Israel's Ron Dermer on Iran Conflict

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Israel will pursue its military operations against Iran regardless of the progress of any potential negotiations involving the US, Israeli Strategic Affairs Minister Ron Dermer said in an interview on Bloomberg Television.

“We’re going to go about our operation to remove these two threats,” Dermer said Monday, referring to Iran’s missile and nuclear programs. “Whether Iran will decide to meet with the United States and agree to terms that they should have taken a month ago, or two weeks ago, or two months ago, you know, that’s up to Iran to decide.”

His comments came after US President Donald Trump said Iran wants to talk about de-escalating the four-day old conflict. 

Bloomberg Washington Correspondents Joe Mathieu and Kailey Leinz deliver insight and analysis on the latest headlines from the White House and Capitol Hill, including conversations with influential lawmakers and key figures in politics and policy. On this edition, Joe speaks with:

• Israel Minister of Strategic Affairs Ron Dermer.
• Bloomberg Politics Contributors Rick Davis and Jeanne Sheehan Zaino.
• Bloomberg Markets Live Managing Editor Kristine Aquino.
• Rapidan Energy Group Founder and President Bob McNally.
• Arbroath Group Founder and Managing Partner Christopher Smart.

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
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(00:20):
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Speaker 2 (00:25):
Thank you for being with us here on Balance of
Power Live from Washington.

Speaker 3 (00:28):
I'm Joe Matthew.

Speaker 2 (00:29):
Indeed, it's good to see you on Bloomberg TV and
radio as we follow President Trump north of the border
to the G seven in Canada, commenting earlier that Iran
wants to talk, this, of course following reports that Iran
was looking for off ramps following a brutal weekend of
missile attacks by Israel. Of course, that went back and

(00:49):
forth with a series of rounds. The President speaking earlier
as he appeared with Canadian Prime Minister Mark Carney, as
you heard here on Bloomberg.

Speaker 4 (00:56):
Listen, I'd like to talk, but they should have done
that before. I had sixty days and they had sixty days,
and on the sixty for his day, we don't have
a deal. They have to make a deal, and it's
painful for both parties. But I'd say Iran is not
winning this war.

Speaker 3 (01:16):
Not winning this war.

Speaker 2 (01:18):
Asked about reports Iran wants to work toward a resolution,
President Trump responding, they'd like to talk, but they should
have done that before this, following a report from the
Wall Street Journal saying as much that Iran was signaling
through intermediaries that it hoped to return to the negotiating table.
This is where we start our conversation. I'm glad to

(01:39):
say with Ron Dermer, Israel's Minister of Strategic Affairs, former
Israeli ambassador to the US, is with us live right
now on Bloomberg TV and radio. It's great to have
you with us, sir, and appreciate your time today. Can
you confirm that these reports are true? Have you heard
outreach from Iran?

Speaker 5 (01:57):
Well, there are some reports, and then the Iranians deny,
and then they may be passing messages through interlocutors to
the United States. I mean, you never know with the
Iranians what they're actually doing. But what I can tell
you is what's happening in the battle is they're losing.
As the President said, I think he was very diplomatic,
and he said Iran is not winning this war. They're
losing this war because Israel is determined to remove two

(02:21):
existential threats to our country. I mean, remember, Iran is
a country that openly calls it actively works to destroy Israel,
and they're on a pass lay weapons and we want
to remove destruction. We want to remove the ballistic threat.

Speaker 3 (02:34):
I'm sorry, no understood. So then is it too late?
Is my question?

Speaker 2 (02:39):
Do you need to see the destruction of Iran's nuclear program,
it's nuclear facilities before you ever consider going back to
the table.

Speaker 5 (02:47):
Well, let's remember what happened a couple months ago. The
President talked about a sixty day timeline. I was with
the Prime Minister when he went to Washington, and the
President told the Prime Minister, look, he wants to give
Iran a last chance to see if we can can
reach a deal. But what were the outlines of that
deal is that Iran was going to have to dismantle
its military nuclear capability. That's what was put on the table.

(03:09):
And the President has been very clear about this from
the beginning, not just the beginning of his presidency. He's
been saying this for years. Iran must never have a
nuclear weapon, and he's been very clear that Iran cannot
have a nuclear enrichment capability, which is how you get
the fuel for nuclear weapons, So then you don't have
to really trust whether Iran has it or not. If
they have no fuel for the car, then it's not
a problem, and he gave it time. Several weeks. His

(03:32):
Special Envoy Steve Wetcoff, had several rounds of discussions, about
five rounds of discussions. We were in close contact with
them throughout, and they were very clear of what was
going to be their red lines and a deal. And
unfortunately Iran thought that they could string these talks on
forever and that there wasn't going to be any deadline,
and it was clear to us in the last few
days that there was no chance that iron was going

(03:54):
to agree to it. Will Iran agree to something else now,
I don't know, but remember one of their sites has
already been dismantled by us. That's the naton's Enrichmond facility,
and we're also basically taking out their missile production factories
as well. So we're going to go about our operation
to remove these two threats. Whether Iran will decide to
meet with the United States and agree to terms that

(04:16):
they should have taken a month ago or two weeks
ago or two months ago. You know, that's up to
Iran to decide.

Speaker 2 (04:22):
Okay, all right, that's very important, Minister Dermer. I want
to go a little bit further down that road with you,
because we heard from National Security Advisor Hednagby who said
that Israel can tackle four Doe the site, the enrichment
site at four Dough deep underground alone. The conventional wisdom
here is that you need of the US to help
with that by way of bunker busting bombs. The MOAB

(04:44):
included is the destruction, Minister of for Dough the endgame,
and do you need us.

Speaker 3 (04:49):
Help to do it.

Speaker 5 (04:51):
I'm not going to get into operations this or that operation.
I hope by now people will not underestimate Israel's will
and ca capability of doing something thing. It's doing some
things in when we start a military operation. You saw
that with Hisbella, with the beepers. You've seen what's happened
in Gaza, You've seen what we've done as we're fighting

(05:12):
this seven front or so, I think it's safe to
say that you should underestimate Israel's capability to deal with threats.
What's important to understand, Joe, is that Israel started this
operation to remove two threats to the very survival of Israel.
We talked a little bit about the nuclear but there's
also the ballistic missile threats. Some of your viewers have
probably seen those scenes from Israeli neighborhoods where you had

(05:34):
a direct hit of a one ton missile. That's like
a bus filled with explosives flying through the air and
hitting a neighborhood. Now, imagine a country the size of Israel,
which is all the size of New Jersey, that Iran
would fire ten thousand or twenty thousand of these rockets,
and they have plans to build three hundred of these
a month, three thousand a year. You're gonna have ten

(05:57):
thousand every three years. This is not a threat that
we can tolerate. So we've launched an operation to deal
with both of those threats. And on day four, I
can tell you we're ahead of schedule of where we
want it to be, and we're going to win this
war with Iran, and so where's that schedule? Words hopefully
will turn the whole region to peace. Remember, we were
dealing with the a Ram Accords in the first term

(06:18):
and i'd liken the second term of President Trump to
expand that circle of peace.

Speaker 2 (06:23):
Well, before we go that far, minister, how far are
you ahead of schedule? How far has the Iranian nuclear
program been set back?

Speaker 5 (06:32):
Well, it's day four. We've taken out their main scientists.
Iran has the equivalent of the Manhattan Project, you know,
that effort to build a bomb by the United States
before World War Two that ultimately led to victory in Japan.
So Iran has this Manhattan Project and the main scientists
we're all taken out in the first few minutes of

(06:53):
this operation, and we've taken out information that they need
for nuclear weapons, and then facilities than a time in
Richmond Facility, which is their main enrichment facility, there's a
conversion facility that converts the uranium to the stuff that
you need in order to produce a momb that was
taken out. I mean we're setting them back. We're hitting
centrifuge manufacturing facilities, and we have a clear plan over

(07:17):
the next several days to degrade and destroy their capabilities
to produce and set them back several years. And in
that sense, we're ahead of where we thought we would
be on day four of this war. But we're going
to achieve what we set out to achieve.

Speaker 2 (07:31):
Minister Durmer, there's a report that President Trump vetoed an
Israeli plan to kill Iran Supreme Leader Ayatola Ali Kameeni.

Speaker 3 (07:39):
Is that true.

Speaker 5 (07:41):
I'm not going to get into any private conversations with
US officials. What I can tell you is the US
has been tremendous in the support that it's given Israel
from the beginning of this war. On defense, they have
helped us with the AEGA ships to knock down these
flying buses full of TNT that were landing on our cities,
or the trial to land were launched at our cities.

(08:01):
I should say they were helpful in the THAD anti
missile system that you have. You also have American pilots
in the air knocking down drones that are being launched
at US from Iran. So we are deeply, deeply appreciative
of everything that President Trump and his administration has done
in order to defend and protect Israel. I mean, we're
doing the job on offense and defense as well, but

(08:24):
we appreciate everything that they have done to come to
the defense of Israel. It's deeply, deeply appreciated, not just
by the Prime Minister of Israel and the Government of Israel,
by all the people of Israel. We've never had a
better friend in the White House than President Trump. And
our greatest ally in the world is the United States
of America. And I think there's an understanding, frankly, Joe
in America and not just Israel. Then when we are

(08:46):
fighting Iran, we're not just fighting for ourselves. We're fighting
an enemy of the United States. I mean, these people
lead millions, these leaders in Iran, the tyrants of Tehran,
they lead millions of people in chance of death to America.
So when we're taking them on, we are fighting your fight,
and it actually our victory will also be an American victory,

(09:06):
and I think it will help turn the region into
a different direction. I think you're going to see that
a lot of the ghosts sales, and maybe they appear
on your show, and maybe they'll be critical of that,
and maybe they'll issue a pro form a condemnation. But
believe me, in capitals throughout the Gulf and throughout the region,
people who have lived under the shadow of Iran's campaign

(09:27):
of carnage and chaos and terrorism throughout the region. They
are rejoicing now, and my hope is that we're going
to act.

Speaker 3 (09:37):
Offensively.

Speaker 5 (09:38):
No, I think the United States is going to have
to do whatever is it sees, and the President is
ultimately the one that makes that decision. Whatever it sees
it's in America's interests, and I have full faith and
confidence that the President will make that decision whatever he
believes is in the American national interest. But I think
one thing you should keep your eye on, Joe, is
what happened, what is happening with any Our fight is

(10:01):
not with the Iranian people. We have no problem in
Israel with the Iranian people, and America should not have
a problem with the Iranian people. They're actually a very
pro American population, probably second to Israel in the entire
Middle East. It's the regime, and that regime subjugates them
and also terrorizes all of its neighbors, including our Arab neighbors,
while calling for Israel's destruction and ultimately for America's destruction.

(10:24):
Remember we're the little Satan, and they call you the
great Satan. So pay attention to what is happening inside Iran.
When you see the fires starting to spark against the regime.
And believe me, Joe, the thing that is most concerning
for the leader of Iran is that his people will
turn on him and his regime, because after nearly a

(10:44):
half century of tyranny, they've had it. You saw them
come to the streets in two thousand and nine, you
saw them go to the streets in twenty twenty two,
and they may actually go now. And he's very, very
worried about that. So we're going to wage our war
to achieve our goals. But keep your eye what the
people of Iran are doing.

Speaker 3 (11:01):
We will, of course we will.

Speaker 2 (11:02):
You've made a number of references to what happens after this,
Minister Dermer, and I'm curious to just extend that a
little bit, whether this conflict ends at the negotiating table
or on the battlefield. However this happens, will it also
bring an end to your war with Iranian proxies? Will
it mean an end to fighting in Gaza?

Speaker 5 (11:23):
Well, I mean that's a very good question. A war
was launched against us on October seventh by one of
Iran's proxies, Camas, and you see what we've done since then.
When Iran basically opened many fronts against Israel, Hesbala in
the north, the Houti's in the south, and Yemen Shia
militias in Iraq, various different Iranian proxies in Syria, and
also directly from Iran itself. So we've been fighting this war.

(11:46):
But look what we've done. We have crushed Hamas in
Gaza and we essentially have decapitated Hesbala in Lebina. Iran
was this very powerful and dangerous octopus with all of
these arms. And what happen is those arms, those octopus arms,
have turned into t rex arms now and we have
cut them down to size. Now, in the wake of

(12:07):
this war, you say, well, how is it going to
be end diplomatically? Well, you know Japan ended diplomatically too.
You just had a surrender ceremony. What was it the
USS Missouri where you signed some documents. Now, we're not
looking to occupy Iran. We don't have a territorial conflict
with them. I don't think the United States is interested
in putting boots on the ground anywhere they don't have

(12:28):
to in the Middle East. That's not the question. The
question is, in the wake of this war, can we
then make it clear to Iran, that they have to
end their support for terror proxies, they have to give
up these ballistic missiles they're in violation of international law,
and that they have to end permanently any attempt for
a military nuclear capability. They want a peaceful nuclear program.

(12:51):
There are dozens of countries around the world that have
nuclear reactors. They don't domestically enrich uranium, and they can
do that. Those are the terms of what they I
think to get to an end of the war and
then to move on to the business of making peace
and continuing where President Trump left off at the end
of his first term when we made peace with four
Arab states, the United Arab Emeror Deerma, Crane, Sudan, and Morocco.

(13:15):
We should move that to other Gulf countries. And I
think there'll be a lot of surprises that will come
in the wake of this war, when you're going to
see actually peace deals start happening much faster than people think.

Speaker 2 (13:25):
Okay, I want to ask you in our remaining moment, Minister,
because it's important. We're seeing a lot of numbers here.
I want to ask you about casualties and what's really
happening on the ground.

Speaker 3 (13:33):
The National Emergency Services.

Speaker 2 (13:35):
At least twenty one people identified as civilians have been
killed in Iran's retaliatory strikes since Friday.

Speaker 3 (13:42):
Is that number still accurate?

Speaker 5 (13:44):
I think that number now is up to twenty five. Unfortunately,
I'm not certain. You know, when you fired these ballistic
missiles into civilian areas and they're doing it, Remember, we're
targeting terrorists in Tehran have power to simply, you know,
carpet bomb whole cities. We don't do that. We're only

(14:04):
targeting terraces and trying to get the innocence in Tehran
and elsewhere of Iran out of harm's way. We're telling
people just today we took out the National Broadcasting Service,
which just I'm telling the people of Iran. I think
we're rejoicing over that. But we got people to evacuate
all the areas around it. They don't. They're not telling

(14:25):
us where they're going to fire. They want to kill
as many people as possible, and they're slinging these huge,
flaming buses into downtown Tel Aviv. You see it on
your television screens. So I think we're fortunate that the
casualties have not been even more than twenty five, even
though that it's a terrible tragedy for each and every
one of those families. But given what has been thrown

(14:48):
at us and fired at us, I think it speaks
to how the Israelis have acted under fire and what
kind of resolve that they have, And they're running into
their safe rooms, staying in the safe rooms, and acting
with a great deal of discipline that our home front
command is constantly encouraging them get into those safe rooms
because those are the places where it's really really unlikely

(15:11):
that they're going to be heard. And we've seen terrible
scenes of destruction, but unfortunately fewer casualties than otherwise people
would have expected.

Speaker 2 (15:21):
We're glad that you could spend some time with us today, Minister,
and we'd like to stay close with you as this
all develops. Rondermer is Israel's Minister of Strategic Affairs former
Israeli ambassador to the US.

Speaker 3 (15:31):
We thank you for your time.

Speaker 2 (15:33):
I'm Joe Matthew and Washington as we follow the bad
to Canada. This is the backdrop for the G seven
summit that's getting underway right now. The open just took
place in Bloomberg's and Marie hor Dern following President Trump
to Banff, where she is right now, meetings getting underway.
In fact, we already brought you some images of the

(15:55):
President with Prime Minister Carney. He also sat down with
Germany's Chancellor Murrs and Marie, it's great to have you
with us here. You've had many conversations with Ron Dermer
and you can hear the passion in his voice today.
How is this adding to the conversation in Canada.

Speaker 6 (16:13):
Well, I think one thing is very clear when you
hear from Ron Dermer is that the United States has
been absolutely supporting Israel in its defense. Of course, a
key question when we saw this attack originally take place
is how much the United States know and how much
support has the United States given Israel in the offense
at the moment. And the President said this over the

(16:35):
weekend to ABC News that they are not involved in
it right now, but it would become quote possible to
get involved. They have been very involved in terms of
helping Israel strike down missiles and drones, but they have
not yet joined in terms of the offense. And Joe,
you asked an excellent point when it comes to Fourdoh,
the nuclear facility that experts for years have said it

(16:58):
would be very possible for Israel to strike alone and
actually hit that nuclear facility, given the fact how it's
buried into deep into the mountain. And we have already
heard from the IAEA today that Fardeau stands fine and
has not been hit. But Ron Dermer didn't want to
get into any of those specifics, but just coming back

(17:20):
to the point that the US has been a great support.

Speaker 3 (17:23):
Now.

Speaker 6 (17:23):
At the same time, the President was asked about these
reports in the Wall Street Journal that Iran is using
back channels trying to get some Arab countries to convince
President Trump to put some weight on Benjamin nettin Yahoo
for a cease fire, and the President said, yeah, the
Iranians want to talk. The President also said something has
been repeating for days, which is that he gave Iran

(17:44):
months for a diplomatic off ramp. He's talking about some
sixty days. But actually Joe I reported in mid March
that that first letter went over to the Ayahtola giving
them a timeline to have talks, to have nuclear talks.
We were supposed to see the sixth round of those
nuclear talks with Steve Wikoff, his envoy in Oman yesterday
and obviously those talks did not go through.

Speaker 3 (18:07):
So what's going to come from this meeting?

Speaker 2 (18:09):
Then, Anne Marie, we understand there won't even be as
much as a communicate. Bloomberg is writing about the extent
to which Donald Trump loathes the G seven. What's the
point of getting everyone together?

Speaker 6 (18:24):
Well, there won't be a communicate. And I think that
was a tactical strategic plan from Mark Karney and his
team because they remember what happened to them Prime Minister
Justin Trudeau in twenty eighteen when Trump left the summit
didn't sign off on the communicate. So what they're doing
this time around is they're trying to find points that

(18:46):
all of these leaders can actually agree upon and put
statements about those issues. So think of Critical Minerals or AI.
A key question is whether or not we could get
a statement now that this has overshadowed this, if we
could get some sort of statement from these leaders when
it comes to roan An Israel. So we will see

(19:07):
specific statements, but it won't be an overreaching communicate that
you would normally see in a G seven. We should
also note that the president here, besides, of course what
is going on in the Middle East and this concern
for the world about a wider regional war. They are
going to obviously be discussing trade. He is in the

(19:29):
midst of a trade war. We're not just Canada, and
he talked about that. At the top of his more
than hour meeting with Mark Carney, he said, I have
a tariff concept. Mark has something different, but trade is
going to be really key. He bought USTR Jamison Greer,
as well as the Treasury Secretary Scott Bessett, two individuals
have been leading on these trade talks. So the European

(19:51):
Union wants to make sure that they have these conversations
on trade, as well as Mexico's president who is preparing
for her first one on one meeting with Donald Trum
great reporting.

Speaker 3 (20:02):
Anne Marie Hordern with us from Banff, a.

Speaker 2 (20:04):
Beautiful location to hopefully get people in a room to
have some serious conversations. They'll be meeting in Cananaskis in
Canada and we'll let you know what comes from the
G seven with the help of Anne Marie and Bloomberg
Stavid Goerra, who was with us a bit earlier. I'm
Joe Matthew and Washington glad you came along. I can't
wait to hear what the panel thinks about all of this.
Genie Shanzano and Rick Davis are coming up.

Speaker 1 (20:28):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on
Apple Cockley and Android Auto with the Bloomberg Business App.
You can also listen live on Amazon Alexa from our
flagship New York station, Just Say Alexa, Play Bloomberg eleven thirty.

Speaker 2 (20:48):
On Bloomberg TV and Radio, YouTube and Bloomberg Originals. It's
great to have you along as we assemble our political
panel following four days of attacks between Israel and Iran
and a fascinating conversation a Newsy conversation with Ron Dermer
that started our hour. Of course, the former Ambassador to
the US, Israel's former ambassador. He's now Minister of Strategic Affairs,

(21:12):
generating a lot of news here and pretty remarkable to
hear him talk about American pilots. American pilots in the
air over the weekend helping to knock down missiles ballistic
missiles shot by Iran at Israel.

Speaker 3 (21:25):
He described them as.

Speaker 2 (21:27):
Massive burning buses falling into the middle of civilian neighborhoods
and cities across Israel, it was difficult to get some
hard answers on US involvement. Offensively, he essentially kept that
on the US and said that Israel has a clear
plan to set Iran back several years with its nuclear program.

(21:49):
Wouldn't get specific about four Doah or some of the
other nuclear sites, the enrichment sites that Israel has been targeting,
but also does not appear ready to get back to
the table with reports today that Iran is signaling through
intermediaries that it wants to return to nuclear talks. President Trump,

(22:09):
in fact, was asked about that earlier today at the
G seven, and he did acknowledge that that was the case.
Let's assemble our political panel now for their take. Bloomberg
Politics contributors Genie Shanzino and Rick Davis are with us.
Rick is our Republican strategist partner at Stone Court Capital.
Genie senior democracy fellow with the Center for the Study

(22:30):
of the Presidency and Congress. After everything you just heard, Rick,
does that sound like a situation in which the United
States will begin providing offensive support in Israel's attack against Iran?

Speaker 5 (22:44):
Yeah, Joe.

Speaker 7 (22:44):
I think it just depends upon how you define offensive support. Look,
we've consistently put up defense of israel assets ships in
the Mediterranean to shoot down missiles from the Hoodies and
from Iran. We share intelligence actively with Israel in order

(23:05):
to not just defend their country but also keep an
eye on Iran. And so you could argue that some
of those things could be deemed offensive, but it is
not the intention based on what this administration has articulated,
that we will get into a fight with Iran, right
and Donald Trump's been very careful. Even just Saturday, he

(23:27):
was saying, Gee, we hope that Iran shows up on
Sunday for the negotiations because the only way that this
is going to end is with a treaty of some kind.
And so I think he wants to play in so
much as you can if you're Donald Trump, the good cop.
And by the way, what would that treaty look like tomorrow?

(23:48):
Based on what they were talking about yesterday. Yesterday there
were all kinds of questions about, you know, getting them
to stop enriching uranium. I think that it's pretty clear
that israel strategy and what they're executing on right now
is going to keep that from being able to happen,
So what's to negotiate there. I love the fact that

(24:08):
Ron Dermer, former Ambassador to the US, has said that
we also want to include ballistic missiles in that no
more ballistic missiles being manufactured by Iran, and I wouldn't
be surprised that even before the end of this current
attack is over, that they'll start talking about no more
drone manufacturing. And of course that would help our friends
in Ukraine mentally, because they are exporting terror by basically

(24:33):
selling their drones around the world to groups that want
to put Americans and other democratic nations in harm's way.

Speaker 2 (24:40):
All right, Genie, what do you think is it possible
for the US to walk this line providing logistical support
essentially and defensive support to the extent that we've seen
American airmen in the air men and women presumably in
the air knocking down ballistic missiles fired by Iran. There's
reporting that the US NIMITS is on its way now

(25:00):
another carrier group to the region. We've surged so much material.
Is it possible that we could sleep walk into something larger?

Speaker 8 (25:10):
That's absolutely The fear is that this escalates and as
things go in a conflict like this, as violent and
as long as this goes, that the US is somehow
dragged in. And of course yesterday the President said that
it is possible we could be active in this conflict.
So I think that is still a possibility. It was
such a fascinating conversation, Joe, because you could just feel

(25:33):
the passion in the minister's voice as he talked about
this incredibly difficult issue. And one of the things he
raised was you know, hopefully he said, and I don't
want to put words in his mouth. After we are done,
we live in a more peaceful Middle East, and you
know here here to that the question always is what

(25:54):
does the final day or the day after the final
day look like? On both sides? What is the end?
And that is still not clear. We can see from
all the reports that Iran is overgunned, out maneuvered, outmatched.
Israel has the upper hand. They have been decimated in Iran,

(26:14):
the proxies have been decimated, but there is no certainty
that they don't go underground after this is all over,
and what happens after we regime change, which is what
Iran has been Israel rather has been talking about if
we see a regime change, hopefully that regime is more
peaceful and more friendly to the United States, to Israel

(26:36):
in the Middle East. But that has not been what
we've seen in history. So that is the big question
I have. What does this look like when this finally
comes to an end. And I know the President is
saying Iran is talking about coming back to the table
for talks. How do you have talks about a nuclear

(26:57):
peace agreement when your nuclear capabilities have been decimated, if
that's indeed what happens at the end of this. So
I think there's a lot more questions here about the
end and a lot fewer answers and understanding as to
what that looks like and whether we are in fact
actually living in a world that is more peaceful here
and in the Middle East.

Speaker 2 (27:18):
Rick Ron Dermer said, Israel has already dismantled then Atan's site.
This is Iran's main nuclear enrichment facility, and we know
that they had launched those attacks on Friday. There are questions,
and I asked Minister Dermer about what happens to Fourdeaux.
This is the enrichment site that is hundreds and hundreds
of feet beneath rock and it is believed that Israel

(27:40):
can't reach that far underground without the help of US
bunker busters. If they in fact can get there, should
we be trained on this site? Does Israel feel that
it needs to close the deal in four dou.

Speaker 9 (27:53):
Well?

Speaker 7 (27:53):
I think that if they had the means mo Abs
Mother of All bombs, bulk or busters, that I have
no doubt that they would probably have targeted that site
earlier on. But they know there are limitations. They have,
you know, fantastic precision guidance weapons missiles, but when you

(28:14):
bury something deep into a mountain side, it's trickier to
get to. And maybe that is the sum and substance
of ultimately a piece deal is that inspectors get to
go in and we make sure those centerfuges are dismantled
and they're monitoring. And so rather than destroy it with

(28:34):
with you know, offensive means, you get rid of it
through the negotiation process. And yet I think it's very
clear from your interview with Ron Dermer that Israel will
not stop as hostilities till they get the deal they want,
and he was not willing to describe what that deal
looks like. But I'm pretty confident that the two existential

(28:57):
threats that he described, a ballistic missiles and a nuclear program,
have to go away in order for this fight to stop.

Speaker 2 (29:06):
Are you surprised at the way this has unfolded, Genie?
I've mentioned this a few times over the past couple
of days.

Speaker 3 (29:15):
People our age grew up.

Speaker 2 (29:16):
Thinking that this would be the beginning of World War three,
that this was the line you couldn't cross to have
Israel in fact go to war with Iran. But seeing
Iran as crippled as it was going into this, with
its missile defenses attacked repeatedly by Israel, it's changed the
way we're looking at this entire dynamic. You've got a

(29:39):
stock market today that's up hundreds of points even as
this takes place in the Middle East?

Speaker 3 (29:45):
Are we missing something here?

Speaker 5 (29:47):
You know?

Speaker 8 (29:48):
I think that is how we grew up, and it
is a very scary proposition this has been. You know,
the Israel knew they had to go in now, if
they were going to go in at all, because of
course is Iran was weakened severely, as were the proxies.
I think the concern again is that there is no

(30:08):
guarantee that they stay weakened, and that is one of
the scary aspects of this. There is this assumption that
we take out this regime and what follows is much
friendlier to the Middle East and to the United States,
and that is not necessarily the case. Do they go
underground like North Korea and build a bomb. They have

(30:29):
the knowledge, they have the means, they have the capacity.
So those are all very scary propositions. And we should
also add from a domestic standpoint, Donald Trump is finding
himself in a domestic conundrum here on both this issue
and immigration. Similarly, where the MAGA right is standing up
all weakened on these two issues and saying you have

(30:52):
abandoned your promise so much so he came back and say,
Maggi policy is whatever I say it is. But that
is also a real threat to Donald Trump domestically.

Speaker 2 (31:02):
Great conversation as always with Genie Shanzano and Rick Davis.
I appreciate your insights, Bloomberg Politics contributors. For a reason,
we're going to talk more about the market reaction or
lack thereof, to what we're seeing here in the Middle
East and drill down on energy. Bob McNally from Rapidan
is going to be with us to talk about what
this means for the energy complex.

Speaker 1 (31:22):
Next on Bloomberg, you're listening to the Bloomberg Balance of
Power podcast. Catch us live weekdays at noon and five
pm Eastern on Apple, Coarcklay and Android Auto with the
Bloomberg Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.

Speaker 3 (31:42):
It is pretty remarkable. Stocks up, fixed down, oil down.

Speaker 2 (31:49):
Doesn't sound like a world in which we're on the
precipice of a global conflict breaking out of the Middle East,
unless Charlie Pellett is whistling past the graveyard. Here, we
have a pretty decent market on our hands after four
days of attacks between Israel and Iran. I want to
spend some time with Christina Kino, who covers the markets
for US, Bloomberg's managing editor for Markets Live with us

(32:11):
on Bloomberg. Christine, thanks so much for joining from New York.
Why do investors seem so confident? Is it just a
matter of one headline that Iran is looking.

Speaker 3 (32:20):
For an off ramp?

Speaker 10 (32:21):
Well, Joe, you know the history of markets is that
they are notoriously bad at pricing geopolitical risk. And you
know the same goes for what we're seeing now and
is latest out of the Middle East conflict. We did
see the initial knee jerk negative reaction on Friday when
news of Israel's initial strike against Iran emerged, and since

(32:42):
over the weekend, we have seen investors being willing to
recalibrate their appetite for risk, and clearly that's leaning more
toward the risk positive side of things. I mean, there's
definitely the headline that Iran is potentially willing to de escalate,
helping sent a little bit. But more broadly, you know,
there is still this very bullish sentiment in markets, particularly

(33:05):
in stocks.

Speaker 2 (33:06):
Well, I guess this can take on a life of
its own, But what are you looking at? What sectors
are power in this higher Well, Joe.

Speaker 10 (33:12):
You know, we're seeing the traditional sector. Semiconductors definitely one
of the sectors that are powering this rally. You're talking
about your magnificence of inn stocks, your big tech, and
that tends to be what we see, you know, during
the times of a rebound in markets, all these megacap
stocks that tend to get better when risk sentiment pulls back,
they're the ones that lead a rally. Right out of

(33:34):
the gate when we're starting the week on a more
positive note like this. The other thing the thing to
keep watch on is the dollar, because you know, it's
a relationship with risk a version really has been shifting
a lot. You know, gone are the days when the
dollar is an ultimate gain or an automatic game because
of risk a version. It seems like it's more responding
to developments domestically, particularly as we have the Federal Reserve

(33:56):
decision later this week.

Speaker 2 (33:58):
Really interesting to see most to the big defense names
coming back down to earth after the big rally we
saw last week. Lockheed, Northrop, L three all down three
percent or more at this stage of the game, which
will be following for you here, Christina, is great to
have you appreciate your read on the markets. Come see
us again here on Balance of Power Live from New York,

(34:19):
Christina Keno from our market's team, I'm Joe Matthew in Washington.
As we zero went a little bit more closely on
energy and more specifically oil were as I mentioned, looking
at lower prices today that goes for WTI and that
goes for Brent down about a percent and a half
each following a little bit of an uptick last week,
a more severe uptick right at the outset of Israel's

(34:41):
attack on Iran. We can't have this conversation without Bob mcnaalan.
I've been looking forward to doing this for a couple
of days here to get his read, the founder and
president Rapidan Energy Group, former White House Energy advisor in
the George W. Bush administration. Bob, welcome back. It's great
to see you. Should this market be more concerned.

Speaker 11 (35:00):
Great to be with you, Joe, You know, I think
it should, but you know what, you have to cut
it some slack. We have a pattern here where we've
had scary geopolitical disruption events going back to September of
twenty nineteen when the Iranians hit the Saudi Abcake stabilization plant,
most important oil facility in the world, had the biggest

(35:20):
open in Sunday and for crude oil markets ever, but
it didn't last. The Iranians chose to inflict light reversible damage.
Russian of Asia, Ukraine cruised, crude prices spiked, ended up
being a nothing burger. We've had the houties disrupts the
you know, Baba Ma Dab hasn't royal global oil markets
and Israel and Iran have come to blows twice last

(35:41):
year and now, and we still see oil flowing through
Horn Moves and being produced. So it's understandable why the
market would say, boya cried wolf.

Speaker 9 (35:49):
I've seen this movie before.

Speaker 3 (35:50):
Going back on and changes.

Speaker 2 (35:52):
I'm going to watch un does close the straight for well,
keep hearing this is that the worst case scenario for
the oil market.

Speaker 9 (35:58):
It's right up there in my view.

Speaker 11 (35:59):
The worst case is a damaging attack on the Adcake
stabilization plan. There is no more important and valuable piece
of real estate on planet Earth. One facility stabilizes and
controls about seven million barrels a day of Saudi production.
The Iranians hit it once just as just as so
that they could. They didn't do damage. If they went
back and destroyed that facility, Joe, we'd be in a depression.

(36:21):
We oil go to one fifty in a week and
then down to twenty, and it would be really the
end of the world as we know it. At seven
percent of world oil supply gone now straight at Horn
Moos is eighteen million barrels a day, about five million
barrels a day of product, thirteen million barrels a day
accrued not a lot of redirects. You can put a
little bit out through Yamboo and the Red Sea, and

(36:41):
a little bit out through UAE through Hobsham, but basically
you're losing fifteen fourteen million barrels a day. Our strategic
stocks can't cover that. Even if they were full, they
couldn't cover that. So yeah, that's right up there as
a second worst.

Speaker 9 (36:54):
I would think.

Speaker 2 (36:55):
Neither of these appear to be expected by this market.
It gets back to the boy who cried wolf. To
your point here, we had Ron Dermer on the program
at the top of the hour, Minister for Strategic Affairs
in Israel, and he's.

Speaker 3 (37:09):
Talking a tough game. They're not done.

Speaker 2 (37:12):
They're not near being done, according to Ron Dermer, who
talked about not only eliminating the nuclear threat, but the
ballistic missile threat. That's going to require a lot more
sorties and could potentially change.

Speaker 3 (37:23):
The nuances of this conflict.

Speaker 2 (37:28):
Short of the worst case scenarios, you're mapping out, what
else should we have our eyes on.

Speaker 11 (37:33):
Well, you know, Israel is a changed country after ten
seven twenty three, and the plan was always Gaza, Lebanon
and then Iran, and we're into the Iran phase. And
I think they're even hinting at regime destabilization, if not destruction.
They're emptying Tehran, et cetera. So Israel is not going

(37:55):
to stop until it achieves its objectives, very least neutralizing
nuclear facilities, missiles, and possibly destabilizing that regime. And I
don't believe President Trump is going to stop Israel from
doing that. So I would think that Iran has to
play the only card it has. It doesn't have military
escalation dominance with US or at Israel. The only card

(38:17):
Iran has is to threaten the thing that scares President
Trump perhaps the most, and that is five dollars gasoline here.

Speaker 3 (38:24):
And so whether it could make that happen, it.

Speaker 11 (38:26):
Can make that happen, And this debate is out there.
We shouldn't expect if the United States were to become
militarily engaged against Iran, or Iran were to try to
close the straits, it wouldn't be like the First Gulf
War or the Second Gulf War, where the US prevailed
militarily in hours to days.

Speaker 9 (38:41):
No, it would not be a cakewalk.

Speaker 11 (38:43):
Look at the Hutis, who are inferior to Iran, yet
they are keeping us at bay. Iran is able to
shut that straight for some period of time, a lot
longer than the market thinks. So I think they may
have to demonstrate that they're willing to do that to
get this crude price back, to try and convince President
Trump to reign in the Israelis.

Speaker 9 (39:03):
In a way, it's the only card that fascinating.

Speaker 2 (39:05):
You've been preparing for this moment, probably for a long
time as somebody in the oil space. What's different about
Iran and it's standing in the oil market It's importance
and scale in the oil market.

Speaker 3 (39:18):
Now, then, say, back in the nineteen.

Speaker 2 (39:20):
Seventies when an embargo had such an impact on our lives.

Speaker 11 (39:23):
Yeah, you know, back in the nineteen seventies, especially the
early nineteen seventies, the United States was the Saudi Arabia,
the swing producer, the spare capacity holder of oil. Going
back a little earlier, late nineteen sixties Arab Israeli war,
Arab oil embargo didn't matter because the United States had
a safe.

Speaker 9 (39:40):
Ample buffer in spare.

Speaker 11 (39:42):
But as we went through the nineteen seventies, that went
over to opek and the United States lost control. And
here we are with a one hundred million barrel a
day market with maybe three four million barrels a day
of spare, and all of the spare is in the.

Speaker 9 (40:00):
War zone in the Arabian Gulf. So we are We're in.

Speaker 11 (40:04):
A pickle, and the world's in a pickle. And what
I think people may not realize. In the seventies, the
United States knew we were vulnerable because we were losing control.
The imports were rising. What people may think now is
because of shale oil, because of the US is a
net oil exporter.

Speaker 9 (40:20):
I hear this all the time.

Speaker 11 (40:21):
We don't need the Middle East, We don't need the oil. Yes,
we do, because the price of oil is what we
really care about. What our consumers and businesses and investors
care about the price you pay for it.

Speaker 9 (40:32):
Not where it comes back, which is a segue, and whether.

Speaker 11 (40:34):
We're an importer or an exporter, whether we're big or small.
If there's a disruption anywhere, prices go up everywhere.

Speaker 2 (40:42):
In the meantime is reel Attacking Iranian energy sites means
an energy crisis in Iran or beyond the region.

Speaker 11 (40:51):
So it depends on what targets they attack. So if
they're attacking local oil terminals like outside of Tehran like
they did, or the South Park fourteen face fourteen gas saw. Yes, right, Yeah,
that's a problem for Iran. That's not a problem for
a mister and Missus America.

Speaker 9 (41:06):
That's not a problem for our Exxon station knows this,
that's right.

Speaker 11 (41:10):
And so the Iranians hit the Haifa refinery. These are
hitting domestic facilities in Iran and Israel. It's concerning because
they're spreading beyond military targets. However, it hasn't yet hit
flows or production that matter for the world, and that's
why crude is off today and folks are not so
much worried.

Speaker 3 (41:30):
Isn't that something This is all remarkable to hear about.

Speaker 2 (41:34):
As I think about your answer on the Strategic Petroleum Reserve,
we talked to the Energy Secretary last week.

Speaker 3 (41:39):
Chris Wright said it would take years. We've heard this
constantly from the administries.

Speaker 2 (41:44):
If first we have to repair the caverns and then
we can start bidding, it's going to be a year's
long process. But Bob, it sounds like we don't have years.
Based on what you just said, we might need that oil.

Speaker 11 (41:55):
Yeah, you know, sometimes our biggest mistakes are bipartisan and
Congress and its wisdom. Both parties, starting about five ten
years ago, started selling off the SPR just because we
thought we didn't need it, and then President Biden sold
about one hundred and eighty million barrels when there was
no emergency with Russia. We didn't lose any Russian oil.

(42:18):
Had we lost Russian oil would have been a reason
there wasn't.

Speaker 9 (42:20):
So here we are.

Speaker 11 (42:22):
Half of the reserve is full. Secretary's right, right, is right.
We'd have to be slow to refill it. I was
working for President Bush and we did it through a
royalty and kind program and took us.

Speaker 9 (42:36):
Years to get back to the tippy top.

Speaker 3 (42:37):
So you've already done this.

Speaker 9 (42:39):
I've done it. I was there in the White House
after nine to eleven. I've tried.

Speaker 11 (42:42):
I was there for the Second Gulf War. We thought
through the type of barrel flow and contingency planning, where
our inventories where spare capacity. And the math gets pretty
grim if we lose the Strait of Hormuz or Abcake
with or without an SPR.

Speaker 3 (42:57):
If that happened, you'd have to release what was left
in there.

Speaker 11 (43:01):
Now they would I think we'd organize a release between
us and then the Japanese and the Germans hold most
of the other stocks. But we're talking about maybe two
to three million barrels a day of flow. Hormuz is
eighteen total, maybe some redirects. We're losing fifteen, so fifteen
is a lot more than you know, three.

Speaker 3 (43:19):
Fascinating. It comes down to barrels, as you always say.

Speaker 11 (43:23):
It comes down to barrels. And you know, there's an
iron law of economics. You can't consume which you can't produce,
and the price is like the police officer that enforces
that rule. And if you lose fifteen and you only
can grab thirteen from spr and you can't produce more
in a hurry, we've got to consume that much less

(43:43):
and the price will do that by going up.

Speaker 2 (43:46):
What does this mean for the big oil names ex On,
Chevron and so forth.

Speaker 3 (43:50):
The stocks are hardly moving.

Speaker 9 (43:52):
And I understand that this is not a good thing
for them.

Speaker 11 (43:54):
You know, we've seen wars in the Arabian Gulf lead
to oil price spikes, but what comes after that at recessions,
demand downturns, and price drops. This is not a good
thing if you're an oil company or an oil producer.
Now what would be interesting is if there is regime
change in Iran and you could get private companies operating
in that country with the world's second second third largest

(44:17):
oil reserves excuse me gas reserves, third largest oil reserves,
so there's a lot of oil there and if around
were to have regime change, peace and stability would be strengthened.
But yeah, so it's but for the oil companies though,
these momentary spikes.

Speaker 3 (44:33):
Are dangerous, really interesting.

Speaker 11 (44:35):
I think it's the same thing for OPEC countries as well.

Speaker 2 (44:37):
Having listened to Bob McNally for a couple of minutes here,
you're not terribly worried yet, but things could change very quickly.

Speaker 3 (44:44):
Is that a fair assessment.

Speaker 11 (44:45):
You're right, I'm not terribly worried, but I'm more worried
than we are today. Here we are on the markets,
i'd be I would not be buying this sell off here.

Speaker 9 (44:53):
I think we're going to be going higher before we
go lower. I think this is not over yet.

Speaker 2 (44:57):
Fascinating as always, Bob McNally, wrap, great conversation. I'm so
glad that you come in. It's always great to have
you here in the nation's capital. I'm Joe Matthew and Washington.
Glad you're with us as well.

Speaker 1 (45:10):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on
Apple Cocklay and Android Auto with the Bloomberg Business App.
You can also listen live on Amazon Alexa from our
flagship New York station, Just Say Alexa Play Bloomberg eleven
thirty with.

Speaker 2 (45:29):
A bit of euphoria in the markets here Following the
big headline on the Wall Street Journal, pretty interesting Eron
is looking for an off REMP. Maybe that's not a shocker,
but following predictions of World War three, that sounds pretty
good to a Wall Street trader. Today, we're going to
get to the bottom of whether that is actually founded.
With President Trump appearing a short time ago G seven, Canada,

(45:50):
David Goa just brought us up to date, remembering that
this is the alliance he loathes. According to the headline
on Bloomberg, he appeared with Mark Carney a short time
ago and was asked about the situation. Might be a
good time to bring in Tyler Kendall into this conversation.
Bloomberg's Washington correspondent is with me here on Balance of
Power with the President abroad. The conversation has been just

(46:12):
as dicey, and we're picking up where we left off
last week, Tyler. With regard to any number of national
security concerns, the big one.

Speaker 3 (46:19):
Of course, is Iran and Israel.

Speaker 2 (46:20):
They're going to be talking about Ukraine and Russia at
the G seven with President Zelenski on the invite list too.

Speaker 12 (46:25):
Yeah, definitely Joe and President Trump. Actually, what we were
going to hear is that he appeared to confirm reports
that Iran really does want to de escalate here. He
says that he heard that they want to talk, and
he reiterated to them that they should make a deal
before it's too late. Now you're mentioning the other geopolitical conflicts,
But of course we have to keep in mind the
White House went into this G seven s and thinking

(46:46):
that trade was actually going to be the priority and
that they could show some sort of forward progress here
as we are now within that one month deadline to
July ninth.

Speaker 2 (46:55):
Yeah, it's amazing to think back up a couple of weeks,
you would think this would be all about tariffs. The
world has of course once again shifted under our feet,
which is why it's a great pleasure to bring in
Christopher Smart.

Speaker 3 (47:05):
He's with us in studio right now.

Speaker 2 (47:06):
Founder managing partner are Growth Group, former Special Assistant to
the President at the National Economic Council and the Obama administration. Christopher,
great to see in Washington to do with you, Lad,
you're back with us. It's pretty interesting when you back
away from this ever changing world. You've got Wall Street
on a tear today, but your note to clients would
suggest that recession odds are rising.

Speaker 3 (47:26):
How do you have both?

Speaker 13 (47:28):
Well, it's short term, long term, I guess you know,
if you had gone home Thursday night and not looked
at the news until this morning, or not looked at
the markets until this morning, you would assume everything was
fine and nothing had changed since then. Given what's happened
to the stock prices, into bond prices, and even the
oil prices kind of cooled off a little bit since then,
I think the immediate risks of what we see unfolding
in the Middle East appear to not have much impact

(47:52):
on global oil supply, particularly since the Saudiast and Opek
have been pumping a lot of oil since the beginning
of the year, and the global economy is slowing down.

Speaker 3 (47:59):
But there's all what was that risk?

Speaker 13 (48:00):
And that's why markets look a little jumpier right now
that we're going to get some outsized events closing down
the straits of horror moves or something that really does
upset that bound.

Speaker 2 (48:09):
That's the event that keeps you up at night, because
we all grew up Christopher with the idea that if
Israel were to go to war with Iran, that's over.
This is World War three times. You've heard Donald Trump
say it himself. He grew up in that same environment.
Are we learning otherwise?

Speaker 13 (48:24):
I think we're learning otherwise because the folks lining up
on the other side of the equation behind Iran aren't
lining up very closely behind the Iatola and the current government.
You have President Putin, who is one of Iran's allies,
offering to mediate the conversation rather than saying he's backing
Iran to the hilt. You've heard very little from China

(48:45):
other than let's try and de escalate this thing, and
everything should be solved through negotiations. So it appears, at
least right now, to be contained. But obviously, when you've
got that kind of exchange of missiles back and forth,
the risk of something going astray and some other US
asset being.

Speaker 3 (48:59):
Hit is always there.

Speaker 12 (49:01):
Well, I wanted to build on this because President Trump,
of course is at the G seven, but as you mentioned,
he took a call not from a G seven ally
over the weekend, but from the Russian president. And then
also we've heard from him actually just moments ago at
the G seven saying that he would potentially welcome if
China did come into these talks because he needs somebody
that Iran would speak to. So when it comes to

(49:22):
these strategic alliances that Iran does have, will they really
make an impact at the end of the day.

Speaker 13 (49:27):
It's hard to see how they will, particularly because Israel
frankly is winning right now and looks like it is
going to be able to drive the military balance as
far as it wants to go. And so that's why
you see I think these overtures on behalf of Iran
to say let's talk, let's talk. But again, it's hard
to see how involving either Russia or China improves the

(49:49):
prospects for peace as long as Israel continues to have
its eye on the ball, which appears to be completely
disarming Iran's military and maybe doing enough weakening of the
regime to see if something new and better can replace it.

Speaker 12 (50:04):
I was going to bring the picture actually to domestic
issues here as we have this interest rate decision of
course on Wednesday, and wondering how you're seeing these tensions
in the Middle East complicate an already complicated picture for
the FMC.

Speaker 13 (50:20):
Well, I think it gives the FOMC yet another excuse
to do nothing, because the uncertainty of the oil price
compounds the uncertainty around tariffs. Usually an oil price spike
is something that more monetary policy monetary authorities try and
look through as a one off. But the volatility and
the impact on expectations, I think is where the FED

(50:41):
will be focused most of all, as it has been
looking at the tariff equation.

Speaker 2 (50:46):
What do you think when you're looking at Donald Trump
at the G seven talking about as if it was
something done in error, Vladimir putin Russia somehow kick that
out of the alliance. Very skeptical of our allies in Europe,
kind of poking Mark Carney not with the fifty first state,
but a lot he's referring to the former Prime minister
and so forth. The Transatlantic rift does Wall Street care

(51:10):
about this. We talk about it a lot at home.
What about the market?

Speaker 13 (51:13):
I think it's hard for markets to price it in
on a day to day basis. I think where you
really do start seeing it impacted is when you talk
to some of my clients who are corporates with global footprints,
certainly Transatlantic footprints, and feel frozen, not sure quite where
to build their next factory, quite where to sign the
next contract with their supplier. That's the kind of thing

(51:34):
that's likely to play through not day to day, but
month to month and even year to year. I think
the difficulty with how to interpret the president's statements. I
think he really is focused on he wants to do deals,
and he wants peace deals. I'm not sure he thinks
about what happens beyond the peace deal or after you
come to agreement with Putin on Ukraine? Does that embolden him,

(51:56):
does that upset the balance of power? Does that change
the global order? I'm not sure he thinks in those terms.
He's really just looking to find a way forward for Iran,
for Gaza, for Ukraine, and see if he can secure
those kinds of understandings without necessarily thinking about what they.

Speaker 12 (52:16):
Mean for the next steps from peace deals to trade deals,
which of course was supposed to really be the other
big focus of the summit. We had the Treasury Secretary
Scott Besson on Capitol Hill last week saying that it
is highly likely that some of these trading partners are
going to get an extension beyond July ninth, those ones
that have been prioritized in these talks. In your note

(52:37):
you talk about investment in the US. I'm wondering what
that would mean for investment decisions in this country if
we see certain countries perhaps see those rates go back
up to where they were on April second, and others
get an extended pause.

Speaker 13 (52:49):
Well, I think that's the problem with the way this
has all been rolled out, is that the uncertainty is
very high, and whether there is a deal that gets
done with the country, will it be renegotiated because something
else up. How can you start planning with your trade
flows and your suppliers that may come out of the
UK without knowing what's going to without knowing what's going
to happen.

Speaker 3 (53:09):
With the EU.

Speaker 13 (53:11):
How do you understand your global auto supply chain without
a deal in place with Japan? I mean there are
lots of very complicated, interlocking pieces to this puzzle, and
as long as most of them remain undecided and uncertain,
I think that is where you build the uncertainty into
business decisions. And I'll just say one more thing. Sooner

(53:31):
or later, companies are going to have to make decisions.
They can't be frozen forever, and so they're going to
have to make more costly decisions. It's going to eat
into their earnings. It's going to eat into the returns
that investors should be expecting.

Speaker 3 (53:41):
Well, wait a minute, what happened in ninety deals in
ninety days? Christopher?

Speaker 13 (53:44):
Well, deals are deals, but what we've been getting is
sort of handshakes on a framework for the potential of
a memorandum.

Speaker 3 (53:50):
Understanding rather than a trade deal.

Speaker 13 (53:52):
And I think that's the kind of thing that make
investors crazy, because you know, they need to decide what
particular terrif line their particular product falls into and what
extra charge is going to be for that, rather than
a framework for you know, working this out over a
period of weeks and months.

Speaker 12 (54:08):
What about sector specific tariffs, how are you watching those?
Because that seems to be the more longer lasting, perhaps
more durable solution from this administration, when we do see
the so called reciprocal tariffs get more of a pushback.
And I'm particularly fascinated by the fact that these sector
specific tariffs weren't supposed to be in those original negotiations

(54:29):
on so called Liberation Day.

Speaker 13 (54:31):
No, indeed, And I think that is, you know, given
the court pushbacks on some of these tariffs that are
based on the president's international emergency authorities that courts are
deciding to rule against. The much stronger leg that the
president administration has to rest on are these sectoral tariffs,
whether it's on steel, whether it's on pharmaceuticals or the

(54:52):
automotive sector. And I think those are the kinds of
things that are potentially much more disruptives of the global
economy because it's not just a single bilateral relationship that
they're impacting, but pharmaceuticals, autos steal and I think that's
the kind of thing that we're going to have to
keep our eye on.

Speaker 3 (55:07):
No communicate has expected to come from this G seven.
That's how little we're getting along.

Speaker 13 (55:12):
I think they've learned their lesson.

Speaker 3 (55:14):
Yeah, that didn't go great in twenty eighteen. I guess it.

Speaker 13 (55:17):
Didn't go great in twenty eighteen in Ma Any case,
I think are important when you do have agreement, because
it does help frame things, but they also also tend
to highlight the disagreement.

Speaker 3 (55:26):
So is this the tree that fell on the woods?
G seven?

Speaker 13 (55:29):
Well, it's a complicated G seven, right, because we were
expecting to have some clarity on trade if nothing else.
You know, there's still talk that there might be a
bilateral deal with India or Japan announced because the President
will be meeting with both of those leaders. But I
think generally it is being tremendously overshadowed by the news
of the day, by what's going on on the ground

(55:51):
in Iran, in Israel, the potential for talking about Russia,
talking about China in this context. So I think it's
going to be hard to write that single headline coming
out of the G seven that we might all prefer
to be able to do.

Speaker 2 (56:05):
This is the world that we're in, Tyler. We've got
an image of President Trump with the Chancellor of Germany.
The meeting did happen, Chancellor Murr's and the President's got
a big smile.

Speaker 3 (56:14):
Looks like the meeting went pretty well.

Speaker 2 (56:15):
We'll see if anything comes of it, and if the
market wants to care about that today. Great pleasure to
have Christopher Smart with us in studio are Growth Group.
Great to be with you, Toast to Boston and everyone
in my former town when you get back home.

Speaker 3 (56:28):
Break to have you here in the nation's capital.

Speaker 2 (56:33):
Thanks for listening to the Balance of Power podcast. Make
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