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John Talker sitting in for Alex steel On. Paul Swiney're live here in our Bloomberg Interactive Broker studio in New York City. Were streaming live on YouTube as well. What we've been trying to do all day today, starting at seven am with Tom Keen and surveillance, is just to try to find some guests here who are experienced and educated in all things in the complexities of the Middle East and help us the audience to get some context
about what's happening in the Middle Eastern. Next guest as certainly one of those folks, Aaron David Miller, Senior Fellow at the Carnegie Endowment for International Peace, joining us from Washington, DC via zoom Here. Aaron, We've had presidents and President's Trump urging Israel to have restraint, particularly as it relates to Iran. But I guess today Iran said, Hey, the risks to us are just too high. Iran is making too much progress on the nuclear front. We had to act.
What kind of contexts? How do you view what happened last night?
It's a long movie, guys, and thanks for having me. First of all, I think the Israeli's acted in large part because you have an his early prime minister who is now very risk ready his lifelong mission is to Freezer from the shadow of an Irani and bomb. And the Israeli's not just the prime minister, get behind this idea of the Began doctrine. You know that in the summer of nineteen eighty one, then Israeli Prime Minister of Monock and Began went after the Assira reactor in Iraq
and destroyed it. The Americans destroyed the reactor again, by the way, during their campaigns in Iraq, just doing the Reagan administration, and Reagan's not very happy with the Israeli decisions. He later came to regret it, though, and agreed with Began that getting rid of the reactor was a wise move. In this case, I think the first Democratic and Republican president ever did not communicate in an unmistakable way to the Prime Minister of Israel, and they talked on Thursday.
We're not sure what the conversation was before these strikes tomorrow, last night, and this morning. Let's put this way, Donald Trump did not say no. Had he wanted to say no, he could have brought to bear an enormous amount of leverage and pressure to dissuade the Israelies from not striking. So I don't think that conversation was necessary. He may have had doubts, but I think in the end he's simply enabled to exceed an acquiesced in the Prime Minister's decision.
And remember, the negotiations were supposed to zoom on Sunday in Oman, and yet the administration kept saying right up to the end. Five hours before the strikes, the President tweeted on true Social that he hoped there would be a diplomatic ending to this. So the administration cooperated with this ruse. And right now we are waiting for the Iranian response. It could be weeks before it occurs. They're
clearly knocked off balance. Much of their general staff has been eliminated, former head of the Iran Iranian Revolutionary Guard eliminated, Chief of staff for the Iranian military eliminating the Israelis. They are still ongoing now, striking ballistic missile sites you wa East sites, drone sites in effort to repress and suppress whatever remains of Iran's air defense. There will be an Iranian response. It may be asymmetrical, using terror against
Israeli or Jewish targets. There's a history there. It could be a while. And then you raised the question, or I'd raise it, what are the Iranians going to respond to? Well, they confine their strikes to the United Two, I'm sorry, to Israel proper. Or are they going to go after American assets in the Gulf, or in Iraq, or in
Syria or oil infrastructure in Saudi Arabia. I would bet, given how weak and vulnerable the Iranians are, they'd probably, at least at this stage confine their response to Israel.
A secretary at Rubio said this was a unilateral action. Then we got a tweet or something on social media from the President that said, among other things, the next attack being planned will be quote even more brutal and begs the question for me, what is US foreign policy with respect to this?
Well, I think the President had made a judgment he obviously argued the Iranian negotiations were not producing. He gave them two months to reach an agreement, which is an unrealistic deadline. To be sure, that deadline was reached June eleven, and that Thursday overnight, Thursday Friday morning, they attack. So no, I think the administration rode the tiger of what the Israelis now have in this region, which is an escalation dominance.
They've essentially hollowed out Hamasa as a military organization. They've basically decimated his Bullah, as well as the statement saying remarkably they would not initiate any activity in response to what the Israelis have done. So I think that right now the NFC presidents chairing an NFSC meeting, i'd say the priorities you asked me what US foreign policy will be in this case, I think there are three or
four issues. Number One, protect Americans. Make sure that the sites that are vulnerable are as hardened as they could be. Number Two, prepare for a significant defense. Assistance of Israel helped the Israelis multi layer their own defenses, as the Biden administration did in response to the Iranian attacks last year.
In April October. That's number two, Number three Coordinate Regional defense unnamed golf countries in April and October helped both intelligence wise and participation in an Aaron missile defense shield remarkably supporting Israel in the face of that Iranian attack. Jordan shot down Jernes in April, last April and October, and US deployed F fifteen specially equipped with interceptors to protect and help the Jordans airspace. The final piece of what policy would be, are they looking for a way
to de escalate. Will they try and push a doubt for something in the Security Council, but some sort of initiative that would try to get the Iranians back to the negotiating table. That's going to be a very heavy lift, though, Guy, and the Iranians invested five trillion dollars over time in this nuclear program. They are humiliated. They are embarrassed to the extreme. So I think we're talking about we're beginning to a very long and very difficult Israeli Iranian confrontation.
Aaron, thank you so much for joining us. Really appreciate getting a few minutes of your time, Aaron. David Miller, he's a Senior Fellow at the carnegieen Dowment for International Piece in Washington, TC, joining us of via zoom.
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Let's get back to the geopolitical topic of the day, Israel and Iren. Ariel Cohen joins his senior fellow at the Atlanta Council, joining us from Stockholm, Sweden of via zoom. Ariel, can you put into context what has happened over the last twenty four hours? What is israel strategy? Where does a rain go from here?
First of all, this was in the works for probably twenty years. Iran was giving every opportunity to walk away from its nuclear weapons program. First with a jcpoa planned by the Obama administration, it didn't work. Instead of yes they could enrich for the domestic power production three and a half percent enriched uranium, they escalated twenty percent and more. Now they were enriching it sixty to eighty percent, which
the only application is weapons. They kept accelerating development of their ballistic missiles, and they were funding proxies from the Red Sea to the Mediterranean, from the Hufis to Ribala, to Irate to Iraqi Typeisbala. So they were building or try to build a Middle Eastern empire. And it all came down rushing, and Trump gave him six sixty days to agree to keep their internal domestic power production through nuclear reactors, but to shut down the Richmond They refused.
Every Friday, they chanted death to America, death to Israel. They tried to assassinate Tromp on American soil. So when people are telling me, now we don't care about Iran, nobody talks about Iran like this, bright lights, Marjorie tailor, Marjorie.
I just want to quickly ask, do we know if the the Iranian nuclear capabilities have been neutralized or anywhere near neutralized? At this point, I think.
Israel is way on its way to do that because of NATON In Richmond facility, despite the fact that it was protected with the eight meter concrete envelope, is destroyed and other nuclear facilities are destroyed. But if this regime stays in place, they may rebuild, or it will require
another war. In five or ten years. So the question I'm asking myself number one, with Trump watching the inflation, can the Saudis and other Gulf oil producing countries export oil east I'm sorry, west to the Red Sea so that the oil supply is not disrupted too much. This is important for the US that Iran doesn't put mines in the Strait of Hormuz, through which twenty five to
thirty percent of oil exports is going through. And secondly, can the regimes survive either giving up its nuclear program or being bombed as badly as the Israeli seemed to be doing and still stay in power. And at this point I'm not sure about either outcome.
Doctor Colin, can you just reiterate what I think I heard you say, which is you believe that Israel has destroyed or neutralized their nuclear facilities.
Indeed, the main enrichment facility was in Natans. Israel is also destroying or destroyed most of the massive ballistic missile arsenals. Just the other day we saw that Iran was buying enough materials and precursors to build ten thousand ballistic missiles over a period of three years from China. Apparently this
is also a target. It may not be fully destroyed yet because we're barely twenty four hours into the operation, but in terms of the success us of taking out the leadership of the Iranian Air Force, the head of the Iranian Revolutionary Guard commanders up.
We're gonna have to leave it there just because of the time. We really appreciate getting a few minutes of your time. Doctor Ariel Cohen, Senior Fellow at the Atlantic Council, joining us via zoom from Stockholm.
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Inflation expectations coming down, so let's check out with Joan Shue, Surveys of Consumers, Director at the University of Admission, Joanne Big snapback in the numbers at Big Reversal.
It seems like, yes, consumers are feeling a little bit more settled after the big shock of the April developments and tariffs, so they do think that the outlook for the economy has improved. At the same time, we're still you know, almost twenty p sent below where we were back in December after sentiments saw a post election bump. So consumers are still pretty far from where they were just a few months ago, and they don't think we're out of the woods yet.
And joined with respect to all the great work that you guys do with the events of the past twenty four hours, particularly with the inflation expectations, I kind of tend to want to throw these numbers right out the window.
Well, there's a lot going on in the world right now, and in terms of how consumers react to global events in the Middle East, where we can wait until the final reading for June, but of course things are happening on a daily basis. Consumers are incorporating this information separate from the possible disruption to energy prices, from what's going on overall. Consumers worst fears about what might happen to inflation.
When they saw the development developments in April, they feel better about that, but they're still bracing for higher inflation than they were just a few months ago. So consumers are looking bracing for that.
And the one year inflation expectation was six point four percent down. It came in at five point one still much higher than where we want to see it, where the FED wants to see it. Joan, thanks so much for joining us. Joe and Shue, Surveys of Consumers Director at the University of Michigan.
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Let's check in with the story from yesterday, the air crash in India that claims so many lives, a lot of issues they're one of the issues is just boeing the plane, ge the engines. From a business perspective, that's kind of where a lot of folks are looking at this state. Sid Phillip joins his deputy team lever for Global Aviation Zoom from Paris.
Sid.
What do we know about the actual pla itself? Maybe some causes here or is anything been reported?
So far?
There hasn't been much in terms of causes. I mean so far we sort of we understand that investigators are coming through the wreckage to determine really what caused that crash and it killed all but one person on board, so two hundred and forty one.
People in fact that somebody wanted away from that. It's absolutely a mirror ple.
I can't wait to see the reporting on that. So it is has Boeing said anything? What's Boeing said?
Since Boeing is actually sort of it hasn't said a lot. It's Boeing is basically deferring to the regulators and investigators on this matter. So they're sort of putting it onto investigators saying they're not going to comment and they're not
going to say anything about this accident. They're going to help with the investigation, but they aren't going to comment, and they're going to let that the investigators sort of work through the whatever evidence that they can find and whatever sort of the black boxes and what they decode from those black boxes before they really make a determination and say anything on the matter.
It also gets to the investigation. But you know more than us about that particular airport in question. I understand that's known for a lot of bird strikes. Do I have that right?
There have been some bus strikes. I mean again, at this point, it's a bit early to be seeing what the matter is. I mean At the moment, the accident's being investigated by the Air Aircraft Accident Investigation Bureau of India and they also have investigators from the UK and the US who are assisting with the probe, and so
they're looking at multiple angles in this investigation. And I think the DGCA, which is India's aviation regulator, also ordered some maintenance checks on all of Air India's Boeing sevent eighty seven's, including they asking them to check on fuel systems, cabinet engine controlled hydraulics, just to rule out what really caused this incident, he said.
Just thinking about Boeing it it seemed like just recently, maybe the last six to nine months, Boeing was putting behind it a lot of the safety issue that have plagued it for the last several years of seven three seven macs and so on, and then this happened. What's the feeling within Boeing about kind of where they are in terms of getting back some of their engineering chops, their safety chops, getting production levels backed up to where
they need need to be. What's what do you think the view is from Boeing.
So Boeing, I mean Boeing obviously has been working on improving their quality systems. They have a new CEO, Kerry Outberg, who is sitting there who's basically been working on improving quality and making sure that the company can actually ramp up production and ramp up safely. And so that's what
they've been ramping up. And they've sort of just reached a key milestone on the seven three seven Max, which is separate from the jet that actually crashed in India, and that jet is the one that had those two fatal crashes in twenty eighteen and nineteen and also the door plug falling off last year, and so they've they've ramped up production on that. They've sort of got to the FA mandated level of thirty eight a month, and so they are in the process of sort of showing
up their company, showing up their balance sheet. And this will be a sort of blow to that effort, and this will sort of force Kelly Ottberg and new CEO to sort of again go back into crisis mode. And I mean, he isn't going to be attending the Paris Ashore which starts next week. He's decided to skip that along with Stephanie Pop who leads a commercial commercial unit.
Yeah, I was kind of curious how that proceeds. Arguably the Paris Era show, as we that's the biggest event on the aviation calendar, isn't it is?
It is the biggest aviation event typically where airlines splash out on big orders. There's lots. It's very celebratory. That's where alines sort of talk about their future fleet plans and aircraft manufacturers including Airbus and Boeing show off what their latest products are and all the innovations and developments that they have.
So where is Boeing in terms of like a lot of folks tell me, Hey, if you're looking at Boeing, the only thing you'd really need to focus on is how many seven thirty events are they getting off the line every month? Where are we right now and where do they want to go?
At the moment, we're close to the FA mandated limit of thirty eight a month, and they have talked about getting beyond that to about fifty a month, but that is long term, it's not yet, it's not yet, not a near term consideration. But that's basically where they I mean air buses, which is Boeing's direct rival, makes about sixty eighty twenty one s, which compete with the seven
three seven MAXs. They make about sixty a month and they have an ambition of reaching seventy five a month by twenty twenty seven.
Tell us about GE, the engines in question, and does Boeing Is GE just one of the many suppliers of engines for Boeing.
No, so, G is one of the main suppliers of engines for Boeing, I mean on the seven three seven Max. GE is one half of a joint venture that makes the exclusive engines for the seven three seven Max. And they also provide all the engines on the CET Triple seven X, which is the upcoming model, and they're one of two engine options on the seven eighty seven. So they are a very very important supplier in terms of
the aviation ecosystem. They're very important supplier to Boeing. And I mean, this engine has has been in service for over a decade now, and so this isn't a new engine, It isn't an engine that has any particular issues, so it is I mean, I'm sure that she is also contributing to the investigation.
All right, So thanks so much for joining us at phill Up, Bloomberg Deputy team leader for Global Aviation.
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