Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day
Speaker 2: for insight from the best in markets, economics, and geopolitics
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Speaker 2: anywhere else you listen, and as always on the Bloomberg
Speaker 2: Terminal and the Bloomberg Business app. The President of the
Speaker 2: United States, Donald Trump, on a phone call with the
Speaker 2: Russian President Vladimir Putin, as the President makes the purse
Speaker 2: for a thirty day ceasefire to build on the developments
Speaker 2: of the last twenty four hours, and pleased to say,
Speaker 2: we're joined now by Steve whitcaff the White House Special
Speaker 2: Envoy to the Middle East. Steve, welcome to the program, Sir,
Speaker 2: fantastic to get some time with you. I know how
Speaker 2: much time you put in with the Russian President to
Speaker 2: make this all happen. It's not the first time you've
Speaker 2: spoken to him. It's not the first time the President
Speaker 2: of the United States has spoken to the Russian leader either,
Speaker 2: could you set the States for a cert How different
Speaker 2: was this call?
Speaker 3: I thought the call was epic, I thought, Jonathan, I
Speaker 3: thought it was epic, transformational all you know, those are
Speaker 3: the sorts of adjectives that I use about this call.
Speaker 4: The president and.
Speaker 3: President Trump and President Putin were in sync with one another.
Speaker 3: The call was outcome oriented.
Speaker 4: They were talking.
Speaker 3: About how to save lives, how to stop the carnage.
Speaker 3: And for me, I was proud to be an American
Speaker 3: sitting there listening to it.
Speaker 2: Steve, let's talk about some of the outcomes. We're hopeful
Speaker 2: that ultimately we end up with a thirty day ceasefire.
Speaker 2: Before we get there, we're working towards things like a
Speaker 2: prisoner swap. We're working towards a maritime ceasefire in the
Speaker 2: Black Sea. That's important too. There was also a conversation,
Speaker 2: yes that about maybe in agreement to limit attacks on
Speaker 2: energy infrastructure. And we'd love to build on that because
Speaker 2: earlier on this morning we heard from the Ukrainian leader
Speaker 2: who said the overnight Russia sent one hundred and fifty
Speaker 2: drones and hit Ukrainian energy. I just wonder what was
Speaker 2: actually agreed and whether rush across the line overnight, Well, what.
Speaker 3: Was agreed between the two presidents was, and it was
Speaker 3: at President Trump's suggestion, that there'd be a cessation of
Speaker 3: attacks on energy infrastructure from both sides, and civilian infrastructure
Speaker 3: for that matter, also working towards a black Sea moratorium
Speaker 3: on hits on naval vessels and freighters carrying grain and
Speaker 3: things of that sort, and ultimately that would evolve into
Speaker 3: a full on ceasefire, which is a bit more complicated
Speaker 3: because there's a two thousand kilometer border, there's Kursk, and
Speaker 3: there's a lot of details that go in to that.
Speaker 3: But with regard to your question on some of the
Speaker 3: reporting with regard to the Russian drones last night, I
Speaker 3: have it on good information from a telephone call I
Speaker 3: had before I went on this show, that President Putin
Speaker 3: issued an order within ten minutes of his call with
Speaker 3: the President directing Russian forces not to be attacking any
Speaker 3: Ukrainian energy infrastructure. And that was and any attacks that
Speaker 3: happened last night would have happened before that order was given.
Speaker 3: In fact, the Russians tell me this morning that seven
Speaker 3: of their drones were on their way when President Putin
Speaker 3: issued his order and they were shot down by Russian forces.
Speaker 3: So I tend to believe that President Putin is operating
Speaker 3: in good faith. He said that he was going to
Speaker 3: be operating in good faith to the President yesterday, and
Speaker 3: I take him at his word.
Speaker 5: So, mister Rikkoff, is your understanding that of today, energy facilities,
Speaker 5: energy infrastructure will be off limits.
Speaker 4: That's my understanding, yes, ma'am.
Speaker 5: Do you think the next stage, potentially, as we get
Speaker 5: the roadmap towards thirty day full ceasefire, potentially geography should
Speaker 5: be off limits, like drones hitting Kiev.
Speaker 3: You know, I can't speak to that. I think the
Speaker 3: idea behind the thirty day ceasefire. First of all, we
Speaker 3: made more progress yesterday than has been made in the
Speaker 3: last three and a half years. They actually, the tool
Speaker 3: leaders actually talked and committed to cessation of attacks on
Speaker 3: energy infrastructure and civilian infrastructure. They talked about reviving the
Speaker 3: Black Sea maritime agreement that had been negotiated several years
Speaker 3: ago and never really implemented. Those are monumental things and
Speaker 3: they're trust building things as well. And I think beyond that,
Speaker 3: they also went into how you would put the finishing
Speaker 3: touches on a full on ceasefire. That full on ceasefire
Speaker 3: has a lot to do with this two thousand kilometer
Speaker 3: line that where the Ukrainians are lined up against the Russians.
Speaker 4: It's complicated.
Speaker 3: There are different battlefield conditions in various spots. That's for
Speaker 3: the technical teams to figure it out. And they're going
Speaker 3: to be meeting in Saudi Arabia, I believe, beginning Monday
Speaker 3: and Tuesday. So lots of progress happened yesterday, and it
Speaker 3: happened in large part because of President Trump.
Speaker 2: Let's talk about that meeting in Saudi Arabia in the
Speaker 2: next week or so. The team's going to be led by,
Speaker 2: I believe Secretary Rubio. I think we all want to
Speaker 2: know what needs to happen at that meeting before the
Speaker 2: two leaders end up in the same room to get
Speaker 2: to that end deal. That we all want to see
Speaker 2: what needs to happen in the next week.
Speaker 3: Well, I'm not sure that the Secretary of State has
Speaker 3: done an amazing job, as has the National Security Advisor
Speaker 3: Mike Waltz. They were both at the last meeting Jetta.
Speaker 3: It went well, lots of trust building happened, and I
Speaker 3: believe on Monday. We actually have the technical teams going
Speaker 3: in why because that's what we're down to. We don't
Speaker 3: need to have larging the larger overarching discussions that's been
Speaker 3: had and it was completed yesterday between the two leaders.
Speaker 4: They agreed on a pathway to.
Speaker 3: Some cease fire conditions today and to a full on
Speaker 3: cease fire that will be negotiated over the coming days.
Speaker 3: I actually think in a couple of weeks we're going
Speaker 3: to get to it. So lots of good things now
Speaker 3: it's for the technical teams to dot the i's and
Speaker 3: cross the t's, and everybody is committed to that process.
Speaker 5: If you think we're going to get there in a
Speaker 5: couple of weeks, could we then see a meeting in
Speaker 5: person between President Trump and President Putin in the Kingdom?
Speaker 3: You know, I can't speak for them, but my best
Speaker 3: bet would be that it's likely to happen. They have
Speaker 3: a great rapport together. They had a great rapport in
Speaker 3: the first Trump administration. It was on display yesterday. This
Speaker 3: was really a very positive, very proactive, outcome oriented call.
Speaker 3: And that's who President Trump is. He's there to get
Speaker 3: to the goal line, and we did. We went a
Speaker 3: long way yesterday to doing that.
Speaker 2: Even now, the president a long long time, going back decades.
Speaker 2: In fact, there's very few people that know him better
Speaker 2: than you do. There's a lot of people speculating about
Speaker 2: what the motives are, what the end objectives are.
Speaker 6: If we could just sit on that for a moment.
Speaker 2: Does the push for peace in Ukraine run parallel with
Speaker 2: the push to normalize US Rush relations or Steve?
Speaker 6: Are they separate issues?
Speaker 3: No, I don't think there's any doubt that the two
Speaker 3: are important. For Russia is a critical relationship for US.
Speaker 3: It's critical as it affects all other things out there, China, Iran.
Speaker 4: The Middle East.
Speaker 3: These two leaders coming together and I think having conversations
Speaker 3: about nuclear proliferation, which they did yesterday and was anormously positive.
Speaker 3: These are this is enormously beneficial.
Speaker 4: For the world at large. And the President believes in this.
Speaker 3: He believes in peace, he believes in engaging, He believes
Speaker 3: in using peace through.
Speaker 4: Strength to.
Speaker 3: Create a better world for everybody. And with that could
Speaker 3: come a drop in defense budgets. Take all that money
Speaker 3: and spend it on things that matter more than waging
Speaker 3: war all the time. This is his policy, and so
Speaker 3: he's to be commended for that. Yesterday was literally transformational
Speaker 3: as far as I as far as I am.
Speaker 7: Concerned, mister Rikoff, So then is the idea of its
Speaker 7: normalization to draw a wedge between Russia and China and
Speaker 7: Russia in Iran as well to further isolate America's adversaries
Speaker 7: like Tehran and Beijing.
Speaker 3: The I think normalization is about having real conversation President Biden,
Speaker 3: according to President Putin, did not speak to President Putin
Speaker 3: for three and a half years. That's not a proper
Speaker 3: way to run policy. President Trump, in a short eight
Speaker 3: weeks has spoken to President Putin twice, very very positive
Speaker 3: and constructive conversations. He's directed me on his behalf to
Speaker 3: go to Moscow. I've had close to eight hours of
Speaker 3: conversations with President Putin and met with other key people
Speaker 3: on his team, and he's directed the National Security Advisor,
Speaker 3: the Secretary of State, the CIA director Pete Hegseth, or
Speaker 3: Secretary of Defense. Everybody is engaged in this process, and
Speaker 3: it's really wonderful to see. I think people ought to
Speaker 3: be uplifted, and I think you're going to see some
Speaker 3: very very positive results in.
Speaker 4: The new term.
Speaker 2: In the lengthy conversations you have had with the Russian lead.
Speaker 2: Did restrictions on Russian energy come up soil? Did they
Speaker 2: come up yesterday?
Speaker 3: When you say restrictions, Jonathan, on Russian energy, what do
Speaker 3: you I'm not sure what you're asking.
Speaker 2: Restrictions on financial services, engaging in deals that restrict the
Speaker 2: flow of Russian energy, the price camp that the Bible
Speaker 2: administration pushed over the last year or so, Sir, have
Speaker 2: a variety of restrictions that make it difficult for Russian
Speaker 2: energy to compete with energy.
Speaker 6: I'll swear.
Speaker 3: We did not discuss or the pardon me, the President
Speaker 3: did not discuss specifically sanctions yesterday.
Speaker 4: If that's what you're referring to.
Speaker 3: I think obviously that's a conversation that the two leaders
Speaker 3: are going to have and everybody is open to it.
Speaker 3: But first and foremost, we want a solution to that
Speaker 3: means an end to the fighting. We want to get
Speaker 3: to the ceasefire. That's the President's policy, and we're going
Speaker 3: to get to the ceasefire, and I think after that
Speaker 3: everything else will be a detail sanction relief and all
Speaker 3: the other things that go with a full on peace treaty.
Speaker 5: Trump said last night to Fox News that Russia would
Speaker 5: like to use some of the US economic power. This
Speaker 5: is an individual who's been against the likes of Nordstream
Speaker 5: Nordstream two for years. Mister Werkoff, you know that. But
Speaker 5: can you see a world when Russian energy comes back
Speaker 5: online via pipelines like Nordstream?
Speaker 4: Well, I can certainly see that world.
Speaker 3: But let me give you, let me give you an
Speaker 3: example about the deleterious effects here and why we have
Speaker 3: to get to a solution. Russian oil today is being
Speaker 3: sold cheap to China. I'm not sure that's such a
Speaker 3: wonderful benefit of that India.
Speaker 4: OK So you're underscoring my point.
Speaker 3: So there are all these deleterious things that could come
Speaker 3: from this, and I think the beginning of it is
Speaker 3: a conversation. I think it's sort of unacceptable for two
Speaker 3: world leaders of the stature of a Russian president and
Speaker 3: an American president who haven't talked to three and a
Speaker 3: half years. That's an unacceptable policy program for the president.
Speaker 3: He wants to get things done, and you get things
Speaker 3: done by getting on a telephone or meeting personally and
Speaker 3: instructing your staffs to do that, which is what he's
Speaker 3: done here.
Speaker 4: Mister Ricofer.
Speaker 8: It's a conversation.
Speaker 5: We've had a lot on this programmers. The fact that
Speaker 5: sanctions when it comes to Russia didn't change Putin's motives
Speaker 5: and they still were able to fund the war by selling.
Speaker 7: A lot of these a lot of this energy.
Speaker 5: It just created new markets for Russia to be willing
Speaker 5: to trade. Scott Bessant, though, the Treasury Secretary said the
Speaker 5: other day that we will go to attend and bring
Speaker 5: sanctions if we have to on Russia to bring Putin
Speaker 5: to the table. Do you see President Trump getting to
Speaker 5: that point lifting sanctions to attend in order to cajole
Speaker 5: Putin to the table for the ceasefire.
Speaker 3: Look, Scott bessen does a great Treasury Secretary. I'm not
Speaker 3: going to speak to what he had to say. I'm
Speaker 3: going to say this. I've had two meetings at the
Speaker 3: direction of President Trump with President Putin in the last
Speaker 3: several weeks that have collectively aggregated to almost eight hours.
Speaker 3: Many other people in the senior people in the administration
Speaker 3: are having meetings with their colleagues and their counterparts there.
Speaker 3: The President has directed all of this. There is amazing
Speaker 3: progress being made. Yesterday, in one telephone call, we talked
Speaker 3: about an immediate ceasefire on energy infrastructure. That's game changing,
Speaker 3: and also the Black Sea moratorium game changing, and the
Speaker 3: contours of how we get to a personal ceasefire, a
Speaker 3: thirty day ceasefire, game changing. Enormous progress as compared to
Speaker 3: where we were, because we're communicating, we're talking in a collegial,
Speaker 3: constructive manner, and everybody is outcome oriented, the outcome being
Speaker 3: the end of fighting there and the end of the
Speaker 3: killing there.
Speaker 2: We don't like to see that serve we could just finish.
Speaker 2: On Europe, something we've not discussed in the last ten
Speaker 2: minutes or so. The Europeans, Germany and the EU are
Speaker 2: pushing to rearm. They're set to spend hundreds of billions
Speaker 2: of euros on defense. That's something that President Trump has
Speaker 2: been pushing for for quite a while. Does he welcome that,
Speaker 2: does he complicate talks in any way? Does it antagonize
Speaker 2: Russia and make this harder? How does he view that
Speaker 2: at the moment?
Speaker 3: Look, I think the President has a policy which is
Speaker 3: that Europe should pay more for their own defense, and
Speaker 3: so I think to the extent that that's what's happening.
Speaker 3: I think that's a good thing, rearming and all the
Speaker 3: other stuff that leads to more conflagration, that leads to
Speaker 3: that undermines a peace process.
Speaker 4: I would say that that's not such a good thing.
Speaker 3: So look, we're here to get a deal in Russia
Speaker 3: and Ukraine, and we're well on the way to getting
Speaker 3: it done. And I think you're going to hear some
Speaker 3: You're going to hear some really positive things happening as
Speaker 3: these talks continue.
Speaker 5: Mister Werkoff, you're a successful businessman that is now really
Speaker 5: at the height of diplomacy around the world. European strong
Speaker 5: economic ties with Russia did not prevent Putin for his
Speaker 5: full scale invasion of Ukraine in twenty twenty one. Do
Speaker 5: you think it could prevent hostilities in the future if
Speaker 5: we were to see a ceasefire and businesses in trade
Speaker 5: were back to come into.
Speaker 3: The fore I don't think there's any doubt. I think
Speaker 3: the point is to get everybody focused not on war,
Speaker 3: but on making their countries better, on spending the money
Speaker 3: on their people in Ukraine, on rebuilding, on doing on
Speaker 3: doing good things for their people. That's how you get
Speaker 3: to a better place. And that's President Trump's agenda throughout
Speaker 3: the world and we see it being very very His
Speaker 3: agenda is very effective.
Speaker 4: People buy into it.
Speaker 3: I was on the phone with President Macrone last night
Speaker 3: giving him a download of what happened, and we had
Speaker 3: a really positive conversation about the outcome. So I think
Speaker 3: there's a lot of buy in to President Trump's leadership,
Speaker 3: the way he's leading the world today, not just the
Speaker 3: United States. It's just exceptional for me to watch.
Speaker 2: We've a few seconds left with you, sir, but I
Speaker 2: think that's an important comment to make relations with Europe.
Speaker 2: They are endorsing, Are they this approach that the President
Speaker 2: is taken, Because publicly they seem to be saying one thing.
Speaker 2: Are they endorsing this approach? Privately, I'm hearing a lot
Speaker 2: of endorsement, Jonathan. That's a very interesting development, sir. I
Speaker 2: wanted to finish on you personally, just for a moment,
Speaker 2: if we can, for the people internationally that aren't aware, Sir,
Speaker 2: you were widely regarded as a talented negotiated making a
Speaker 2: fortune in real estate before taking on these responsibilities, and
Speaker 2: you seem to be having an instant impact in the role.
Speaker 2: And it's started in January before Trump even got into
Speaker 2: the White House, with the agreement, the ceasefire and hostage
Speaker 2: change between Israel and Hamas in January. Can we just
Speaker 2: finish on how transferable those skills actually are. How different
Speaker 2: is this for you to go from that world of
Speaker 2: real estate to this life and death in Ukraine.
Speaker 3: Well, you know, I went into the real estate business.
Speaker 3: I was a young lawyer and I went in because
Speaker 3: I wanted to be Donald Trump to tell you the truth,
Speaker 3: and that really is the truth. By the way I've
Speaker 3: talked about this in the past, he was a great
Speaker 3: real estate guy, and to a large extent, I follow
Speaker 3: his example when it comes to negotiating. The President is
Speaker 3: all about clearing up misconceptions, clearing up miscommunication, figuring out
Speaker 3: how to get a good deal for all stakeholders, all
Speaker 3: constituents as a part of the deal, and then deciding
Speaker 3: beforehand what the outcome he wants is. That's how deals
Speaker 3: get structured, and they're not all that dissimilar in the
Speaker 3: political realm, and that's how we've done it in the
Speaker 3: Middle East. We follow his direction in that way and
Speaker 3: it's highly effective.
Speaker 2: Steve, You've been generous with your time this morning, sir,
Speaker 2: and we appreciate it. Hair Rum Blimbuck's vinements, We've going
Speaker 2: to do this again. Thank you very much for being
Speaker 2: with us. THEE House Special Envoy to Middle East, that
Speaker 2: Steve Whitcuff. Bnandi Geldberg of TD writes market sentiment moved
Speaker 2: from euphoria to dispasse so fast it's given investors whiplash.
Speaker 2: While the data has become concerning, the economy is still
Speaker 2: doing okay and show signs of moderating.
Speaker 6: Kannadi joins us now for more.
Speaker 2: It's good to see you, sir, Thanks for being If
Speaker 2: he says exactly that today, is that holekish?
Speaker 6: I think so.
Speaker 9: I mean you were looking at that tenure rate right
Speaker 9: around four thirty and saying, look how stuck it is.
Speaker 9: I think if he sounds dubbish, he would get raped
Speaker 9: to four percent. If he sounds hawkish, we can back
Speaker 9: up pretty significantly. The market's been pricing in a lot
Speaker 9: of you know, fed action, so to speak. If he
Speaker 9: comes out and says nothing, I think we go back
Speaker 9: up to four fifty four sixty.
Speaker 4: In a hurry.
Speaker 1: Hold on a second, on the short end, on of
Speaker 1: the long end, on the long end, Okay, Isn't that
Speaker 1: counterintuitive because some people are actually growing increasingly concerned about
Speaker 1: longer term inflation with the expectation that you've got debt
Speaker 1: issuance around the world, let alone deglobalization, et cetera. You're
Speaker 1: saying that if they sound somewhat hawkish or at least
Speaker 1: not ragingly dubvish, you could get a backup on the
Speaker 1: long end.
Speaker 8: How does that make sense?
Speaker 9: I think, Look, I think the market is so much
Speaker 9: worried about growth than inflation right now. I mean, we're
Speaker 9: all talking kind of stackflationary impulses here. I do think
Speaker 9: the Fed, if they face any sort of growth slowdown,
Speaker 9: will be pretty quick to act. But I think at
Speaker 9: this point they're going to pour a little bit of
Speaker 9: cold water on the market's expectation that they're going to
Speaker 9: come in effectively tomorrow and start cutting interest rates. They're
Speaker 9: still in wait and see mode, and that could push
Speaker 9: along end of the curve a little bit higher.
Speaker 1: Watch what they do, not what they say. That's what
Speaker 1: people are saying right now. When you have a drinking
Speaker 1: game around uncertainty and data dependency, how.
Speaker 6: Do you want to drink again?
Speaker 8: Cheers?
Speaker 6: There you go some hot water.
Speaker 1: There is a question though, about how much they're going
Speaker 1: to give a signaling with quantitative tightening. And I keep
Speaker 1: going back to this because ultimately we've heard about that
Speaker 1: from Scott Best at the Treasury Secretary. We've heard that
Speaker 1: potentially they could start to pause the allowance of their
Speaker 1: balance to roll off their lack of reinvestment as a
Speaker 1: way to sort of ameliorate concertainty around the debt ceiling.
Speaker 8: What do you take of that type of move If
Speaker 8: that does come, I.
Speaker 6: Think they'll try to sell it. As you know, this.
Speaker 9: Is completely technical, don't read into this. I think part
Speaker 9: of the issue is the markets are going to have
Speaker 9: trouble divorcing that from you know, interest rate policy.
Speaker 6: The Fed has always said there's two different programs.
Speaker 9: Our view is they can still wait a little bit.
Speaker 9: So our view is they don't have to actually cut
Speaker 9: QT here. They can wait until the next meeting or
Speaker 9: the meeting after. We actually think QT is going to
Speaker 9: run all the way until September before they end, with
Speaker 9: a little bit of a risk obviously to them ending earlier.
Speaker 9: I think that discussion has already gotten in the market.
Speaker 9: It's a little bit you know, optimistic. I would say,
Speaker 9: Scott is some love to have QTM today because that's
Speaker 9: three hundred billion less a year that the Treasury has
Speaker 9: to fund. I would say it's more more likely than
Speaker 9: not that it still stays in place for now. They've
Speaker 9: got plenty of time until that August X date. I
Speaker 9: don't think they need to rush. They can do it
Speaker 9: in June, they can do it in July. Heck, they
Speaker 9: can even do it in September.
Speaker 2: They Treasury secondary sat and you'll see and set exactly
Speaker 2: the same thing. By the way, so he essentially alluded
Speaker 2: to that, let's get to the full cast median dup.
Speaker 6: She has two cuts? Does it shives three? Two? I
Speaker 6: think let's a shot at the end to today.
Speaker 9: I think the risk is that it goes to three.
Speaker 9: I mean, we've actually got it still showing two. I
Speaker 9: think that conversation around inflation versus growth is really what
Speaker 9: everyone's nervous about. And you know, I wouldn't be surprised
Speaker 9: to see some of the dots actually move higher, not lower.
Speaker 9: So I think the expectation is the dots all shift
Speaker 9: universally lower because of the worry about growth. There's going
Speaker 9: to be some Fed officials who are worried about inflation,
Speaker 9: and there's a good chance the medium actually stays around two,
Speaker 9: some shift lower, some shift higher, and we don't get
Speaker 9: a lot of movement.
Speaker 2: The biggest risk I think for Marcus today, and we're
Speaker 2: all trying to gain this out. If you get a
Speaker 2: snack flashing me outcome and the revisions to the forecast
Speaker 2: and the Federal SEF that just looks tased and confused.
Speaker 6: That helps nobody.
Speaker 1: Well, it helps nobody who wants a FED put. But
Speaker 1: anyone who's looking for a FED put, well, good luck.
Speaker 1: I feel like the bond market maybe has moved away
Speaker 1: from the idea of a FED put a little bit.
Speaker 1: Stock markets still held out hope. It might be the
Speaker 1: one most susceptible to disappointment today.
Speaker 2: Do you think he's worried about what's developing in market
Speaker 2: or it's just not big enough, not yet.
Speaker 9: I think they're watching it closely. I think you know,
Speaker 9: ski scope certainly matters. I think the timeline matters as well.
Speaker 9: I mean, if you have a fifteen to twenty percent
Speaker 9: fall in risky assets over the course of a couple
Speaker 9: of weeks or a month, that's certainly concerning. If that
Speaker 9: happens over the couple of months or a quarter, that's
Speaker 9: something they keep an eye on. What we're really watching
Speaker 9: is the impact of this fallen equities on hir income consumers.
Speaker 9: There they have been the driving force of this economy
Speaker 9: for the last couple of years. They're the reason the
Speaker 9: economy has outperformed all expectations. If they snap their pocketbooks shut,
Speaker 9: I think that's the fear. I think that's what markets
Speaker 9: are trading right now. You know we've been taught before,
Speaker 9: don't bet against the American consumer.
Speaker 6: Not yet.
Speaker 9: I think there's a lot of nervousness, but the data
Speaker 9: is not there yet.
Speaker 6: That would be a night to change.
Speaker 2: Cannot appreciate your time as a ways, cannot go back
Speaker 2: that of tday. We'll begin the saund with Stuck's steady
Speaker 2: as Trina's White, the FMC rank decision, Kaki Chantry, if
Speaker 2: black Croft wang in on the market volatility, writing this,
Speaker 2: there is no single smoking gun, but rather we look
Speaker 2: to a mosaic of data and sentiment indicators that have
Speaker 2: all contributed to the pullback in risk.
Speaker 6: Gnkie joins us now for more Gnkey and morning, it's
Speaker 6: good to see you.
Speaker 8: Morning.
Speaker 2: Great Please You've said that because a lot of days
Speaker 2: we get this down draft inequities and a lot of
Speaker 2: people just say trade, trade, uncertainty, policy volatility, and then
Speaker 2: we see names that aren't really associated for that story
Speaker 2: down aggressively, maybe much more so than the gms of
Speaker 2: this world, which you think explains the fuller picture.
Speaker 10: Yeah, absolutely, so a couple of things. First of all,
Speaker 10: thank you for having me. I would characterize it as
Speaker 10: four different things that have been driving the markets over
Speaker 10: the last.
Speaker 8: Couple of weeks.
Speaker 10: So the first is, as we were discussing earlier, there
Speaker 10: has been a significant expectation of slowdown of growth for
Speaker 10: Q one and the entirety of the year, and that's
Speaker 10: coming from which brings me to the second point. That's
Speaker 10: coming from consumption or expectations of consumers slowing down. For
Speaker 10: the longest time, that has been the lynchpin of the economy.
Speaker 10: If you're at going to see consumers slowing down, and
Speaker 10: we've seen that in the soft data so far. We
Speaker 10: haven't necessarily seen it in some of the harder data,
Speaker 10: but if that comes about, I think that's going to
Speaker 10: be a real concerns. We've heard that from corporate commentaries.
Speaker 10: We're talking about Delta airlines. We've seen that from coals,
Speaker 10: we saw it a couple of weeks ago from Walmart
Speaker 10: and Target.
Speaker 8: That's another thing.
Speaker 10: I'll also say, of course this policy uncertainty that has
Speaker 10: been there all along, but now alongside the policy uncertainty
Speaker 10: and the questions about tariffs and immigration, there's now that
Speaker 10: very real slowing down that you're seeing. Finally, I'll say
Speaker 10: that we have to give a nod a little bit
Speaker 10: to some of the valuations that we already had coming
Speaker 10: into this year. We all admitted and we knew that
Speaker 10: valuations in the US market were a little stretched. So
Speaker 10: you're seeing that pullback happen. So it's a bunch of
Speaker 10: things that are coming together.
Speaker 1: We try to create a narrative for just momentum play.
Speaker 1: And I keep saying this because the tech trade has
Speaker 1: been the one that's got the most beaten up, and
Speaker 1: it comes at a time where suddenly people are questioning
Speaker 1: whether maybe their money will be better treated.
Speaker 4: In other places.
Speaker 1: You're seeing those flows rapidly shift. How much is that
Speaker 1: ultimately with underpitting this and it's sort of exemplified by
Speaker 1: the biggest losers.
Speaker 8: I think that's a part of the story.
Speaker 10: There's obviously, you know, two last week on Thursday, when
Speaker 10: we had those big moves and we entered into correction territory.
Speaker 10: A lot of finger pointing did happen towards what was
Speaker 10: the positioning, what were some of the hedge fund most
Speaker 10: shortened names, what were they doing all of that? And
Speaker 10: surely that plays a role, yes, But if that was
Speaker 10: happening in vacuum without the macro picture decelerating, if that
Speaker 10: was happening in vacuum, it wouldn't have been ten percent,
Speaker 10: it wouldn't have lasted, it wouldn't have been yesterday.
Speaker 8: So I think it's a combination.
Speaker 10: That was my point earlier that Jonathan, that you read out.
Speaker 10: It's a lot of things coming together while at the
Speaker 10: same time China and Europe are going the other way
Speaker 10: in terms of fiscal expansion. I think this is a
Speaker 10: great opportunity for investor to recognize, especially USM bust investors,
Speaker 10: to recognize the need for adding hedges and the need
Speaker 10: for diversification. To the extent you haven't had non US
Speaker 10: in your portfolio, to the extent you haven't had inflation
Speaker 10: link bombs in your portfolio, to the extent you haven't
Speaker 10: had anything other than tech in your portfolio, we think
Speaker 10: this is a good time to think about adding those hedges.
Speaker 11: So let me ask you on the non US So.
Speaker 11: Danny Berger earlier today shared a really interesting factoid that
Speaker 11: since the start of last year twenty twenty four, do
Speaker 11: we turn on the max seven is the same as
Speaker 11: it return on the decks? Yeah, going forward, what do
Speaker 11: you think that that relationship looks like?
Speaker 8: I think a lot depends.
Speaker 10: I mean, just yesterday, obviously we finally got the approval
Speaker 10: of some of the fiscal policies that are going to
Speaker 10: take place. I think a lot of that depends on
Speaker 10: what ultimately happens and at what pace.
Speaker 8: If I had to bet for the next.
Speaker 10: Ten years, I would still put my money in American
Speaker 10: Innovation and AI. Some of them is just large gap
Speaker 10: quality US companies. Over the next few months or even
Speaker 10: the next year. I think Germany, which is already, as
Speaker 10: you pointed out, had an amazing run. I think there's
Speaker 10: more to that story to go. But what is your
Speaker 10: time frame? When I sit back and think about how
Speaker 10: clients are positioned, especially in the US, and I think
Speaker 10: a lot of people are recognizing the fact that they
Speaker 10: haven't had the right diversification in their portfolio, that you've
Speaker 10: had too much of large gap stocks only in the
Speaker 10: US only. You haven't had Europe, you haven't had emerging markets.
Speaker 10: And I think this is a time when investors, I
Speaker 10: mean they should always be diversified, but certainly in the
Speaker 10: near term if the growth is coming from elsewhere, you
Speaker 10: want to be thinking about ways to add that.
Speaker 11: So recent investor survey showed the biggest ever outflow from
Speaker 11: US equities and showed the biggest ever outflow from the
Speaker 11: US to the rest of the world. Yeah, some people
Speaker 11: view this signaling the end of the really nasty technicals
Speaker 11: and that now we can look to at least neutral technicals.
Speaker 11: Do you buy that?
Speaker 10: I mean, yes, I follow the survey. It's a good
Speaker 10: one to follow if you're a market participant. I also
Speaker 10: look at how many people fill out the survey. We
Speaker 10: do our own and we just had a client call
Speaker 10: with over two thousand people that answered similar pole questions,
Speaker 10: and what they talked about was actually looking to buy,
Speaker 10: looking for an opportunity to buy a pullback in US risks.
Speaker 10: So I don't know if that survey by itself is
Speaker 10: the end all and be all in terms of technicals.
Speaker 10: I think this is an opportunity to educate. Honestly, this
Speaker 10: is our opportunity to go out and tell investors that
Speaker 10: there are other options.
Speaker 6: There.
Speaker 10: Used to be just one. There was no alternative. We
Speaker 10: all know that acronym. Now there are other options. Those
Speaker 10: options come in gold as diversifiers, in short data tips,
Speaker 10: it comes in the minimum volatility parts of the US market,
Speaker 10: and yes it comes in Europe and non US.
Speaker 2: Prices during the edge right now, isn't it over the
Speaker 2: last few months.
Speaker 1: I love that idea that essentially, if you want to
Speaker 1: talk about why Europe might make sense, now is your
Speaker 1: moment to go talk to people.
Speaker 2: It's easy to talk about now. We had people coming
Speaker 2: on the program for so many years and the same
Speaker 2: thing and nothing happened.
Speaker 1: Exactly, so now they can come out and say, look,
Speaker 1: there is hope there. I do wonder at what point
Speaker 1: we get a structural shift and just Obahama's point earlier
Speaker 1: about this idea, that are we looking at a long
Speaker 1: term shift in flows and potential and how.
Speaker 8: Do you price it in?
Speaker 1: And it seems like investors are not really suggesting that
Speaker 1: just yet.
Speaker 2: Gucky, appreciate your time, so it's going to see you.
Speaker 2: Thanks for dropping by Gaki chandrib of Black Crock still
Speaker 2: a proper introduction. David Rumstein at the Carlile Group joined
Speaker 2: us now for more. David, good morning, good to see.
Speaker 4: You, My pleasure to be here.
Speaker 12: Thank you for having me.
Speaker 2: You've caught up with some fantastic individuals over the last
Speaker 2: few weeks, including the former Treasury Secretary Steve Manuchin. But
Speaker 2: I think we want your thoughts, your individual view on
Speaker 2: where we are on this economy and where you think
Speaker 2: things a headache.
Speaker 12: Obviously, the economy depends on certainty, and there's some lack
Speaker 12: of certainty right now. But what's going to happen on
Speaker 12: taxes and tariffs? So when there's greater certainty, I think
Speaker 12: we can better predict where the economy is going to go.
Speaker 12: Muhammad knows that so well. So in my view, there's
Speaker 12: some uncertainty right now. I had a chance recently at
Speaker 12: an event over the weekend to interview the chairman of
Speaker 12: the House Ways and Means Committee, and you know, he's
Speaker 12: pretty bullish on his ability to get the tax cuts through.
Speaker 12: The President wants, but the market wants to see if
Speaker 12: it's actually going to happen, and then what's going to
Speaker 12: happen in the Senate, And then we have to see
Speaker 12: whether the tariffs are actually going to go through or
Speaker 12: at what level. So there's some uncertainty, but right now
Speaker 12: the market is not as disappointed and where things are
Speaker 12: as I would have thought. The market's not collapsing as
Speaker 12: some people thought it might. So you know, maybe some
Speaker 12: of the things that President Trump is doing is or
Speaker 12: having some impact on the market favorably.
Speaker 1: How much is a FED part of this discussion with
Speaker 1: people expecting them to step in and rescue the economy
Speaker 1: should grow slow enough versus prioritize inflation.
Speaker 12: Well when the FED, I think the Fed's view is
Speaker 12: the FED doesn't surprise people. Under JPW, the FED pretty
Speaker 12: much tells you what it's going to do and then
Speaker 12: explains what it's done after he does it. And today
Speaker 12: there's been no signals out of the FED that is
Speaker 12: going to be a rate cut that I can see.
Speaker 12: So I think it's unlikely you're going to get a
Speaker 12: FED rate cut today, and therefore I think the market
Speaker 12: would be shocked if it were. We'd be very happy
Speaker 12: if it did, but I don't think it will happen today.
Speaker 11: David Wall are we on two characterizations about private equity.
Speaker 11: One is a ton of money on the sideline waiting
Speaker 11: to come in and two distributions back. All feel very
Speaker 11: very slow. Well.
Speaker 12: For the last couple of years, there haven't been as
Speaker 12: many exit opportunities as people wanted. As a result, a
Speaker 12: lot of the private equity firms are ready to sell things.
Speaker 12: They were hoping at the beginning of this year as
Speaker 12: the new administration came in that there'll be looser regulatory controls,
Speaker 12: IPOs better and so forth. That hasn't yet happened. It
Speaker 12: may happen, hasn't yet happened. There is a lot of
Speaker 12: money on the sidelines, for sure, and I do think
Speaker 12: that some of the deals that have been talked about
Speaker 12: probably will get done. But I think the market is
Speaker 12: wait and see whether There are a lot of the
Speaker 12: large deals are going to be approved by the FTC
Speaker 12: or the Justice Department, and isn't clear that they will
Speaker 12: get approved. For example, the Whiz deal that was I
Speaker 12: guess announced or maybe going to be announced, it's not
Speaker 12: clear that I'll get approved. It didn't get approved before
Speaker 12: under Biden, or at least the temporary indications where it
Speaker 12: wouldn't have been improved. Today, I don't know whether that
Speaker 12: deal will be approved or not. That's a big deal
Speaker 12: with the market. Market be very happy that deal will
Speaker 12: get approved.
Speaker 11: My guess would be So you mentioned the importance of
Speaker 11: trying to resolve the uncertainty, and that's the upside. What's
Speaker 11: the downside? What's the thing that keeps you up at night?
Speaker 12: Well, clearly markets want to know what the rules of
Speaker 12: the game are. Most business people can adapt. Just tell
Speaker 12: us what the rules are, and we'll move one way
Speaker 12: or the other. Right now, there's some uncertainty is whether
Speaker 12: President Trump can get through the tax cuts he wants
Speaker 12: at the level he wants. Can they get through the Senate?
Speaker 12: Will those people get all the spending cuts they want?
Speaker 12: Nobody really knows. Will the judges stop some of that?
Speaker 12: There's some uncertainty Until there's more certainty. I don't think
Speaker 12: anybody can know for certain whether we're really going to
Speaker 12: have the economic boom that we would like to have.
Speaker 5: David, you have a relationship with the president, You've spoken
Speaker 5: to him. Do you believe there's something like the Trump
Speaker 5: put still in play?
Speaker 4: Well?
Speaker 12: I think President Trump came into office with big expectations
Speaker 12: from the market that he would do a lot of
Speaker 12: things that President Biden didn't do. So far, President Trump
Speaker 12: has tried to do a lot of these things. They
Speaker 12: haven't yet come to reality, but they may. I just
Speaker 12: don't know yet. I think he's fairly bullish about his
Speaker 12: ability to get these things through Congress, but obviously he's
Speaker 12: frustrated from time to time about what the judges are doing.
Speaker 2: Last question comes from a blimpeg subscribe. But does mister
Speaker 2: Rubinstein think the Orioles will win the American League East?
Speaker 2: It seems to be the only thing people care about
Speaker 2: right now. What's your wants to that?
Speaker 12: We certainly deserve because we have a great owner and.
Speaker 8: We agree with that high.
Speaker 12: Yes, if the ownership is the most important criteria, we
Speaker 12: should and we have a good team, and amazingly they
Speaker 12: can project how many games we're gonna win in advance
Speaker 12: of the season, and they're pretty accurate. But I won't
Speaker 12: say how many they project.
Speaker 2: I think Mike is part of the ownership group too,
Speaker 2: so I've got to agree with that as well. So
Speaker 2: it's always going to catch up with you. Appreciate your time.
Speaker 2: Thank you, Thank you very much David Rubinstein there at
Speaker 2: the Carlisle Group. Thank you, and do not miss David's
Speaker 2: conversation with former Treasury Secretary Steve Manuchin tonight on peer
Speaker 2: to peer Conversations Right here on Bloomberg. This is the
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