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the Bloomberg Terminal and the Bloomberg Business app. There's that cross currents here, and I said, get you know, surveillance cross current reporter Alex Webb so joining us from London, ere and everything in tech and particularly on Apple, Alex Web, Alex Macworld just came out. But the two paragraph thing I don't understand, which basically says if Apple and their next road show upgrades the iPad, they're going to make old iPad that we're still using not compatible with the
new iPad. For where you set is there shell Game planned ups Lescence where the phone that Lisa Matteo has in six months won't work because they got a new phone.
Apple gets asked about this and they often sort of they deny that it's planned obsolescence, but they just sort of say, well, it's just the nature of things sometimes, you know, technology just has to move on, and we want to create the best possible handsets that we do, and therefore, in order to have the best hardware, have to create the best software. And it's just the sort
of natural consequence of that. It's also that, you know, we do know that essentially the innovations with each new generation of device are little bit more iterative each time, you know, less of a quantity leap, and so the need to kind of like drive software upgrades and like chip upgrades essentially are what is driving the actual handstet upgrades. So even if Apple says they don't, a lot of people look at it and go, this kind of it is planned obso lessence.
So Alex in terms of moving on, boy, they had a big announcement here just recently, moving on from the electric car business, automated car business.
Can you tell us.
What their business was, what they were trying to do, and why they walked away.
So it's important to qualify not an announcement. Right, Apple has never quite the acknowledged what they were doing here. Right, this is all from sources. Mark Guman's done a brilliant job over there as a chronicling this. Like they started back in twenty fourteen developing a car, and it has been a very turbulent decade where they said, actually we're not going to make a car. Where they didn't say, but internally they decided we're not going to make a car, We're just going to.
Make autonomous driving systems.
Then when they saw sort of Tesla go stratospheric, they won't, actually we are going to make a car. Finally, it seems that they have, you know, put paid to those ambitions at the time. And the only the closest Tim Cook came to talking about it was in twenty six seventeen inter view of Emi Chang, our own Emily Chang, and he said, we think that autonomous driving systems are the biggest AI challenge. And if you look at where things have developed in the past year or so, yeah, there.
Are two things that have happened.
Firstly, the electric vehicle market has become less appealing, and secondly, the AI market has become massively appealing, and so all these people AI wants they have working on the car, they have this huge problem. They don't really have a big AI consumer facing product. So if you can move those to that, then it solves two issues for you.
I fortunately you mentioned that the interview with Tim Cook with our own Bloomberg Television.
Let's go to that right now, take a listen.
We sort of see it as the mother of all AI projects. It's probably one of the most difficult AI projects actually to work on, and so autonomy is something that's incredibly exciting for us, and but we'll see where it takes.
As that was Tim Cook from Apple speaking with Bloomberg's Emily Chang talking about the car here the automated car, here the electric car.
So I mean, what does it tell you, Alex?
I mean I kind of feel like they're just kind of going where the wind's blowing, and now the wind's blowing towards AI, so let's put our resources. There is there any concern about that?
I mean there's a push and a pull effect here, right. I think with the with the car, they were essentially initially and I think he said it in that into as well, three pillars that had been kind of disrupting the car industry. There was ride hailing, there was autonomous vehicles, and there was electric vehicles, and essentially each one of those has gradually eroded. Right hailing it transpise is not a very good business, as Uberschelle orders will probably testified.
Well not share holder people got out of the stock. You know, the autonomous driving piece is taking a lot longer than had been predicted in twenty fifteen, you know, optimistically at scale by maybe twenty thirty. And finally this EV piece, which has done pretty well for Tesla, of late, we've seen sales, the pace of sales growth massively decline and a recalibration from the OEMs on how to do it like you know, actually maybe we should be doing.
More hybrid than pure electric.
And that's what the big carm makers are pivoting towards now. At the same time, they have missed the boat right for now on AI. It's not too late, it's it's not irreparable. They can catch up, but they are not right anywhere compared to the likes of Google. So it is a pivot that is kind of necessary.
It isn't this a bad price because I see the complete destruction of a used Tesla price. Some of that I guess based on elone must desire to move cars. I think I saw yesterday Jeep, which is the cheapest traditional engines. Right, sure they're cutting the price is well, did they do the math and just say that they can't develop the aesthetic the fit in the finish of Apple alex web for one hundred thousand a car or dare I say even higher?
It's always been the big question of like where would an Apple car be positioned in the market, Right, Tessa's being came in as a sort of premium vehicle and gradually working down the value channel or you know, the kind of price chain to becoming more affordable. But as you say, they are having to discount massively and have been in the past year or so in order to fill the sort of two million vehicles of capacity that
they've constructed over the past few years. If you compare that, if you think about you know, super premium car makers like Ferrari, which you know is valued at seventy one billion euros, it only does six billion euros of sale each year. Sales each year that is, like you know, practically is not quite a rounding error. But I think Apple does three hundred billion, so if you're adding six billion of sales, it is not even worth writing home about.
So it's the market big enough for it to be worth Apple's time exactly, big question, particularly if they see themselves as a premium brand.
Paul. I think this is the heart of the matter. And Mark German is going to tell me, or Alex Web with their industry leading reporting, is going to tell me. But I get it's all this techno babble and you know, Apple car play and all that. Thank you for being an Apple car player, Paul.
This is just about price, a lot of it.
You're going to get it out of the Apples showroom. And the answer is the math doesn't.
Work, no, I mean, and it doesn't work for Detroit. Is kind of what we're hearing in particularly when you have a price leader like Elon Musk tends to be a little bit I mean, unpredictable.
So Alex you know, had.
One thing on that. Sure it's at this point as well.
It's like a lot of the commentary suggests Apple is going to struggle in the first year to sell meaningful numbers of the headsets, which are three and a half thousand dollars. Right, So if you're covering a vehicle that is one hundred thousand dollars, the lord of small numbers with big number.
Give us, give us an update here, Alex. For what one month into this idiocy a success or failure? They headset.
But I mean, the thing I'm saying, be saying from day one is it doesn't need to be a success as long as whatever Facebook does is not a success.
Right, this is the.
First generation they're gonna come to. They're going to make cheaper versions.
You know.
This is about proving out the technology, getting in the hands of developers so that then they build products for the platform. So it's too early to say Apple's push into this space as a success or a failure. The key thing is, as long as this market does not take off when someone else owns it, Apple doesn't need it to be a huge success, Alex.
A lot of the Apple bulls are telling me, don't worry about AI apples. You know, they're not first to the to the game, but they come in when it's an opportune time to come in.
Even with phone telephones.
Back in the day cell phones, they weren't the first Is that a valid argument for AI or is there a material risk that they're late, maybe too late?
No, I think there's there's certainly personance to that. We're very early in this sort of AI revolutional I'm increasing think of it's more a heat solution. They have not completely completely missed out on this, but they do still need to get moving right. They still do still need to get at to that table. Of course, the advantage they have is you can still access a lot of
the AI products through there through their platform. Right, Chat GPT is an app Open Open AI hasn't a chat GPT app that I have on my iPhone, So like on that basis, it's kind of okay, we're not yet seeing and.
It will struggle to see.
I personally struggle to see how it will work that you will have fully AI voice assistance like Google Assistant or Alexa.
We're not seeing those come out just yet.
Like, I think they've got a little bit of time until the costs come down and the processing power for that to be a real threat to else.
Thank you so much in London. This is the most important conversation of the day, Bob Michael's with us and then pause. You mentioned when we were chatting before at Banker's Trust, which is iconic years ago and all sorts of work in the United Kingdom and now holding court for mister Diamond. He has to brief James Diamond on what yields are going to do. Imagine that. But I want to talk about you look great today, by the way, and YouTube can you see this? I mean Michael with
a bow tie. Thank you, Solid sartorial Solid. I told you you and others made a guest the other day and Paul noted that he had Near East Anthropology as his parchment. BA. Right now, liberal arts and particularly the classics, are getting killed across American universities. Your pen it's truly definitive under classical studies. Defend right now the value you got out of a classical studies education to get you to worry about duration and convexity.
So there are many other things you study at university. And I did a lot of sciences, which ultimately helped me with bondmath. But I always thought of classics as my avocation while I was studying other things that I knew would lead to a vocation. And I think if you get that balance, it makes for a far better university life.
I totally agree. I'm the strongest point since did you study Latin and Greek? Are you like former Prime Minister Johnson? Where you can waltz right now into Latin or Arma?
We're room quake kind of Troy. I quy primus aboris?
Can we can we get that tape? Robert Broughton?
Can you be sure that we get you?
Please?
Few few tea pot Thrisimachus. There you go, you learn it, you never forget it.
That's great, Paul, can you save the damn interview?
I can save it because he also got a CFA that got some to where he is. Hey, so we're in good shape. So Bob, what do we do here? I mean, we're going to get a big inflation print tomorrow. A lot of folks are trying to figure out what this Federal Reserve.
Is going to do.
It seems like, you know, march off the table. May not sure, maybe push it back to June four A rate cut?
How are you guys? A Morgan stantly thinking about this?
Honestly, Paul, I just want to enjoy the soft landing. Okay, we're in the midst of it now. We've got very low unemployment. We've got stable inflation. We look at the six month annualized rate of core PC. It's currently one point nine percent. Tomorrow will likely get a point four it. We'll push it up to two point four. It's okay. It's in touching distance of two percent. You go back a few years it was six point six percent. So I think the Fed is right to just pause here.
I think if they look at inflation on a shorter term basis, they have to be real happy with it. But they were late to hiking rates thinking inflation would be transitory. They can't make that mistake again. So June still looks like ours and everyone else's central case.
All right, I said Morgan Stain. Of course, JP Moore. It's all Morgan's you know, at some point at in time, back.
When it probably back in the day when it was so.
I mean, you think about this market I'm looking at I end. Go on the Bloomberg terminal, that's the Bloomberg index browser, and you get all the fixed income indexes, most of which Bloomberg owns we're in the red this year twenty twenty two. Is this brutal for the fixed income market? A little bit of performance last year thanks to November and December. Now, where do I go into fixed incomes ses? What are you walking around a trading floor? What are your traders doing?
So there are a couple things. And I was out at a dinner last night with about fifty financial advisors and we were talking about this. And my greatest concern is not that the market rallies to one percent. I don't really want that. I'd rather have the market back up to about five percent to give more investors an opportunity to get into the market. And I think you when you well, you look at the amount of money and money market funds, it's five and a half percent.
People want to get in. They want a slightly higher yield. You look at pension funds, they they want a slightly higher yield. I look at the aggregate bond indecks. At the end of December thirty one, twenty twenty two, it was four point sixty seven percent, yield four point seven percent, and we were looking at four additional rate hikes at the start of twenty twenty three. This morning five point zero percent, So you're up about thirty basis points and we're looking at three to five rate cuts.
This year and Michael Ferral is going to tell you we're a long way from potential GDP and for whatever reason, let's say the stimulus whatever. But I'm just imagining. I mean, I mean the new Park Avenue offices is JP Mortin boy Jamie will have a lunch up in the girders, like it's like you know one of those photos black.
Away from inside that goes Bob, come on up with me and sit on.
A come in broadcast from there.
We'd like to do it, seriously, I'd like to do that. You line up, you and mister Diamond, and the number one question mister Diamond's going to have for yours team is all this cash that's out there, How does Bob Michaels think the deployment of trillions of dollars of cash at the margin will occur?
Well, I think it's going to go into a lot of different places. First, I think a lot of it will stay where it is because you get a yield on cash which you didn't get before. And you know the Fed cuts rates a few hundred bag let's say they take it down to three percent, you're still going to get a yield on kash about three percent I think a lot of it's coming into the bond market. Everyone is waiting for the Fed cut rates. That makes cash less attractive. That's where a lot of it goes.
Because we're doing almost no FED talk because we're talking in vidio. Bob Michael doesn't know what in vidio is. Let's listen to Chairman Powell.
Here, we're room quay kind of troy I que primus aboris.
Well, there we go. Bob didn't have his headphones on. We just played Jerome Powell saying some Latin there.
Okay, it was almost brief done as well.
Did the press conference? Doesn't make any sense sense to you? Or is Jerome Powell speaking Latin?
I think they're going in the current. So you go back to December and the infamous pivot with the ten year at about four point two zero percent, it looked like inflation was coming down very rapidly, and that was room for them to start bringing down rates. I think at the recent and upcoming press conferences, inflation is going to be a little bit north of two percent, So you're going to hear them try and dampen the expectation that the FED might step in and march your main.
Fixed income currencies, commodities, the thick group. That's kind of where you are. Let's talk about commodities. Is there a commodities play out there?
What are we doing?
Is a lot of people tell me to just buy gold and sell everything else on the commodity space or bitcoin?
Yes, I like that. I think it comes into the greater fit protectorate. Yah. I don't know exactly what it is there.
And JP Morgan, I'm not sure you're bosses brought onto this bitcoin thing.
Yeah. I think the whole issue with the commodity complex is there was a lot of expectation a year ago about China reopening, and it reopened, but not with the momentum that everyone thought. So suddenly things look a little bit overpriced. You're starting to see that even with energy. You look at what's happened in the Middle East, and you would have thought energy oil would be north of one hundred and it's not. So. I think it's also telling us that the broader global economy is also ratcheting
down from where it was. These are all good things for central banks.
A couple of days ago, we had a firestorm. This is for global Wall Street, for the CFA, Institute. Good morning Mary down in Charlottesville. And with this is Bob Michael of JP Morgan. He and I have darkened the door of the chartered Financial Analyst program. We both survived. Daniel Perlis was on, Who's got a wonderful book out which basically says, eminem theory doesn't work. Is not Candy,
It's not Hershey's. It is Miller and Medigliani, Medigliana and Miller, and it was a theory that came up years ago. I want you to tell me about fancy cfa math in the bond market and in market capitalization against super big tech firms that have three percent debt your world. I'm just baffled by how they have so little debt, in the veracity of what you and I were. Wean done with Merton, Miller and Medigliani.
Well, we've been through this before, because there were other companies in other industries that generated a tremendous amount of free cash flow, and the bond market would have liked to have welcomed them with open arms and parked their debt for a long period of time, and they just did in issue a lot. I think of Walmart going back thirty years there were times when people refer to Bristol Meyer's debt as a museum piece because they didn't
issue enough. And you know, this is just where we are in the US economy, where the tech industry is the one which is seeing a lot of top line growth, a lot of revenue, a lot of free cash flow, and that's able to sustain their R and D budgets and allow them to do other things.
What is the efficacy of a big tech company moving from three percent to a responsible level of debt. I don't know, Paul, eight nine, ten, whatever. What is there a social good to that?
There's there's a shareholder good to that, because if they're able to borrow, let's say, in the current market environment, borrow tenure at around five percent and use those proceeds to buy back shares of stock, you would assume the return on equity would be much higher than the five percent that they're borrowing at. And I think you see
some of that going on. But you're looking at at just one industry right now that has everything going for it, and rightly so that's the key to efficiency and productivity going forward.
Hey, Bob, if I want to take some credit risk here, what do you recommend stay in that investment grade space or do I even go out in some of the high yield because high yield is where the performance has been. Like last year, I was surprised how yield performed as well as it did, because everybody was telling me about a recession, but hi yield really performed.
Yeah, and that it's the great question because the difference between owning just investment grade or both investment grade and below investment grade comes down to your call on recession or not. And I would say this time last year, for sure, it looked like we were head into recession. Maybe we did. Maybe the regional banking crisis was a recession and the policy response solved it in a couple of weeks. I don't know, But at the start of this year, there's nothing out there that tells us we're
heading into recession. We like credit. We're using every opportunity to buy it, that includes high yield. I know you had a conversation earlier about the private credit market. We look at the private credit market as having absorbed a lot of the marginal borrowers that would have come in the public high yield market previous cycle. So it's there and I think the way we look at private credit is it's effectively re ensuring the public credit markets. So
we look at US public high yield. First of all, six percent of it defaulted away in twenty twenty, so you had survivor bias with the remaining ninety four percent. You look at corporate fundamentals, they look very strong. You look at the issuance that would have been marginal. That's in the private credit market. We have to accept that private credit is a new and very powerful source of non bank lending that didn't exist.
In case of guys get exposure to that. Do you I mean, what do you guys do?
Not putting it in public funds. But I will tell you our clients, whether it's retail or institutional, they're going in full speed ahead. And I know there's a lot of controversy on mark to market, but it really is the equivalent of a bank making a loan, and you know, you roll eighteen months forward. Some of the legacy loans
look a look bit stale with current pricing. They'll reset and then you're going to have some credit issues and until you work them out, you're going to carry them as money good unless they're your timeline.
Do you and your team have in your head for that workout of private credity and the fiction of what they're the pricing is, is it? Oh?
I think I think a lot of it's going on now. I think that there was a lot of marginal borrowing over the last couple of years. I think the beauty of private credit is there's a lot of dry power. It steps in, it applies a haircut and does a lot of restructuring. But let's not forget private credit. Financial crisis two thousand and seven was about zero. I'm sure
there was some out there, but it didn't exist. And now you're talking estimates are one point six trillion, which is an equal in size to the public highyield markets. And whether you quipple or not, about how it's being deployed and how it's being marked that and some of its dry power. A lot of that has gone into the economy. It's gone to places which have hired workers
and created a level of economic activity. And that's probably another reason that we managed to skate through last year with pretty good economics.
James Diamond in the news today looking at Texas and j have you been to the JP Morgan offices in Texas.
I was just in Texas a couple weeks ago. It's been a big conference.
What's a pixie does to the Texas economy that mister Diamond is talking about today.
I wouldn't even want to hazard a guess.
There're seeing a lot of conversation ended ugly, but.
I mean it's interesting.
I mean it's we're seeing so many financial services companies, Tom and other companies including Tesla, relocate to Texas.
For Glown Incorporated.
Do you know what's also missing the cycle? Any problem in municipalities. Where is a municipality that's under pressure? Where is the next Puerto Rico? Where is the concern over Chicago or Illinois or California. It's not there. And we look at the state rainy day funds and there's still flush with a lot of cash. Well states that didn't have any day funds.
The Chancellor today in the United Kingdom saying I'm sorry, texts revenues are better in the United Kingdom than anybody imagined. I mean, and again, is this misguess on a slow economy?
And missisas Yeah.
So wonderful muni bonds. I've got to leave muni bonds talk to financial advisor.
Come back with your muni bond expert. Seriously, I'd love that. But you know, if you want to drag somebody along and you, they can give us the credit on the Denver airport or something like that. That'd be very good. Boy, Michael, this has been wonderful. The low point was a Greek Latin discussion.
You know you start there. Thanks for having me, it's a pleasure.
It was great. We've got this codified forever here without question, Foreign Affairs and the Console Foreign Relations is leading with our dialogue on our fractured geopolitical world, all of us, starting with the stewardship of Richard Hawse, Ambassador. Thank you in your retirement. I can't believe you're retired for joining us today. I'm going to start with an open question, Richard Howson, and this goes back to your wonderful book
The World. Do we have a foreign policy? Does America have an identifiable theme, strategy, or plan.
Well, Tom, first of all, it's great to be back with you. Second, I'm busier than ever, not retired, retired for old people. Does America have a foreign policy? We either have none or we have several. Either way, but what we don't have is a coherent, consistent one that enjoys broad support. And that's your real problem. If you want to be a great power, your friends, your allies need to see you as reliable. We are clearly not in Your foes need to see you as formidable, and
I think they increasingly have questions. So whatever it is we have, it's not succeeding.
The color for us and new isolationism. I understand it's across a political landscape from mister Trump to mister Biden. But how do you perceive the ancient American tradition to say, we're protected by oceans. We really don't want to play in the international relations game.
Tom, It's an important question. Isolationism is something that never disappears. It's almost like a gene in the body politic, and every once in a while it breaks out. I think now it's three and a half decades after the end of the Cold War, we're seeing it. It's not evenly spread across the political spectrum. I think it's largely, not entirely, but largely now in the province of the Republican Party. We see it most very really in the House of Representatives.
The more radical Republicans who are obviously hitching their wagon to Donald Trump. And I think what we're seeing is a traditional pullback from the world, a sense that we have to worry more about butter than guns, even though withdrawal from the world, as we've learned historically, is truly dangerous, and even though our domestic problems aren't caused by a lack of spending so much as how we spend our money. But that said, the resurgence of isolationism is a real threat.
We're seeing it obviously in the case of Ukraine, but we're seeing it also across the world. I've just come back from a trip to the Middle East, and I've got to tell you, our friends look at us there. I've also recently been in Europe and Asia, and it's the number one topic on the mind of every American friend, partner and ally is can we continue to count on you?
So, Richard, let's kind of go to some of the hotspots around the world here. Let's start with Ukraine here, because I mean it's front center here in terms of getting a.
New aid bill for Ukraine.
Can you give us your latest thoughts on kind of how you think the US position Visa VI Ukraine will play out over the coming weeks and months.
Look here we are at the beginning of the third year of this phase of the war. The glass is half full if you look at how well Ukraine has done with American and European help. But recent trends of god to leave people worried. Is Russia's throwing much more mass at this conflict than Ukraine is now able to counter with. Give a the falling off of American help, and I don't have a crystal ball whether ultimately the Speaker the House or representatives will figure out a way
to provide new military aid to Ukraine. So it's possible we drift through the election in November without new help, in which case Ukraine will hang on, but it will gradually lose some territory. Or there'll be maybe a partial renewal of American aid, which is my bet. You won't get the full amount the President wants, but you'll get something.
And again, I think at the end of this year, the third year of fighting of this phase of the war, I think you'll have a battlefield that pretty much looks the way it does now, with Ukraine still in control of roughly seventy five to eighty percent of its territory, and then this one way or another, the war will either continue or we'll see a stage set for some type of negotiation.
All right, let's switch gears to the Middle East, because, again, similar to Ukraine, it doesn't seem like there's any near term resolution here. How do you think the political calculus, the military calculus stacks up in that part of the world.
Well, you're right, there isn't any near term resolution. At most, there'll be another temporary cease fire with an agreement to release some hostages exchange, allow some prisoners to get out of jail, more aid to get into Gaza. But that's not to be confused with a strategic and to the conflict in their camping.
Uh.
This Israeli government is looking at a long term occupation. There were jects working with the Palestinian authority. Hamas is obviously unacceptable. So there's no the prerequisites. So stability or peace are simply not there, no matter how much the United States might might urge them. There's also the danger of the war widening. So I think we have to assume that a turbulent Middle East is the backdrop for the foreseeable.
Future ambassador host with US Richard Haass with his folks, can't say enough about his legacy at the Council on Foreign Relations full closure. I'm remember there and Foreign Affairs Magazine subscribe, throw to your children and say just shut up and read one article, pick any article. So, Ambassador, I did a panel at Davos with Lawrence Freedman of
King's College. Obviously definitive on Warren, particularly with a continental perspective, and his peace in Foreign Affairs this month is something I think we're not thinking of, which is instead of US Congress, maybe Ukraine. Obviously, Lawrence Freedman's thinking about Putin and he makes it real sure, real clear. It's a war Putin still can't win. How close would you suggest we are to diplomacy or negotiation with mister Putin?
First all, it's good to see you, quoting Laurence Freaveman. He and I were students at Oxford together, and over the last forty fifty years, Laurie's just one of the most thoughtful people writing about international relations that is out there. I think Tom, we're not in the realm of negotiations this year. Everybody Putin wants to see what happens in November.
He's hoping that time is his friend. And I think the Ukrainians are not yet prepared to enter a negotiation where they would have to at least temporarily give up the reality that they're not going to get their territory back to military force. I think, if you have a situation, let me just paint it for you. If Joe Biden gets re elected, if you have a Republican Senate, which you're almost certain to have, and if the House goes Democratic,
that would be the best outcome for Ukraine. And I think that would send the signal to putin that time isn't his friend, and I could see that bringing Russian to the negotiating negotiating table. On the other hand, if Donald Trump wins or if the House stays Republican, that I think that weakens Ukraine. And then the question for Ukraine is are they prepared to have a negotiation without
a lot of wind in their sales? And that would be obviously a much more fraud dangerous sort of diplomatic context. But one way or another, I think we're moving in the direction of diplomacy. The question is who does.
It favor Ambassador David, and you know out on live chat, this is on YouTube foks forgetting some really brilliant questions and David brings it right over to what we're talking about. Ambassador Wh're saying, Okay, we're watching Ukraine, but so is China. Does our behavior on the continent of Europe affect The math that Beijing has is they look at Taipei.
Tom absolutely they see these things may be squares on the chessboard, but everything we do or don't do sends a message not simply about our capability, but our willingness to act. And America's capability is on parallel, but our will is increasingly questioned. So China is watching what is going on with the congressional holding up of AID. They're looking at American political dysfunction and on division. They want
to see what happens in November. So I think this year twenty twenty four, the Chinese have made the strict eg determination. They want stability in the US China relationship. We saw that in November when Hesen Ping and Joe Biden met. China doesn't want to see new American economic limits on trade or investment. But depending upon what happens here in November, when they take their America there, when they take their look at America's will and to come
to Taiwan's defense, things could change. So I think again this year things are calm, but China is watching what happens with Ukraine, watching what happens with our domestic politics, and I think the most interesting moments will come in the aftermath of November, when they basically, you know, their equivalent of the CIA, draws up their assessments of American willingness to act on behalf of a trends in Asia.
Doctor Haws, can you give us a sense of the relative position of mister Putin in Russia with his people in terms of support? Is it as strong as it appears to us.
On the outside?
It seems like, boy, this is a tough war, you know, lots of casualties.
How is his position internally?
You're going to be hearing from Angelas Stent, who's one of the countries, you know, leading excerpt. But I think Putin's I think he's very strong, and I think a lot of the so called Russian experts got it wrong after the Pregosian challenge. They thought Putin was weak and on the ropes. I think he largely controls the narrative inside his country. The murder of Navali, and let's call it what it is, It was a murder. It just
shows the impunity with which he acts. He's done a pretty good job at casting this with Russia as victim, even though Russia is the aggressor. So I think anyone who's hoping that this war is going to come to an end because suddenly there's going to be regime change in Russia, I think they're kidding themselves.
Ambassador, we need to make some news today, now that you're completely retired and sliding through the day five days a week, would you consider public service to America again, whether it is on Ireland or another matter? Who at whatever the election outcome is in November, can we see has in Washington the time.
I'd like to think that one does public service on the outside, whether it's appearing on shows like yours, or I do a weekly newsletter called Home and Away, which people can find on substeck. I think there's lots of ways to contribute. But sure, Look, I work for four presidents. I've been honored to do that. I've worked for Democrats, and Republicans, from Jimmy Carter through George W. Bush and and even now. I talk regularly to people in the government.
So I'm always looking for a way, as are always prepared to be to serve this country, particularly now this. Yeah, this is a truly critical time in our history, both domestic internationally. This is not a democracy, is not a spectator sport. This is a time for you know, for what I would call true patriots. That word is now abused,
but for people who care about this country. It's a time to get informed, get involved, and of course if any you know, if I think I can actually you know, help, of course of course I would too.
Back to back really our books the world and also the Bill of Obligations as well. Richard Hass, thank you so much, Ambassador Hass retired. I love the guy's working like a fifteen hour exactly seven days a week. Richard Hass there, of course, with all of his work with the Council on Foreign Relations, this is an honor, folks.
The shock of mister Putin and what he did on February twenty fourth, I had to jumpstart my book of the summer and it took somewhere in the vicinity of twelve seconds, Paul to know immediately that Putin's World, Russia against the West and with the Rest, is the only book. It is. Angela's Stent on Vladimir Putin, jaw dropping about how he got to where he is. We are honored that from the Brooking Institution, they're non resident senior Fellow.
Angela Stent joins us this morning for an update. Angela, if you had to redo Putin's World today with a new prologue or epilogue, what would you write?
Well, I think it reinforces everything that I wrote in the book. But even when I wrote that book, I didn't expect a full scale invasion of Ukraine and Putin just completely turning against the West like that. So I mean I said in the book that Putin was out to revise the post Cold War order, that he didn't accept the collapse of the Soviet Union. But he's done it much more aggressively and probably sooner than I would have thought.
And I think of Robert Gates and Condaleza Rice in Belgrade a long time ago, and there was this hole back and forth, and it was basically Merscheimer of Chicago and others with realist politics saying don't push, don't push, another saying we've got to expand, et cetera. And here we are doctor Stent with Paul. I still can't believe
I'm saying this. Finland in Sweden, in Nato. Angela state, how does that change the calculus for Putin's world to have everything going wrong from Turkey from Istumbul, from Ancora up to Stockholm and Helsinki.
So obviously this is one of Putin's great achievements, unintended to have the Baltic Sea now in Nato Lake. But it's not going to change, you know, his conviction that the West is against him and that he can outlast them and in a way out maneuver them. So he's just doubling down now. I would say that both the Russia Ukraine War and the Israel Amas War have actually given him more influence in what the Russians now called the world Majority and we call the Global South. So
he's actually gaining adherents there. And Russia is back in Africa in a way that it has to read since the Soviet collapse.
Yes, Angela talked to us about kind of what's going on within Russia. How much support does mister Putin have among the populast?
Did they not have?
Does he not have the headwinds that maybe we hadn't passed wars, seeing body bags come home and that type of thing.
Talk to us about how the populast is feeling.
Yeah, So, the.
Latest opinion polls by the independent polling organization Levadas still show that Putin has a seventy percent popularity rate, even though more than fifty percent of the Russians now say that they wish the war would and then there should be negotiations, but they don't want Russian League of Territory out. So don't forget a lot of those Russians. They they're not shown on their efficient TV screens the body bags coming back. People obviously know that in local towns and
villages where they see them coming back. And we have seen protests by mothers and wives saying, you know, our men were mobilized in twenty twenty two and they've basically not come back. Yeah, but in such a repressive society, and the penalties for express senior opinions are so great, But that's really dampened popular unrest.
If you like an opposition to this war, Angela.
So from your perspective, I mean, I guess if we think back, just look at history, there's no reason to think that the Russians will grow tired of this. We've seen in their history how they can take so much pain for such a long period of time. How do you think they view a solution here to Ukraine? Is it absolute victory or can there be something negotiated?
So I think at this point Putin is waiting for the results of our presidential election in November, hoping that we'll have a president that will cut all assistance and support for Ukraine. But I think the way they see it is they're going to hold out. As you say that down that many times in history. In the end the Europeans and the US. The result, well, we can look what's going on in our own congress. We can't
even appropriate the sixty billion dollars for Ukraine. I think at the moment, who probably understands that he can't take the whole of Ukraine, but he could get a settlement. He could then whether Ukrainians would have to make concessions on territory, and then the army could regroup. And remember he told Taker Kossen our goal is the denoxification of Ukraine, and that means regime change in Ukraine. So in the long run, that's still what he is.
Aftertone, let me circle back to our conversation with Richard Haas earlier this morning and to ask you, and this is playing off of a fabulous foreign affairs article from a number of months ago where Angel's stent folks looks at America in the world's middle powers, do you detect a foreign policy that's coherent in Washington?
Unfortunately, I'm not sure, you know, particularly towards dealing with these countries in the global South. You know, they are on the fence about all of this. I think democracy versus autocracy. Casting it as that is not very helpful and it hasn't.
Been very productive.
So I think we really have to impress on these countries though. What Russia is doing is, you know, a violation of the un chotter of international law. And if Russia can get away with it, who knows who might invade them and get away with it.
Too, Angel, thank you so much. Angels start with us with Brookings in her fabulous book Putin's World. You do look at the front pages. Tell me it's not beyond meat.
No, it's not beyond me. No, definitely, but it has to do with food. So there you go. Americans are starting to talk more about what they're doing differently, how they're changing how and what they eat, how they're changing how they live because of food inflation. So these are people who responded to a Wall Street Journal article. They're talking about how they're doing potluck dinners. That's something different. They're eating rice and beans instead of meat, so they
still get their protein. They're planning meals, they're making spreadsheets to do this. They're buying more in bulk, so they're going more costco runs, maybe clipping coupons. They're cooking simpler meals, so now things like meat loaf and tuna casserole are coming back again because they're cheaper to make. They're cheaper and easier to make. There you go. And they're also
doing things which I found industring. They're gardening, they're imposing limits on eating out, which I know my families do, and we're cutting back on how much we eat out. And then they're hunting and fishing for their food. They're doing that on.
The you know, oh look a squirrel. Okay, Bill, go get the squirrel Heather log in the Washington Post. They quote Constant Hunter working with Diane Swank today as well the headline We've been looking at inflation the wrong way and John Sylvia x Wells Fargo has been brilliant on this. And I think you're just dead on Lisa. I mean, I I take great offense from people looking at Q over Q.
Yeah, the store brand stuff versus I mean, that's like thirty discount.
Yes.
I didn't even think about that until several years ago. Now it's become much more of a saying so true.
I'm looking at the photo here in the one Sheton Post and they don't say what the store is. The store is in Bethesda, Maryland, but I'm looking at the milk that comes in the door at my house and I might as well be buying beer. I mean six.
Okay, since we're on the topic of money, did you know this that having five million is no longer enough to crack the top one percent tier in the US. This is research from Night Frank. It now takes at least five point eight million to join that richest tier of Americans, fifteen percent more than it was a year ago. The top spot for the highest threshold worldwide Monaco twelve point eight million. Surprise, we have Luxembourg, Switzerland. It takes
about eight million to make the cut there. But they're just talking about different things in the article, like why Russia's evasion of Ukraine hurting the economy people when they were just starting to recover from the pandemic. That's prices for energy food surging. So you see that threshold is starting to take up a bit.
To me, it really talks of the failure of the American retirement system. Roger Ferguson's let on this TIA. I'm not sure what the former vice chairman's doing right now, but this idea that the US government has that five hundred thousand dollars is a lot of money is just incredibly wrong. In off the mark about what is comfortable that you need? I mean, Ken, I mean Ken. The answer is what you're trying to do, Ken, is to
retire and listen to the sound of the shores. I mean, you know, there's just no question you want to retire with excellent waves.
Yep, they were retired.
Okay, I'm distracted, now I can use some of that.
Okay.
Next one is from USA Today, it's a warning actually for Netflix customers who pay their account through Apple. So apparently, yeah, they're billing statements the streaming subscription through Apple's iTunes or app stored. They're no longer going to be an option, so you have to change it by the next billing
cycle or you won't be getting Netflix anymore. So it's it's something that happened back in twenty eighteen from what I understand, and now what happened is that those people who were grandfather well now it's their turn, so now they have to start, you know, switching.
I just I just assumed Netflix is going to charge me. They're gonna take They're gonna take that.
Not if it's aff they will find you.
A couple of years ago I figured out how I was playing for three Netflix.
Yeah.
Thanks, I'm thankful with the Netflix for you know, putting that to bed, because exactly I had like some offspring on my credit card.
Netflix to care that for me, I still did.
It's just one small account, it's like or whatever.
Now it happened come from from somewhere. I was trying to watch Netflix the other day and it said I couldn't because I had two many users.
I just resigned up from Major League Baseball to enjoy the Red Sox losing. And they raise it five dollars.
Okay, that's the front. Ye raise the fee, sure, and people will pay. People will pay it.
I'll pay anything. They'll see the Detroit Tigers work fourteen people. Have you done one? No?
This was a good one.
Oh yeah yeah.
New York Times they say that there's a new trend on TikTok. It's people posting and asking commenters how old do you think I am?
This is the new thing? Yeah, thank you.
Apparently it started because it was someone from gen Z who's at like eleven to twenty six year age who did it. Because there are studies that show that gen Z is aging faster than millennials.
So there was this.
Competition back and forth. But people, I mean, you're asking for trouble.
That's I don't know.
You post it out there and you ask people how old do you think you are?
I don't know, live chats, how old do you think I am? What are they say?
Yes, how old do you think I am?
How old do you think I am?
All right?
Put it on the chat, yes, you know.
So that's going.
On one and four Riches right on, Lisa Mateo, that was very strong. Thank you. This is the Bloomberg Surveillance Podcast, bringing you the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten a m. Eastern from
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