Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along
Speaker 1: with Jonathan Ferrell and Lisa Brownowitz Jaily. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com,
Speaker 1: and of course on the Bloomberg Terminent. This is a joy,
Speaker 1: not that it t And Bremer, president founder of You
Speaker 1: Raise Your Group. I'm going to read you a single
Speaker 1: sentence from December of this year. If Putin doesn't get
Speaker 1: concessions from the US lead West, he is likely to
Speaker 1: act one of the top risks for Dr Bremer. And
Speaker 1: as you Raise your Group and he joins us here
Speaker 1: this morning, Ian, I want to frame forward with you.
Speaker 1: I want to get without the breaking news that you've
Speaker 1: been on all weekend, the end of the free market.
Speaker 1: One of your books talks about that adjustment from free
Speaker 1: market to some form of new capitalism. What does President
Speaker 1: Putin or whoever's after Putin, What does their free market,
Speaker 1: what does their business structure, what does their command economy
Speaker 1: look like in two or three years? Well, it's not
Speaker 1: our target. I mean we talk about Putin as if
Speaker 1: he's a global pariah. UM. That's of course not true,
Speaker 1: because it's a G zero world. You can't make someone
Speaker 1: a global paria. But he is a pria in terms
Speaker 1: of the advanced industrial economies of the world, the G
Speaker 1: seven as it were. So what does that mean? Well,
Speaker 1: when you have the Chinese government saying that the relationship
Speaker 1: with Russia is like a rock UH, that means that
Speaker 1: you're going to see a far more integration of Russia
Speaker 1: UH into the Chinese economic network, both in terms of
Speaker 1: the technology that supports the military industrial complex for Russia,
Speaker 1: of the financial transactions that allow them to function as
Speaker 1: UM an advanced economy UM, and of course also the
Speaker 1: energy flows and infrastructure that will need to be built,
Speaker 1: not just in terms of oil production and next fort
Speaker 1: also eventually for gas. They'll be moving towards China to
Speaker 1: Russia will also be working with a lot of other
Speaker 1: developing countries around the world, the Gulf States, India, Brazil,
Speaker 1: China is going to be absolutely critical for the Russian
Speaker 1: How do we adapt? How do we move from two
Speaker 1: thousand and eight in Bucharest, NATO, where Gates and Rice
Speaker 1: begged the United States to not sell democracy to the
Speaker 1: Far East of of of Europe. How do we adapt
Speaker 1: to a new regime? Were just maybe possibly we can't
Speaker 1: sell democracy twenty four seven. Yeah, the fact that the
Speaker 1: American model of democracy is seen by China as pasted
Speaker 1: seld and they're going to be the largest economy in
Speaker 1: the world, means that we're in a hybrid system. It's competitive.
Speaker 1: The big question I have here is not about the
Speaker 1: tilt of Russia, because Russia, of course, we've been steadily
Speaker 1: losing for decades now. It's rather whether or not new technologies,
Speaker 1: which are top down the data and surveillance economy, actually
Speaker 1: facilitates authoritarian consolidation and also undermined civil society in ways
Speaker 1: that can't be redressed. Back in two thousand and eight,
Speaker 1: technology was something we thought of as supporting democracy and
Speaker 1: undermining authoritarian states. Think about how it was the Soviet
Speaker 1: Union collapse. Think about the Arab Spring and the Colored revolutions. Well,
Speaker 1: those are all quaint and in the back view mirror
Speaker 1: right now. Instead, technology is what allows the Chinese to
Speaker 1: repress a million leaguers and it doesn't lead to any
Speaker 1: demonstrations on the ground. Why because they can monitor and
Speaker 1: police the behavior of every single citizen. If the Russians
Speaker 1: can do that. If other smaller economies can do that,
Speaker 1: that's a big challenge to American democracy. And a lot
Speaker 1: of people right now are hoping for the bandwidth to
Speaker 1: worry about selling democracy. Right now, people are worried about
Speaker 1: selling wheat. They are worried about selling nickel and aluminum
Speaker 1: and corn and soybean oil. And what we are seeing
Speaker 1: right now is China coming out over the weekend and
Speaker 1: saying that domesticizing food production is an issue of national security.
Speaker 1: We have heard from the US supply chain security is
Speaker 1: a national security issue. How much are we seeing a
Speaker 1: pivot point moving to the mass deglobalization of our economy. Well,
Speaker 1: I mean, I'm glad you brought up grain in particular,
Speaker 1: when you have um, the largest grain producer in the world,
Speaker 1: invading the fifth largest grain producer in the world, one
Speaker 1: would think you're going to have big food problems. And
Speaker 1: certainly coming off the pandemic where extreme poverty after decreasing
Speaker 1: for decades is going up in the next twelve months,
Speaker 1: this is going to be absolutely critical and you're gonna
Speaker 1: see a spike in starvation around the world. Yes, in Afghanistan,
Speaker 1: but also across sub Saharan Africa, and when you have
Speaker 1: pigs in Europe and the United States UH fighting for
Speaker 1: grain supply UH, that will allow wealthy people in the
Speaker 1: world to eat the meat that they want, competing with
Speaker 1: people in poor and the poorest countries in the world
Speaker 1: that can't buy that grain for themselves. You can see
Speaker 1: that the globalization of the world that had been leading
Speaker 1: to an increased global middle class is now unwinding, especially
Speaker 1: on the back of this crisis, which, frankly, I mean
Speaker 1: the the U the Russia Ukraine invasion is going to
Speaker 1: be worse for global poverty in my view. Um, then
Speaker 1: when all is said and done, than the pandemic has
Speaker 1: been and that's a pretty traumatic statement. How will this
Speaker 1: conflict rearrange the economic outlook as we know it? Um,
Speaker 1: it's going to increase inequality because you know, when you
Speaker 1: have massive supply chain challenges and when you have energy
Speaker 1: price spikes, it doesn't affect nearly as much the wealthy
Speaker 1: around the world, who have the ability to move their assets,
Speaker 1: they have the ability to change their lives. Who gets
Speaker 1: really stuffed. The advanced economies can do more even to
Speaker 1: help support their poor and middle income economies, But the
Speaker 1: emerging markets have vastly more debt on their books after
Speaker 1: the last two years of crisis and now don't have
Speaker 1: any more flexibility to help their populations. But this is
Speaker 1: a massive shock um to their imports coming down the pike. Okay,
Speaker 1: not for the major commodity producers who benefit for higher prices.
Speaker 1: But you're up, You're on the other side that trade.
Speaker 1: You're gonna be hurt dramatically coming out of this. And
Speaker 1: Dr Bremer, let's steal something from Freed Cicaria here, and
Speaker 1: let's talk about not the post American world, but the
Speaker 1: post putent world. I read a lot this weekend on
Speaker 1: Mr Putin's inner circle, his defense minister who never served
Speaker 1: as a professional army guy, etcetera. What does the post world? What?
Speaker 1: What does the post putent world look like for Russia?
Speaker 1: But we'd have no idea if it's gonna be in
Speaker 1: twenty years or in twenty days. Uh. It's important to
Speaker 1: recognize that the likelihood of removing Putin from power is
Speaker 1: extremely low until the moment that it happens, and so
Speaker 1: it's not very useful to speculate on when it could happen.
Speaker 1: But it's important to understand that the pressure is there, um.
Speaker 1: And of course that leads to more erratic behavior domestically
Speaker 1: for Putin himself, who in the last week has been
Speaker 1: taking all sorts of measures to create a North Korea
Speaker 1: style police state. That just doesn't work well for a
Speaker 1: country of relatively educated one fifty million digitally literate Russians. Um.
Speaker 1: And you know, it's true that the average Russian believes
Speaker 1: what the Russian state media is putting out um, but
Speaker 1: a lot of urban, younger Russians do not. And the
Speaker 1: ten thousand Russians that have already been arrested um for
Speaker 1: a non violent protests against the war. As the economy
Speaker 1: starts to literally implode in the coming days and you
Speaker 1: don't find goods on shelves and you have to rash
Speaker 1: and people don't get their wages, some of those are
Speaker 1: gonna turn violent, and the Russians are gonna repress it.
Speaker 1: So we have to at least consider that. You know,
Speaker 1: one of the only ways this potentially gets resolved in
Speaker 1: the near term is if you have a dramatic discontinuity
Speaker 1: in Russia itself. And uh, that's that's a very hard
Speaker 1: thing to plan for in a country with five thousand
Speaker 1: nuclear weapons and thank you. Let's look at the equity
Speaker 1: markets now. A briefing with Lori Calvacina, head of US
Speaker 1: equity strategy at RBC Capital Markets. Laura, I want to
Speaker 1: rip up the script here. You have the advantage of
Speaker 1: one h Croft. She is absolutely exquisite on commodities. How
Speaker 1: are you folding the analysis of Halima Croft into your
Speaker 1: equity work? All right, well, thanks for having me as
Speaker 1: always in look, I am very fortunate to be working
Speaker 1: with Helima these days. And you know that, you know
Speaker 1: the drill tom in December, they start trotting out all
Speaker 1: the strategies to do panels and I was fortunate to
Speaker 1: be on a number of these with Halima, and she
Speaker 1: had been warning us that there was going to be
Speaker 1: a problem with Russia and Ukraine to start the year.
Speaker 1: You know, Frankly, I think a lot of market participants
Speaker 1: were not listening to her. And it's not that we
Speaker 1: necessarily grasped how bad this was going to be in
Speaker 1: the moment that we did have an inkling that this
Speaker 1: was coming. So as I've been able to operate through
Speaker 1: this environment, I feel fortunate that you know, I have
Speaker 1: not necessarily been as reactive to the news as some
Speaker 1: other market. How you change I mean we got we
Speaker 1: just short on Tom, Lauria, how many have you change
Speaker 1: your allocation given the outfrontedness you've got with Helma Croft. Well, look,
Speaker 1: we stuck with our energy overweight, even though we were
Speaker 1: getting a little bit nervous frankly on how bullish everybody
Speaker 1: had become. So we did stick with that. That's been fortunate.
Speaker 1: It's been one of the best performing sectors to start
Speaker 1: the year. Um. We've also been talking about how we
Speaker 1: expected the market to sort of pivot back towards growth
Speaker 1: stocks later this year, and one of the reasons for
Speaker 1: that is we thought economic growth expectations, we're going to
Speaker 1: start focusing on a return to trent. We thought that
Speaker 1: would happen in I think this crisis raises the risk
Speaker 1: that we bring that economic projection, that raining and of
Speaker 1: economic expectations in a little bit earlier than anticipated. Secular
Speaker 1: growth stocks tend to do well when the economy is cool,
Speaker 1: so that has helped us sort of stay very steady
Speaker 1: in some of those sector allocations we had to start
Speaker 1: the year. Lauria, is this a bible dip? I don't
Speaker 1: know if you necessarily want to buy it today. And
Speaker 1: the framework we've used is that we view this as
Speaker 1: a growth stare, something that doesn't necessarily push us into
Speaker 1: a recession that makes everyone feel like we're gonna hit one.
Speaker 1: And if you look at growth scare pricing, it can
Speaker 1: take the S and P five hundred down to round thirty.
Speaker 1: In the short term, growth scarce tend to see markets
Speaker 1: fall fourteen pie to trump. We simply haven't done that yet,
Speaker 1: despite how terrible the sentiment has done. Laura, you said
Speaker 1: that it can make everyone feel like we're going to
Speaker 1: into a recession even though we're not, and that's been
Speaker 1: sort of the tipping point of a lot of strategists
Speaker 1: whether this is or isn't a recessionary event. What are
Speaker 1: you looking at it for? The resilience that could potentially
Speaker 1: tip over should the commodity surge continue. So look, I think,
Speaker 1: you know, maybe the silver lining of coming out of
Speaker 1: this hand down and I use that in quotes with
Speaker 1: a bit of irony, but we've all got this arsenal
Speaker 1: of high frequency economic barometers that we've been living and
Speaker 1: breathing for the last couple of years because of COVID,
Speaker 1: and I'm peeping a very close eye on those. Right now.
Speaker 1: We're still seeing improving trends and open table dining, flyne
Speaker 1: return to work is still in the process of recovering
Speaker 1: and has a way to go, but none of these
Speaker 1: are shining any signs of slowing down right now, Lisa.
Speaker 1: So I think we have to keep an eye on
Speaker 1: the resiliency of the consumer in here and what or
Speaker 1: not that holds up. Laurie, this question might sound counterintuitive
Speaker 1: of first approach. I just wonder how nuance this might be.
Speaker 1: Is there a point where crude goes so high that
Speaker 1: energy equity stopped going high with it. I think it's
Speaker 1: it's a point at which the market starts to sense
Speaker 1: out demand destruction. And I don't think there are any
Speaker 1: easy answers to that question in terms of where that
Speaker 1: exact level is. Frankly, we would have thought we would
Speaker 1: have already seen it by now. Um. I think that
Speaker 1: we have to sort of counterbalance the oil price impact
Speaker 1: with the psychological impact of reopening, and many consumers very
Speaker 1: eager to get back to their lives. We're seeing that resilience,
Speaker 1: We're seeing that eagerness to get back to normal dominating
Speaker 1: in the data right now. There will eventually probably be
Speaker 1: a point at which that won't hold up. But all
Speaker 1: I can tell you today John is we haven't hit
Speaker 1: it yet. Laurie, Thank you, Laurie Canvassin or MBC Capital
Speaker 1: Markets wonderful as always, John, what's so important here in
Speaker 1: this anticipated interview is it is eight thousand four miles
Speaker 1: from Midland, Texas to re Odd and that is a
Speaker 1: world a part of global oil economics, in the marginal
Speaker 1: economics of getting the marginal barrel out of the ground
Speaker 1: to be marginally refined. John, we can speak with Paul
Speaker 1: Sanky of sank You Research. We'll catch up with Paul
Speaker 1: Sanky right now. Paul, let's start right here. Often these
Speaker 1: conversations and sometimes it's our fault, sometimes it's the fault
Speaker 1: of the people we speak to. We talk as if
Speaker 1: there is this special tap down in Texas that you
Speaker 1: can just turn, go down there and just turn and
Speaker 1: all of a sudden, crude output is up. Talk to
Speaker 1: us about how difficult that effort is if we even
Speaker 1: tried to well, I mean it's even basic labor. But
Speaker 1: you know, then if you get into engineers and and
Speaker 1: you're just the ability to add capacity as being wildly
Speaker 1: exaggerated here simply because there aren't the people. As Thomas referenced,
Speaker 1: Midland is kind of in the middle of the desert.
Speaker 1: In fact, it is in the middle of the desert,
Speaker 1: and there's tremendous competition from Austin for both labor and
Speaker 1: engineers is and so just in people terms alone, for
Speaker 1: commentators to turn around and say, you know, the USCMP
Speaker 1: industry should add, should add capacity and volume is completely misguided.
Speaker 1: I was in Midland in late December talking to the
Speaker 1: service companies, talking to diamond Back, a major reamp there,
Speaker 1: and the fact is that things are drum tight prior
Speaker 1: to this crisis, and yes they could add on a
Speaker 1: one year view, but there's nothing they can do this week.
Speaker 1: But they are damned if they pump. Environmentalists criticize them,
Speaker 1: and investors punished them, and they're seemingly blamed if they don't. Well,
Speaker 1: what do you make of the relationship between the administration
Speaker 1: and they all patch in America at the moment? I
Speaker 1: mean absolutely appallingly badly managed, because of course, as you know,
Speaker 1: they came in with almost no oil expertise on the
Speaker 1: basis that they would change the energy system. I don't
Speaker 1: know how you can change the energy system without oil expertise.
Speaker 1: And now you're in a situation where you're talking to Venezuela,
Speaker 1: you're talking to Iran, and you're basically pretty much not
Speaker 1: talking to Texas. So it doesn't make any sense to whatsoever.
Speaker 1: How much could they actually though, influence the output in
Speaker 1: Texas quickly, given the fact that there has been a
Speaker 1: lack of investment, given the fact that a lot of
Speaker 1: this has been driven not by Washington but by a
Speaker 1: lot of the shareholders that have looked for fiscal discipline. Well,
Speaker 1: the point that John highlighted from my research yesterday was
Speaker 1: that if they try to aggressively increased capacity now they're
Speaker 1: simply going to compete with each other. And Tom also
Speaker 1: picked up on the point, you're just going to inflate
Speaker 1: things more because all you're gonna do is take the
Speaker 1: guys from the next door rig and put them on
Speaker 1: your own rig. And the list goes on, because it's
Speaker 1: not just about people. It's about steel, it's about cement,
Speaker 1: it's as they would say, cement um. It's even about
Speaker 1: sand actually at a given level. So there's just all
Speaker 1: sorts of tightness down there because we know that we
Speaker 1: were in a commodity squeeze already before all that has happened,
Speaker 1: which is why it's so dramatic. The answer is, you know,
Speaker 1: if you really started to reorganize towards more capacity, you
Speaker 1: would begin to see an impact towards the end of
Speaker 1: this You so, Paul, what could this administration do it
Speaker 1: would you like to see them do in order to
Speaker 1: support more more domestic production as opposed to coin event
Speaker 1: as well, as you point out, well, the grand scheme,
Speaker 1: as you know, is nuclear with a new grid. But
Speaker 1: of course, you know, can we do that? The utilities
Speaker 1: don't really want it. You know, the utilities have a
Speaker 1: lot of vested interests and don't get the criticism they should.
Speaker 1: Nor does Amazon get the criticism it should for you know,
Speaker 1: the amounts of oil that's used to deliver a package
Speaker 1: to everyone in return half of them. You know, all
Speaker 1: of this stuff is not really examined in the grand
Speaker 1: scheme of things. But above all, what the industry wants
Speaker 1: is consistency. So one of the latest things that we're
Speaker 1: seeing is suddenly they're saying we'll reduce the federal federal
Speaker 1: gasoline tax. Totally idiotic, just in terms of environmental friendliness
Speaker 1: and not encouraging efficiency. What they're saying is will take
Speaker 1: off the stupid mandate for ethanol but you know, being
Speaker 1: used again. Just as the industry is moving towards major
Speaker 1: investment in renewable diesel, the administration says, actually, we might
Speaker 1: have to change this because there's a cry. It's a
Speaker 1: crisis management. And that's exactly what you know leads to
Speaker 1: what I call the energy regression. We're in an energy regression.
Speaker 1: We're going backwards. Paul. Let me go to the third rail,
Speaker 1: and it's not the expensive summer camp that was a
Speaker 1: third rail this weekend. Let me go to the third
Speaker 1: rail of the Keystone pipeline. Is it a valid economic
Speaker 1: project and it can it actually enhance United States energy independence? Yes?
Speaker 1: I mean it could and absolutely more Canadian oil is
Speaker 1: an obvious outlet here to to as a long term
Speaker 1: solution because obviously we have such a tremendous ally right
Speaker 1: there with the available oil who by the way of
Speaker 1: doing a tremendous job of Scope one and two ementionance reductions.
Speaker 1: So yes, that shouldn't have been delayed back in ten,
Speaker 1: which was one of the obomber administration first through a
Speaker 1: wrench in the works. Actually, the Biden administration was just
Speaker 1: bad messaging because by then the project was pretty much dead.
Speaker 1: In so far as the Biden administration canceled, it is
Speaker 1: the first, literally the first thing that they did. Um.
Speaker 1: But yeah, you could really easily resuscitate with stuff if
Speaker 1: you could get around the environmental opposition. Environmental opposition is local,
Speaker 1: you know, it's a problem of negotiating very specific issues.
Speaker 1: The latest one has been this Mountain Valley pipeline, which
Speaker 1: would release more US gas from the Marcellist into the
Speaker 1: general U. S economy and to export. And that's nineties six,
Speaker 1: complete with six billion dollars sunk, and a federal geodge
Speaker 1: judge blocked it for crossing the Appalachian Trail. You know,
Speaker 1: stuff like that just makes no sense environmentally. Pasanki gasoline
Speaker 1: triple A unloaded from three six D two I believe
Speaker 1: four oh seven in seven travel days. If you will
Speaker 1: in your head, where is the tip point on triple
Speaker 1: A unladed where it really begins to affect our behavior
Speaker 1: for fifty four fifty nationwide? But then you add sixty
Speaker 1: cents to well, that's the retail price. But then you
Speaker 1: have to add a dollar in New York and a
Speaker 1: dollar in California, you know, in the higher tax states.
Speaker 1: So you're going to get to five fifty. And by
Speaker 1: the way, that's in the post. That's going to happen
Speaker 1: because essentially the gasoline price is trailing the crew price,
Speaker 1: obviously quite quite severely. So what happens when we get
Speaker 1: to five fifty, Well, people change behavior quite radically because
Speaker 1: obviously there's a lot of discretion over how much you
Speaker 1: drive your car, which car you drive, whether you drive
Speaker 1: like a crazy idiot, or you know, very conservatively, whether
Speaker 1: you pump up your tires. We saw all of this
Speaker 1: in O eight on, and you know, there's actually quite
Speaker 1: a significant ability to change behavior. What's interesting now is
Speaker 1: obviously that you have very low unemployment and therefore people
Speaker 1: do need to drive. And so I think the elasticity
Speaker 1: here is going to be pretty sticky, to say the least,
Speaker 1: and I think we'll get to really significant, significantly higher
Speaker 1: gasoline prices are absolutely guaranteed. Well, that's the test, and
Speaker 1: I think this is really interesting for you and I
Speaker 1: to try and talk through work out. It's an open
Speaker 1: question in the treasury market when you would go higher
Speaker 1: aggressively high. We talk about how self limiting a sell
Speaker 1: off would be, because it's nice to bite the U. S.
Speaker 1: Economy and yours come back in. Does the same dynamic
Speaker 1: exists in the commodity market for crude and I'm trying
Speaker 1: to work out what that might mean for say, the
Speaker 1: likes of oxy are more than ninet here today. At
Speaker 1: what point do energy prices go too high for even
Speaker 1: energy equities to continue running with it? Yeah, I mean
Speaker 1: you get into the point of demanded structure. Obviously, oxously
Speaker 1: was an outlier move because we now know that Warren
Speaker 1: Buffett was building a significant stake and seems to want
Speaker 1: to do it entirely in a week so. But generally speaking,
Speaker 1: if the market begins to believe the strip, which is
Speaker 1: now over a hundred all the way down as far
Speaker 1: as the I can see, then these things move higher.
Speaker 1: And it's really the back end of the price curve
Speaker 1: that matters, which is aggressively higher. I think because there's
Speaker 1: a total question mark of what Russia will look like
Speaker 1: in the future. I think there's two things here. Number
Speaker 1: one is that very good news this morning Russia has
Speaker 1: softened its stance, and I think we see the markets
Speaker 1: coming back it given that Russia is softening its stance
Speaker 1: and maybe at the point of admitting defeat here quite possibly.
Speaker 1: That's that's the good news. The bad news is we
Speaker 1: may actually see Russia now permanently out of the market um,
Speaker 1: you know, for multiple years, long enough to make a
Speaker 1: difference to the strip, at which point the future strip
Speaker 1: will be at a hundred. And these things are hugely
Speaker 1: undervalued against that um once you get to on a
Speaker 1: spot basis. Obviously, we worry about demand destruction. And really
Speaker 1: the big question here, and you guys debate it constantly,
Speaker 1: is what will the recession look like? You know, it's
Speaker 1: not a question whether we get a recession, it's like
Speaker 1: what kind of recession are we going to get? Paul
Speaker 1: awesome as always going to catch up with this, Paul
Speaker 1: sand Kick of Sanky Research. It is our great pleasure
Speaker 1: now to introduce a former governor of the Bank of Israel,
Speaker 1: but farm more than that, the Rockefeller Professor at the
Speaker 1: University of Chicago just a few years ago, Jacob Frankel.
Speaker 1: It has been far too long since we've seen you
Speaker 1: working with Mr Diamond at JP Morgan. He comes to
Speaker 1: us today from his tell of you, Professor Frankel let
Speaker 1: me cut to the chase. Joe Stigletts talked about globalization
Speaker 1: and it's discontents. We have globalization and Mr Putin's discontent
Speaker 1: or Mr Putin's grievances. What will come after? Well, remember,
Speaker 1: since the collapse of the Soviet Union in the l nineties,
Speaker 1: the entiled world was excited to embrace Russia, to embrace China,
Speaker 1: to bring them into the Group of Nations. The seven
Speaker 1: G seven has become g A, the G twenty w
Speaker 1: t O, the World Trade organizations all brought them in
Speaker 1: and both China and Russia have benefited immensely from being
Speaker 1: intotegrated into the world. This has been a great period
Speaker 1: which unfortunately, during the past few years, with the emotions
Speaker 1: of the Trade WARLD and now with the invasion of
Speaker 1: the Ukraine, has inverted it all back. Russia will end
Speaker 1: up being much poorer. They are suffering on a day
Speaker 1: in and day out. They are isolated, They are secluded financially, economically, politically,
Speaker 1: and the question now is how will the world look
Speaker 1: like thereafter? I think that, unfortunately, to my mind, the
Speaker 1: globalization is will be part of the legacy of the past,
Speaker 1: and we will now move to a new world order
Speaker 1: in which democracies of the type of the US and
Speaker 1: Europe will be on one side, and and other countries,
Speaker 1: autocratic countries like China and Russia will be on the
Speaker 1: other hand. But take up how how do we get
Speaker 1: to that place? Considering the intertwining of the supply chains
Speaker 1: as we've seen that we still haven't moved away from
Speaker 1: even with the pandemic. A lot of companies have kept
Speaker 1: their factory footprints in China. Indeed, they have kept them
Speaker 1: in China because it was economically wanted, and I believe
Speaker 1: that they will continue working with China. China sees what
Speaker 1: happens with Russia. So while it does not take clear
Speaker 1: sights and does not join the world in condemning what
Speaker 1: is happening in in Russia, by the same token, it
Speaker 1: takes the so called in their language, the middle ground.
Speaker 1: So Russia China will continue to be a partner, but
Speaker 1: it will be of a different nature, not of camaraderie,
Speaker 1: but of self interest. Jack Franco, as a former governor
Speaker 1: of the Bank of Israel, a bit of a delicate question,
Speaker 1: but I will ask it of you, what is the
Speaker 1: place of Israel to negotiate some form of better place
Speaker 1: in this war in Ukraine. Well, I believe that the
Speaker 1: place of Israel is to be wherever it is found
Speaker 1: to be useful. And in this regard, when both the
Speaker 1: US and Russia and the Ukraine have approached the Prime
Speaker 1: Minister of Israel in a request to see if he
Speaker 1: can bring some common sense, even though the chances are
Speaker 1: not very high, Like most cases of such negotiations, Mr
Speaker 1: Bennett decided to jump to the water and to see
Speaker 1: if he can bring a little bit of a cohession.
Speaker 1: But I can tell you this is not an issue.
Speaker 1: It's a big, big issue. So even a progress of
Speaker 1: one inch is a progress, Jacob. Right now we're getting
Speaker 1: a sense that the US is working and striking some
Speaker 1: sort of Iranian deal in order a nuclear deal, in
Speaker 1: order to unleash some of the oil supplies there. I
Speaker 1: know this is a delicate issue for Israel. Are there
Speaker 1: is there more willingness in the nation to allow that
Speaker 1: kinde of type of deal and actually support it given
Speaker 1: where we are in the commodity space, Well, we are
Speaker 1: so much now in the midst of everything. And to
Speaker 1: get into the kitchen when there are important chefs in
Speaker 1: it is never a wise move to take. But what
Speaker 1: I can say is that given the situation that the
Speaker 1: US is planning and effectively so, to ban imports of oil,
Speaker 1: it will be extremely important to find other sources. And
Speaker 1: other sources can come from Saudi Arabia, can come from
Speaker 1: other places that have it, and so this is I
Speaker 1: will put it in this context. What is important, however,
Speaker 1: is not to forget that the A has been the
Speaker 1: position of Israel on along that the Iranian deal. The
Speaker 1: key world is not a deal, but the key world
Speaker 1: is sick, security and safety to all concerned, and if
Speaker 1: it compromises it, then it's not a good deal, and
Speaker 1: if it does not compromise it, then it is a
Speaker 1: good Jacob Frankel, thank you so much for joining us
Speaker 1: some tele Aviv today, of course, former international chairman at JP,
Speaker 1: Morgan Chase, the former governor of the Bank of Israel.
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