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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferroh, along with Lisa Bromwitz and am Marie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business App. Israel launching another
round of attacks on several locations in Iran. President Trump reportably telling ABC QUO, I think it's been excellent and there's more to come. Joining us now to discuss is Dannington on the Israeli Ambassador to the United Nations, Ambassador Goo Mornic.
Thank you for having me do.
Thank you for sharing some of your time with us, because I'm sure you've been exceptionally busy. Let's just talk about where things stand right now. Is this operation on and ultimately one of the gals.
Where the gods are very clear, we want to be sure that they will not put the threat not only against Israel, but against the entire Western civilization, and specifically, we have two main goals. To eliminate the nuclear capabilities and to stop the production of ballistic missiles. And let me elaborate on that. You know, it's not only the nuclear weapons. We all know about the UNU enrichment and about that they're getting very close to put a bomb together.
But to look at what they're doing with the ballistic missiles. They want to They wanted to be at the same level of the US and Russia in terms of the quantity and the technology of the ballistic missiles. We couldn't allow it to happen. We got intel about their intentions to create another attack against Israel. You know, we all remember what happened on October seventh, But this time they wanted to use thousands of ballistic missiles and invade into it well with their proxies.
So it was a preemptive attack.
So we will continue until we will be sure that we eliminated those two capabilities.
Share rank you right now, Well, we will.
Have to wait and see the result of the attack of last night.
It was a major attack.
More than two hundred aircraft participated in the attack. Many targets, many senior military officials were eliminated last night, and we will continue until we will know that one is in the point that they cannot continue with the efforts.
Including the IRGC General commander. Is there an intent for regime changing around from Israel, Well.
That's not our goal. You know, we are concerned about the threats to it. Well, for the Iranian people, I wish they will have a different regime.
You know, we saw what happened in the one.
The people are suffering there that have no way hitting the winter, no ac in the summer, that are suffering there. But our goals is to eliminate the capabilities of A one so they will not be able to threaten us. And then when you look at the map, we have no border with A one. It takes us hours to fly there in order to attack those facilities. But still they spend billions of dollars to create threats against Israel.
This nuclear enrichment is deep into the mountains. How long will that victory actually take? And it's called Rising Lion?
Why is that?
Well, you know, every time we pick a name when we have a military operation, sometimes the computer is doing it for us. So there is no real meaning for the world of the operation. But I would say that Ia published recently that they ran at the enough urvenium to create not only one bomb, multiple bombs, so it's only it was a matter of days to put it together. We decided not to wait, not to take that risk.
We believed the threats of the Iranian when they said that they're going to use those ballistic missiles to destroy is well, we took it very seriously.
How much did the Israeli government brief.
The US government?
So we talked with the US, but this decision was decided in Jerusalem, and we took that decision independently, not for the first time in the eighties and on too. Remind you we attacked the nuclear actor in Iraq. We took the decision by ourselves when we attack the reactor in Syria. I think it will serve the US and other Western democracies, but it was a decision that was made in Israel.
Do you think the United States will come to not just Israeli defense, but potentially if you're needing help with more attacks, if this continues for days and.
Weeks, Well, since the day that was established, we never asked the US to fight for US. We know how to fight and we know how to defeat our enemies. You know, we have heard threats that Dirnia that are threatening the US, targets that are threatening the allies of the US in your embassy right, So we take precautions in different places around the world. We are aware of the threats, but we will continue. Also in Israel. We have to be honest, you know, in needwel today we
are getting ready for serious attacks coming from Iran. It will be very intense, intense in Israel in the next few days. We are preparing the population in this operation. It's not only about the bravery of the pilots, it's about the population in Israel. They will have to follow the guidelines in order to avoid casualties.
Ambassadors, you know, the United States is system themselves from this in the last twenty four NS and said they weren't pound of the attack. What's not clear to us is whether they assisted in the defense of Israel. Did the well, you know we have capabilities and we are Did they assist you when they sent over drafts from Iran to Israel? Did you receive any help from partners outside of Israel?
Well, as far as I know that we were able to deal with the ones by ourselves and in a way. But we have to realize, you know, the threat is not only against the Israel as I said earlier, iranly threatening the allies of the US in the Gulf. So we have the capabilities. I'm not sure they have the same capabilities.
Are you worried about an asymmetrical response from Iran?
Well, we took into consideration that there will be retaliation and marine and.
We will be proportional.
Well, they know that we have capabilities as well, so they will have to think twice before the attackers and what they are doing. And I would say that today we can reach every target in Iran.
We have the control in terms of.
Our pilot to reach every target.
Well, you know we have the capability. We focused on on the gore the earlier I mentioned earlier, the ballistic missile infrastructure and the nuclear facilities.
How long will that take if you were to reach every target.
Well, it's not going to be a short operation, and it will be weeks or months. I wouldn't say months, but it can take days or weeks.
How lonely this is round the United Nations at the moment.
Well, I will let you.
Know in a few minutes when I go there, Jonathan. But it's gonna be it's gonna be tough for US. Iran already called for the Security Council to meet public what happened this afternoon. But you know, I will tell my colleague that the U n where were you in the last ten years when I ran threatened this? Well, where were you when the same ballistic missiles? Where were you when they actually acquire the nuclear capabilities?
So you know what will not stop Iran is well.
Will the international response. Saudi Arabia calling it heiness, the NATO Secretary General calling for de escalation, the UN Secretary General calling from maximum restrain. Do you think there is a diplomatic group when it comes to dealing with this regime?
Well, I think that they you know already you have the diplomatic Act and the time for that will come. But we saw that the diplomacy didn't convince Iran to change courts. You know, for decades they negotiated, they played the game. The light we found we had the intel that they are developing nuclear capabilities for military usage.
There's some analysis so that under the JCPOA, they were restrained, they were capped.
They are not capped.
Now when it comes to enrichment, well, you know with the without the JCPOA, they were continuing.
And what only recently that you know.
The alongside the reactors and the plan that was supervised by the international community, they developed a military capability that they were hiding it from the international community. So once we realized that going to that direction, we decided to stop that.
Ambassador, we appreciate your time this morning. Thanks for making take for I'm sure you're gonna have an exceptionally busy down ahead of you, so thank.
You, sir.
The Israeli Ambassador to the UN Dannyton on there and the latest attacks on Iran, it's the latest this morning. Investor's rushing into bonds, pushing gilds lower. Briefly, as tensions between Israel and Iran reached a boiling point, joining US natural discusses, Robert said of PGM. Rob I said briefly, because yields now up, particularly at the front end, by about two basis points, it feels like a tug of war between natural risk, a version out of risk assets
to something else, plus an inflation redevelopment. What would you put more weight on one versus the other?
Right well, actually, for right now, the market is in some respects putting more emphasis on the FED this point in the cycle. I mean, actually from the best levels. At some points overnight we've seen some flattening of the Yell curve, where effectively having a higher oil price reduces the odds of FED rate cuts, which then is positive for the inflation outlook, you know, leads to a flatter curve.
And you know, so that's rather ironic, but we've seen a lot of these situations in the Middle East over the years, you know, going back, and they're all at different points in economic cycles. So when you go back to nineteen ninety, you know that was hitting in the middle of a recession. This one is hitting in the middle of a pretty firm economic backdrop, albeit one with a lot of anxiety. But it leads to a different kind of market reaction to.
Your point, staying points, Mensa.
So let's talk about the stancing point with my some progress on inflation, full consentctive month of downside surprises. Where are we now, Robert, and do we risk upending some of the progress we've made.
Definitely. You know, we have had three good months of inflation. But the problem with this cycle is before the three months of good inflation, we had three months of terrible inflation. And then before that last year there were months of good and then months of bad and not just one, but a few and a crack. And that's why this has been such a difficult cycle for people to get
their arms around. And the same has been true on the real economic activity, where you get a few strong months a few week months, and so the Fed is in this constant pull and pull, a push and pull of.
Oh yeah, we've succeeded.
We're going to be able to cut interest rates, although we have to really stand tough. And already most inflation forecasters were looking for inflation to go up as a result of tariffs. If not in yesterday's warning, yesterday morning's number, definitely in the next several numbers that are coming.
So it thanks the question, rob, let me jump in at the time we have left. What does it mean for the Fed next Wednesday when they've got to put out full costs.
Yeah, so they're definitely going to be on hold and evaluating, and I think it's going to make them very reluctant to even change their dots to make any fine tuning. They're going to want to say they need more information. And going back to that nineteen ninety incident where people think, you know Kuwaits, you know, being invaded and the Iraqis being repulsed was very quick. That actually took a few months for the price of oil to make it all the way up to the top. So these things can
take some time to evaluate. We're not in a weak economic backdrop. The Fed's going to have time to evaluate. I think they're going to stand pat try to talk down volatility, talk about the firm underrelying situation.
Robert f Pa, Jim rub appreciate at the time so as to make consign for us this morning to spend time on the potential Iranian response. We can do that now with Stephen Kirk, the Senior Fellow for Middle East and Africa Studies of the Council on Foreign Relations. Stephen, welcome to the program sir. What a timely opportunity to
catch up with you, Stephen. Can we start with I Runian defense and military capabilities, how degraded they've been, how greated they've become, and not just Theirs, but also the military capabilities of Iranian proxies as well.
What is the current state of play? Yeah?
Well, reporting coming out of Iran and Israeli reporting indicates that a tremendous amount of damage has been done to Iran's ability to respond. Her reports of James Bond like Mozart operations in which they have disabled the ability of the Iranians to launch large numbers of ballistic missiles towards Israel, that they have targeted Iran's air defenses so that Iran
is more vulnerable than ever. Thus far, the only thing that the Irans have been able to muster or a wave of UAV strikes, most of which I believe have been shot down. As far as the proxies go. His Belaw has said it will not respond to Israel's attacks on Iran, and in fact, the Lebanese government has said it will make sure that his BiLaw does not respond
to Israel's attacks on Iran. We haven't yet heard from the Iraqi militias, but in the past, specifically last October when the Israelis hit Iran previously, the Iraqi militious have said that they weren't interested in retaliation, that leaves the Huthis, and we'll have to see how they respond. But by early accounts, the Israelis have done a very significant amount of damage to Iran's ability to strike effectively.
Of course, its early days.
The Iranians may have some tricks up their sleeves, but right now all the advantage goes to the Israelis, who are once again undertaking attacks against Iran.
Steven.
If it's true that the US and Israel have a tight security relationship, why would Israel choose to act in the United States.
Not, Well, we don't know for sure whether the United States was not in on this. There is a lot of Israeli reporting suggesting that this was the last few days. We're in an elaborate deception campaign. But I think, in keeping with the President's worldview, Defense Secretary Pete Heggs had said it best before Congress just the other day, in which he said Prime Minister Natanya is going to do what's best for his country, and President Trump's going to
do what's best for the United States. I think the Israelis view is that the Iranians in recent weeks have crossed a certain threshold and that they just could not wait. There is a fair amount of Israel US security coordination and nas these attacks were unfolding, It's likely that the United States provided real time intelligence to the Israelis, and
of course, in retaliation. Because Israel is part of Senkom, the United States and Israel and other regional partners will cooperate in defense of Israel as a result of that.
It remains to be seen.
I think the president's posts on social media this morning would suggest he'd like to have it both ways, and maybe when you're the president of the United States he gets to have it both ways. But I think more needs to be We need to find out more about the actual US role here.
You just insinuated that you don't think this would hinder the US response in defending Israel. So do you expect the US to come out in full force and Israeli defense when we see Iran's retaliation.
We already see in this Sencom area of operations the Jordanian Air Force is shooting down Iranian drones and that is in coordination with the United States.
So yes, I do think that the United.
States will help them the defense at Israel in the event of a kind of massive Iranian response, And I do think that the United States would get involved if the Iranian seek to respond by, for example, closing the straight up removes or attacking shipping in the Persian Gulf.
We've been talking about for months, actually years, about Iranian enrichment and these breakout periods.
Why now, Stephen Well?
I think the Iranians have been working diligently at this and that their security situation has deteriorated over the course of recent months. I think we should be skeptical about the reports over these many years that Iran was not seeking to weaponize its program and has been diligently working
throughout in order to develop weapons capability. I was privy to an open source briefing just recently which made it clear that the Iranians really have never stopped their efforts to develop nuclear weapons.
So do you think today's attack was all about where they are in terms of their capability when it comes to their nuclear program, or is there something else Israel knows that we have yet to be briefed on.
Well, I think the Israeli for these relatives, a certain threshold had been breached and they felt that they did not have much time left before the Iranians weaponize, but I think that there's a broader goal here for the Israelis.
The way this attack is unfolding is quite similar to what the Israelis did to his Belaw in the fall of twenty twenty four, essentially an effort to decapitate the regime, make it render it render its ability to respond effectively quite weak, and provide an opportunity for the change in regime. It is the Iranian regime that is the danger, not necessarily Iran or the Iranian military or even the Iran nuclear program. Is the regime and what their intentions are
to do with it. If you change the regime, you provide an opportunity for perhaps a more benign government.
There an opportunity.
It's a very, very risky strategy, but it seems clear based on how the Israelis have attacked the IRGC leadership, the military leadership, and he even reportedly took a shot at the Supreme Leader himself.
Even I want to follow up on this. What you're saying is really quite important, because what I've heard so far this morning is something quite different. That this was a targeted, limited operation to degrade the military and nuclear capabilities of this country and that regime change was something bigger,
something that they weren't pursuing. If the Iranian regime believes that the Israelis are looking to tople the regime and they view this as the start of an existential threat, how does that shape their response in the coming weeks and months, Because I can tell you from a financial market perspective, a lot of people are thinking about the Strait of Homers and some people would sit here and say that's the big cup, the nuclear option. They wouldn't
reach for that. Maybe they look to de escalate things from here. Are you saying this could play out differently?
Oh?
I certainly think that that's the case, and I think that people are missing the point here. Prime Minister Benjamina Dnialo has for months been talking about the Iranian people, how the Runian people are suffering under this.
Regime, that.
A different regime would be better for the Iranian people, And so I think that there is absolutely a broader goal that is here. The Israelis promised Prime Minister Natanao himself promised on October ninth, twenty twenty three, to change the Middle East. That doesn't entail limited operations just against nuclear programs now. As I said, it's a risky strategy. The Israelis are far away. They are looking to greatly weaken this regime so that it can be more easily toppled.
It's not a coincidence.
I don't think that the Israelis call their Operation Rising Line. Take a look at the Shah's regime. Take a look at their flag. There's a lion in the middle of it. So I do think that it may be existential for the Runans, and that they may try to retaliate in very,
very significant ways. I think the question is how much damage has the Israeli military done in last night's wave of attacks, waves of attacks that are being undertaken now, waves of attacks that are being contemplated in the coming days. How much damage they've done to the Iranian ability to respond, and whether whether the Iranians, after all this will be able to muster the kind of massive response against Israel
or American bases around the region. They'll still have a lot of resources at their disposal, certainly the ability to create chaos in other parts of the region, but will it be this kind of existential regional war that people have been warning about so far? It doesn't look like it, with Hezbollah saying we're not involved. Quiet from the Iraqi militias that may unfold in coming days, but the Israelis seem intent on not allowing that to happen.
Deeply thoughtful of stuff. Steven, appreciate its time, Steven Cooks. They have the Council on Farm Relations.
Good morning, Jonathan.
I'm here with the CEO, Jim Farley and Jim a lot to talk about here at Lama with you.
You just got out of a race car.
But before we do that, I want to ask you about the Israeli strike on Iran and the counter attack. Are all of the Ford employees that you know of in safe places? You do have operations in the Middle East?
We do.
It's a really important region for us. We're watching Turkey as well. We have a huge operation in Turkey. We export all the way through Europe and the UK. So so far, so good, but it's clearly a concern for all of us in business.
One of the things we've seen as a result, obviously, is the oil price rise five or six percent really across the board. Has the low oil price been helpful to you or has it not helped to encourage people to buy electric cars.
Yeah, it's interesting because it cuts both ways.
At Ford, we're sixty percent almost of the commercial business in the US, and a lot of that is energy.
So you go to Odessa, Texas, everyone drives the forward super duty. So you know, if.
Oil isn't in that sixty five seventy dollars range, our customer suffer. But you know, obviously, I think for the economy, for everything, it needs to be in that kind of range.
That makes sense for everything.
Large spikes, big changes in oil prices and gas prices.
Have huge impacts on our demand.
We see truck and full sized SGUV demand go down when they're big spikes.
Happened in eight it happened many times.
So no, I don't think our business likes big changes. For the consumer, it's very stressful for them.
The electric business, though, I would imagine, also is dependent on kind in some sense higher gas prices. I drove your Lightning. It was fantastic, spent a week in it. I've driven the Machi for a couple of weeks and one of the great pleasures is you don't ever have to go to a gas station.
Right, How are those businesses doing right?
Now because you've taken such big losses there and maybe slowed down in terms of your progress into evs.
Yeah, we've really changed because we're thankful we've been number two to Tesla for three years in the US because we spent our capital like five six years ago and all that product has been out for four years that you mentioned, So we've learned a ton.
Now.
We've changed our capital allocation for evs. We've reduced the spending, changed the battery chemistry a lot to focus on more profitability. We've gone down market and mostly in commercial. Those are the only markets where we think in the US, you know, an age seven percent of the industry is going to make sense for ev where you can actually make money. And the EPA requirements have a big impact on the
EV investments by OEMs. During the last several years, you know, we had to kind of sell like fifteen to twenty percent of our mix to be EV's both for the ZEB States California, Colorado, New York, but also you know, to meet the national tailpipe emissions and so what's happened. Interestingly, the total number of evs in the US has grown, but the total revenue has not changed. In three years because the prices have come down equal to the volume going up. So the EV market has not been going
for three years. If you look at total revenue, everyone looks at unit volume. Don't look at that. Look at the price and the volume. And I think we now have a good strategy going forward. A lot of our competitors are just investing for the first time, and good luck if you're selling an eighty thousand dollars SUV electric vehicle. We've invested a lot in hybrid. We are really successful with our truck. Hybrid's twenty five the best selling vehicle in the US for forty seven years, been in the
F one fifty. Twenty five percent of those customers now by hybrid, and a.
Lot of it is exportable power.
You can run your house for six days with an F one fifty hybrid now, and the others don't offer that at all. So yeah, we think hybrid is really the mainstream technology. We'll see erevs come to the US soon as the next technology for partial electrical I.
Want to ask you about.
Race on Sunday, sell on Monday, since we're here at Lamas, since you just got out of a Mustang race car, how does this racing effort, and it's a big effort trickle down to the bottom line for Ford shareholders.
Well, for us, the biggest is off road market. You know.
We have you know, almost twenty percent of a global profit coming from our enthusiast off road products, and we race it to car. We said Baja, were said King and the Hammers. That's a big thing, you know. I don't think there's a better way to promote your brand. Look what Ford winning in sixty six at Lama did for Ford Motor Company.
It made us a global company.
We're American company, but that moment changed us completely, and that's why we're going back in twenty seven to take on Ferrari and take on Porsche.
We think we have the technology but also the.
Tech transfer software, battery, tech, error dynamics. It's different than the seventies, but the tech transfer over to our road cars is immediate. You'll see hundreds of Ford engineers here who will be working on Monday on our road cars. And it's really important tech transfer. But we do it, I think as smart as we can. And maybe as a racer, I'm more sensitive about wasting money on racing,
and we challenge ourselves to be really smart. I think we've done a great job with the off road, the raptors, the tremors, you know, all the broncos. I think that's been, frankly, some of the smartest investment we had in racing.
You say you're an American company, You've outed yourself as literally the most American car maker. Eighty percent of the cars that you sell in America are made there. Donald Trump was out overnight saying maybe he's going to go after even.
Higher auto tariffs.
While you've said in the past that causes costs and chaos, does it also kind of help you because no one else makes as many cars as you do in America.
Well, for Ford, this is a moment for us. You know, we have employee pricing out there. We gained a couple points a share year over year. A lot of Americans are shopping forward because now they're starting to think, hey, half the cars in the US are imported, and if all the car companies were like Ford, there'd be fifteen new factories in the US, a million new jobs. You know, I think a lot of Americans are starting to pay
attention to where these where these cars come from. And for us, yes, I think Donald Trump's policies, especially around the Asian countries where they've supported with substies direct or indirect for their automobile industry.
You know, this is a great thing.
We have to sort out this Mexico Canada thing because we need to keep the vehicles affordable in the US and there's actually a lot of parts we can't even make in the US, Matt as you know, and so we have to kind of sort out what it ruled does Mexico and Canada have in our North America market from supply chain and manufacturing keep the vehicles affordable, and that's something that we're talking to the administration. We found
the administration to be very positive to work with. They want to help companies like Ford that did the right thing for Americans.
But we have more work to do in terms.
Of what the administration has been trying to do with China. Are you satisfied with the rare earth minerals that you have access to?
I know that you had to slow down production in the past. Yes, Have you been able.
To secure the amount of magnets that you need?
Is stay to day?
It's stay to day these high para magnets. The raw materials to them only come from certain places in the world. They're all processed in China, and they go in your speakers and your autosystem. They go in your motors, for your wipers and your seats.
They're all over our F one fifty for example.
We have applications in them offcom.
They're getting approved one at a time.
You know, we're educating the administration, We're educating the Chinese leadership about how important these jobs in the Midwest are.
There dependent.
We have had to shut down factories. It's hand to mouth right now, and I'm reading the paper like everyone else. I was very happy to read about London and having a good meeting there because it has a direct impact in our jobs in Michigan, Ohio.
So we'll see. It's hand to mouth right now.
Jim, thanks so much, really appreciate your time and congratulations on the race.
Thank you.
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