June 23, 2025 • 47 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyJune 23rd, 2025
Featuring:
1) Richard Haass, Senior Counselor with Centerview Partners & President Emeritus at Council on Foreign Relations, joins for a discussion on the Israel-Iran conflict. Iran vowed retaliation and continued attacks on Israel following US strikes on its nuclear facilities, fueling fears of a wider war in the Middle East and rattling global markets. The conflict has also raised concerns about oil prices and inflation.
2) Robert D. Kaplan, author and foreign affairs expert, joins for a discussion on the Iran-Israel conflict and whether the US involvement stops at this weekend's strikes. The US operation targeted nuclear sites at Fordow, Natanz, and Isfahan, and included 125 aircraft, strikes by Tomahawk missiles, and the use of 14 Massive Ordnance Penetrator bombs.
3) Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets, on why oil has now become central to her 2025 S&P target. US equity futures advanced and crude prices fluctuated on speculation that Iran's response to Washington's bombing of its nuclear sites is unlikely to significantly disrupt oil traffic from the Middle East.
4) Steven Englander, Global Head of G10 FX Research and of North America Strategy for Standard Chartered Bank, brings us into the market open and discusses how the Fed's approach to rates could be reshaped by a potential oil and inflation spike. The yield on 10-year Treasuries rose two basis points to 4.39%, and a data release showed private sector activity in the euro area barely grew in June, as erratic US trade policy and geopolitical conflicts leave companies uncertain about what's next.
5) Paul Sankey, Lead Analyst at Sankey Research, discusses the path for oil and energy from here. Oil prices initially surged after US strikes on Iranian nuclear sites, but later dropped as fears of an immediate supply disruption faded. The oil market remains gripped by an escalating crisis, with risks including a potential disruption to supplies through the Strait of Hormuz and attacks on crude infrastructure in rival suppliers.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
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(00:25):
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Speaker 2 (00:27):
We efforted Richard Haas yesterday we are unable to get him.
We have him today and we extend out here commercial
free for you. In a conversation with the President Emeritus,
the consun Foreign Relations and of course senior counselor. Was
someen of you partners with Paul Far.
Speaker 3 (00:46):
More than that.
Speaker 2 (00:48):
The single best clarity before the attack I put out
on Twitter in LinkedIn Ambassador Has's essay in the Financial Times.
It's forever ago.
Speaker 3 (01:01):
Richard. It was three or four days ago.
Speaker 2 (01:04):
You wrote a jewel of short clarity of what to do,
what to hope for. If you wrote that essay now,
how would you change it?
Speaker 4 (01:14):
Well, good morning, Tom, and thank you. Look, the United
States faced difficult decisions in the aftermath of the Israeli actions.
We chose the path of acting in this case to
do an intense but idealistically or optimally narrow, military strike
(01:35):
against Iran. What's so interesting to me if I had
to say one thing at this point. If you think
about this crisis over the last ten or so days,
the first week was dominated by Israel, it deciding in
the aftermath of October seventh, the weakening of Iran's proxies,
it was going to act against the Iranian nuclear program
and more broadly against the Iranian political leadership. Then the
(01:56):
United States decided this was the moment to set back
the Iranian nuclear program. But now initiative has passed to
Iran for the first time in this crisis. It's the
Iranian leaders who control as much as anybody. How this
unfolds from this point on, And that's what's different. If
I were writing today, indeed I will be writing later today.
Speaker 3 (02:18):
That's what's different.
Speaker 4 (02:19):
For the first time since this phase of the crisis began,
decision making, if you will, is in the hands of
Iran more than Israel, more than the United States.
Speaker 2 (02:29):
Investor has and I want to make clear here that
Richard Hass redefined the international relations debate with the invention
of the Internet. At the Council Unfeigned Relations John Bellinger
at CFR, Richard Has writes a blistering essay with his
legal expertise. Does President Trump have the authority to strike Iran?
(02:51):
From where you sit with all your work back to
Northern Ireland. Did the president have the ability to act
from the executive branch? Or did you need to use
a different process with Congress?
Speaker 4 (03:03):
And the president had the authority like all of his
predecessors if you look at the history of a modern
American foreign policy initiative, and foreign policy has decidedly passed
to the executive I mean, Tom, what was it sixty
years ago Arthur Slessinger Junior wrote his essay and book
about the impurial presidency. This is nothing new. Congress virtually
(03:25):
never ever fulfills its constitutional obligation to declare war, and
we have used military force hundreds of times in the
absence of anything so formal. So I just flat out
disagree with that kind of a narrow legalist interpretation. That said,
if I had been advising President Trump, I would have said,
(03:46):
take a page out of the book of President Bush,
the father push forty one. Do things with the internationally
with building on the International Atomic Energy Agency skating report
of Iran, Do things with the Congress, do things with
the American public if you're going to use military force,
people should come to conclude that you tried to do
diplomacy and at the end of the day you reluctantly
(04:09):
had to use it. But also, by the way, would
have helped this president with his magabase. So I think
he should have gone about this differently. But did he
under American political tradition? Did he possess the authority to
do what he did?
Speaker 3 (04:22):
Absolutely, Richard.
Speaker 5 (04:23):
As the world awaits some type of response to moren
do we have any good information as to their capabilities
today from just their military capabilities into their leadership because
Israel has dealt a blow to their leadership, what should
we expect.
Speaker 4 (04:38):
No, they're both good points. I actually think they're unlikely
to retaliate. My reading of the Iranians is they're focused
on regime survival. In some ways. This is the second
great difficult period crisis for Iran's leadership since their nineteen
seventy nine revolution, the first one being a decade later
(04:59):
during the Iran Or War. So my guess is they're
going to focus on regime consolidation. Down the road, they
may focus on reconstituting their nuclear program. We have no
idea how much of their nuclear program is intact, but
I think it is difficult for the Iranian leadership to act.
They're trying to stay off the net because they don't
(05:19):
want to give signals for Americans or Israelis to target them.
They obviously have lost control over the airspace of their
own country. Their proxies are much diminished, so I don't
think they have very good options. That said, they can
still lob missiles at the forty thousand American soldiers in
the region. They can play havoc with shipping. It doesn't
(05:42):
take a lot to drive insurance rates up. They can
do asymmetrical warfare using cyber or terrorism, so they actually
have lots of capability. You don't have to compete with
US be two stealth fighters in order to be militarily effective.
But I just think that the Iranians right now, their
priority in the short is not to retaliate against the
(06:02):
United States.
Speaker 2 (06:03):
Richard Haus with US, we continue with Ambassador House Paul Sweene,
and I welcome all of you across the nation are
continuing that coverage. Here a difference this morning, the markets
are open. We will consider the markets across the arc
of the show. We thank Golder mount Avali from London
for being with us. Jumana Brasseti from Dubai, and we
continue here on YouTube and on all of our commute
(06:26):
our audio radio affiliates as well, and we say good morning.
Speaker 3 (06:30):
Paul Richard.
Speaker 5 (06:31):
For many observers, the American strike on the nuclear facilities
in around was a bold strike, a surprising strike. Does
that have an impact in other parts of the world.
I'm thinking about Ukraine and Russia, thinking about China. How
do you think those actors are viewing this?
Speaker 4 (06:49):
It was surprising more in the tactical rather than strategic sense.
We've been talking for years that we weren't going to
let her On gain nuclear weapons or even get close
to them. What was surprising, for how tactically was when
the President talked about his two week last chance for
diplomacy to work that turned out to be a faint
or a ruse. I think it was surprising tactically, not strategically.
(07:10):
I think the rest of the world took note both
that the United States acted as well as how effectively
the US military looked. What was brought together was was
criite extraordinary. My guess is the Russians probably have liked
this crisis any time. They like when energy prices go up.
They like when the United States expends munitions in other
(07:32):
parts of the world. That means we don't have to
give to Ukraine. People aren't talking as much about Ukraine.
I thought it was quite interesting at the G seven
that Ukraine almost seemed to be something of an afterthought.
So the Russians have to like that. My guess isn't
The Chinese are probably concerned about on the opposite side
of the coin, as a massive energy importer. They don't
(07:53):
much like instability in the Middle East, but all of
them have to be happy. I would think that the
United States is once again involved in the Middle East.
That means we have less bandwidth, less ability to focus
on safety Stasia or Taiwan, or on helping Ukraine.
Speaker 2 (08:09):
Richard Haass with us and folks, I can't say enough
about this. This is a book you can throw at
your smart alec kids, the college brats. They're home from
Oberlin and you throw this book at him, and you
won't hurt them because it's beautifully brief bill of obligations.
I can't say enough about Richard Haas's cry for citizenship
in America. I can't again, I can't say enough about it.
(08:31):
I'll put that out on Twitter and LinkedIn as well.
Part of our bill of obligations, Richard Haass is to
have a coherent foreign policy. We can go back to
clash of civilizations staggered a Zakaria in a post American world.
Robert Cappen coming up in a bit, maybe with a
Kissingerian realist theory. What's the host theory you observe at
(08:55):
the State Department right now?
Speaker 4 (08:58):
Well, State Department Israel to observe. It's actually a sad
story over the last decade or two of the weakening
of an institution, the hollowing out of the Foreign Service,
more broadly, the hollowing out of our interest or capability
in terms of diplomacy, in terms of the whole mission
(09:19):
of the Agency for International Development, the whole promotion of
democracy and American values around the world. We have dramatically
weakened one of the principal instruments of American national security.
We've then compounded a top with the hollowing out of
the National Security Council. This is an administration, I would
argue that is in some ways it's put itself dangerously
(09:40):
dependent on a top down approach to foreign policy, where
the president does things and quite honestly, the rest of
the administration falls in behind. I don't see an awful
lot of ground up analysis, but I do worry about
what's been now more than what decade and a half
of the weakening of the diplomatic dimension instrument of American
(10:01):
foreign policy and national security Richard.
Speaker 5 (10:05):
Some folks are even discussing, probably a small chance, but
still discussing regime change in a rent How do you
think about that topic?
Speaker 3 (10:15):
A couple of ways.
Speaker 4 (10:16):
One is I find regime change in the category of wish,
not a strategy. If Bibi Netsnahu, the Prime Minister of Israel,
or Donald Trump said to their generals, I want regime change,
they wouldn't know how to implement it. Regime change is
not something you can design an operation to bring about.
Colin Powell used to say, the military military instruments do
(10:38):
two things. They destroy and they kill. Regime change is
not is not on the menu. So that's one thing.
Second of all, you never know if you can bring
about You also never know what comes of it. You
know what would follow this regime? Is it necessarily something
that you want for all, you know, nuclear materials which
are clearly still existing around could get into the hands
(11:00):
of all sorts of groups that might be in the
Be careful what you wish for. So I take, I
take regime changes, unseerious foreign policy. If it comes about,
it's going to come from within Iran. It's not going
to come, if you will, from Israeli or American bayonets.
Speaker 2 (11:15):
Do we underestimate, ambassador, has the military violence of the
theocracy in Iran? The news flow to me, Ambassador, with
the respect of my colleagues, is so simplistic. Iatola theocracy,
the people of Iran. What's in between them? And the
(11:35):
answer is a harsh dictatorship.
Speaker 4 (11:38):
Right, You've got that, You've got all sorts of citizen
groups that are uh, listen to them, the so called basis,
you know, the the guys who used to come out
with the sticks and beat beat up on the Green
Movement protesters. And then you've got formal authorities, uh, the
military and and.
Speaker 3 (11:57):
And so forth.
Speaker 4 (11:58):
So this is this is a regime that has tools,
if you will, time of repression in addition to what
it can do as a more traditional marilitary In addition
to its its proxies. But this is a this is
a system, it's been in place now for more than
half a century, that has instruments of repression and coercion.
Speaker 2 (12:16):
Paul, I remember exactly where I was in the shock
of the hostages. Are you ready a country road in Pittsfield, Vermont,
on a cold, cold November day, walking down the road,
trying not to slip in my two tone Tony Lahma
cowboy boots, and we were in shock. Is a nation
(12:37):
over the failed hostage event?
Speaker 3 (12:39):
Yep?
Speaker 5 (12:39):
Absolutely, Richard, give us the point of view of Israel here.
A lot of folks are saying this might be a
special time for Israel to kind of reset the Middle
East as it takes care of, you know, many of
what it perceives to be its enemies, including obviously a
Ran most recently, can Israel change its position in the
(13:00):
Middle East or the balance of power in the Middle East?
Speaker 4 (13:03):
Well, I would argue Israel has much improved its strategic position,
mainly through the weakening of Iran's proxies as Bola first
and foremost Amas secondarily, then through regime change what we
saw in Syria. Israel has improved its position against Iran,
but hasn't resolved it. By that, I mean Iran remains
(13:23):
hostile to Israel has capabilities. And again we don't know
how much of their nuclear components survived. For all we know,
a lot of them were parked in undisclosed location. So
Israel is not out of the woods there. And even more,
Israel's not out of the woods dealing with Gaza or
with the three million Palestinians in the West Bank. And
(13:44):
I think that's still the biggest strategic question. So Israel
has the Iranian dimension and still has the Palestinian dimension
very much.
Speaker 2 (13:52):
Richard has one final question Paul and I in our
broadcast yesterday, Paul, please help me.
Speaker 3 (13:58):
I agree that we.
Speaker 2 (13:59):
Were thunder struck by the acuity and concision of our
Chairman of the Joint chief of Staff. I was blown
away by his report. Richard Hass you're the grizzled veteran.
What did you think of the press conference of our
Chairman of the Joint chiefs of Staff.
Speaker 4 (14:18):
Tom He was impressive. General Carilla, the head of Central Command,
is impressive. Let me just make a larger point. When
I look at American society, I think there's two great
pools of talent one is in the American military. The
professionalization there is awesome. And the other is something you guys,
you have all deal with all the time, which is
the best of American corporate leadership. These are people who
(14:40):
know how to run big operations and do it in
a really responsible, accountable way. So I'm not surprised when
I see great talent in the military rise to the top.
It is a meritocracy. These people are tested and they
are responsible for large numbers of lives. So I find
the post Vietnam American military is quite an extraordinary institution.
Speaker 2 (15:04):
Richard Huss, thank you so much. Just send of you
partners and a course is definitive work. The Council on
Foreign Relations Ambassador House back decades to the diplomacy of
a Northern Ireland solution.
Speaker 1 (15:23):
You're listening to the Bloomberg Surveillance podcast. Catch US Live
weekday afternoons from seven to ten am Eastern Listen on
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Speaker 2 (15:35):
There is an approach that each expert in international relations
and geopolitics takes. We had Richard Haass with this earlier.
Ambassador Hass looking at the fabric of American culture and
extending it out across his treatment of foreign policy, Robert D. Kaplan,
over a stretch of over twenty books, just simply speaks
(15:58):
of the map. If you're one of those believers in
get out the map and look at it, Kaplan is definitive.
His new tour de force is Wasteland a world in
permanent crisis.
Speaker 3 (16:10):
This is coming off my.
Speaker 2 (16:11):
Book of the year a few years ago, The Loom
of Time from Morocco to Persia. Robert Chaplin, thank you
so much for joining us. I'll cut to the chase.
You say, technology has permanently changed our map, our geography.
Is that true of this war with Israel and Iran?
Speaker 6 (16:31):
Yes, it is to an extent, because Iran is a
long distance from Israel on the map.
Speaker 3 (16:38):
But yet the.
Speaker 6 (16:39):
Israelis and of course the Americans have condensed that distance
through technology. The America excuse me. The Americans sent B
two bombers all the way from the center of the
United States white Men Air Force based in Missouri to
bomb Iran, so that Iran is is close to America
(17:02):
in you know, in in operational terms, as you know,
as Kansas was to the Indian wars in the middle
of the nineteenth century. And let me just make one
thing very clear here. Yeah, people who are saying that
(17:23):
this could this could lead to another you know, forever
forever war, Middle East quagmire, they're making a mistake of category.
Iraq is in different was in a different category than Iran.
Iraq was in the category of Vietnam and Afghanistan and
(17:46):
Korea in the sense that it involved tens of thousands
of ground troops which got stuck literally in a quagmire.
Here we're dealing with just air and naval sets. The
war could go in a number of ways. There could
be blowback, but as long as we stick with air
(18:07):
and naval assets, there's not going to be a quagmire.
There's going to be something different. It may be something bad,
but it will simply exist in a category different from
those four forever wars Korea, Vietnam, Iraq, and Afghanistan.
Speaker 5 (18:26):
Robert, what do you expect the response from Iran will be?
Speaker 6 (18:33):
I think there will be a response. It may take
a few days or a few weeks. It may be
a terrorist attack in Europe. It may be an attack
by Shia, a pro Iranian Shia militia in Iraq on
US troops not too far away. There certainly will be blowback,
(18:55):
but it's going to take a few months at least
to really just whether this decision by President Trump to
bomb the Iranian nuclear facilities was a wise or an
unwise decision. It will unfold stages, and.
Speaker 2 (19:15):
You're the loom of time, and folks, I can't say
enough about this is your single concise read on the
span from Morocco to the Eastern Arab world and over
to Persia. You talked there, Robert Kaplan, about the giant
of your academics, which is Clifford Gertz, and it's the
idea of culture described for our American audience today, the
(19:39):
Persian culture, the Persian culture extant since the theocracy of
nineteen seventy nine.
Speaker 6 (19:47):
Yes, Persia. Iran is not the Arab world. It is
not Iraq, it is not Syria, it is not Libya.
Iran has been a nation state of sorts on the
Iranian plateau for thousands of years. Iran was the world's
(20:08):
first superpower and antiquity. You're dealing with a highly sophisticated,
highly evolved organ you know, culture and civilization where there
is not one center of political power, but multiple centers
of political power. Uh. You know, I've been to Iran
(20:28):
several times. It takes two hours in traffic to drive
from one end of Tehran to the other. Being in
Iran is like being in Egypt or India, and that
is it's overwhelming. You feel overwhelmed. So the so the
idea that you know that a singular attack on nuclear
(20:50):
facilities is going in a linear fashion to lead to
a regime change is far too simplistic. They're you know,
they're very very well likely could be a regime evolution,
as I call it, but it will involve many other factors,
and it will be internally driven. It won't be imposed
(21:13):
from the outside.
Speaker 5 (21:15):
Robert, what do you think our the US strategy should
be towards Iran at this point? Again, the over the weekend,
a significant escalation and military action, it should be our
strategic view.
Speaker 6 (21:28):
Well, at this point, we should try, as President Trump said,
to keep it a one off that we try as
hard as we can not to attack again, not to
respond again. You know, if they're just going to do
a desultory pin prick response like they did after President
Trump bordered the assassination of Kassamsuleimani, the head of the
(21:52):
El Kutz force, back in twenty twenty. In January twenty twenty,
I think it was there's no need to spawn, you know,
the policy now should be to lower the temperature, not
talk about changing a regime from the outside. Because the
damage has been done. It will take days or weeks
(22:14):
to more properly assess exactly how much damage was done.
But the idea that the Uranians are just going to
rebuild their nuclear facilities is very simplistic. They're never going
to rebuild it to the point that Fardeau or Natans was,
you know, way before they get to that point, the
(22:36):
Israelis will be able to attack them. So this attack
really did do substantial damage.
Speaker 5 (22:44):
What do you expect Israel to do here? Because a
lot of folks are suggesting this is a unique time
for Israel here in terms of exerting and expending and
its role within the Middle East and add to its security.
Is this a unique time for Israel?
Speaker 6 (23:00):
Yes, it is because you know, Benjamin Netanyahu, love em
or hate him, is a world historical figure. People may
forget Clinton, Obama and Biden and half of the European
prime ministers, you know, who will be forgotten in the
course of the decades. But decades from now, people will
(23:21):
be writing biographies about Netanyahu, you know, because he's been
in power so long, and the way he was able to,
you know, achieve tactical surprise in his attacks on Iran,
and then I'll use the word manipulate President Trump into
taking action on his own is is nothing short of extraordinary.
(23:44):
I think with these the smart thing for the Israelis
to do now, now that they got help from the US,
is to give the US something that is start the
process of withdrawing from Gaza.
Speaker 2 (23:58):
Robert Kevin one final question, and one's going to run
on with the day. And again, folks, I can't say
enough about Wasteland. Robert Caplin's new effort in The Loom
of Time, my book of the year. You wrote a
monograph I'm going to call it The Tragic Mind, taking
us back to Greek mythology and how we need tragedy
to move forward. Does President Trump have a tragic mind
(24:21):
in there somewhere? Is there a philosophy of tragedy?
Speaker 3 (24:25):
Is a foundation strength? Very hard?
Speaker 6 (24:28):
Yeah, Tom, that's a very hard question to answer. Because
I don't sense it. I think he's too vain and
superficial to really have a deeply, a deeply developed sense
of tragedy. But I could be wrong. I could be
wrong on this because the person who really did have
(24:48):
a deeply evolved sense of tragedy was President George H. W. Bush,
who is very cautious and another. You know, the great
thing about his administration was not what happened, but all
the bad things that did not happen because of governance.
Speaker 2 (25:06):
This has been wonderful, Robert Kaplam, thank you so much.
It's a muster read folks wasteland, a world in permanent crisis.
Speaker 1 (25:13):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
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Just say Alexa Play Bloomberg eleven thirty.
Speaker 2 (25:30):
Lri Calvicina joins us for a quick discussion here this
morning with the RBC Capital Marcus Lorie. How did your
strategy change this weekend as you published for Monday?
Speaker 3 (25:42):
How do you amend to a new war.
Speaker 7 (25:46):
Hi Hi, Tom, So, thanks for having me. To be honest,
we didn't change anything. We had done a piece about
a week ago laying out our framework for how we
were thinking about rising tensions in the Middle East and escalations,
and I would say, you know, while while I got
more convinced that we needed to have some sort of
short term market draw down, which obviously we haven't gotten
so far yet, we really just continued to focus on
(26:08):
the things we've been focusing on, and I would say,
you know, maybe where our view is a little differentiated.
Everyone's debating the oil price supply disruption potential. We obviously
agree that's one big transmission mechanism to equities. We also
think that you have to look at it through the
lens of valuation. Heightened uncertainty on geopolitics typically suppresses pes
in the S and P. Five hundred. And also, we're
(26:28):
very concerned about sentiment. This has been a market that
has been melting up because of very very modest inflections
in various sentiment gauges, and we think that those sentiment
gauges could be at risk down the road from an
episode like this.
Speaker 5 (26:40):
Laurie listening to the FED last week again, they don't
seem to be in any rush to cut rates here,
so that maybe puts even more pressure on corporate earnings here.
What is your sense of kind of where corporate earnings are?
Is there a risk to I don't know out of
the upside where the downside from here?
Speaker 7 (27:00):
It's a great question, Paul, and I'll say our rates
team is still looking for September cuts, but they have
also highlighted the risk that perhaps the FED starts a
little bit later, and so we do think that could
potentially be a headwind for equities if you start to
see those cuts pushed out. I would say from an
earnings perspective, you know, we are sitting at two fifty
eight in our own twenty twenty five Sep. Five hundred
and forecast. It's a little bit below consensus. On a
(27:22):
bottom up basis, we think that's still the right number
for this moment in time. If we look at gauges
of earning sentiment, they've rebounded, but they're about as good
as they tend to get if you're not coming off
of an extreme low on a big crisis.
Speaker 3 (27:36):
That's right where I wanted to go.
Speaker 2 (27:37):
As we staggered towards July fifteenth, I mean, folks, with
all the distractions, I guess it's about earnings. LORI, where
is the street now?
Speaker 3 (27:47):
Is the street still.
Speaker 2 (27:49):
Overestimating earnings and then they pull them down?
Speaker 3 (27:52):
Or we now as a consensus going the.
Speaker 2 (27:54):
Other way where we're low balling like Lori Kelvisina and
we'll drag it up later.
Speaker 3 (27:59):
Which is it?
Speaker 4 (28:01):
So?
Speaker 7 (28:02):
Look, I think we're in a discovery process, right and
I think that we've had these massive uncertainties from tariffs,
and we've listened to a bunch of companies that just
came out in the last reporting, Sayson saying, you know, Frankly,
I think they were in a state of shock, but saying, look,
you know, we can manage through this, we can mitigate.
We're going to pass things on through pricing and customers
are just going to eat it and there's not going
to be any erosion in demand at least that's what
(28:23):
you're hearing from more sort of the industrial side of
the economy. We're going to see if that's right. The
consumer companies having a much tougher time, you know, and
Frankly have sounded less optimistic, and we're going to see
how they're feeling as well. But you know, I think
there's still a little bit of downside risk to the
bottom of consensus numbers here and there, And you know
that contrasts with the numbers having you know, kind of
(28:44):
rebounded a bit in here, and so, you know, my
my concern is that we're going to see things go
the other way a bit.
Speaker 2 (28:50):
Paul Discovery process, they were a great barbine.
Speaker 3 (28:55):
They play blues like.
Speaker 5 (28:56):
Nobody Lord to the extent that some level of terriffs
are year to stay. Does that suggest that the bigger
you are, the better you are on your income statement
to deal with that, that would suggest, you know, big
cap stable companies versus maybe smaller mid.
Speaker 7 (29:11):
Camp Yeah, that's generally the rule of thumb we use,
Paul whenever there is something that poses a challenge to
corporate America to manage through. The smaller companies unfortunately don't
tend to manage through it quite as well. And that's
because they have less bargaining power, whether you're looking at
sort of their employees, whether you're looking at their suppliers.
(29:31):
And you know, it's interesting, Paul, I was, I can't
remember what survey this came out in last year. I
think it might have been the Duke's CFO survey. But
they did, you know, sort of a study on are
you using AI or not? Are you using automation tools?
And bigger This wasn't necessarily a big cap versus small cap,
but bigger companies were more likely to be using those
automation tools and to be using tools like AI to
enhance their efficiencies than smaller companies. And so you know,
(29:54):
even frankly, some of the tools that are being engaged
with are just different when you're looking from big cap
companies small cap companies.
Speaker 2 (30:01):
Lurri Cavasena, thank us so much, RBC Capital Markets.
Speaker 1 (30:09):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Coarclay, and Android
Auto with the Bloomberg Business app. You can also watch
us live every weekday on YouTube and always on the
Bloomberg terminal.
Speaker 2 (30:24):
Now, the markets we really wanted to focus in here,
and they have in studio Paul Sank coming up on
oil world class and even better, Steven Englander with its
Sandra Charter Bank joining us at the studio. Now, folks,
this is going to be a window in the global
Wall Street where they don't just look at yen in
euro Steven Englander, you walked in and you said, cad yen,
(30:46):
which is the number of Japanese yen per Canadian dollar
since a pandemic. It's been massively strung Canada weekend.
Speaker 3 (30:55):
And it's reversed.
Speaker 2 (30:57):
How do you glean information from a study of Canada
versus Japan.
Speaker 8 (31:03):
Well, you know, I'm thinking of it more short term
that you know, even though yen traditionally is a safe haven,
it's it's still low yielding, has the lowest drilled interest rates.
The politics are kind of a little bit soft, and
it's very exposed to higher oil prices, whereas some of the.
Speaker 2 (31:24):
Weakness we're seeing today in dollar yen as well.
Speaker 8 (31:27):
Yeah, and you know, and what you're seeing is is
that the end is actually one of the weakest currencies overnight.
Canada is holding in there because it does have oil.
You know, it's trade related.
Speaker 3 (31:40):
It's not as.
Speaker 8 (31:41):
Exposed to to July the ninth, and you start of say,
if things go south that you know, maybe cad is
continues to hang in there.
Speaker 3 (31:49):
But you know, yeah, you bet at.
Speaker 2 (31:51):
The standard charter bank is strong, loooning weaker.
Speaker 8 (31:55):
Yeah, well, we don't bet, but it's certainly sort of
something that we sink, we we would think about if
you're asking us, you know how markets might trade.
Speaker 2 (32:05):
Put me in my place there?
Speaker 3 (32:07):
Why did you save the interview?
Speaker 2 (32:10):
Steve Hall?
Speaker 5 (32:11):
Has a world of rising tariffs impacted your view of
currencies here. We don't know where the tariffs are going
to shake out, but we do know that we got
to pay attention to these things for at least for
the next several years. How does that impact your view?
Speaker 8 (32:24):
Well, it's made very complicated because there are three factors
that are involved. One is that they've increased the risk
premium on US assets a lot.
Speaker 3 (32:33):
Part weaker dollar, yeah.
Speaker 8 (32:34):
Partly because of you know, the expansion of the envelope
of tariffs beyond what anybody thought was reasonable, but also
the possibility that they can do everything else with the
same kind of broader envelope of policy options. Second thing
is it's risk off for the rest of the world.
You know, if you get tariffed up, that's no fun.
(32:56):
It's going to disrupt trade.
Speaker 3 (32:57):
And the third thing.
Speaker 8 (32:59):
Is that normally you would sort of say, look if
your if US tariffs on Europe go up, the euro
would fall, although that hasn't been the case yet because
the risk premium has dominated. How you weigh all those
three is very complicated.
Speaker 2 (33:13):
I look, Steve Angloder in my book of the Summer
Ken Rogoff out of Harvard, our dollar year problem fabulous, fabulous,
look back at Rudy Donbush and the late Stan Fisher
and all in our dollar for the greater public listening
right now, should they have dollar worries?
Speaker 3 (33:32):
Yeah? They should.
Speaker 8 (33:33):
I think that the You know what makes America great,
I think is the ability to attract money from abroad
at low interest rates. That's been the history of the
last twenty or thirty years. Invested in new technologies, get
high rates of return and do very well of it.
You know, the US is like a big hedge fund.
Speaker 2 (33:54):
Do you suggest that's bro I love that. Can we
steal that?
Speaker 3 (33:57):
Yeah?
Speaker 2 (33:57):
Lisa right, that the US is like a big edge
fun My book of the Year by Ruster Sherman. Rockefeller
now is basically a trease on capitalism in America. Steven
Anglicher the Standard Charter Bank with this on quote, the
US is like a hedge fund. Is this the financialization
of America? It's only giving gains.
Speaker 3 (34:19):
To the elite, not necessarily.
Speaker 8 (34:22):
I think everyone benefits, you know, from the development of
new technologies. I mean, even if you're poor, having a
cell phone with remarkable capabilities is a wonderful thing. But
I do think it's dependent on being able to borrow
cheaply as long as you're running a current account deficit,
and that's not going to go away, so, you know.
(34:44):
And my worry about the dollar is that some of
the policies that are being pursued and that are contemplated
may raise the cost of capital to the most dynamic
sector of the US and that would be a pity.
Speaker 5 (34:58):
Speaking of the US dollar year date, we've seen it
down you know, eight to nine percent, having a little
bit of a bounce back today, maybe risk even how
much more downside do you think there could be? Because
I've been asking, I don't know anything about your world,
the currency business. So my stock question is are we
ever going to see a bear market in the dollar?
I've been asking that for six years. Are we starting
to see the beginning of one? Or is this just
(35:19):
a trade?
Speaker 8 (35:21):
It could be if you think of say we have
you know, another session a year from now, and tax
build has passed, tariffs have been resolved, and the US
is growing sluggishly, has a big fiscal deficit, has a
big current account deficit.
Speaker 3 (35:40):
That could be real trouble for the dollar.
Speaker 2 (35:42):
What does one final question, what does the standard Charter bank,
with all of your heritage of the Pacific RIM and
particularly down south over to India, what do you see
of a vibrancy in the Pacific RIM right now?
Speaker 8 (35:55):
Ex China, you know, they're hit with the same issues
everybody else has hit. You know, there's the deflation being
exported from China. There's loss of confidence because of the
you know, the risk on the tariff side. So you know,
nothing is catastrophic, but a lot is sluggish.
Speaker 2 (36:14):
I look, you know, just in the space folks, I
can do this on the Bloomberg Professional Service. I got
like a five standard deviation plus two to minus three
on Taiwan dollar. I got a massively strong Taiwan dollar
Sing dollar in the rest is that on an asymmetric basis?
Is that strong EM or is that weak US? Or
(36:37):
is it something different?
Speaker 8 (36:38):
Well, there's a lot of speculation on you know, what's
causing these moves, and I think there's some anticipation that
perhaps currency adjustment was substitute for some of the trade
impediment adjustment that the US wants that you know, especially
Asian currencies as a group, may prefer to allow their
(37:00):
and he's to appreciate rather than sort of say, use
that as a leakage. Yeah yeah, but rather than open
up vulnerable sectors like farming and stuff where which is
politically important, they say, let's socialize this. Everybody will take
the hit through the exchange.
Speaker 2 (37:16):
And you know, my keymail me and he says, Tom,
use the damn terminal. So yeah, I'm doing the t function.
Speaker 3 (37:21):
Yeah a monthly.
Speaker 2 (37:22):
I'm trying to impress englander.
Speaker 3 (37:24):
Here.
Speaker 2 (37:24):
I got Taiwan dollar in April plus two standard deviations
on trend and now it's minus exactly minus three. That's
a five standard deviations swing. That's it's it's like more
than substantial.
Speaker 3 (37:39):
Was that?
Speaker 2 (37:40):
Will you come back now that we use the terminal?
Speaker 3 (37:43):
I'm always impressed when I talk to you. Well please,
there you go.
Speaker 2 (37:47):
So that's what the third divorce lawyers, Thank you so much,
greatly appreciate it. He's with a standard charter at Bank
and Studio.
Speaker 1 (37:56):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay 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 (38:12):
They emailed the White House today, I say, can you
give me an oil tweet from the president because we
got Paul Sanki coming and joining us. Paul Sanki, Sankie
researcher four. Our conversation we're going to do quickly here
the President of the United States moments ago, all caps. Everyone,
come keep oil prices down.
Speaker 3 (38:30):
Period.
Speaker 2 (38:31):
I'm watching exclamation point. You're playing right into the hands
of the enemy. Don't do it. What would you say
to the White House and the manipulation of oil prices?
Speaker 9 (38:45):
H I think the best trade is of oil of
the Chinese. And so they're the real you know, the
under the power underneath this order is there is that
buying an Iranian crude.
Speaker 2 (38:55):
They put the bid on oil.
Speaker 9 (38:57):
They put the bid on Iranian oil so that the
main buyer, by far, you know, eighty percent of Iranian
oil is a lot of it actually goes to Malaysia
and then is reflagged. So you see that Malaysia exports
more oil to China than it produces oil, so it's
obviously smuggled. And basically the other manipulation is the White
House turning their blind eye. And this is the second
administration that's done that to all these sanctions. So you know,
(39:19):
you haven't really interrupted Russian oil despite all the sanctions.
Iranian oil as of today is still flowing as it
was that you know, recent, very high levels compared to history,
and so there has been you know, concerted efforts not
to get the oil interrupted, and nobody, including Iran, wants
to interrupt the oil. The other thing here is that,
(39:40):
you know, people seem to think that there's some sort
of gate at the Straits of hor Moves when they
talk about closing the Straits of horr Moos, you know,
they think Iran has the power to do that. The
real question is does Iran start shooting missiles at tankers,
which is really going to be dramatic if it happens,
And of course that's what happened in the tanker War
of the seventies between Iran and a Rock, where they
(40:00):
were both firing missiles, and that's actually what got us
the nineteen seventies high in oil prices, which was over
one hundred dollars a barrel.
Speaker 5 (40:08):
Given that background, why isn't Brent crude north of one
hundred dollars today?
Speaker 9 (40:13):
There's plenty of oil, and you know, Chinese demand is weak,
suppliers abundon. I think to me, Tom and I have
known each other twenty five years. What's so extraordinary about
the current market is firstly that we're a one hundred
and three million barrels a day of demand, you know,
an extraordinary number, one hundred and three million barrels a
day of every day, you know, so this is like
one thy three hundred barrels a second of consumption. But
(40:34):
even more extraordinarily, which we would never have thought you
could do twenty years ago, you've got capacity of you know,
one hundred and eight million barrels a day, so there's
actually five million barrels a day spare. The interesting thing
about the spec capacity is it's all in the Gulf,
so the market is clearly as further to the answer
to your question is the market is thinking that the
risk of interruption in the Straits of horn Moves is low.
(40:56):
Basically because China, US, Europe, everybody set out pretty much
maybe less so want the oil to keep flowing, and
that the Iranian's only source of revenue now dollar revenue
is going to be oil. So it's difficult to see
exactly who wants to shut the straits of war moves,
and I think the odds on various betting sites are
far too high. It's actually quoted at thirty percent chance
(41:18):
the straits are shut by the end of June, which
I just think is extremely unlikely because I don't even
know how you would shut it short of sending missiles.
Speaker 5 (41:25):
If you take the risk premium, assuming there's some risk
premium in global crude today, if you take that out,
is a market still pushing this monority lower?
Speaker 9 (41:36):
Yes, I think so. I mean I think that you know,
we are in a plentiful supply situation. The one thing
that hasn't turned out well for the Bears has been
that demand remains pretty strong, particularly Middle Eastern heat. So
we saw a very cold winter in the globally in
you know the key markets, which would be Northeast, Asia, Europe,
and the US that gave us a lot of extra demand,
(41:56):
a million over a million miles a day of extra
demand just on than Q one and now we're getting
a good four hundred thousand bars a day of extra
demand because of the massive heat that we've had in
the Middle East. You're doing if you think it's hot
in New York today, Abby Dabbi recorded fifty three degrees
I think, which is one hundred and twenty seven degrees
in the shade in May. And as a result, experts
(42:21):
have been a bit constrained. Now having said that Saudi
is now all of them have now started sending as
much oil out of the Gulf as possible. So we
really need some incremental geopolitical disaster to make well go high.
Speaker 2 (42:32):
Can we do something quaint like an individual stack?
Speaker 10 (42:35):
Yeah, I don't know if he still does OXI Vicky
over at Axey with Warren Buffet twenty seven percent ownership
of Berkshire at the way, debt encumbered.
Speaker 2 (42:46):
Essentially, his stock's gone nowhere for ten years. Akson has
sixty some thousand employees. Oxy's teen swings thirteen thousand employees.
Is mister Buffet got himself into a problem.
Speaker 9 (43:00):
Warren Buffet, as you call him, owns actually more dollars
of Chevron than he does of Oxy. So my thought
is that if he wanted to engineer something. Yeah, you
know that you could. You could roll it all up
into Chevron and move on. So that's one option. But
of course Chevron's buying Hess at the moment, and we're
in arbitration on that deal. So I think a lot
will obviously depend on whether that arbitration says that Exxon
(43:22):
has a right of first refusal on the assets in
Guyana or whether Chevron simply wins the deal and moves on.
If Chevron wins Hess, it's in terrific shape. It's got
a great asset base with that extra Guyana leg that
they really need to make them source complete. The beauty
of Oxy for a Chevron would be that it would
catapult them pretty much beyond Exxon, you know, which would
be a historic moment for them.
Speaker 2 (43:42):
To be larger and more international than the Exon.
Speaker 9 (43:45):
Not more international, but larger because they've become the largest
player in the Permian. Chevron actually in twenty twenty, when
Xon was really struggling badly, went up to a higher
market cap. And I can tell you there was champagne
corks in the corridors of San Romano when Chevron. If
you think about the his but today, you know, would
Exon do another big deal? I think the main thing
here is Thomas is the Trump. You know, would Trump
(44:08):
be more ready to allow Exon for Conico, Phillips, you
know some of these mega deals that they sort of
have to do now because it doesn't look like oil
is going to get much out of a call it
sixty to eighty range. And really the thing for these
companies to do is to merge and create synergies and
increase returns.
Speaker 2 (44:26):
I got eight ways to go here, I got time
for one question is as simply as I camp Paul
Sank for our American audience, what is our biggest misconception
of oil production and the Persian golf? After we all
read Daniel Jurgen's surprise, what's a thing we get wrong?
Speaker 3 (44:44):
Now?
Speaker 9 (44:45):
I think the single biggest thing people get wrong is
they think that, you know, there's there's more environmentally friendly
alternative to oil. When ail is naturally occurring, always say
it's liquid solar power. So the big idea is oil
just has a very bad public image. It's actually, if
we could if gas was announced as an invention today,
the word world would celebrate that we found the solution
to our energy problems that are environmental problems, and US
(45:05):
emissions are down based on our increased use of natural gas.
It's as simple as that. That's how we've actually reduced
CO two over time. The biggest misconception in the Gulf,
I think, is that they're all much more friendly and
talking to each other than you realize. You know, you
see all these back channels, and you can see that
even the US is talking to Iran. So I think
there's you know, a whole different level here for conspiracy theorists,
(45:27):
which is that you know, a lot of these guys
are much more trying to sort this out. And I'm
actually believing I'm not quite optimistic here, Tom, because I
believe that if you can actually have some sort of
transition in Iran, and that's going to be a terrible challenge.
You know, you're going to be in a Venezuela situation
quite possibly. In the seventy nine revolution, there was significant
civil war fighting in Iran for at least a year
(45:49):
or two posts the revolution. I mean that they continue
to basically fight within Iran, and at the moment there's
no opposition nor opposition leader in Iran, So you worry
that it's likely to go to the Revolutionary Guard, who
are effectively not just a military force, there an economic force.
So they run the u at the Iranian economy. And
as a result, the thing I'd be watching for is
for a split in the Revolutionary Guard.
Speaker 2 (46:11):
Right at the time I got to ask how attached
is a revolutionary regard to Ayotola.
Speaker 9 (46:17):
I mean, that's their job. Their job is not military,
their job is to protect the revolution, and they've turned
that into a massive, sort of corrupt they're sort of
like a cartel. They're like a government cartel that they're crooks,
their criminals. All these guys should be out, you know,
we've got to get rid of them. And I just
hope the Iranian people, who, as you said, have a
wonderful culture, can come through it.
Speaker 2 (46:37):
So wrong, be a stranger your weekend note, You tore
apart me, you tore apart financial media. You said you'd
done seventeen things. Will you come back or.
Speaker 3 (46:47):
Are we like you lumping us in with everyone? So
you're on a special list.
Speaker 9 (46:51):
Man, you're on the yes every time. But you know
you don't pay me, So if you want to pay me,
may I'll come a day, Okay, I think Lisa likes,
get them.
Speaker 3 (47:03):
A case of Kirkling hot dogs.
Speaker 5 (47:05):
Can we dogs.
Speaker 9 (47:08):
Have a quarter hot dog every morning, so I'm always
in the market for hot dogs.
Speaker 3 (47:11):
Thank you, thank you, thank.
Speaker 2 (47:12):
You so much for joining us.
Speaker 1 (47:14):
This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Eastern on Bloomberg dot com, the
iHeartRadio app tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
(47:35):
always on the Bloomberg terminal
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
We efforted Richard Haas yesterday we are unable to get him.
We have him today and we extend out here commercial
free for you. In a conversation with the President Emeritus,
the consun Foreign Relations and of course senior counselor. Was
someen of you partners with Paul Far.
Speaker 3 (00:46):
More than that.
Speaker 2 (00:48):
The single best clarity before the attack I put out
on Twitter in LinkedIn Ambassador Has's essay in the Financial Times.
It's forever ago.
Speaker 3 (01:01):
Richard. It was three or four days ago.
Speaker 2 (01:04):
You wrote a jewel of short clarity of what to do,
what to hope for. If you wrote that essay now,
how would you change it?
Speaker 4 (01:14):
Well, good morning, Tom, and thank you. Look, the United
States faced difficult decisions in the aftermath of the Israeli actions.
We chose the path of acting in this case to
do an intense but idealistically or optimally narrow, military strike
(01:35):
against Iran. What's so interesting to me if I had
to say one thing at this point. If you think
about this crisis over the last ten or so days,
the first week was dominated by Israel, it deciding in
the aftermath of October seventh, the weakening of Iran's proxies,
it was going to act against the Iranian nuclear program
and more broadly against the Iranian political leadership. Then the
(01:56):
United States decided this was the moment to set back
the Iranian nuclear program. But now initiative has passed to
Iran for the first time in this crisis. It's the
Iranian leaders who control as much as anybody. How this
unfolds from this point on, And that's what's different. If
I were writing today, indeed I will be writing later today.
Speaker 3 (02:18):
That's what's different.
Speaker 4 (02:19):
For the first time since this phase of the crisis began,
decision making, if you will, is in the hands of
Iran more than Israel, more than the United States.
Speaker 2 (02:29):
Investor has and I want to make clear here that
Richard Hass redefined the international relations debate with the invention
of the Internet. At the Council Unfeigned Relations John Bellinger
at CFR, Richard Has writes a blistering essay with his
legal expertise. Does President Trump have the authority to strike Iran?
(02:51):
From where you sit with all your work back to
Northern Ireland. Did the president have the ability to act
from the executive branch? Or did you need to use
a different process with Congress?
Speaker 4 (03:03):
And the president had the authority like all of his
predecessors if you look at the history of a modern
American foreign policy initiative, and foreign policy has decidedly passed
to the executive I mean, Tom, what was it sixty
years ago Arthur Slessinger Junior wrote his essay and book
about the impurial presidency. This is nothing new. Congress virtually
(03:25):
never ever fulfills its constitutional obligation to declare war, and
we have used military force hundreds of times in the
absence of anything so formal. So I just flat out
disagree with that kind of a narrow legalist interpretation. That said,
if I had been advising President Trump, I would have said,
(03:46):
take a page out of the book of President Bush,
the father push forty one. Do things with the internationally
with building on the International Atomic Energy Agency skating report
of Iran, Do things with the Congress, do things with
the American public if you're going to use military force,
people should come to conclude that you tried to do
diplomacy and at the end of the day you reluctantly
(04:09):
had to use it. But also, by the way, would
have helped this president with his magabase. So I think
he should have gone about this differently. But did he
under American political tradition? Did he possess the authority to
do what he did?
Speaker 3 (04:22):
Absolutely, Richard.
Speaker 5 (04:23):
As the world awaits some type of response to moren
do we have any good information as to their capabilities
today from just their military capabilities into their leadership because
Israel has dealt a blow to their leadership, what should
we expect.
Speaker 4 (04:38):
No, they're both good points. I actually think they're unlikely
to retaliate. My reading of the Iranians is they're focused
on regime survival. In some ways. This is the second
great difficult period crisis for Iran's leadership since their nineteen
seventy nine revolution, the first one being a decade later
(04:59):
during the Iran Or War. So my guess is they're
going to focus on regime consolidation. Down the road, they
may focus on reconstituting their nuclear program. We have no
idea how much of their nuclear program is intact, but
I think it is difficult for the Iranian leadership to act.
They're trying to stay off the net because they don't
(05:19):
want to give signals for Americans or Israelis to target them.
They obviously have lost control over the airspace of their
own country. Their proxies are much diminished, so I don't
think they have very good options. That said, they can
still lob missiles at the forty thousand American soldiers in
the region. They can play havoc with shipping. It doesn't
(05:42):
take a lot to drive insurance rates up. They can
do asymmetrical warfare using cyber or terrorism, so they actually
have lots of capability. You don't have to compete with
US be two stealth fighters in order to be militarily effective.
But I just think that the Iranians right now, their
priority in the short is not to retaliate against the
(06:02):
United States.
Speaker 2 (06:03):
Richard Haus with US, we continue with Ambassador House Paul Sweene,
and I welcome all of you across the nation are
continuing that coverage. Here a difference this morning, the markets
are open. We will consider the markets across the arc
of the show. We thank Golder mount Avali from London
for being with us. Jumana Brasseti from Dubai, and we
continue here on YouTube and on all of our commute
(06:26):
our audio radio affiliates as well, and we say good morning.
Speaker 3 (06:30):
Paul Richard.
Speaker 5 (06:31):
For many observers, the American strike on the nuclear facilities
in around was a bold strike, a surprising strike. Does
that have an impact in other parts of the world.
I'm thinking about Ukraine and Russia, thinking about China. How
do you think those actors are viewing this?
Speaker 4 (06:49):
It was surprising more in the tactical rather than strategic sense.
We've been talking for years that we weren't going to
let her On gain nuclear weapons or even get close
to them. What was surprising, for how tactically was when
the President talked about his two week last chance for
diplomacy to work that turned out to be a faint
or a ruse. I think it was surprising tactically, not strategically.
(07:10):
I think the rest of the world took note both
that the United States acted as well as how effectively
the US military looked. What was brought together was was
criite extraordinary. My guess is the Russians probably have liked
this crisis any time. They like when energy prices go up.
They like when the United States expends munitions in other
(07:32):
parts of the world. That means we don't have to
give to Ukraine. People aren't talking as much about Ukraine.
I thought it was quite interesting at the G seven
that Ukraine almost seemed to be something of an afterthought.
So the Russians have to like that. My guess isn't
The Chinese are probably concerned about on the opposite side
of the coin, as a massive energy importer. They don't
(07:53):
much like instability in the Middle East, but all of
them have to be happy. I would think that the
United States is once again involved in the Middle East.
That means we have less bandwidth, less ability to focus
on safety Stasia or Taiwan, or on helping Ukraine.
Speaker 2 (08:09):
Richard Haass with us and folks, I can't say enough
about this. This is a book you can throw at
your smart alec kids, the college brats. They're home from
Oberlin and you throw this book at him, and you
won't hurt them because it's beautifully brief bill of obligations.
I can't say enough about Richard Haas's cry for citizenship
in America. I can't again, I can't say enough about it.
(08:31):
I'll put that out on Twitter and LinkedIn as well.
Part of our bill of obligations, Richard Haass is to
have a coherent foreign policy. We can go back to
clash of civilizations staggered a Zakaria in a post American world.
Robert Cappen coming up in a bit, maybe with a
Kissingerian realist theory. What's the host theory you observe at
(08:55):
the State Department right now?
Speaker 4 (08:58):
Well, State Department Israel to observe. It's actually a sad
story over the last decade or two of the weakening
of an institution, the hollowing out of the Foreign Service,
more broadly, the hollowing out of our interest or capability
in terms of diplomacy, in terms of the whole mission
(09:19):
of the Agency for International Development, the whole promotion of
democracy and American values around the world. We have dramatically
weakened one of the principal instruments of American national security.
We've then compounded a top with the hollowing out of
the National Security Council. This is an administration, I would
argue that is in some ways it's put itself dangerously
(09:40):
dependent on a top down approach to foreign policy, where
the president does things and quite honestly, the rest of
the administration falls in behind. I don't see an awful
lot of ground up analysis, but I do worry about
what's been now more than what decade and a half
of the weakening of the diplomatic dimension instrument of American
(10:01):
foreign policy and national security Richard.
Speaker 5 (10:05):
Some folks are even discussing, probably a small chance, but
still discussing regime change in a rent How do you
think about that topic?
Speaker 3 (10:15):
A couple of ways.
Speaker 4 (10:16):
One is I find regime change in the category of wish,
not a strategy. If Bibi Netsnahu, the Prime Minister of Israel,
or Donald Trump said to their generals, I want regime change,
they wouldn't know how to implement it. Regime change is
not something you can design an operation to bring about.
Colin Powell used to say, the military military instruments do
(10:38):
two things. They destroy and they kill. Regime change is
not is not on the menu. So that's one thing.
Second of all, you never know if you can bring
about You also never know what comes of it. You
know what would follow this regime? Is it necessarily something
that you want for all, you know, nuclear materials which
are clearly still existing around could get into the hands
(11:00):
of all sorts of groups that might be in the
Be careful what you wish for. So I take, I
take regime changes, unseerious foreign policy. If it comes about,
it's going to come from within Iran. It's not going
to come, if you will, from Israeli or American bayonets.
Speaker 2 (11:15):
Do we underestimate, ambassador, has the military violence of the
theocracy in Iran? The news flow to me, Ambassador, with
the respect of my colleagues, is so simplistic. Iatola theocracy,
the people of Iran. What's in between them? And the
(11:35):
answer is a harsh dictatorship.
Speaker 4 (11:38):
Right, You've got that, You've got all sorts of citizen
groups that are uh, listen to them, the so called basis,
you know, the the guys who used to come out
with the sticks and beat beat up on the Green
Movement protesters. And then you've got formal authorities, uh, the
military and and.
Speaker 3 (11:57):
And so forth.
Speaker 4 (11:58):
So this is this is a regime that has tools,
if you will, time of repression in addition to what
it can do as a more traditional marilitary In addition
to its its proxies. But this is a this is
a system, it's been in place now for more than
half a century, that has instruments of repression and coercion.
Speaker 2 (12:16):
Paul, I remember exactly where I was in the shock
of the hostages. Are you ready a country road in Pittsfield, Vermont,
on a cold, cold November day, walking down the road,
trying not to slip in my two tone Tony Lahma
cowboy boots, and we were in shock. Is a nation
(12:37):
over the failed hostage event?
Speaker 3 (12:39):
Yep?
Speaker 5 (12:39):
Absolutely, Richard, give us the point of view of Israel here.
A lot of folks are saying this might be a
special time for Israel to kind of reset the Middle
East as it takes care of, you know, many of
what it perceives to be its enemies, including obviously a
Ran most recently, can Israel change its position in the
(13:00):
Middle East or the balance of power in the Middle East?
Speaker 4 (13:03):
Well, I would argue Israel has much improved its strategic position,
mainly through the weakening of Iran's proxies as Bola first
and foremost Amas secondarily, then through regime change what we
saw in Syria. Israel has improved its position against Iran,
but hasn't resolved it. By that, I mean Iran remains
(13:23):
hostile to Israel has capabilities. And again we don't know
how much of their nuclear components survived. For all we know,
a lot of them were parked in undisclosed location. So
Israel is not out of the woods there. And even more,
Israel's not out of the woods dealing with Gaza or
with the three million Palestinians in the West Bank. And
(13:44):
I think that's still the biggest strategic question. So Israel
has the Iranian dimension and still has the Palestinian dimension
very much.
Speaker 2 (13:52):
Richard has one final question Paul and I in our
broadcast yesterday, Paul, please help me.
Speaker 3 (13:58):
I agree that we.
Speaker 2 (13:59):
Were thunder struck by the acuity and concision of our
Chairman of the Joint chief of Staff. I was blown
away by his report. Richard Hass you're the grizzled veteran.
What did you think of the press conference of our
Chairman of the Joint chiefs of Staff.
Speaker 4 (14:18):
Tom He was impressive. General Carilla, the head of Central Command,
is impressive. Let me just make a larger point. When
I look at American society, I think there's two great
pools of talent one is in the American military. The
professionalization there is awesome. And the other is something you guys,
you have all deal with all the time, which is
the best of American corporate leadership. These are people who
(14:40):
know how to run big operations and do it in
a really responsible, accountable way. So I'm not surprised when
I see great talent in the military rise to the top.
It is a meritocracy. These people are tested and they
are responsible for large numbers of lives. So I find
the post Vietnam American military is quite an extraordinary institution.
Speaker 2 (15:04):
Richard Huss, thank you so much. Just send of you
partners and a course is definitive work. The Council on
Foreign Relations Ambassador House back decades to the diplomacy of
a Northern Ireland solution.
Speaker 1 (15:23):
You're listening to the Bloomberg Surveillance podcast. Catch US Live
weekday afternoons from seven to ten am Eastern Listen on
Applecarplay and Android Otto with the Bloomberg Business app, or
watch US Live on YouTube.
Speaker 2 (15:35):
There is an approach that each expert in international relations
and geopolitics takes. We had Richard Haass with this earlier.
Ambassador Hass looking at the fabric of American culture and
extending it out across his treatment of foreign policy, Robert D. Kaplan,
over a stretch of over twenty books, just simply speaks
(15:58):
of the map. If you're one of those believers in
get out the map and look at it, Kaplan is definitive.
His new tour de force is Wasteland a world in
permanent crisis.
Speaker 3 (16:10):
This is coming off my.
Speaker 2 (16:11):
Book of the year a few years ago, The Loom
of Time from Morocco to Persia. Robert Chaplin, thank you
so much for joining us. I'll cut to the chase.
You say, technology has permanently changed our map, our geography.
Is that true of this war with Israel and Iran?
Speaker 6 (16:31):
Yes, it is to an extent, because Iran is a
long distance from Israel on the map.
Speaker 3 (16:38):
But yet the.
Speaker 6 (16:39):
Israelis and of course the Americans have condensed that distance
through technology. The America excuse me. The Americans sent B
two bombers all the way from the center of the
United States white Men Air Force based in Missouri to
bomb Iran, so that Iran is is close to America
(17:02):
in you know, in in operational terms, as you know,
as Kansas was to the Indian wars in the middle
of the nineteenth century. And let me just make one
thing very clear here. Yeah, people who are saying that
(17:23):
this could this could lead to another you know, forever
forever war, Middle East quagmire, they're making a mistake of category.
Iraq is in different was in a different category than Iran.
Iraq was in the category of Vietnam and Afghanistan and
(17:46):
Korea in the sense that it involved tens of thousands
of ground troops which got stuck literally in a quagmire.
Here we're dealing with just air and naval sets. The
war could go in a number of ways. There could
be blowback, but as long as we stick with air
(18:07):
and naval assets, there's not going to be a quagmire.
There's going to be something different. It may be something bad,
but it will simply exist in a category different from
those four forever wars Korea, Vietnam, Iraq, and Afghanistan.
Speaker 5 (18:26):
Robert, what do you expect the response from Iran will be?
Speaker 6 (18:33):
I think there will be a response. It may take
a few days or a few weeks. It may be
a terrorist attack in Europe. It may be an attack
by Shia, a pro Iranian Shia militia in Iraq on
US troops not too far away. There certainly will be blowback,
(18:55):
but it's going to take a few months at least
to really just whether this decision by President Trump to
bomb the Iranian nuclear facilities was a wise or an
unwise decision. It will unfold stages, and.
Speaker 2 (19:15):
You're the loom of time, and folks, I can't say
enough about this is your single concise read on the
span from Morocco to the Eastern Arab world and over
to Persia. You talked there, Robert Kaplan, about the giant
of your academics, which is Clifford Gertz, and it's the
idea of culture described for our American audience today, the
(19:39):
Persian culture, the Persian culture extant since the theocracy of
nineteen seventy nine.
Speaker 6 (19:47):
Yes, Persia. Iran is not the Arab world. It is
not Iraq, it is not Syria, it is not Libya.
Iran has been a nation state of sorts on the
Iranian plateau for thousands of years. Iran was the world's
(20:08):
first superpower and antiquity. You're dealing with a highly sophisticated,
highly evolved organ you know, culture and civilization where there
is not one center of political power, but multiple centers
of political power. Uh. You know, I've been to Iran
(20:28):
several times. It takes two hours in traffic to drive
from one end of Tehran to the other. Being in
Iran is like being in Egypt or India, and that
is it's overwhelming. You feel overwhelmed. So the so the
idea that you know that a singular attack on nuclear
(20:50):
facilities is going in a linear fashion to lead to
a regime change is far too simplistic. They're you know,
they're very very well likely could be a regime evolution,
as I call it, but it will involve many other factors,
and it will be internally driven. It won't be imposed
(21:13):
from the outside.
Speaker 5 (21:15):
Robert, what do you think our the US strategy should
be towards Iran at this point? Again, the over the weekend,
a significant escalation and military action, it should be our
strategic view.
Speaker 6 (21:28):
Well, at this point, we should try, as President Trump said,
to keep it a one off that we try as
hard as we can not to attack again, not to
respond again. You know, if they're just going to do
a desultory pin prick response like they did after President
Trump bordered the assassination of Kassamsuleimani, the head of the
(21:52):
El Kutz force, back in twenty twenty. In January twenty twenty,
I think it was there's no need to spawn, you know,
the policy now should be to lower the temperature, not
talk about changing a regime from the outside. Because the
damage has been done. It will take days or weeks
(22:14):
to more properly assess exactly how much damage was done.
But the idea that the Uranians are just going to
rebuild their nuclear facilities is very simplistic. They're never going
to rebuild it to the point that Fardeau or Natans was,
you know, way before they get to that point, the
(22:36):
Israelis will be able to attack them. So this attack
really did do substantial damage.
Speaker 5 (22:44):
What do you expect Israel to do here? Because a
lot of folks are suggesting this is a unique time
for Israel here in terms of exerting and expending and
its role within the Middle East and add to its security.
Is this a unique time for Israel?
Speaker 6 (23:00):
Yes, it is because you know, Benjamin Netanyahu, love em
or hate him, is a world historical figure. People may
forget Clinton, Obama and Biden and half of the European
prime ministers, you know, who will be forgotten in the
course of the decades. But decades from now, people will
(23:21):
be writing biographies about Netanyahu, you know, because he's been
in power so long, and the way he was able to,
you know, achieve tactical surprise in his attacks on Iran,
and then I'll use the word manipulate President Trump into
taking action on his own is is nothing short of extraordinary.
(23:44):
I think with these the smart thing for the Israelis
to do now, now that they got help from the US,
is to give the US something that is start the
process of withdrawing from Gaza.
Speaker 2 (23:58):
Robert Kevin one final question, and one's going to run
on with the day. And again, folks, I can't say
enough about Wasteland. Robert Caplin's new effort in The Loom
of Time, my book of the year. You wrote a
monograph I'm going to call it The Tragic Mind, taking
us back to Greek mythology and how we need tragedy
to move forward. Does President Trump have a tragic mind
(24:21):
in there somewhere? Is there a philosophy of tragedy?
Speaker 3 (24:25):
Is a foundation strength? Very hard?
Speaker 6 (24:28):
Yeah, Tom, that's a very hard question to answer. Because
I don't sense it. I think he's too vain and
superficial to really have a deeply, a deeply developed sense
of tragedy. But I could be wrong. I could be
wrong on this because the person who really did have
(24:48):
a deeply evolved sense of tragedy was President George H. W. Bush,
who is very cautious and another. You know, the great
thing about his administration was not what happened, but all
the bad things that did not happen because of governance.
Speaker 2 (25:06):
This has been wonderful, Robert Kaplam, thank you so much.
It's a muster read folks wasteland, a world in permanent crisis.
Speaker 1 (25:13):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay 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 (25:30):
Lri Calvicina joins us for a quick discussion here this
morning with the RBC Capital Marcus Lorie. How did your
strategy change this weekend as you published for Monday?
Speaker 3 (25:42):
How do you amend to a new war.
Speaker 7 (25:46):
Hi Hi, Tom, So, thanks for having me. To be honest,
we didn't change anything. We had done a piece about
a week ago laying out our framework for how we
were thinking about rising tensions in the Middle East and escalations,
and I would say, you know, while while I got
more convinced that we needed to have some sort of
short term market draw down, which obviously we haven't gotten
so far yet, we really just continued to focus on
(26:08):
the things we've been focusing on, and I would say,
you know, maybe where our view is a little differentiated.
Everyone's debating the oil price supply disruption potential. We obviously
agree that's one big transmission mechanism to equities. We also
think that you have to look at it through the
lens of valuation. Heightened uncertainty on geopolitics typically suppresses pes
in the S and P. Five hundred. And also, we're
(26:28):
very concerned about sentiment. This has been a market that
has been melting up because of very very modest inflections
in various sentiment gauges, and we think that those sentiment
gauges could be at risk down the road from an
episode like this.
Speaker 5 (26:40):
Laurie listening to the FED last week again, they don't
seem to be in any rush to cut rates here,
so that maybe puts even more pressure on corporate earnings here.
What is your sense of kind of where corporate earnings are?
Is there a risk to I don't know out of
the upside where the downside from here?
Speaker 7 (27:00):
It's a great question, Paul, and I'll say our rates
team is still looking for September cuts, but they have
also highlighted the risk that perhaps the FED starts a
little bit later, and so we do think that could
potentially be a headwind for equities if you start to
see those cuts pushed out. I would say from an
earnings perspective, you know, we are sitting at two fifty
eight in our own twenty twenty five Sep. Five hundred
and forecast. It's a little bit below consensus. On a
(27:22):
bottom up basis, we think that's still the right number
for this moment in time. If we look at gauges
of earning sentiment, they've rebounded, but they're about as good
as they tend to get if you're not coming off
of an extreme low on a big crisis.
Speaker 3 (27:36):
That's right where I wanted to go.
Speaker 2 (27:37):
As we staggered towards July fifteenth, I mean, folks, with
all the distractions, I guess it's about earnings. LORI, where
is the street now?
Speaker 3 (27:47):
Is the street still.
Speaker 2 (27:49):
Overestimating earnings and then they pull them down?
Speaker 3 (27:52):
Or we now as a consensus going the.
Speaker 2 (27:54):
Other way where we're low balling like Lori Kelvisina and
we'll drag it up later.
Speaker 3 (27:59):
Which is it?
Speaker 4 (28:01):
So?
Speaker 7 (28:02):
Look, I think we're in a discovery process, right and
I think that we've had these massive uncertainties from tariffs,
and we've listened to a bunch of companies that just
came out in the last reporting, Sayson saying, you know, Frankly,
I think they were in a state of shock, but saying, look,
you know, we can manage through this, we can mitigate.
We're going to pass things on through pricing and customers
are just going to eat it and there's not going
to be any erosion in demand at least that's what
(28:23):
you're hearing from more sort of the industrial side of
the economy. We're going to see if that's right. The
consumer companies having a much tougher time, you know, and
Frankly have sounded less optimistic, and we're going to see
how they're feeling as well. But you know, I think
there's still a little bit of downside risk to the
bottom of consensus numbers here and there, And you know
that contrasts with the numbers having you know, kind of
(28:44):
rebounded a bit in here, and so, you know, my
my concern is that we're going to see things go
the other way a bit.
Speaker 2 (28:50):
Paul Discovery process, they were a great barbine.
Speaker 3 (28:55):
They play blues like.
Speaker 5 (28:56):
Nobody Lord to the extent that some level of terriffs
are year to stay. Does that suggest that the bigger
you are, the better you are on your income statement
to deal with that, that would suggest, you know, big
cap stable companies versus maybe smaller mid.
Speaker 7 (29:11):
Camp Yeah, that's generally the rule of thumb we use,
Paul whenever there is something that poses a challenge to
corporate America to manage through. The smaller companies unfortunately don't
tend to manage through it quite as well. And that's
because they have less bargaining power, whether you're looking at
sort of their employees, whether you're looking at their suppliers.
(29:31):
And you know, it's interesting, Paul, I was, I can't
remember what survey this came out in last year. I
think it might have been the Duke's CFO survey. But
they did, you know, sort of a study on are
you using AI or not? Are you using automation tools?
And bigger This wasn't necessarily a big cap versus small cap,
but bigger companies were more likely to be using those
automation tools and to be using tools like AI to
enhance their efficiencies than smaller companies. And so you know,
(29:54):
even frankly, some of the tools that are being engaged
with are just different when you're looking from big cap
companies small cap companies.
Speaker 2 (30:01):
Lurri Cavasena, thank us so much, RBC Capital Markets.
Speaker 1 (30:09):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Coarclay, and Android
Auto with the Bloomberg Business app. You can also watch
us live every weekday on YouTube and always on the
Bloomberg terminal.
Speaker 2 (30:24):
Now, the markets we really wanted to focus in here,
and they have in studio Paul Sank coming up on
oil world class and even better, Steven Englander with its
Sandra Charter Bank joining us at the studio. Now, folks,
this is going to be a window in the global
Wall Street where they don't just look at yen in
euro Steven Englander, you walked in and you said, cad yen,
(30:46):
which is the number of Japanese yen per Canadian dollar
since a pandemic. It's been massively strung Canada weekend.
Speaker 3 (30:55):
And it's reversed.
Speaker 2 (30:57):
How do you glean information from a study of Canada
versus Japan.
Speaker 8 (31:03):
Well, you know, I'm thinking of it more short term
that you know, even though yen traditionally is a safe haven,
it's it's still low yielding, has the lowest drilled interest rates.
The politics are kind of a little bit soft, and
it's very exposed to higher oil prices, whereas some of the.
Speaker 2 (31:24):
Weakness we're seeing today in dollar yen as well.
Speaker 8 (31:27):
Yeah, and you know, and what you're seeing is is
that the end is actually one of the weakest currencies overnight.
Canada is holding in there because it does have oil.
You know, it's trade related.
Speaker 3 (31:40):
It's not as.
Speaker 8 (31:41):
Exposed to to July the ninth, and you start of say,
if things go south that you know, maybe cad is
continues to hang in there.
Speaker 3 (31:49):
But you know, yeah, you bet at.
Speaker 2 (31:51):
The standard charter bank is strong, loooning weaker.
Speaker 8 (31:55):
Yeah, well, we don't bet, but it's certainly sort of
something that we sink, we we would think about if
you're asking us, you know how markets might trade.
Speaker 2 (32:05):
Put me in my place there?
Speaker 3 (32:07):
Why did you save the interview?
Speaker 2 (32:10):
Steve Hall?
Speaker 5 (32:11):
Has a world of rising tariffs impacted your view of
currencies here. We don't know where the tariffs are going
to shake out, but we do know that we got
to pay attention to these things for at least for
the next several years. How does that impact your view?
Speaker 8 (32:24):
Well, it's made very complicated because there are three factors
that are involved. One is that they've increased the risk
premium on US assets a lot.
Speaker 3 (32:33):
Part weaker dollar, yeah.
Speaker 8 (32:34):
Partly because of you know, the expansion of the envelope
of tariffs beyond what anybody thought was reasonable, but also
the possibility that they can do everything else with the
same kind of broader envelope of policy options. Second thing
is it's risk off for the rest of the world.
You know, if you get tariffed up, that's no fun.
(32:56):
It's going to disrupt trade.
Speaker 3 (32:57):
And the third thing.
Speaker 8 (32:59):
Is that normally you would sort of say, look if
your if US tariffs on Europe go up, the euro
would fall, although that hasn't been the case yet because
the risk premium has dominated. How you weigh all those
three is very complicated.
Speaker 2 (33:13):
I look, Steve Angloder in my book of the Summer
Ken Rogoff out of Harvard, our dollar year problem fabulous, fabulous,
look back at Rudy Donbush and the late Stan Fisher
and all in our dollar for the greater public listening
right now, should they have dollar worries?
Speaker 3 (33:32):
Yeah? They should.
Speaker 8 (33:33):
I think that the You know what makes America great,
I think is the ability to attract money from abroad
at low interest rates. That's been the history of the
last twenty or thirty years. Invested in new technologies, get
high rates of return and do very well of it.
You know, the US is like a big hedge fund.
Speaker 2 (33:54):
Do you suggest that's bro I love that. Can we
steal that?
Speaker 3 (33:57):
Yeah?
Speaker 2 (33:57):
Lisa right, that the US is like a big edge
fun My book of the Year by Ruster Sherman. Rockefeller
now is basically a trease on capitalism in America. Steven
Anglicher the Standard Charter Bank with this on quote, the
US is like a hedge fund. Is this the financialization
of America? It's only giving gains.
Speaker 3 (34:19):
To the elite, not necessarily.
Speaker 8 (34:22):
I think everyone benefits, you know, from the development of
new technologies. I mean, even if you're poor, having a
cell phone with remarkable capabilities is a wonderful thing. But
I do think it's dependent on being able to borrow
cheaply as long as you're running a current account deficit,
and that's not going to go away, so, you know.
(34:44):
And my worry about the dollar is that some of
the policies that are being pursued and that are contemplated
may raise the cost of capital to the most dynamic
sector of the US and that would be a pity.
Speaker 5 (34:58):
Speaking of the US dollar year date, we've seen it
down you know, eight to nine percent, having a little
bit of a bounce back today, maybe risk even how
much more downside do you think there could be? Because
I've been asking, I don't know anything about your world,
the currency business. So my stock question is are we
ever going to see a bear market in the dollar?
I've been asking that for six years. Are we starting
to see the beginning of one? Or is this just
(35:19):
a trade?
Speaker 8 (35:21):
It could be if you think of say we have
you know, another session a year from now, and tax
build has passed, tariffs have been resolved, and the US
is growing sluggishly, has a big fiscal deficit, has a
big current account deficit.
Speaker 3 (35:40):
That could be real trouble for the dollar.
Speaker 2 (35:42):
What does one final question, what does the standard Charter bank,
with all of your heritage of the Pacific RIM and
particularly down south over to India, what do you see
of a vibrancy in the Pacific RIM right now?
Speaker 8 (35:55):
Ex China, you know, they're hit with the same issues
everybody else has hit. You know, there's the deflation being
exported from China. There's loss of confidence because of the
you know, the risk on the tariff side. So you know,
nothing is catastrophic, but a lot is sluggish.
Speaker 2 (36:14):
I look, you know, just in the space folks, I
can do this on the Bloomberg Professional Service. I got
like a five standard deviation plus two to minus three
on Taiwan dollar. I got a massively strong Taiwan dollar
Sing dollar in the rest is that on an asymmetric basis?
Is that strong EM or is that weak US? Or
(36:37):
is it something different?
Speaker 8 (36:38):
Well, there's a lot of speculation on you know, what's
causing these moves, and I think there's some anticipation that
perhaps currency adjustment was substitute for some of the trade
impediment adjustment that the US wants that you know, especially
Asian currencies as a group, may prefer to allow their
(37:00):
and he's to appreciate rather than sort of say, use
that as a leakage. Yeah yeah, but rather than open
up vulnerable sectors like farming and stuff where which is
politically important, they say, let's socialize this. Everybody will take
the hit through the exchange.
Speaker 2 (37:16):
And you know, my keymail me and he says, Tom,
use the damn terminal. So yeah, I'm doing the t function.
Speaker 3 (37:21):
Yeah a monthly.
Speaker 2 (37:22):
I'm trying to impress englander.
Speaker 3 (37:24):
Here.
Speaker 2 (37:24):
I got Taiwan dollar in April plus two standard deviations
on trend and now it's minus exactly minus three. That's
a five standard deviations swing. That's it's it's like more
than substantial.
Speaker 3 (37:39):
Was that?
Speaker 2 (37:40):
Will you come back now that we use the terminal?
Speaker 3 (37:43):
I'm always impressed when I talk to you. Well please,
there you go.
Speaker 2 (37:47):
So that's what the third divorce lawyers, Thank you so much,
greatly appreciate it. He's with a standard charter at Bank
and Studio.
Speaker 1 (37:56):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay 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 (38:12):
They emailed the White House today, I say, can you
give me an oil tweet from the president because we
got Paul Sanki coming and joining us. Paul Sanki, Sankie
researcher four. Our conversation we're going to do quickly here
the President of the United States moments ago, all caps. Everyone,
come keep oil prices down.
Speaker 3 (38:30):
Period.
Speaker 2 (38:31):
I'm watching exclamation point. You're playing right into the hands
of the enemy. Don't do it. What would you say
to the White House and the manipulation of oil prices?
Speaker 9 (38:45):
H I think the best trade is of oil of
the Chinese. And so they're the real you know, the
under the power underneath this order is there is that
buying an Iranian crude.
Speaker 2 (38:55):
They put the bid on oil.
Speaker 9 (38:57):
They put the bid on Iranian oil so that the
main buyer, by far, you know, eighty percent of Iranian
oil is a lot of it actually goes to Malaysia
and then is reflagged. So you see that Malaysia exports
more oil to China than it produces oil, so it's
obviously smuggled. And basically the other manipulation is the White
House turning their blind eye. And this is the second
administration that's done that to all these sanctions. So you know,
(39:19):
you haven't really interrupted Russian oil despite all the sanctions.
Iranian oil as of today is still flowing as it
was that you know, recent, very high levels compared to history,
and so there has been you know, concerted efforts not
to get the oil interrupted, and nobody, including Iran, wants
to interrupt the oil. The other thing here is that,
(39:40):
you know, people seem to think that there's some sort
of gate at the Straits of hor Moves when they
talk about closing the Straits of horr Moos, you know,
they think Iran has the power to do that. The
real question is does Iran start shooting missiles at tankers,
which is really going to be dramatic if it happens,
And of course that's what happened in the tanker War
of the seventies between Iran and a Rock, where they
(40:00):
were both firing missiles, and that's actually what got us
the nineteen seventies high in oil prices, which was over
one hundred dollars a barrel.
Speaker 5 (40:08):
Given that background, why isn't Brent crude north of one
hundred dollars today?
Speaker 9 (40:13):
There's plenty of oil, and you know, Chinese demand is weak,
suppliers abundon. I think to me, Tom and I have
known each other twenty five years. What's so extraordinary about
the current market is firstly that we're a one hundred
and three million barrels a day of demand, you know,
an extraordinary number, one hundred and three million barrels a
day of every day, you know, so this is like
one thy three hundred barrels a second of consumption. But
(40:34):
even more extraordinarily, which we would never have thought you
could do twenty years ago, you've got capacity of you know,
one hundred and eight million barrels a day, so there's
actually five million barrels a day spare. The interesting thing
about the spec capacity is it's all in the Gulf,
so the market is clearly as further to the answer
to your question is the market is thinking that the
risk of interruption in the Straits of horn Moves is low.
(40:56):
Basically because China, US, Europe, everybody set out pretty much
maybe less so want the oil to keep flowing, and
that the Iranian's only source of revenue now dollar revenue
is going to be oil. So it's difficult to see
exactly who wants to shut the straits of war moves,
and I think the odds on various betting sites are
far too high. It's actually quoted at thirty percent chance
(41:18):
the straits are shut by the end of June, which
I just think is extremely unlikely because I don't even
know how you would shut it short of sending missiles.
Speaker 5 (41:25):
If you take the risk premium, assuming there's some risk
premium in global crude today, if you take that out,
is a market still pushing this monority lower?
Speaker 9 (41:36):
Yes, I think so. I mean I think that you know,
we are in a plentiful supply situation. The one thing
that hasn't turned out well for the Bears has been
that demand remains pretty strong, particularly Middle Eastern heat. So
we saw a very cold winter in the globally in
you know the key markets, which would be Northeast, Asia, Europe,
and the US that gave us a lot of extra demand,
(41:56):
a million over a million miles a day of extra
demand just on than Q one and now we're getting
a good four hundred thousand bars a day of extra
demand because of the massive heat that we've had in
the Middle East. You're doing if you think it's hot
in New York today, Abby Dabbi recorded fifty three degrees
I think, which is one hundred and twenty seven degrees
in the shade in May. And as a result, experts
(42:21):
have been a bit constrained. Now having said that Saudi
is now all of them have now started sending as
much oil out of the Gulf as possible. So we
really need some incremental geopolitical disaster to make well go high.
Speaker 2 (42:32):
Can we do something quaint like an individual stack?
Speaker 10 (42:35):
Yeah, I don't know if he still does OXI Vicky
over at Axey with Warren Buffet twenty seven percent ownership
of Berkshire at the way, debt encumbered.
Speaker 2 (42:46):
Essentially, his stock's gone nowhere for ten years. Akson has
sixty some thousand employees. Oxy's teen swings thirteen thousand employees.
Is mister Buffet got himself into a problem.
Speaker 9 (43:00):
Warren Buffet, as you call him, owns actually more dollars
of Chevron than he does of Oxy. So my thought
is that if he wanted to engineer something. Yeah, you
know that you could. You could roll it all up
into Chevron and move on. So that's one option. But
of course Chevron's buying Hess at the moment, and we're
in arbitration on that deal. So I think a lot
will obviously depend on whether that arbitration says that Exxon
(43:22):
has a right of first refusal on the assets in
Guyana or whether Chevron simply wins the deal and moves on.
If Chevron wins Hess, it's in terrific shape. It's got
a great asset base with that extra Guyana leg that
they really need to make them source complete. The beauty
of Oxy for a Chevron would be that it would
catapult them pretty much beyond Exxon, you know, which would
be a historic moment for them.
Speaker 2 (43:42):
To be larger and more international than the Exon.
Speaker 9 (43:45):
Not more international, but larger because they've become the largest
player in the Permian. Chevron actually in twenty twenty, when
Xon was really struggling badly, went up to a higher
market cap. And I can tell you there was champagne
corks in the corridors of San Romano when Chevron. If
you think about the his but today, you know, would
Exon do another big deal? I think the main thing
here is Thomas is the Trump. You know, would Trump
(44:08):
be more ready to allow Exon for Conico, Phillips, you
know some of these mega deals that they sort of
have to do now because it doesn't look like oil
is going to get much out of a call it
sixty to eighty range. And really the thing for these
companies to do is to merge and create synergies and
increase returns.
Speaker 2 (44:26):
I got eight ways to go here, I got time
for one question is as simply as I camp Paul
Sank for our American audience, what is our biggest misconception
of oil production and the Persian golf? After we all
read Daniel Jurgen's surprise, what's a thing we get wrong?
Speaker 3 (44:44):
Now?
Speaker 9 (44:45):
I think the single biggest thing people get wrong is
they think that, you know, there's there's more environmentally friendly
alternative to oil. When ail is naturally occurring, always say
it's liquid solar power. So the big idea is oil
just has a very bad public image. It's actually, if
we could if gas was announced as an invention today,
the word world would celebrate that we found the solution
to our energy problems that are environmental problems, and US
(45:05):
emissions are down based on our increased use of natural gas.
It's as simple as that. That's how we've actually reduced
CO two over time. The biggest misconception in the Gulf,
I think, is that they're all much more friendly and
talking to each other than you realize. You know, you
see all these back channels, and you can see that
even the US is talking to Iran. So I think
there's you know, a whole different level here for conspiracy theorists,
(45:27):
which is that you know, a lot of these guys
are much more trying to sort this out. And I'm
actually believing I'm not quite optimistic here, Tom, because I
believe that if you can actually have some sort of
transition in Iran, and that's going to be a terrible challenge.
You know, you're going to be in a Venezuela situation
quite possibly. In the seventy nine revolution, there was significant
civil war fighting in Iran for at least a year
(45:49):
or two posts the revolution. I mean that they continue
to basically fight within Iran, and at the moment there's
no opposition nor opposition leader in Iran, So you worry
that it's likely to go to the Revolutionary Guard, who
are effectively not just a military force, there an economic force.
So they run the u at the Iranian economy. And
as a result, the thing I'd be watching for is
for a split in the Revolutionary Guard.
Speaker 2 (46:11):
Right at the time I got to ask how attached
is a revolutionary regard to Ayotola.
Speaker 9 (46:17):
I mean, that's their job. Their job is not military,
their job is to protect the revolution, and they've turned
that into a massive, sort of corrupt they're sort of
like a cartel. They're like a government cartel that they're crooks,
their criminals. All these guys should be out, you know,
we've got to get rid of them. And I just
hope the Iranian people, who, as you said, have a
wonderful culture, can come through it.
Speaker 2 (46:37):
So wrong, be a stranger your weekend note, You tore
apart me, you tore apart financial media. You said you'd
done seventeen things. Will you come back or.
Speaker 3 (46:47):
Are we like you lumping us in with everyone? So
you're on a special list.
Speaker 9 (46:51):
Man, you're on the yes every time. But you know
you don't pay me, So if you want to pay me,
may I'll come a day, Okay, I think Lisa likes,
get them.
Speaker 3 (47:03):
A case of Kirkling hot dogs.
Speaker 5 (47:05):
Can we dogs.
Speaker 9 (47:08):
Have a quarter hot dog every morning, so I'm always
in the market for hot dogs.
Speaker 3 (47:11):
Thank you, thank you, thank.
Speaker 2 (47:12):
You so much for joining us.
Speaker 1 (47:14):
This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Eastern on Bloomberg dot com, the
iHeartRadio app tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
(47:35):
always on the Bloomberg terminal
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