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All right, folks, focus with us, because there's stuff headlines constantly coming at us. We do want to talk to you politics. That's what we begin on this Wednesday. President Trump's idea of depopulating and taking Overgaza was broadly welcomed in Israel, with officials praising the surprise proposal as it means to beeve up security following the war with Moss.
We were following that story late yesterday and obviously and more into today, and just moments ago Tim noticing AFP coming out and saying that this is from Secretary of State Marco Rubio of the United States, saying that the President only wants Palestinian to leave Gaza temporarily while the territory is reconstructed. So again it feels like a little bit of a rolling back of what we had yesterday.
Well to that point, the wit the White House saying, and this according to Fox News and the Washington Post that Trump has not committed to putting US troops on the ground in Gaza. So some a fast moving story here that we're continuing to get clarification on.
Yeah, and these are all important details.
I should point out though in the Arab world his suggestion of taking over Gaza was taken very differently. Saudi Arabia called the plan and an infringement on the legitimate rights of the Palestinian people, and that was a position echoed by governments across the Middle East.
So let's get to our round table with us.
Right now is Bloomberg Opinion International affairs columnist Mark Champion. He joins us from London. And then in DC we have Dana Stroll. She's senior fellow and research director at the think tank the Washington Institute for Near East Policy. Among her roles in civil service include from twenty twenty one to twenty twenty three, she was Deputy Assistant Secretary of Defense for the Middle East, and that, of course is the Pentagon's top civilians with responsibility for the region.
So great to pair pairing, I should say, to talk about what's going on in the Middle East.
Welcome to both of you. Mark, I do want to start with you.
Your column today makes the point that President Trump's proposal to take over Gaza maybe more serious than initially thought, with language and the judgic similar to a real estate developer's approach. Again, we've just got some headlines that there seems to be some clarification that he doesn't necessarily maybe mean to take it over completely.
But you say we should take this seriously. How come?
Well? I think that what I'm trying to say is that it's clear that he and the people around him think in these terms. They've been talking about this, you know, Jared Kushner, his son in law who's in real estate, Trump himself, and of course his special ENVOYE Steve Whitcock, also in real estate, and this is you know, I think we should take seriously that this is the way that they think about these things. You know that said, you know that this is clearly very unlikely to go anywhere.
And what worries me slightly is that you know, here you are at a juncture. You're you know, you're in a peace process that's in several stages. The second one is going to come up faster and when we you know, then think and it will require the kind of further forward looking strategy and planning in order to get that through that has not been there until now because Israel has not been willing and certainly how Maas has not
been willing to you know, to engage. So you know what worries me is that, you know, the the administration will be you know, thinking and talking in these terms which really aren't going to go anywhere, and in the meantime, we have an unsolved problem that will simply return to fighting.
Dana, come on in here. I'm wondering if, if, given your experience in the region, your experience when it comes to dipplematic affairs, if you see this as having any weight to it, or maybe perhaps an off the cuff re mark or something that doesn't necessarily or should not necessarily be taken seriously, how are you looking into it?
Well, first of all, I don't think it's an off the cuff remark. I think it's quite consistent with the negotiating strategy we've seen from President Trump and just his first two weeks in office here, which is to create a crisis mostly with words and threats animate his team to then have backchannel negotiations which de escalate a situation.
And then largely if you look at Columbia or Mexico or Canada, each government has come with modest or moderate reactions that appear to address Trump's concerns, and then all of a sudden there's a delay in what he has promised in terms of a harsh response. In this case, NETANYAHUO was about to face a fork in the road. If the Gaza ceasefire moves to pace to Israel would have had to end this war. And we seen with all of these hostage releases Hamas come out in their uniforms.
It certainly doesn't look like the total victory that Prime Minister in Nathan Yahu promised the Israeli people. Now, rather than talk about what Israel's going to do, or the Palestinians or the region, all the talk today is about what the United States is going to do. It's totally shifted the dynamics and the focus of this conversation. And I think Trump knows exactly what he's doing here.
Well, And that's a really good point.
And you know, Mark, come on back in, because I think some of what we've been hearing is that, you know, this is about President Trump taking the focus of what really matters, what is the next phases of the ceasefire between Hamas and Israel, and really figuring that out. Do you agree that it's kind of like the flashy thing, you know, look over here, but it kind of gets everybody off the hook of thinking about what's the next phase of the ceasefire.
I think it is. I do think that's part of what he's doing. It's simply that I don't believe he has a thought through strategy that he's trying to you know, unlike with the trade, where you know, he had things that he could get. I simply don't think that he has a strategy that will be able, you know, to to get a movement forward, to get the Israelis to on board, to to you know, get to a place where you can have a serious proposal and therefore, you know,
this kind of real estate talk and so on. I think it is serious in the sense that it's a real distraction, you know, you know, I take it that he knows what he's doing when he's doing making you know, throwing up all these you know, balls of fire in the air.
So everybody's looking a different.
Way, but you need to have something underneath there that you can realistically get people to do, and that I think is missing, you.
Know, Dana.
One of the things I think we keep thinking about as we watch, you know, what's been going on in terms of threats of tariffs, then maybe a little bit of a rollback and you know, or things change or they're postponed in terms of their enactment. Having said that, you know, we thought about with tariffs, what's the goal here of President Trump? What's the goal here in your view of President Trump in terms of meeting with Benjamin
Netanyahu and what his real aim is. President Trump's aim is for Israel and for the Palestinians.
Well, first of all, what Trump wants is Israel's security, and he doesn't want to see homos return to a position of governance. And right now, the Arab leaders of the rest of the Middle East aren't really cooperating. They're unwilling to commit any sort of security presence or boots on the ground, meaningful resources beyond humanitarian aid. Pressure on the Palestinian authority in terms of what its leadership could look like in gods or reconstruction or an actual day
after plan for Gaza. All he's heard from Arab leaders is mostly know what they're unwilling to bring to the table.
And now you see the dynamics sort of shifting.
And of course next week the table is set for King of Dullah of Jordan, followed by perhaps Egyptian President c c All coming to Washington, and this is going to be the focus. So you see a lot of movement because of what Trump has said yesterday.
Mark, does it threaten relationships that the US has in the region, such as President Trump's relationship with the Kingdom of Saudi Arabia for example.
Well not at this point. I do think that there's a huge difference in the situation between his first term and this his second term. You know, in his first term, the interests of the Gulf States and Israel were more or less aligned. Their biggest concern was Iran, the threat from Iran. And you know, so he was able then to get the Abrams Accords, and after that the Biden administration was able to talk to the Saudis a lot
about similar deals because there was no real impediment. And this time around, since October twenty three, when you've got the you know, you've had the war in Gaza in between, and also the sort of interests of Saudi Arabian particular have changed much more focused on the economy and stability,
less worried about Iran. You now have a different situation, and I just think it's going to be quite difficult to bring these different interests together where you've got the domestic political concerns of Saudi Arabia and the Gulf State's now focused on their own populations and their view of Gaza, and it just makes it harder to bring everybody together. And I'm not clear that you know he's got a plan for.
That, Dana.
When we think about what is the plan though for Palestinians, you know, Marx column gets into you know, Gaza is a demolition site. You know, it's a mess, and to think about the Palestinians going back there, I mean, how do they live. There's no infrastructure, so there needs to be some kind of rebuild. And you do wonder how, you know, how this happens going forward, how do you see it playing out in terms of Yeah, first.
Of all, the estimates for the cost of rebuilding Gaza are upwards of eighty billion dollars and we're probably talking about decades to clear out the rubble and rebuild Gaza, so there's not really a temporary relocation of Palestinians.
And based on past US.
Experiences for example, post conflict reconstruction in Iraq and then Afghanistan, the difference in Gaza is how concentrated the destruction is and the closed nature of the border, so civilians can't move around when we're trying to get ordnance, unexploded mines and bombs and the.
Rubble cleared out.
So this was always going to be a huge challenge just on the on the remarks about the region, what's totally different from Trump's first term is this strategic nature of the Middle East. Iran is more vulnerable today than it ever has been because of Israel's military strikes that have taken out its air defenses. But Charyl Ossatt has
gone in Syria. There's also a ceasefire in Lebanon and a chance an opportunity to reimagine Lebanon without a stranglehold of Hazbolah governance, and the same thing in Amasque in Gaza.
Trump can't do this alone.
He needs the Europeans, he needs the Arab leaders, and I think there's an opportunity here for different leaders to bring things to the table.
It's not only about Gaza.
Well, sticking on Gaza does raise the question of what the future of Gaza is if this ceasefire holds, if and when the war does end, what is the plan for Gaza? If the United States does not go through with the plan that President Trump said yesterday at the White House.
On the current trajectory, without anything other than what we see right now, Gaza is probably going to become something like Mogadishu on the Mediterranean. There's no non Hamas alternative to governing Gaza. We've seen that there's plenty of Hamas. Guys who have come out of the tunnels, put their uniforms back on, are distributing humanitarian aid and telling people we're going to help you get back to your homes
and we're going to help you rebuild. So that means that Hamas reconstitutes, it regains governance over Gaza, and its remaining leaders have already threatened to do October seventh over and over and over.
Yeah, So hence you understand the difficulties in figuring the way forward and what really is the next step. Dana, thank you so much. Really appreciate your input. Dana Strol. She's senior fellow and research director at the Washington Institute for Near East Policy and someone who has been on the inside within the US government really understanding and working on this region.
Dana, thank you so much.
Hey, Mark, before we wrap up with you, we did want to ask you about Russia and Ukraine, the role the US and President Trump will play in what happens next. We know US allies expect the Trump administration to present a long awaited plan to end Russia's war in Ukraine at the Munich Security Conference in Germany next week.
This is coring to folks in the know.
You've got a second column out today about President Trump saying he wants some of Ukraine's resources in return for continuing aid. Your note, or you note that this is a price worth paying.
Why, Well, first of all, it's something that President Zelensky of Ukraine offered. So he put out this victory plan last year, and one of the five baskets in there was incentives for the West. But you know, it's quite clear that he had a transactional Donald Trump in mind. Incentives to say, look, you're not just helping us, you're helping yourselves.
After the war.
We have a lot of.
Resources and you know, we're willing to open them up and you know, make them available to you. So there's lithium, there's you know, magnesium, there's you know a number of different resources that would be useful in industry and the ev industry and so on. So you know, he was just it's already there offered. Trump has taken up the offer.
It's exactly what Zelensky was trying to do. And you know, given Europe's weakness militarily, its failure to really build military capabilities, you know what's became clear that the peace devan of the Cold War was over. It really isn't able to
do it on its own. So Ukraine needs the US and Europe, you know, is if you could describe this as the price that Europe should be willing to pay allowing the you know, the US under Trump to have access to some of these materials, to keep quiet about it, because they need the American military, they need Trump Mark.
We're three years into this reward, though, you know, how does how does this actually end it?
And just got about thirty seve and Mark.
Yeah, I mean, we'll see what the US plan actually is on offer, and you know, there are ways to do it. I've written about it, but it's you know, it's it's really not going to be easy, and you know an instant overnight deal is highly unlikely.
Yeah, there's a lot, it's a full plate, certainly when you look around the world. Mark, thank you so much, so appreciate you weighing in on both what's going on potentially in the Middle East and then of course the ongoing war there in Russia and Ukraine. Bloomberg Opinion International Affairs columnist Mark Champion joining us from London.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Applecarplay and the Android auto with the Bloomberg Business app, or watch us live on YouTube.
Quite a bit of news in the world.
Adventure capital Cherry Ventures, it's a VC firm based in Berlin, has raised five hundred million dollars in funding. That's the back Europeans startups that come in from our Bloomberg team across the Pond and the VC firm General catalyst Carol checked this out they're getting into wealth management. They hired twenty former staffers from First Republic Bank. Remember it's one of the casualties of the twenty twenty three regional banking
crisis to create a wealth management business. I wonder if you're gonna be able to at those two point five percent mortgages that you're found for. Yeah, maybe the one point nine percent that I've heard of.
Maybe not anytime soon.
Now.
Jeff Garbo is with us. He's US venture capital leader already. Why he joins us here in our Bloomberg Interactive Broker studio.
Hello.
Hello, We were remarking that it's been since pre pandemic that you've actually been here in our studio.
It's been a while.
Yeah, it's great to be back. Thanks for having me.
Well, it's great to have you here.
You know, the M and A market has gone through a lot, just like the rest of the world, right through the pandemic, coming out of the pandemic, dealing with a higher rate environment after a very low rate environment in the cross of capital was nothing. How would you describe the venture world right now?
So it's a very interesting time in the venture world because the pace of change probably has never been greater. I was just up on sand Hill Road on Monday with a top tier AI investor and he was remarking at, you know, how fast things He's amazed at how fast things are going. And that's something that we kind of expect. And I'm drawing a lot of analogies to kind of what's happened in the internet through the Internet phase.
Is it really a fair comparison, do you think?
I think so? And is it you know, is it exact? You know, time will tell, but you know, there is so much change. There is so much you know, you take a step back and look at the big picture. What were we going to do on the Internet, Well, we were going to do like I was going to buy something. I was gonna, oh catalog. So by the way, I would never have to make another catalog if I was a company, it was just oh, I would put it up there and then I would never have to
reprint it. And if I wanted to dislike do it. But now you think about, you know, twenty five years later, if the Internet would went down, you know, the economic engine of the United States runs and the world runs
on the internet. So yeah, I was gonna go ahead, and so I just think I think that has that same possibility and a lot of you know, with AI and some of the things that are happening now, but the stack is being built and over time that will grow up and build and then it will collapse, but you'll you'll have just much more efficiencies.
Who's the company that sends out that huge catalog restoration hardware? All right, yeah, we just got that. Yeah, I know, they went right into the recycling.
Multiple ones usually, right, Yeah, it.
Was like they didn't get the memo of the nineties. Is it moving even faster though? Than I mean, I talked to somebody today today. He's in the AI space, and he said, things move like we're talking three month increments for revolutionary changes here.
That's what it feels like. And it feels like it is faster. And part of that maybe because of all the capital that's out there. You know, we have multiples of capital that are available through the venture pipeline. The world has become flatter, You've got more international participation both from an LP perspective, putting money into the pipeline as well as direct investments. So it just feels like, yeah, and one of the by products of that has been.
You know, in two thousand and five there were five thousand venture back startups. At the end of twenty twenty four, there are fifty five thousand venture back startups in existence. So a venture cycle is about ten years. You know, through the math on that you've got multiples of venture cycles in twenty years.
Is there a pets dot Com version of the AI era and exuberance?
Well, you're always you know, it's funny because you always are we going to ultimately dot.
Com of course being.
A flop, a flop you could say web then too, there's many of them, like you just through dot Com, right, and like there was just models that didn't have any kind of financials or profitability behind them, and it was just like, yeah.
There will be companies that don't succeed, but that's not that's not necessarily just part of an era. That's part
of the business. You think about, This is a portfolio management business, and I have to produce outsized returns on the amount of money that I raise if I'm a venture investor, So I have to take some really big swings, and you know what, they're not all going to work out because we're making bets based upon what we know today what is today will not be what happened was what is going on in three years.
So do we get a bubble, there will be anyone, There will be There will be over exuberants just.
Because there's so much capital. But you never get advances without taking those kind of leaps.
What was the reaction on sand Hill Road about deep Seek?
Well, I think the you know, we can't really comment direct land companies, but I think at some point you see the technology wave happen where costs always come down and you're always going to have to be dealing with cost curves. And so, as I was talking about earlier, you have a scenario where thirty years ago you would raise fifty million dollars to spend to start an internet company. Today you can do that for fifty dollars, and you could do it on consumption, on a swipe of a
credit card. Whars before you had to add full cost of ownership. So you're going to see AI do that. That's why I talked about the AI stack collapsing. It's getting built up because it's being created and then at time that will happen. It happened in networking with boxes.
I'm not asking you to comment on deep seek.
I want to know how freaked out the venture capitalists are about the billions they've invested in the AI companies that seem to be less efficient than deep seek.
Why we don't have all the information on what's really happened and what the ramifications are going to be. I think you as an investor, you always need to be
taking into consideration what you're seeing. So I think one of the things you know that will be one of the things that may not have been talked about a lot, you'll see more open source because a lot of this stuff, a lot of the investments have been in closed environments, and open source is cheaper, cheaper to develop, it's cheaper to license, So that may be one of the by products in and if we've truly reached efficiencies, then you can start to build on top of that stack and
start to build the pyramid up.
I mean, isn't that something venture capitals do like it's it's about disrupting kind of the establishment. And already you might say that in video is the establishment or open AI is the establishment in AI.
And so the.
Expectation is that sure, we're going to come across probably a model that costs a fraction of the existing AI build that we are talking about today, and who knows how long that takes or maybe it's already happened.
You know, we don't know.
You're right, deep seek We have to find out a lot more information. But is it kind of the venture perspective that of course we're going to find probably a.
Faster way to do this, a cheaper way to do this.
That's all was and that if there wasn't, if that wasn't that proposition, there wouldn't be a venture business. You know, it's innovation, it's driving change. And so does that mean.
Investors the established investor who has plowed a ton of money into Nvidia, and Nvidia so dominates the market that they there's a possibility that they're not the ones who dominate going forward.
That also may open up opportunity because you know, think about we're early when you think about the visions that have been painted out. And I was talking about this this morning. There was a talk a while ago about Internet first the first people who are the Internet first workforce. Well, just think what happens when you get the first AI workforce and what the capabilities that they have a lot of the stuff that they will be using. I'm talking
twenty years from now, haven't been built today. That needs to get built. So but you need to have foundation and because and you need to have that foundation and infrastructure laid. It's the same thing.
You know.
The other analogy to look at is internet building. You know, if you remember during bandwidth, everybody said, oh, we have so much bandwidth over bandwidth, we'll never use it. We'll guess what we burned through that usage in a fraction of the time anybody ever thought it was so Oftentimes, when you find you have abundance and overbuild, you don't necessarily have that in these technology markets because it gets used up. And that is also the mother of invention and innovation.
Where's the money going now?
So obviously ai AI is taking up about forty percent.
Well kind of AI though, like what Well.
Obviously we've seen a lot of foundational model, yeah things, we've seen some open source things, starting to see applications going after professional services. We had that conversation earlier this week on Sandhill Road. The other thing with the classification, it's going to be you know, that's going to be a little squishy because right now, if you're not. We are in a have and have not environment. I talked about the fifty five thousand venture backed startups in the world.
Half of them haven't read about half of them haven't raised in three years. So you're going back to market in an AI market and having to sell a story. So you're going to have to pivot. So a lot of people that may not have been AI native companies now are positioning themselves as AI company. So you're going to see that number influenced by that.
I mean, how many of them are?
Of those they have to go back for more money, right, I mean they're not ready to go public, they're not ready to do what have you?
What kind of money is out there?
So in that fifty five so oh, dry powder is about three hundred and ten billion.
How does that compare with where we've been.
I don't know.
The last couple of years.
It's about par It hasn't grown substantially because interesting the past couple of years have been down fund rate fund formation, yeah years, and it kind of dropped. It lagged the investment cycle by about a year. So when twenty twenty two things slowed down in venture and the investment side, and then twenty twenty three. The formation side started slow, but twenty twenty four was an up year for the first year and two years on an investment into companies last year.
Okay, okay, do you use.
AI in your job?
Yes?
I do. How do you use it?
I use it to help distill information. We've got something called EYAI that basically we've you know, it's kind of our large language model that we help feed information into.
So essentially it's I'm guessing it's built on a LM like an open AI for example, chat GPT.
It's built on something like that, and.
You copy and paste a large document into it and get it summarized. What do you how do you do it?
Summarization helping to analyze a lot of it, So, you know, how do you prompt in? You know, that's that's a key of how you can help get better value out of it? Is what are the questions? It's funny it used to be you know it now we're our tagline is all lan. It used to be asked the better you know one of the things on our ey private has asked a better question.
Yeah, and if you give a better prompt engineer, So if.
We ask the better questions that helps, you know, distill And that's actually you know, when you think about the AI workforce, that's going to be critical thinking is going to be something that's very important.
I was I was talking.
We were talking to Man Deep earlier from Many Intelligence, and I mean we were off Mike and we were talking about AI and he was saying, you know, everybody who you know, you have to embrace this stuff.
You have to experiment with it.
Uh.
If you want to understand the technology, you got to start using it.
Ethan Mollock, who we have had on is co author of co Intelligence. Living and Working with AI is basically like if you if you haven't been working and playing with it, you are behind the curve in a big way.
Telling you that Chicken Mary and by the time you see it, it's too late. Yeah, that's the thing. That's why you have to be ahead of the curve.
Playing with it on my phone a little bit. Jeff Graybow, thank you so much.
Us Venture Kappa leader at Ey adding us right here in our Bloomberg Interactive Broker studio.
This is the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Applecarplay and the Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa, I played Bloomberg eleven thirty.
But once again, check out the stock market, Charlie, give us giving us an update there, Carol, we are flat. It's yellow on the Nasdaq. You don't see that every day. It's not red, it's not green, it's yellow. Three tens of one percent to the upside on the S and P, five hundred and seven tenths on the dow to the upside. Let's drive to the clothes and get an idea of what Jennet Gerritty has to think about these markets.
Yeah, exactly.
She's managing director, chief economist over at Robertson Stevens, a wealth management firm with more than seven billion in assets under management, and she joins us on this Wednesday from Menlo Park, California. Janette, good to have you back here with Tim and myself. A lot coming out investors right now.
We are seeing stocks.
So pretty much at their best levels of the session, but just a little bit higher here. How are you looking at this investment environment? Are there more opportunities or more reasons to be cautious.
Well, there's a lot of opportunities, and I think your previous speaker was highlighting some of them. There's a lot going on. Sometimes there's a little bit too much going on. I think that's been maybe the story of this week. And the markets are appear to be and I think most investors are sort of saying, Okay, let me focus on the fundamentals as they are and look forward. And
the economic fundamentals are very good. It's an economy firing on all cylinders right now, and I think that's carrying through on how people are thinking about the immediate opportunities.
Having said all of.
That, there is risk here that things get disrupted, even sometimes just by the things that are talked about. One example of that would be, you know, the manufacturing sector is now growing again. It's actually been in a bit of a slump for a couple of months, as indicated by the purchasing managers indices, and now it's picking up
and you can see things picking up in January. What remains to be seen is to a degree, things kind of come to a stop for a minute while people try and figure out what the real substance is in the discussion of tariffs or anything else.
That's so it's you know, that's what we're trying to figure out right now. I mean, I was joking earlier today, it's like, is it only Wednesday, because it feels like we've been talking about tariffs for two weeks at this point.
Well, we expected on day one because that was a tefic part of his campaign, right and then when it didn't happen, we were kind of like, wait, what's going on?
What were your clients doing on that? Were they calling you Monday? Were they, you know, trying to figure out, Okay, what's what's going on here? Is everybody because they've seen this movie before, they're just like, Okay, sit back and we'll wait to see what he does.
Well to a certain extent, they've seen this movie before, but not quite in this way. And and so, but I think most of our clients we were talking about them to them about this some time ago. Per the point that this is this is should not be entirely a surprise. The speed, the magnitude, the lack of clarity as to what the objective really is, I think is what surprised people is they say, we can understand why this is being done. Then that gives us a certain
amount of sense of certainty. But that's been hard to absorb. But they there's not enough there for them to be worried about.
Yet they're just a little bit worried.
All right, Jeanette, Thank you so much. Jeannette Garrity.
She's managing director economist at Robertson Stevens.
This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from two to five pm 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 always on the Bloomberg terminal.