie Canvassin or MBC Capital

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Speaker 1: Markets wonderful as always, John, what's so important here in

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Speaker 1: this anticipated interview is it is eight thousand four miles

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Speaker 1: from Midland, Texas to re Odd and that is a

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Speaker 1: world a part of global oil economics, in the marginal

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Speaker 1: economics of getting the marginal barrel out of the ground

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Speaker 1: to be marginally refined. John, we can speak with Paul

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Speaker 1: Sanky of sank You Research. We'll catch up with Paul

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Speaker 1: Sanky right now. Paul, let's start right here. Often these

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Speaker 1: conversations and sometimes it's our fault, sometimes it's the fault

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Speaker 1: of the people we speak to. We talk as if

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Speaker 1: there is this special tap down in Texas that you

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Speaker 1: can just turn, go down there and just turn and

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Speaker 1: all of a sudden, crude output is up. Talk to

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Speaker 1: us about how difficult that effort is if we even

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Speaker 1: tried to well, I mean it's even basic labor. But

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Speaker 1: you know, then if you get into engineers and and

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Speaker 1: you're just the ability to add capacity as being wildly

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Speaker 1: exaggerated here simply because there aren't the people. As Thomas referenced,

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Speaker 1: Midland is kind of in the middle of the desert.

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Speaker 1: In fact, it is in the middle of the desert,

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Speaker 1: and there's tremendous competition from Austin for both labor and

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Speaker 1: engineers is and so just in people terms alone, for

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Speaker 1: commentators to turn around and say, you know, the USCMP

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Speaker 1: industry should add, should add capacity and volume is completely misguided.

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Speaker 1: I was in Midland in late December talking to the

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Speaker 1: service companies, talking to diamond Back, a major reamp there,

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Speaker 1: and the fact is that things are drum tight prior

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Speaker 1: to this crisis, and yes they could add on a

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Speaker 1: one year view, but there's nothing they can do this week.

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Speaker 1: But they are damned if they pump. Environmentalists criticize them,

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Speaker 1: and investors punished them, and they're seemingly blamed if they don't. Well,

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Speaker 1: what do you make of the relationship between the administration

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Speaker 1: and they all patch in America at the moment? I

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Speaker 1: mean absolutely appallingly badly managed, because of course, as you know,

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Speaker 1: they came in with almost no oil expertise on the

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Speaker 1: basis that they would change the energy system. I don't

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Speaker 1: know how you can change the energy system without oil expertise.

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Speaker 1: And now you're in a situation where you're talking to Venezuela,

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Speaker 1: you're talking to Iran, and you're basically pretty much not

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Speaker 1: talking to Texas. So it doesn't make any sense to whatsoever.

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Speaker 1: How much could they actually though, influence the output in

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Speaker 1: Texas quickly, given the fact that there has been a

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Speaker 1: lack of investment, given the fact that a lot of

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Speaker 1: this has been driven not by Washington but by a

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Speaker 1: lot of the shareholders that have looked for fiscal discipline. Well,

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Speaker 1: the point that John highlighted from my research yesterday was

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Speaker 1: that if they try to aggressively increased capacity now they're

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Speaker 1: simply going to compete with each other. And Tom also

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Speaker 1: picked up on the point, you're just going to inflate

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Speaker 1: things more because all you're gonna do is take the

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Speaker 1: guys from the next door rig and put them on

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Speaker 1: your own rig. And the list goes on, because it's

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Speaker 1: not just about people. It's about steel, it's about cement,

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Speaker 1: it's as they would say, cement um. It's even about

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Speaker 1: sand actually at a given level. So there's just all

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Speaker 1: sorts of tightness down there because we know that we

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Speaker 1: were in a commodity squeeze already before all that has happened,

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Speaker 1: which is why it's so dramatic. The answer is, you know,

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Speaker 1: if you really started to reorganize towards more capacity, you

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Speaker 1: would begin to see an impact towards the end of

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Speaker 1: this You so, Paul, what could this administration do it

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Speaker 1: would you like to see them do in order to

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Speaker 1: support more more domestic production as opposed to coin event

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Speaker 1: as well, as you point out, well, the grand scheme,

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Speaker 1: as you know, is nuclear with a new grid. But

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Speaker 1: of course, you know, can we do that? The utilities

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Speaker 1: don't really want it. You know, the utilities have a

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Speaker 1: lot of vested interests and don't get the criticism they should.

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Speaker 1: Nor does Amazon get the criticism it should for you know,

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Speaker 1: the amounts of oil that's used to deliver a package

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Speaker 1: to everyone in return half of them. You know, all

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Speaker 1: of this stuff is not really examined in the grand

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Speaker 1: scheme of things. But above all, what the industry wants

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Speaker 1: is consistency. So one of the latest things that we're

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Speaker 1: seeing is suddenly they're saying we'll reduce the federal federal

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Speaker 1: gasoline tax. Totally idiotic, just in terms of environmental friendliness

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Speaker 1: and not encouraging efficiency. What they're saying is will take

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Speaker 1: off the stupid mandate for ethanol but you know, being

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Speaker 1: used again. Just as the industry is moving towards major

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Speaker 1: investment in renewable diesel, the administration says, actually, we might

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Speaker 1: have to change this because there's a cry. It's a

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Speaker 1: crisis management. And that's exactly what you know leads to

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Speaker 1: what I call the energy regression. We're in an energy regression.

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Speaker 1: We're going backwards. Paul. Let me go to the third rail,

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Speaker 1: and it's not the expensive summer camp that was a

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Speaker 1: third rail this weekend. Let me go to the third

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Speaker 1: rail of the Keystone pipeline. Is it a valid economic

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Speaker 1: project and it can it actually enhance United States energy independence? Yes?

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Speaker 1: I mean it could and absolutely more Canadian oil is

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Speaker 1: an obvious outlet here to to as a long term

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Speaker 1: solution because obviously we have such a tremendous ally right

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Speaker 1: there with the available oil who by the way of

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Speaker 1: doing a tremendous job of Scope one and two ementionance reductions.

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Speaker 1: So yes, that shouldn't have been delayed back in ten,

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Speaker 1: which was one of the obomber administration first through a

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Speaker 1: wrench in the works. Actually, the Biden administration was just

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Speaker 1: bad messaging because by then the project was pretty much dead.

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Speaker 1: In so far as the Biden administration canceled, it is

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Speaker 1: the first, literally the first thing that they did. Um.

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Speaker 1: But yeah, you could really easily resuscitate with stuff if

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Speaker 1: you could get around the environmental opposition. Environmental opposition is local,

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Speaker 1: you know, it's a problem of negotiating very specific issues.

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Speaker 1: The latest one has been this Mountain Valley pipeline, which

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Speaker 1: would release more US gas from the Marcellist into the

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Speaker 1: general U. S economy and to export. And that's nineties six,

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Speaker 1: complete with six billion dollars sunk, and a federal geodge

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Speaker 1: judge blocked it for crossing the Appalachian Trail. You know,

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Speaker 1: stuff like that just makes no sense environmentally. Pasanki gasoline

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Speaker 1: triple A unloaded from three six D two I believe

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Speaker 1: four oh seven in seven travel days. If you will

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Speaker 1: in your head, where is the tip point on triple

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Speaker 1: A unladed where it really begins to affect our behavior

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Speaker 1: for fifty four fifty nationwide? But then you add sixty

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Speaker 1: cents to well, that's the retail price. But then you

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Speaker 1: have to add a dollar in New York and a

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Speaker 1: dollar in California, you know, in the higher tax states.

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Speaker 1: So you're going to get to five fifty. And by

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Speaker 1: the way, that's in the post. That's going to happen

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Speaker 1: because essentially the gasoline price is trailing the crew price,

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Speaker 1: obviously quite quite severely. So what happens when we get

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Speaker 1: to five fifty, Well, people change behavior quite radically because

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Speaker 1: obviously there's a lot of discretion over how much you

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Speaker 1: drive your car, which car you drive, whether you drive

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Speaker 1: like a crazy idiot, or you know, very conservatively, whether

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Speaker 1: you pump up your tires. We saw all of this

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Speaker 1: in O eight on, and you know, there's actually quite

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Speaker 1: a significant ability to change behavior. What's interesting now is

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Speaker 1: obviously that you have very low unemployment and therefore people

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Speaker 1: do need to drive. And so I think the elasticity

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Speaker 1: here is going to be pretty sticky, to say the least,

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Speaker 1: and I think we'll get to really significant, significantly higher

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Speaker 1: gasoline prices are absolutely guaranteed. Well, that's the test, and

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Speaker 1: I think this is really interesting for you and I

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Speaker 1: to try and talk through work out. It's an open

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Speaker 1: question in the treasury market when you would go higher

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Speaker 1: aggressively high. We talk about how self limiting a sell

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Speaker 1: off would be, because it's nice to bite the U. S.

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Speaker 1: Economy and yours come back in. Does the same dynamic

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Speaker 1: exists in the commodity market for crude and I'm trying

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Speaker 1: to work out what that might mean for say, the

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Speaker 1: likes of oxy are more than ninet here today. At

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Speaker 1: what point do energy prices go too high for even

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Speaker 1: energy equities to continue running with it? Yeah, I mean

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Speaker 1: you get into the point of demanded structure. Obviously, oxously

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Speaker 1: was an outlier move because we now know that Warren

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Speaker 1: Buffett was building a significant stake and seems to want

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Speaker 1: to do it entirely in a week so. But generally speaking,

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Speaker 1: if the market begins to believe the strip, which is

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Speaker 1: now over a hundred all the way down as far

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Speaker 1: as the I can see, then these things move higher.

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Speaker 1: And it's really the back end of the price curve

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Speaker 1: that matters, which is aggressively higher. I think because there's

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Speaker 1: a total question mark of what Russia will look like

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Speaker 1: in the future. I think there's two things here. Number

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Speaker 1: one is that very good news this morning Russia has

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Speaker 1: softened its stance, and I think we see the markets

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Speaker 1: coming back it given that Russia is softening its stance

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Speaker 1: and maybe at the point of admitting defeat here quite possibly.

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Speaker 1: That's that's the good news. The bad news is we

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Speaker 1: may actually see Russia now permanently out of the market um,

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Speaker 1: you know, for multiple years, long enough to make a

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Speaker 1: difference to the strip, at which point the future strip

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Speaker 1: will be at a hundred. And these things are hugely

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Speaker 1: undervalued against that um once you get to on a

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Speaker 1: spot basis. Obviously, we worry about demand destruction. And really

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Speaker 1: the big question here, and you guys debate it constantly,

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Speaker 1: is what will the recession look like? You know, it's

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Speaker 1: not a question whether we get a recession, it's like

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Speaker 1: what kind of recession are we going to get? Paul

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Speaker 1: awesome as always going to catch up with this, Paul

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Speaker 1: sand Kick of Sanky Research. It is our great pleasure

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Speaker 1: now to introduce a former governor of the Bank of Israel,

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Speaker 1: but farm more than that, the Rockefeller Professor at the

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Speaker 1: University of Chicago just a few years ago, Jacob Frankel.

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Speaker 1: It has been far too long since we've seen you

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Speaker 1: working with Mr Diamond at JP Morgan. He comes to

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Speaker 1: us today from his tell of you, Professor Frankel let

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Speaker 1: me cut to the chase. Joe Stigletts talked about globalization

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Speaker 1: and it's discontents. We have globalization and Mr Putin's discontent

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Speaker 1: or Mr Putin's grievances. What will come after? Well, remember,

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Speaker 1: since the collapse of the Soviet Union in the l nineties,

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Speaker 1: the entiled world was excited to embrace Russia, to embrace China,

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Speaker 1: to bring them into the Group of Nations. The seven

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Speaker 1: G seven has become g A, the G twenty w

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Speaker 1: t O, the World Trade organizations all brought them in

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Speaker 1: and both China and Russia have benefited immensely from being

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Speaker 1: intotegrated into the world. This has been a great period

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Speaker 1: which unfortunately, during the past few years, with the emotions

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Speaker 1: of the Trade WARLD and now with the invasion of

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Speaker 1: the Ukraine, has inverted it all back. Russia will end

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Speaker 1: up being much poorer. They are suffering on a day

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Speaker 1: in and day out. They are isolated, They are secluded financially, economically, politically,

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Speaker 1: and the question now is how will the world look

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Speaker 1: like thereafter? I think that, unfortunately, to my mind, the

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Speaker 1: globalization is will be part of the legacy of the past,

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Speaker 1: and we will now move to a new world order

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Speaker 1: in which democracies of the type of the US and

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Speaker 1: Europe will be on one side, and and other countries,

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Speaker 1: autocratic countries like China and Russia will be on the

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Speaker 1: other hand. But take up how how do we get

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Speaker 1: to that place? Considering the intertwining of the supply chains

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Speaker 1: as we've seen that we still haven't moved away from

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Speaker 1: even with the pandemic. A lot of companies have kept

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Speaker 1: their factory footprints in China. Indeed, they have kept them

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Speaker 1: in China because it was economically wanted, and I believe

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Speaker 1: that they will continue working with China. China sees what

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Speaker 1: happens with Russia. So while it does not take clear

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00:24:36,720 --> 00:24:40,399
Speaker 1: sights and does not join the world in condemning what

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00:24:40,640 --> 00:24:44,119
Speaker 1: is happening in in Russia, by the same token, it

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00:24:44,200 --> 00:24:47,119
Speaker 1: takes the so called in their language, the middle ground.

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00:24:47,520 --> 00:24:51,399
Speaker 1: So Russia China will continue to be a partner, but

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00:24:51,760 --> 00:24:56,879
Speaker 1: it will be of a different nature, not of camaraderie,

436
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Speaker 1: but of self interest. Jack Franco, as a former governor

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Speaker 1: of the Bank of Israel, a bit of a delicate question,

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Speaker 1: but I will ask it of you, what is the

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Speaker 1: place of Israel to negotiate some form of better place

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00:25:11,520 --> 00:25:17,439
Speaker 1: in this war in Ukraine. Well, I believe that the

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00:25:17,480 --> 00:25:20,840
Speaker 1: place of Israel is to be wherever it is found

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Speaker 1: to be useful. And in this regard, when both the

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00:25:26,760 --> 00:25:33,480
Speaker 1: US and Russia and the Ukraine have approached the Prime

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Speaker 1: Minister of Israel in a request to see if he

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Speaker 1: can bring some common sense, even though the chances are

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00:25:40,720 --> 00:25:45,600
Speaker 1: not very high, Like most cases of such negotiations, Mr

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00:25:45,680 --> 00:25:48,240
Speaker 1: Bennett decided to jump to the water and to see

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00:25:48,280 --> 00:25:52,320
Speaker 1: if he can bring a little bit of a cohession.

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Speaker 1: But I can tell you this is not an issue.

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Speaker 1: It's a big, big issue. So even a progress of

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Speaker 1: one inch is a progress, Jacob. Right now we're getting

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00:26:00,680 --> 00:26:03,320
Speaker 1: a sense that the US is working and striking some

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00:26:03,400 --> 00:26:06,439
Speaker 1: sort of Iranian deal in order a nuclear deal, in

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00:26:06,560 --> 00:26:09,919
Speaker 1: order to unleash some of the oil supplies there. I

455
00:26:09,960 --> 00:26:13,280
Speaker 1: know this is a delicate issue for Israel. Are there

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00:26:13,320 --> 00:26:16,199
Speaker 1: is there more willingness in the nation to allow that

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00:26:16,280 --> 00:26:18,720
Speaker 1: kinde of type of deal and actually support it given

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00:26:18,720 --> 00:26:22,199
Speaker 1: where we are in the commodity space, Well, we are

459
00:26:22,280 --> 00:26:25,199
Speaker 1: so much now in the midst of everything. And to

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00:26:25,320 --> 00:26:28,159
Speaker 1: get into the kitchen when there are important chefs in

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00:26:28,240 --> 00:26:32,000
Speaker 1: it is never a wise move to take. But what

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00:26:32,119 --> 00:26:36,639
Speaker 1: I can say is that given the situation that the

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00:26:37,480 --> 00:26:43,399
Speaker 1: US is planning and effectively so, to ban imports of oil,

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00:26:43,800 --> 00:26:47,760
Speaker 1: it will be extremely important to find other sources. And

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00:26:47,760 --> 00:26:50,920
Speaker 1: other sources can come from Saudi Arabia, can come from

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00:26:51,040 --> 00:26:53,760
Speaker 1: other places that have it, and so this is I

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00:26:53,800 --> 00:26:56,840
Speaker 1: will put it in this context. What is important, however,

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00:26:57,200 --> 00:27:00,560
Speaker 1: is not to forget that the A has been the

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00:27:00,600 --> 00:27:04,919
Speaker 1: position of Israel on along that the Iranian deal. The

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00:27:05,040 --> 00:27:07,320
Speaker 1: key world is not a deal, but the key world

471
00:27:07,560 --> 00:27:11,840
Speaker 1: is sick, security and safety to all concerned, and if

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00:27:11,840 --> 00:27:14,000
Speaker 1: it compromises it, then it's not a good deal, and

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00:27:14,040 --> 00:27:15,960
Speaker 1: if it does not compromise it, then it is a

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00:27:16,040 --> 00:27:19,359
Speaker 1: good Jacob Frankel, thank you so much for joining us

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00:27:19,359 --> 00:27:22,840
Speaker 1: some tele Aviv today, of course, former international chairman at JP,

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00:27:22,880 --> 00:27:26,040
Speaker 1: Morgan Chase, the former governor of the Bank of Israel.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Thanks for listening. Join

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00:27:30,520 --> 00:27:33,840
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479
00:27:33,920 --> 00:27:38,200
Speaker 1: Bloomberg Radio and on Bloomberg Television each day from six

480
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481
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00:27:52,320 --> 00:28:00,800
Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg w