The Markets, Ukraine, And Biden’s SCOTUS Pick

geopolitical uncertainty in Europe effect the global economic recovery. We're talking inflation, economic growth, and what does that mean for financial assets? With David Coodla joins us. He's a founder, CEO and c i O of Mainstay Capital Management. David, as your outlooked changed it all over the last twenty four hours, It hasn't really changed from you know, where we've been for the past several months. And what I mean by that is, you know we were we've been

focused more. We're overweight value and cyclical stocks UH for equity exposure, we are overweight commodities as a hedge UH, and we're mostly void interestrate sensitive bonds. Now with the geopolitical events. You know, we geopolitical events don't have a perpetual impact on markets. That's what history has shown. I think that this event is a little bit different because of the environment in with inflation and what commodities could

be impacted. That's even whether they're impacted by sanctions or not. Uh, they'll be. They're just impacted by the event itself, whether we're talking about oil, gas, whether we're talking about agricultural commodities, fertilizer. Ukraine and Russia together supplied of the world's wheat and corn. Um, they're going to be in the Ukraine recovery period um. But we'll see what's yet to come. On sanctions, they've

been more symbolic. They've hit the financial ins toos, but they really haven't gone after rushes jugular yet and and may not at all. On where they make their money, which is hydrocarbon's fossil fuel and and and seems like they're making more than ever we've seen. Um that Russian sales of gas were up I think today and thirty eight percent yesterday, So everyone's rushing to buy their products,

even at much higher prices. UM. It doesn't seem that just doesn't seem right, but I guess that's the way it goes sometimes. What do you expect the knock on effects to be for the FED? Anything at all? Well, the you know, the Feds, the FEDS fight coming into this is inflation is bringing inflation down. We got a PC this morning at six point one percent, another you know, another increase year over year. Um we have you know, I think the FED hope that still that inflation comes

down on its own a supply chains heel. Uh. You know, prices were high coming into this, they stand only to be higher. Uh as we come out because of uh we're aluminum is skyrocketed to where uh wheat up six percent yesterday. You know that the impact of this geopolitical event will have some lasting impacts. That stands to only increase inflation. And you know, for the FED, really what they're staring in the face of his stagflation, Yeah exactly.

I mean Paul has been asking or making the point for for weeks or months now that the FED can't stop inflation caused by supply constraints. They can only slow demand with increased rates, right, So that means kind of the only choice is to slow down the economy um

to to get inflation under control. Yeah, and we have you know when we talk about these knock on effects or what's going on with uh, you know, with prices going higher, especially when we talk about oil that you know, at one point Brent crude was a roaching hundred five dollars per arrow per barrel. But you know, uh, even before the geopolitical event, we were looking for oil gas prices to go even higher. Oil is a tax on

the economy, and but it's also inflationary. So they're really between a rock and a hard place because there are forces there they're gonna be slowing the economy and forces it seemed to be continuing to ramp inflation higher, much higher than where the fat expected and probably a lot of others as well. So we're seeing these forecasts for how many rate hikes we get this year. You know, they've been all over the map this week. Each day

is to what was happening in the conflict in Ukraine. So, David, what are your clients asking you most, you know, over the last few days, what's the big question they have? What this geopolitical event means to the market. It I think it's typical Uh, as much as you educate your clients talk about these things. We sent out a communication on Tuesday mornings specifically about you know, what you create, you create going on in Ukraine and what it means

to the markets, what it means to the portfolios. But you know, there's still at twenty four hour news cycle. Um, they're hearing the concerns about, uh, what could happen. And you know, we've seen you know, leaders around the world, specifically in the EU and US, who have been trying to get gas and oil anywhere they can and they are not in i think in terms of sanctions not to put those supplies at risk because they're concerned about

domestic policy. So you know that the concern is they see higher inflation, they hear the the discussions about slower growth, and you know that's that's that's obviously a good discussion to have to put them at ease about what we're doing. All Right, David, thank you so much for joining us once again. We always appreciate getting your perspective on these markets. David Coudlif, founder, CEO and c IO of main Stake Capital Management. Okay, we're let's call it thirty six hours

into this news cycle with Russia invading Ukraine. It seems like something out of the twentieth century at Jason Bourne. But here we are nevertheless, markets very violatile. Yesterday took a big sol off as one would expect, but then in the afternoon really came back with a vengeance and closed on the upside. And we've got some more green

on the screen today. But how do you factor in geopolitical risk uh into your investing, particularly if you're a tech investors, And for that we check in with Lauren Hine, head of advisor relations at robo Global. Lauren, thanks so much for taking the time here, um, as the last twenty four hours changed the way you guys think about these markets. Hi, thanks for having me. Absolutely not. We don't make decisions um about kind of the long term

outlook for innovation based on market swings. I mean, frankly, if anything, the lasts in the last I guess month or two have given our investors a good opportunity to kind of buy in at lower prices. So there's long term opportunity for us whenever we have these kind of geopolitical hits. Um. Do you is that the first thought after obviously the human issues that we're all concerned about. UM. When you look at the markets, do you think this UM is going to cause volatility that is going to

give us a chance to get in UM. That's very much I think where our our mindset is and our investors mindset is. I mean, robot Global specializes in investing in things like robotics and automation, and you know, despite what's happening in the geopolitical landscape, there will be more automation, there will be more innovation, more robotics application cross sector over the next twelve months, over the next three or

five ten years. So a twenty four hour kind of geopolitical news cycle isn't going to really affect the trajectory of technology. And this this leads me to another question. Paul and I were talking to UM a guy who runs a tech cup any recently and he specialized in logistics, and we asked him, you know, does this present a

problem Russia invading Ukraine for the global supply chain? And he said, actually, the economies are pretty insular and not really do you see it the same way, UM, I mean, honestly, it's not something that we've raised a lot of red

flags about here in the last day. We're obviously when we're watching logistics, we're watching supply chain and factory automation regardless, is something we're very optimistic and excited about for the future, something that frankly, technology can really solve some serious problems. But it's not nothing being affected by Russia that we're talking about right now, Lauren. Five G that's something that we've heard a lot about last eighteen months or so.

How do you guys think about five G and maybe how are you guys trying to get some exposure to that? Sure, Honestly, we're not trying to get a pure play exposure to five G through any of our indexes or any of our underlying technology funds that we're creating UM. As far as the five network itself, we know that we need it. We need a faster network with more capacity UM for

any of our technologies to run. So what will be crucial in kind of the next the new economy, But it's not something that we're actively trying to get exposure to. I think we're specialists on kind of the ecosystem of automation more than on the the infrastructure technology space. All right, Lauren, thank you so much for joining us, really appreciate getting We didn't get to ask her at all about softball.

I know there's there's a lot of serious stuff going on, and we come to you, Lauren for real market knowledge, and you're great at that. But you also played varsity um softball at WESI UM. I spent my time in left field, and you guys are making me think I need to get someone on my Google and really start scrubbing that. I'm just thinking. It just sounds like so much fun, and it's Friday, and there's no reason that we shouldn't mention. Mean, how great is intercollegiate softball? Actually,

college sports are wonderful. Softball is a fast game. It's fun to watch, it's fun to play, and frankly, the discipline and the team atmosphere is a great skill set for kind of the rest of your life, especially in a fast faced environment like working with the markets. So that it can't endorse it enough, we're gonna bring it up. We're going to talk some softball. Larenheyde, head of advisor

relations at Robot Global. This is the big take, the best of Bloomberg's in depth original reporting from around the globe. We're running on a financial system that's running on old technology prices. Fish recordized. What unfolds in mid terms, we will no doubt see again in the next presidential election.

The Big Take on Bloomberg Radio, all right, the Big Takes story today really focuses on economics, macro economics on a global scale, and the question is how the unfolding war in Europe could threaten the global economic recovery from the pandemic. Let's check in with Tom or Like, chief

economists for Bloomberg Economics. He joins us here on the phone time, So give us a sense of kind of what you and your colleagues are thinking about this continued global economic recovery post pandemic, and how it may be impacted by the events we're seeing in Russia and Ukraine. So there's three channels which we see for impact from Ukraine to the rest of the world. The first is

spillovers from Russian sanctions Russian recession to Europe. That's a drag on exports for Europe, especially for the Eastern European countries which are most closely had the closest trade links with Russia. The second is what happens to energy prices Now, the big concern here is that Russian supplies of gas to Europe get affected. We see spiking European gas prices, global oil prices that hit consumer spending power at the same time as pushing inflation higher. And the third channel, well,

that's the financial market channel. We've not seen it so far. Energy prices have stabilized, equity markets have stabilized, but clearly in a geopolitical conflict, in a war, there's the chance of a sustained risk off move for markets. If that happens, we see another drag on growth. Potentially we see a more dovish trajectory for the fair heading into the second half of the year. Tom, how bad would it be for the European continental economy to start buying gas, oil,

and aluminum from Russia. I mean, surely the prices would go higher, a lot of shortages would be would pop up, making life more difficult. But would it be a huge problem for growth. It would be a very significant problem for growth. And this is the kind of the dilemma for Europe's leaders. On the one hand, they want to signal to put in that this behavior is completely unacceptable. Well, start funding. The other hand, start funding the right exactly.

On the other hand, turning off gas imports from Russia, which would really be the sort of the maximum pain point for Putin, would also impose very high costs on Europe. We'd see inflation going higher, we'd see consumer spending power going down. Likely, we'd see Europe going into at least

a mild down term, if not an outright recession. So far, European leaders have been very, very reluctant to pay that price, and that's why we're seeing sanctions that hit banks, that hit corporates, that stop but stop short of hitting Russia's

energy sector. I guess the question there in is what needs to occur for for the United States and his Western allies to take that step, Tom, to really go after the energy complex, which is point out we'll have, you know, repercussions for certainly Europeans, and you know, probably even more than that. Well, they've got to decide it's worth it, right the exament, they don't think it's worth it. It's not worth the injury to our own economy too,

to stop funding Vladimir Putin's invasion of other countries. So, Tom, is there any scenario where you see that happening. So I think one crucial point here, um is that Ukraine is not a member of NATO, right um. And so the obligation to put boots on the ground, um, and to get really serious about defense of the democracy there is not nearly as strong as it would be a favorite NATO member. So I'm an economist, I'm not an international relations expert, but I think it's the NATO membership

question which is crucial there. Um. And if you saw Putin's ambition stretching two countries that are members of NATO, that's when things get really seri us in terms of sanctions, in terms of military support, that's when you'd start to really be concerned about the gas being turned off for Europe if they went to the Baltics for example. Um. We have seen, you know, during the Reagan administration, as the Cold War was at its you know peak, um,

military spending was massive and so was economic growth. Is that is that a possibility of this if this escalates. So the end of the Cold War hasn't played out quite as hoped write Um. If you go back to the ES, there was this kind of triumphalist view that democracy and free market and the West or in the ascendancy, and Russia was going to move on to that path, and maybe even China was going to move onto that path.

And that's why you had this very optimistic period in the early two thousands where China was coming into the global economy and Russia scene to be on a reforming path and globalization was driving great for everybody. Well, covid Us China trade wars, neither war in the Ukraine. Seems we've moved decisively off that trajectory deglobalization, maybe not, but certainly slower globalization going forward. Yep, all right, Tom, thanks so much for joining us. Tom orl chief economists for

Bloomberg Economics. Well, today President Biden selected a nominee for the Supreme Court, Judge Katangi Brown and Jackson, the first black woman nominee to the Supreme Court. Um, what does it mean and how is this going to go? How's the whole process gonna work? And this person get approved? June Grasso, host of Bloomberg and Bloomberg Opinionsso it's Grosso. What did I say? So this is important to people? How you pronounced their name? June Grasso? What did I say?

By the way, you said Grasso, like like Dick Grass. Remember, so it's grosso with June. Are you going with the soft a Yes, soft day. I wouldn't have stopped you though, but but Matt did. Mat he has no Yeah, he doesn't work. Listen June. I used to drive home at the same time as June had her show every day. She had a great legal show on Bloomberg Radio with Michael Beast. I listened to it every day. I loved it. Um. She went to Wellesley, which I think is amazing. Uh

and uh law degree from Harvard. She's an Emmy Award winner, So she's kind of a big deal. And yet I wasn't nominated to the Supreme Court. What happened to tell us about the nominee? All Right, she is a star Katangi Brown Jackson. She's been on the bench for nearly a decade. She has the Ivy League credentials, Harvard College, Harvard Law School, she clerked for Brier, who she's going to replace. And she's got a different kind of background

in that she served as a federal public defender. The last Supreme Court justice with significant public defender uh or significant experience representing criminal defendants was Thorgrid Marshall, the legendary civil rights lawyer, and she has been considered a contender for quite a while. President Obama not actually did an interview with her when a sea came open that he gave to Merrick Garland. We know how that turned out. But she she's just a star June. Do you think

she'll get approved? Oh, I definitely think she'll get approved. When she went when the question is how nasty will the nomination process be? I mean the nomination process has been for the last few nominees contentious since Garland. Yeah, well yeah, Garland never got never even got a care Yes, yeah, but it was getting it was a little bit before that,

but it's gotten so contangents and awful. But she just not a year ago, less than a year ago, went through the confirmation process for the d C Circuit, which is sort of the feeder court to the Supreme Court, and she sailed. She sailed through that. Basically there were three Republicans that voted with her, uh for her that was out of the committee. That was Lindsay Graham's uh,

Susan Collins and Lisa Murkowski. But you know, the Supreme Court is a different The Supreme Court nominations and hearings are different, so we don't know if she'll get those particular votes. But the Republicans really don't have a coherent strategy or reason to attack her. So, you know, the the questioning we heard from Republicans during that hearing was about you know, wonky sort of sentencing guidelines and the fact that she had represented as a public defender or

guantanam obey inmate. That was probably the most they had on her and her you know. Also, she's ruled in a lot of high profile cases, but none cases involving those hot button issues like abortion or guns or religious rights. The highest profile you have to think about is the Don McGann case where she famously said presidents are not kings about Donald Trump. So, so assuming she gets confirmed June, what does the Supreme Court look like then? So the

ideological makeup of the court won't change. It will still be six Conservatives and three liberals, but those three liberals will be women. It's going to be an all women block, and also with diversity of their own Hispanic, Jewish, and Black. It's going to be I think, really something to see because those three women are going to be able to talk about some of the issues, and particularly with her background Katangi Brown Jackson, in some of the cases that

come forward. For example, they're going to be an attack on affirmative action coming up next term, and the only other black on the court, Clarence Thomas, is not a fan of affirmative action, So we'll see how she relates in that case and and what happens. I just expect that they're really going to be speck tacular. They're all three are so well spoken and really um sort of there.

You know, you can there you have sound bites from them if you ever listen, if you're wonk enough to listen to Supreme Court arguments, you'll you can you know, you sort of see that the justices that have like what i'd call a sound bite that say things that just resonate. And Elena Kagan and so do Mayor certainly have that, and I expect that Katangi Brown Jackson will

as well. By the way, how do you do judges ideological leanings stay the same because their careers are so long, right, and I know Reagan, for example, appointed a few Federal Court judges who turned extremely liberal in there, right, and so that's definitely true. You have certain justices who turn with David Sutor is a great example of a justice that they thought was going to be moderate to conservative

and turned out to be moderate to liberal liberal. So but the thing is that in order to prevent that from happening in the future, what's being done now is they're vetting these candidates more closely, and they're looking for a background, a history of conservatism so that it will be unusual, or liberalism or liberalism so that it will be unusual for them to all of a sudden make

a turn. But gradually it could happen. And also there are some cases where you don't expect, you know, a ruling and all of a sudden, for example, in the in the ruling about um uh transgender you know, being able to get a job and the violation we had Gorset's writing that majority option, which was a surprise. Okay, June, thank you so much for breaking it down for us. Drewn Grosso, host of Bloomberg Law and Bloomberk Opinion for

Bloomberg News. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller and inteen seventy three and on Fall Sweeney, I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio