Ukraine, Commodities, and Retail (Podcast)

figure out what exactly happened in Poland. I thought you're gonna say, no, we're gonna go a little bit ten fifteen minutes free here of that, We're gonna talk some real stuff. Uh NATO and Poland see no intentional Russian strike as crisis eases. That's the Bloomberg headline. But I need to get the expert opinion, the boots on the ground, and for that returned to Maria today. Oh she's your reporter, Bloomberg. You're not Bloomberg Opinion anymore. You're back to Bloomberg News,

I believe, But no, I'm not. Guys, Yes, I know that I caught that Maria in our notes, So you're not a Bloomberg back backup Bloomberg News thankfully, because we need or objective reporting here. What do we know now about what happened in Poland yesterday? No opinion, just fact.

And I think we're mat Miller if I believe that was his his side of relief, that that I overheard that really yeah, I had even really actually encapsulates a lot of the responses and and and and some of the text messages that I've been exchanging with a number of diplomats today in in Brussels. There was real concerned yesterday when that AP headline hit two people that in Poland a Russian missile that went over the border into Poland.

Of course, not to give anyone a history lesson here, but we know that Poland is a member of NATO, is a member of the European Union, had a very very difficult relationship with Russia for a number of historical reasons that I'm sure Mam Miller also uh well knows well, going back to the Nazi Soviet Pact. This is a very tense relationship that they have, and of course this could have been a real game changer if Russia had

indeed intentionally no targeted Poland. Well, we've heard even accidentally right, because the initial I think report, everybody thought, Okay, Russia accidentally lobbed a missile into Poland because they're fighting close to the border. If they don't, obviously the Ukrainian soldiers will amass there as kind of a safe zone. Um, that still would be bad. And now it seems like everyone is trying as hard as possible to come up

with any other possibility. You know, maybe it was a Ukrainian air defense missile that knocked the Russian missile into Poland. Maybe it was a Ukrainian air defense missile itself that caused the explosion in Poland. So what do we know? Indeed, and you know, just too got trad actually answer the question. Uh yeah, basically that's what we heard very early on

today from President Biden. A lot of people that I was texting at seven a m. In the morning were kind of very relieved by that, where he said the trajectory of this uh well, miss ilead or air defense potentially too, would suggest that it did not come directly

from Russia. Then of course you have the Polish uh themselves come out and say we do not believe this was intentional, and then NATO suggesting In fact, what happened here is that on a day where Ukraine was pounded by Russian missiles, and just to give you a little bit of color here, it was so bad that even neighboring countries like Moldova lost power. Because sometimes we talk about the war in Ukraine, but just just imagine that

in your head for a moment. It was so bad that even the neighbors had blackouts, they had powered down, and they're not even related or fighting this war. And essentially what happens is, you know very well, or defense will try to blow up a missile in the air, but then of course it falls down and you never know where it's going to fall, the damage you can do on the fall, and then allegedly, well today nature suggesting this is exactly what happened Ukraine and our defense

shot it down. The ben fell on the Polish side, and for a lot of people, that's massive lead in a real reminder by the way, that this war is in a very active stage and the risk of a spillover are many and very real. By the way. Yeah, and you know, one of the things I noticed yesterday, Maria, after the initial reports was the number of I guess tweets coming from countries all in that region, all around

NATO voicing very strong support for Poland going forward. So and they and they have to I mean a NATO member if they invoke Article five, then you know NATO has to go to their defense. Now before that, as a precursor, you invoke Article four. And the question I think is will Poland today or this week invoke Article four? What do we know on that you know it might

view they won't smack. I think the version that everyone has agreed with, or that kind of sticks with, is do you have use intelligence suggesting this is not Russia? You have NATO come out Today's Secretary General say this is our defense. Nobody, by the way, blaming Ukraine on that too. They said, this is not Ukraine's faults. These are the risks that happened when Russia, knowing full well by the way, they're very close to the Polish border,

can actually happen. Nobody's blaming Ukraine. But I think what I get today is that there's a sense that this was so close to the brink everyone wants a breather. Let's take a step back, Okay. I just and we we reported that the President of Poland andre Duda said his country is unlikely to invoke article for I have seen the Fox News headline that says they're expected to. So this once again is one of those confusing situations, and I guess it will be we have to wait

for the smoke to clear to some extent. Maria, what what should be the next data point that we should look for in the next couple of days. Look, I think in terms of data point, this this is anything and and for a lot of Europeans this morning this is really the reality check. We've kind of gotten used to this idea that yes, there's a war going on in Ukraine. Yes as brutal, Yes people die, Yes they're fighters on. Yes, Vladimir Putting can be world less, Yes,

Ukraine answered fighting back. But today, I think for a lot of Europeans was a real reminder that the war is happening at the heart of Europe. Matt, you lived in Berlin. I mean, you know the geography of this place is this is really in the center of Europe. This is not just somewhere in the middle of nowhere, far from everything. And I think you alluded to this in your question the Eastern Europeans yesterday came out of

Fort Seeing was a born NATO. We are NATO with stand with Ukraine and with sand with poor and and for them it is always this idea that Russia is always a threat. Ye, Maria, thank you so much for your time. We know you're super busy. You're based in Brussels, so you're right in the middle of all of what's happening in Europe. That's Maria today. Oh, she is our outstanding European reporter for Bloomberg News, getting the latest on Ukraine and appears they have avoided the worst case sent

there a little more coming up. This is Bloomberg. Let's suck a little commodities here, and you want to talk commodities in a serious way. On the Bloomberg terminal, you type in BI space c O M D. That brings up the Bloomberg Intelligence Commodities Dashboard. It's got it all that you could ever need, the best research analysis on the street, the best data for energy metals aggs, all

that kind of stuff, and now cryptos. And the person who kind of runs this dashboarder runs our commodities researchers. Mike mcgloan joins us here in a Bloomberg interactor broker studio Mike, before we get the crypto, just give me one real commodities thing that I need to focus on. Here am I buying pork bellies? My buying corn? What am I doing here? Gold? Gold? Let's bring it back

to little history. In ninety six, I did a report for Social Studies class and the energy crisis and who doesn't well exactly, And I just remember the key theme back there when you're impressionable twelve year old was we don't have enough supply, We're gonna run out of crude oil and we're gonna go into recession. That was seventy six. It's the same thing every time I remember hearing it, you know, years ago, peak supply, and again again this year peaks. Who was that, Charlie weiss er Um. Peak

oil just never kind of happened. It's peak consumption happened in this country. We peaked around two thousand five, and it's the same thing. So I think what's happening now is we're entering I think one of the greatest macroeconomic resets of our lifetimes. And it was somewhat spiked by crude oil spiking, baiting the FED, the Titan More. Now Crudel is doing what it always does, is going back down.

So I see it's still heading towards fifty. It's around eighty six now and it's doing what it always does. We're heading to a significant recession and this is Bloomberg economics across the board. And the key thing I asked myself is what stops this? And right now it's not gonna be the fat but how so Bloomberg Economics does say we're gonna have we have a chance of recession, right, which is not so? But um, is it going to be a deep, long recession or is it going to be,

you know, like a short, sharp shock. Is it going to be shallow and hardly noticeable? That That's the key question in my bias is how could we avoid a deep recession after what happened? This is historic? Now we had the biggest pump in money supply ever on the back of the plague and we're now we're getting to miss the biggest dump ever on a global scale. So

where is the demand pool going to come from? Clearly not China, Clearly not Europe and our models from the US, so to me, this is the big one and right now. Typically by this stage we'd see signs of FED easing on the forward curve at least a year from now, and it's still at tightening. But why do you say, why would you buy gold here, especially as inflation comes down and UH monetary policy gets tight everywhere. Nobody can

open the fiscal gates anymore. Not yet, But it's typically a sign that overall gold is one of the best performing commodities on a totally turn basis, most notably versus crude oil. But it's when you see that signs of the FED, as as noorla Roubini says, wimping out. And it's also key. Think piggyback in my colleaguey or Jersey, he's nailed this year. He thinks yields have pete. If that's the case, if that sledgehammer is done pounding, I'm

not saying they're gonna ease. Gold should be one of the best performers as we tilt towards the res seshion, So so as we get closer to a pause or even dare I say a pivot, gold will soar on that. Yeah, well it should. I mean that's been the key thing holding it down this year. And again we're the signs already there. Gold seems like it's bottom pretty good from that. It got down around sixteen hundred for a while. Now the dollars is peeked in the short term. But that's

the macro. It's that's pounding sledgehammer on a on a scale one to ten, that's a ten everywhere fed pounding hard, and it's already still showing signs of pivoty and oil to fifty. Yes. So the key thing about that is now, I he's got the big truck, so he needs that bread Is that you gotta say? Even my wife's hybrid as soon as the electric power ends, you know, after fifty sixty miles or whatever, right then she gets the same mileage as I get in my truck, but she

has it. I have the same thing. I have a plug in hybrid and I've had it for almost ten years. It's a wonderful vehicle. The vote we talked about that, Ye love the thing about fifties, it's really not profound if we have this recession, which we view as a hundred percent Now it's not just us. You look at demand pull you look imports from trying to have rolled over Now people say that's because the COVID lockdowns, but if you see what's happening with the property crisis and

the political situation, that's badness. Well, you know, we pointed out for years, US unlended gas peaked on a fifty two week basis unlended gas deman in June, which was prime driving scenes. So that's rolling over just like two eight fifty dollars is still above the US cost of production, the world's largest producer. Average cost of production in this country is around forty. And also the key thing that people are missing its stocks to use, it's bottoming stocks

to use. Is just um it's a sign of the stocks well to demand in the US, it's bottoming and in the global basis body and typically signed a peak and prices, but it's also not profound. Fifty is basically about the average price since the big breakdown in two thousand four for a barrel of what west X interviewed w t I, w t I. It's a key thing.

Also recently Brent reached good resistance around hunter bucks of barrel and I checked out the open interest plunging open interests of futures, which meant shortcovering do you want to talk crypto. I mean, we held off as long as we pustle otherwise I'm going into port bellage. We kind of I thought we kind of were. I mean, so crypto affects all of these assets, and you do see it as small as it is relative to obviously giant markets like um oil and uh f X, it really

has affected for example, UM. Peter Cheer from Academy Securities the other day was saying the f t X blow up was responsible for a crappy ten year auction. That was it's the contagion. I mean, it's the fastest horse in the race. And man, you nailed this back in January. You would get on air and you point out, well, bitcoins moving. It was moving on Saturday and Sun and giving indication where things are going. Obviously it started going down,

but it's not just bitcoin, it's crypto. So I like to point out the boombergal because the crypto inex has been still a good perform and went up too far, too fast. But Bitcoin is the number one and it's set contagion factors. So that some of my other colleagues and b I started write about this means people are more likely hit that trigger stop and I look at it.

I'm x X traitor, X hedge fund guy, and cover those guys on the phones and they're just sitting there with their algorithm systems, with their value at risk models, and if it triggers something, they'll hit a stop and it triggered. It's the it's the domino effect. By the way, I don't know how many times we've left bitcoin for dead, um, and I've been covering it for ten years, and every uh, every time we have one of these draw downs, they

are huge, seventy five eight percent, you know. Um. People are like, oh, that's the end of bitcoin, and now you know the reputational damage is going to kill the whole thing. But I just can't believe it will. I completely agree with you there. But in the meantime, it's the hammer hitting hard. And I like to use the example bitcoins like the dollar. It never goes down a lot unless it goes up a lot first. It has to get those new highs. So it's bitcoin. Did cryptos dada?

We got really expensive last year. We're backing up. But look at the theory. UM. Just a couple of years ago, it was trained around a hundred bucks of a hundred dollars. I'm sorry. Right now it's twelve, so it's up ten x. It's gone up way too much. But it's part of that revolution of this system. I look at it like futures, what futures did into finance, Like what ets did for investing. It's there just right now. We're in that. Yes, we got two speculative, excessive, we got silly, you know, people

like FTX got extend. Imagine how much Imagine how much ether you could fit into a barrel? Yes, exactly, all of it, all of it, exactly. All right, we need to get you at an audience with Jamie Diamond. That would be a fun conversation to watch. Mike McLoone versus Jamie Diamond. Yeah, well, you know what I guess Jamie Diamond thinks it's worthless. He said that he thinks that means it's going to zero. But when all right, we'll see,

all right. Mike mcglogan, senior commodity strategist Bloomberg Intelligence. Uh, he's based out of Miami. We got him a couple of days up here in New York. So we got him in the studio, which is good stuff. I want to get right to our next guest, Fernando Valley. He's a senior energy analyst for Bloomberg Intelligence, and Fernando, we were just talking to Mike mcgloan, who covers commodities for b I, and he, you know, he's been out there with this. He think oil goes to fifty dollars a

hour before it goes to one fifty. Is that kind of what you're hearing from the big companies that you talked to? Well, well, I kind of tend to agree with Mike that that that is definitely a possibility. But the companies themselves, they they typically refuse to answer questions on their oil prices. Outlook, what they will say is that there has been a lack of investment in in

growth um and which we agree with. And if you look from twenty fifteen to today, UH investment levels have been about twenty three below the period before proceeding that, the twenty two thousand nine to two thousand fourteen period. So that's a supply side issue. And Mike's argument is that demand is going to fall off a cliff if we go into a big global recession. How much of a concern is that, especially with China opening, because it seems like if China opens back up, that should be

a real boost to demand. Yeah, I would argue that demand is already feeling some of those crimps when you look at Europe for example. Uh, you know a lot of the ways that they've managed to refill their inventories has been by reducing industrial activity. Smelters, cement plants, refineries, you name it. Uh. And I agree the China reopening theoretically would be a big boost to consumption. The question

is when and how they reopen. And then the second part is, as we saw with our own reopenings, there are still effects on your economic activity. Remember that Chinese consumer has significant leverage. Uh. They also have endured now

the paying of lockdowns and that strange savings. And then you get into an issue where the real state marketing China is significantly leveraged, as are the provinces and financial systems to this real estate issue, and they are huge consumers are not just oil directly, but also plastics, which are petrochemicals, and energy in general. Hey, for now I'm looking at the sp energy sector indexes where the stocks have just ripped this year up close to when when

you talk to your institutional investor clients. I mean, is the thinking the money has been made, this trade is played out, or is there more room to go on the energy space. Yeah, but we've doubled the weight of energy and the s and P and uh. We start to see folks saying the easy money has been made because, as you said, the stocks are ripped. Um. We disagree on a part of that, just because the pre cash flow, it's story is continuing. Even if we get down to

sixty fifty is a little bit more challenging. But even at sixty dollars, if you look at how they've cleaned up their balance sheets, um, the kids of the Europeans, They've resized their dividends, um, and they've taken costs out of the system. These companies maintain their diffidends now even in a fifty scenario, no problem. So their distribution will continue. And then you have companies like Chevron and Exxon who actually are building so much cash they could be net

cash as of the second quarter of this year. They will continue to buy back. That's that's part of their strategy is if prices dip and I guess, alluding to your previous question, less about what they say, but what they do. They're building significant cash reserves that they could either buy back stock or acquire struggling producers if there

is a dip in in oil prices. UH. So we think that there is still room to go just because of how strong the balance streets are and because we've see in the second half of the next year the

supply gap emergence. By the way, how well is Europe set up for this winter better than we would have expected, but because they've reduced consumption and um we we also had the mild weather in October that's helped lower the the UH, the draws and inventories, but they may still have to refill if winter is as cold as is currently expected, which is slightly above average, and we're starting to see it shift in weather patterns here and in

the northern hemisphere in the northeastern from their current levels. So oh well l m G primarily UH and there there will be especially freeport comes back online, there will be enough likely that they won't they won't go cold. They may have to again restrict economic activity in order

to make it last. The bigger question is where the inventories end up at the end of winter, and then how does that look filling filling inventories into the following winter because there will be less capacity from Russia, there will be even less ability to refill those inventories at the clip that they did this year. So for now, do you followed the big big integrated oil companies. Are they spending money to look for more energy like drill

on different places and stuff like that. Are they just kind of keeping that in check and building up all the cash flow that they've promised they are? They raised spending by about eight percent relative to one Uh. They we expect they're part of their increased free cash will will go towards new exploration and development. There is an

issue though that uh. You know, when you look at an investment in North America, it's tempered by the the push to the carbonize and you look at uh California banking ice vehicles by President Biden speaking similarly, Canada instituting a large carbon tax and the renewable fuel standard. Uh, the investments in North America become more challenging. And then when you go elsewhere, there just hasn't been a lot

of money spent on exploration. So there has to be a shift of where that money is spent, and we need to find new province is to develop Brazilian giana are two of those, but they are they aren't sufficient to make up for the lack of growth that we expect to see from from you a shale and u lack of investment in other parts of the world. Right, all right, good stuff. As always in Fernando, you still owe me. You need to get me out of one of those oil rigs out like the Gulf of Mexico.

I want to do it, shows you a trip to a rig, I think, so I keep telling him he's got to get me out there that I think that would be pretty pretty cool, totally like the beginning of Armageddon. Yeah, you know, and Bruce willis chasing around Ben Affleck shot on. That's so Fernando owes me that. Fernando Vali, senior Annalys Bloomberg Intelligence. He's been covering energy space for decades and

we love to get his global view. Well. The United Nations Climate Change Conference that are known as COPE will be finishing up this Friday. A It's been a two week conference in Egypt. One of the key issues there in terms has been food insecurity, and I think with the war in Ukraine that's becoming an even bigger issue. We kind of want to talk a little bit about

that with David Friedberg, founder of the Production Board. So, David, give us your sense, give us your view of food insecurity on a global scale, kind of where are we today, how did we get here, and maybe where should we be thinking about going over the next several years. Yeah, So the world food supply, the store of food typically gives us about ninety days of calories in terms of what's consumed around the world, and the Ukraine crisis has caused UM several acute shortfalls and a lot of the

key inputs that drive agricultural production. So the price for your rea, which is like the nitrogen fertilizer that's used, it's primarily driven by natural gas prices, which as we all know, have spiked with the conflict, and that prices two to three x where it was before the conflict began.

Same with FoST fates and potash they're also elevated. And so we're seeing not just the acute food um supply chain problem because we can't be exported from Russia Ukraine, but we're seeing this longer range problem start to manifest, where the amount of fertilizer that's being used to farm around the world is going down because it's gotten so expensive.

And when fertilizer goes down, food production goes down. And when you only have ninety days of calories on earth, the folks that are most worried about that, that can afford to buy more food, buy up all the crops, buy up all the grains, and so then we see the rich nation stock up, prices go through the roof, and the poorer nation like Egypt, Bonisia, all the countries in the Horn of Africa start to suffer because they no longer can afford access to these crops in these grains,

and people start to march towards starvation. And so the UN is estimating that an incremental million people are now marching towards starvation because of this shortfall. And it's like a slow moving train. It didn't happen overnight. It's that production level they're declining, availability of declining. Rich nations are stocking up on grain and the poorer nations are slowly starting to eat through their grain and and struggle immensely.

So we could see, you know, going from a low point of about five fifty million people that around the world were declared under nourished um suddenly that number could spike to over a billion. And so this is a real humanitarian crisis. And I mean, I mean, the interesting takeaway I think is that not only is Vladimir Putin, you know, endangering the lives of a hundred million people in Ukraine with his war there, but also possibly pushing

another billion people on planet Earth towards our starvation. The whole conflict is causing a massive set of unintended maybe on it in the second and third order consequences, and this being one of I think the most significant of a non economic nature. What can be done about it? By the way, David, what is there anything you know, short of stopping Putin? Is there anything the rest of the world can do to try and prevent this starvation crisis?

The UN has an agency called the World Food Program UH and the World's Food Program has asked for a budget increase its twenty billion a year, which there are then going to be using to effectively by grain on the open market from the you know, at the higher prices and make them available to the nations that are most in need. That's kind of an acute solution. They're also managing the logistics of getting weak supplied out of Russia, Ukraine out of those ports and getting them to the

nations in need. So that work is underway. It's a very expensive, very difficult work. The US is now covering I believe, of that budget for the U n to drive that that that availability. The longer range problem is, I think needs to be resolved not just by saying, hey, we can make more fertilizer, which we need to do, um, but the prices are high. But there's a lot of technologies and agriculture that can increase productivity without using as

much fertilizer and so were you know. But the problem is that's not going to resolve in the next year. But over time, we do believe that we should be able to see a doubling of ag productivity around the world through a number of novel technologies that are that are in market or you know, starting to kind of

come to market. So what role do you guys at the at the production board play do you invest in in some of these companies these technologies, Yeah, we're investors in agricultural technology businesses, were also in the process of taking the largest agricultural retailer in Latin America called Laboro Agro Public via our back vehicles, and we think that's a very strategic transaction because Latin America, the acreage to produce food in Latin America is almost as large as

the US, and Latin America is the largest agg exporting market in the world, and corn farmers in Brazil are getting half the yield of what corn farmers in the United States are getting with equivalent soil and equivalent sunlight and the water. So by bringing new technology to that market and teaching farmers how to better use that technology that are used the products and tools that they have, UM, we should be able to see a massive increase in productivity.

Brazil is already estimated to be the largest agg export market in the world, ahead of the US in the next few years. UM. So we're very excited about Latin America and the potential there. It's a key part of the economy. It's very well supported by the government and UM and we think that that can be a great unlock in terms of global calorie availability, which is critically needed right now. All Right, David Good stuff. We learned a lot there. Keep in touch with us and let

us know how this is developing. Going to be a long obviously is a long term you sure? David Friedberg, founder of the Production Board, giving us some thoughts on what is a key topic a copy seven, which is food insecurity. And then unfortunately the war in Irand is exacerbating what was already in Ukraine. Ukraine, thank you, was already a very difficult problem on on global scales. I

don't know, man, you think about this economy. Everybody's kind of got a job at once one, they're spending money at their retail sales came in today a little bit better and expected to gain of one point three percent month to month, but consensus was one but but target horrible miss on the top and bottom line, cutting their forecasts. Um, I don't understand what's going on. Maybe they just missed it. Well, no, because they say that at least shoppers their business are

pulling back. I don't know Walmart had good numbers. Let's talk to a professional about this. Uh Aji Solanki, uh National Director of Retail Services for the US at Colliers that is a Nastack traded company. Uh C I g I is the symbol and so help us square the circle here. We had some good retail sales numbers, They had some good Walmart stuff, but then Target misses it a Target specific issue, do you think or is it just depending upon what consumer you're looking at. Yeah, I

would say definitely that. Um it's it's a little confusing yet disappointing because we are seeing some strong numbers. So we did a bit of a deep dive into Target specifically, and this is not a Target only So what what's happening here is a couple of things. One, if you look at Target, they maintain a very balanced sales mix, you know, between food and general merchandise. And if you look at their year over year sales growth, it's still

have a positive three point four per cent. However, they are starting to see a slow down as it relates to discretionary items. And when you look at discretionary items, those impulse by um items, they're going to have, you know, a higher margin and therefore they're going to see some awesome profit there in addition to discounting the inventory that they had and acquired a little too much of. Yeah,

so we heard from the CEO Target Brian Cornell. He said in a statement that um guests shopping behavior increasingly is increasingly being impacted by inflation, which is clear rising interest rates, got it? And economic uncertainty uncertainty. Why isn't that hurting Walmart guests? Or is it hurting guests across the industry? And Walmart just did a better job of putting out his numbers. You know what it is between the Walmart and Targeted some a couple of really interesting facts.

One is that if you look at targets food sales, the food is definitely something that you know, people are going to continue to to buy, right, we need to eat and stay healthy, etcetera. But if you look at Target food sales in terms of historical percentages versus Walmart, target food sale represents about twenty whereas Walt Walmart's is fifty five events. So when we're in this call it inflationary, um, you know, uh, mindset and being cautious we're going to

spend on food. But I think Walmart's numbers are better because they have a higher percentage in terms of food sales. Auntie, you know, Matt's got his holiday shopping already done, but I haven't even thought about it. So give us a sense of how you think holiday sales will be this year. What's the expectation that some of the retailers are putting out there. Yeah, so what we're seeing right now is

um in terms of holiday sales, it's really interesting. It's going to be UM, you know, we're we're kind of right now looking at still an average spend on holiday shopping around eight hundred and fifty dollars on gifts, which

has been the average for the past ten years. Um. You know, we're still seeing what we're calling this, you know, um home wealth effect, where people are still feeling a little good about you know, that home equity that they have, and so um, you know, with that, you know, people are going to spend a little bit more, so those that have you know, you know, our comfort level of spending a bit more with higher incomes, we're actually going

to see a rise in in holiday spent. So we're gonna I it's not going to be an extreme boom or boost, but we're going to still feel a good positive effect through through the next two months in terms of holiday spending and gift giving and getting together with families. I've noticed a couple of concerning UM shipping news items FedEx for example, it's freight units putting workers on furlough in some US markets. That adds to the evidence we've

seen of a cargo slow down UM. That evidence is really the shipping rates UM getting weaker and weaker, framing a real problem for this industry in three. But what does that say about sales? Retail sale US are? You know? And I think you know, there's a couple of things that a lot of the retailers are still kind of going through. As I mentioned earlier, the the additional inventory.

That inventory is still going through its correction, so there's still enough inventory to at least look as though you're walking into the stores, you're seeing inventory you're gonna you're gonna buy, you're gonna shop, you're gonna spend. It's I think it's it's that correction that's occurring that will occur through the end of three and there hopefully by that point we'll start to see some adjustments as it relates to items being you know, UM shifted and sent to

the US. All right, great stuff. Really appreciate it. That kind of bringing into focus kind of what we're seeing at there in retail land on J. Slanki, National director of Retail Services for the United States at Collier's and Collier's International Group. It is a public and traded symbol c I g I is a symbol. It's got about a four billion dollar market cap. So they're out there doing their thing here. So retail sales numbers, you know,

came in pretty solid today. So it kind of and if you have the the I guess the food sales, shared sales, that's big that you know, That's what I guess. That's the difference between what we saw from Warm and what we saw from Target today. You really need to get an update on what's going on in the Ukraine. It looks like the world, you know, kind of dodged the worst case scenario or bad case scenario yesterday with it missile falling into Poland. But let's get the latest

with Mick Mulroy, co founder of the Lobo Institute. He's a former Deputy Assistant Secretary of Defense for the Middle East at the U s Department of Defense. He was at the c i A for like nineteen years. Former US Marine Infantry officers, so the guy has done it all. Mick again, it kind of looks like the world kind of dodged a little bit of a bullet there yesterday. It could have been a much worse scenario. But what's your latest take on what's kind of evolving over in

the Ukraine. So good to be with you, and I think you're exactly right. We did dodge a bullet, and I think that's a testament to taking the time to make the assessment, look at the radars and determine exactly what happened, And it looks like although it was a Russian made missile, it was it was fired from a Ukrainian air and missile defense system which may have actually hit the incoming missile and then and from that trajectory, which is really impossible to determine, it came down into

Poland uh and caused death. So it's a horrible event, certainly for the people who were killed in their families. But it did look does now look like it wasn't an intended act by Russia, so it wouldn't require Article five, which is this uh common defense under NATO. Although even if it was you know, um a missile fired by Russian troops that accidentally went into Poland, you know, that's got to be expected when they're fighting along the border,

and they are right. Um, you know that doesn't matter if it was you know, with intent. I mean, if if Vladimir putin wages of war in Ukraine and then it starts, and then he starts killing people and Poland and Moldova and other neighboring countries, Um, don't we have to hold them accountable for that? Well, that's exactly right. And I think both the President of Poland and the Hope and NATO leaders have said this is directly caused by Russia's unlawful and unprovoked invasion of Ukraine, So they

are the reason for this. They've Ukrainians have had to defend themselves against a sustained barrage of missiles targeting civilian infrastructure and violation and the law of arm conflict. So this is definitely Russia's fault. And this is the consequences of firing at targets near the border of Poland. Make the likelihood that some missiles, either theirs or the ones trying to defend, are going to come down in Poland.

So the consequences I think obviously it will be different since we I think, right now the belief that it wasn't intentional, it wasn't Russia, but certainly economic diplomatic consequences I still think are in order. But it But as you said in the first question, it looks like the most significant concern, which was an escalation into a conflict Beteenado on Russia, is not the case. Mick. You know, this past couple of days just shows all of the risks.

Are some of the risks that are out there that you know. It's not on the strictly the battle fold. It can it can spill over it and get even deeper and much more broad. Um So the question for a lot of folks is how does this end? I mean, is it up to the West to try to come up with some way to give putin, some way to save face and get out of there. So it ultimately is up to the Ukrainians as well. They are the

ones that are fighting the fight. They are the ones that are taking all the losses and the consequences essentially are supporting them. Right now, the counter offenses that they've launched are successful, and it is pretty apparent that Russia cannot even keep the gains that they had made, let alone getting a new territory. So they're losing, and that's a that's a dangerous position to be in because uh, it's it's unlikely that uh the president of Russia, President Putin,

can withstand losing a war and maintaining power. So how does it end? I think right now our positions be. It ends with Russia leaving all all of Ukrainian territory. Uh, They'm agreeing to reparations for the damage they cause and that those that have committed these atrocities be held responsible international criminal court. So I don't see that happening, but I think that will be the position of the Ukrainians and hopefully supported by NATO. What is your take on

UM combatants targeting civilian infrastructure? I mean, we wouldn't have I think it's probably a decent argument that we wouldn't have one World War two UM when we did if we hadn't you know, fire bombed carpet bomb Dresden and knocked out UM to Japanese cities with nuclear weapons. It seems like, in fact, all major wars UM involve targeting civilian infrastructure. So it's weird to say that it's illegal. UM.

Isn't it something that you know happens in war. So it certainly did, and all the examples you just brought up are good examples of that. But at the end of War War two, we had what we called the Geneva and Hague Conventions, and the whole purpose of which was to avoid what we saw in World War two with this massive deaths of civilians and targeting of infrastructures.

So that was a international decision, and these are conventions that countries signed on too, so we would avoid one of the most extreme atrocities we saw in previous wars. So currently, I mean, if we went to war against Russia, let's just say, um, wouldn't we be smart to target their civilian infrastructure? So one could make a, you know, the cold dual purpose argument that you have to knock off the power because the power obviously has an effect

on the oppositions military capability. Celiberately targeting civilians themselves is obviously war crime and atrocity, and I certainly would never uh support that from my own country. Uh. But and also it's important to point out that Ukraine was the one that was attacked. Russia was the one who did the invasion. There, the aggressor it's against all international rules, norms and conventions. So they have they have been in violation of the law since the day they stepped across

the the Ukrainian border. Even if they would have done the trocities that they have done, they still would have been in complete violation of the law on conflict. And Mike, what WO does it tell you when Russia announces that curse On has now been annexed and then it seems like the next week they lose it. Are they really in that week of a military position? I think so?

I mean you would you would think that if they if they're going to illegally, of course, but annex something that that that they didn't even think they could keep it. Just it's just fodder for everybody, uh, not just internationally but also in Russia that thinks this war is going completely the wrong direction. And I think you're seeing more and more and hearing more and more voices in Russia

for an end to this conflict. Maybe that is what causes pot and ultimately decides to withdraw Alright, great stuff, make We really appreciate getting some of your time. In your perspective, of course, mc mulroy, he's the co founder of the Lobo Institute, decades of experience in the US military, uh in intelligence at c i A and then of course at the Department of the and so just an extraordinary background to get access to him. 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 nineteen 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.