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Glenn Cubboard had the privilege of stunding under Benjamin Friedman, who took our economics and our society and pieced it together. Glenn Hubbard definitive at Columbia Business School, his public service to the nation as well. I was watching King Charles Third Glen Hubbard yesterday and you could feel the calm come across Republicans and Democrats. You are affiliated with a
Republican tendency. What does that Congress that we saw yesterday and the Republicans, what do they look like after Trump?
Well, I think from the King's remarks, you know, good policy runs deep. I think the King was calling for a return to openness in markets, in trade, in tolerance. I think all those things have been a hallmark of conservatism. I think there's also a real opportunity to pivot while President Trump is here, of course, to growth, to opportunity and to full participation in the economy.
The anger that's out there says that many people are not enjoying growth. How do we pull them into growth?
Well, first, we've got to get growth itself up, and that's going to require some things that might be controversial right now. More spending on research, more high skilled immigration, a better policy toward AI and electricity generation. We need all of those things. To get more people into growth requires much more investment in people, better training, better resources, and better working with companies to do that.
Nancy Lazar has been brilliant enough. Paul in market economics.
Professor, the war in the Middle East, it's obviously a wreaking havoc on a lot of economic parts of the economy here, most notably in the energy markets. Is it to the point where you're concerned about its impact on global economic growth? Is a recession something that that could result from kind of this instability we're seeing.
Well, it certainly could, but I don't think it's the likeliest outcome. Remember, the United States in particular is much less energy intensive than in previous shocks. I think what's more likely is a slowdown in growth combined with inflation being uncomfortably stuck, which is one of the problems the FED. Of course we'll have to deal with today.
What do you expect from the FED today? And then I guess, just as importantly from the new Federal Reserve Chairman Kevin warsh.
Well, I don't expect any change in the funds rate today. It'll be interesting to see if there's any change in the language in the FOMSC statement. I think incoming chairwash has been pretty clear he wants to look at all of the data. He has a very clear story about AI going forward. The time path there though maybe a challenge. I don't expect a lot of rate cuts from the FED in the very near term, even under a worsh FED chair.
So if the growth story may be slowing, I guess probably maybe the bigger concern for the marketplace is just inflation out there. Again, we're looking at the cost of energy, whether it's gasoline or diesel fuel or jet fuel. And again not as big an issue here as it is in other parts of the world, but that's going to be a concern.
Yes, but it's more than that. I remember inflation was a problem before February twenty eighth. Inflation was well above the Fed's target and appeared to be stuck. The energy prices may be more of a one off, But the really, as many beneficials have commented, is do expectations become unhinged? So, yes, inflation is a real problem.
Is we excidout at Glenn Hubbert? Can I do an audible?
Sure?
Let it right, Glenn. I don't think you've gotten nearly the credit with Lee Bollinger of the miracle rot at the Columbia Business School Rocket, What was it like the first meetings where you had a vision to blow it up? And by why? To claim Colombia is the juggernaut that you and others developed is unparalleled across this nation. How did that happen?
Well, it happened with a lot of people. And first, I'd like to give a lot of credit to be Bolinger. Actually, his vision for this campus was a big part of it. But it's really a story about the business community, about alumni, about students, about faculty. It's always been a great school and it's come together. I'm very proud of it.
I mean, did you like have lunch with David Geffen and say, David, we've got to do this. No?
No, He's been very generous to the school.
Oh, Glenn Aulberd, thank you so much. And all I can say, did you hire did you bring Abby Joseph Cohen over from Goldacs? Is that your fault? That's my blessing. That's wonderful, Glenn Albert, thank you so much, and seriously congratulations for those of you across this nation and worldwide what the Bolinger Combine at Columbia University did with their business school. It's called Manhattanville. Yeah, new buildings. It's right in the Hudson River.
Half of Global Wall Street, I think came out of the Columbia.
Henry Kravis stepped up on this along with mister Geffen and others, and they brought in Abby Joseph Cohen and we looked sord of speaking to from time to time. Glenn Hubbard. There, stay with us. More from Bloomberg Surveillance coming up after this.
You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Apple Karplay and Joint Auto with the Bloomberg Business Up, or watch us live on YouTube.
We are so gifted, folks. Got a great conversation today, Sea Micheawe. Glenn Hubbard, the giant of Colombian supply side economics, will be with He hates when I say that. Probably in the car right now, I saying, turn a limo around. Michael Ball will be with us. Has been on fire. Jeff Cleveland an ain't dollars a gallon gas in LA. We're gonna go narrow now. Libby Cantrell's like, what's the Fed gonna do? What are the Democrats gonna do? You weren't at the steak dinner last night. I was not
at the same. Okay, I thought you were shortlisted as well.
I'm sure.
I'm sure it was.
I didn't review the list.
Oh did you some notable folks there or something? Yeah, well it's the way. They weren't in a ballroom. No, they were not. Lebby. I want to go wicked narrow ready, folks three two one. Jacob javetts In nineteen seventy two, the world was blowing up in in nineteen seventy three, Watergate, Vietnam, the Red Sox were terrible. All of it came together and the answer is Jacob Javits and a few others said we need to bring back our power the War Powers Act? How will that play out May one and beyond.
Yeah, so this is going to be the big question for particular for Republicans. Republicans, of course, have effectively greenlighted this conflict in Iran. Publicly, they've supported and endorsed President Trump mostly unequivocally. I think privately there's been more skepticism and I think there is more growing ambivalence about this conflict in terms of what are the strategic objectives, what
is the endgame? And there will be a vote in Congress, and that is because the War Powers Act, it's a sixty day requirement per this law that when the president has deployed troops that Congress ultimately needs to vote on it. Now, there's a thirty day grace period, which most likely the president will use that option, if you will, So that means that vote will be at the end of May. But I think push comes a shove. Congress is actually
gone to go on the record on this. The other one important point here is there's going to be a big supplemental request that is different from the one and a half trillion dollar budget requests that's for next year. The two hundred billion dollars supplemental requests. We haven't gotten any details of it. We've just sort of had, you know, there's been kind of trial balloons or what have you. But that is the other kind of forcing issue, and I would say that's probably more important than the War
Powers Act, which is like more symbolic. But really when kind of the rubber meets the road, so to speak, is going to be in that funding bill, and I think some Republicans will probably support it, but I think there's gonna be much more pushback and you'll see that probably with Secretary Hegseth.
Is that funding bill that two hundred million dollars is that have implications for the wars. Some of that two hundred million earmarked for the warner in So therefore, if you your vote on that will be kind of your vote on the war.
Yes, And I think that they're I mean, you know, I'm sure the White House will characterize this as just trying to restock these depleted ammunitions, and I do think that's pretty shocking. Any the American public is sort of surprised that we actually don't have this sort of arsenal of munitions, and of course we've depleted those through into both through Ukraine and through Iran. So I think they'll probably characterize this as just trying for preparedness against China
and what have you. But push comes to schev I think this probably will be at least in part, a referendum on the Iranian conflict. And I mean two hundred million dollars, it's a lot of money. I mean, this is not for nothing, even for Washington. I mean these one we're kind of a neure to these these numbers. But it's a.
Lot politics here.
Does the president not really care about politics and the fact that it is a mid term election year because tariffs don't pull well, the war in Iran is not polling well. I would think a lot of Republicans facing a race this year would be kind of nervous.
Yeah, And I think what we've been saying to our clients from the beginning of Trump two point zero is president Trump if you compare him to one point zero, where he was really focused on the approval ratings and of you know, Republicans, you know, keeping the House, which of course they did not in twenty eighteen. This is different, right. He has a sense of urgency, has his view of unfinished business. I think Iran, tariffs, Venezuela all kind of
fit within that framework. So does he care about Republicans? Yes, does he want to keep the House, of course, I mean everyone likes power and Washington. However, I do think he has his eye on this sort of bigger, more symbolic legacy making issues.
I watch every minute I hit the blue button, the Detroit Ryons blue Button Lebby Cantrell. I watched every minute of the King's speech yesterday, not the movie, the actual speech. And in the back when you were in the house, were you one of those young interests?
I was, yes, I usually wasn't on the house floor, but were young.
I know they're very young.
What do they do?
Congress, by the way, is run by a bunch of twenty year olds, so it seems that way. It's because it is now. They're smart twenty year olds. But well, those those may be pages, you know, and they're they're they're bringing documents, they're bringing coffee to the coffee and peach.
I mean, yeah, these are, but these.
Are important jobs, Tom.
People need to get me to the Capitol grill and I want a medium where don't bring in needed.
To be sustained one thing on that that speech, if I may please, I thought it was really important and interesting that members of Congress applauded when he talked about NATO. And the reason why I think a lot of a lot of our clients don't appreciate this is Congress has the final vote on a withdrawal from NATO. That was
Secretary then Senator Rubio's kind of last gasp. He actually passed the bill Biden passed into Senate and to start into a lot about the Congress needs to authorize NATO withdrawal. And so I think that was important that they all clapped when he talked about the importance.
And you missed it. I mentioned this earlier, folks, and I will say it again. And I think Liby Will you were in the Bentley on her way over. Yeah, of course she was tuned the you know Yankees baseball or Broncos radio on sirious way and then Libya I just said, you have to listen to this speech from another time and place, and you could feel the room relaxed, all parties, everybody just for a moment relaxed. Don't know what it means, but there it was.
I think it was the most unified Congress has been since the beginning of this Congress, right and twenty twenty five. So it is it's at of ironic that became.
I need you bet May six, May seven, May eight, as we go past the word powers that let me cantrell definitive at pimcos. Stay with us. More from Bloomberg Surveillance coming up after this.
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We haven't talked about gold and ages with State s Treed Investment Management. Alkharstochi joins US now head of Gold Strategy. Just as simple as I can. What are the Chinese doing?
The Chinese are buying gold as the West was unwinding holdings in March. Chinese investors continue to have inflows. The PBOC People's Bank of China continued to buy and add to their gold reserves, and you saw bar and coin demand actually spike up in China.
Buy it. Do they go down to Singapore? They hang out at the raffles hotel over the Fullerton and yeah, I'll take that.
So they buy it in the onshore market, and there's been an incentive to export gold from the rest of the world into mainland China like they're galleons.
It's like the Spanish from Batavia are there like boats carrying gold. There are boats carrying gold.
Some comes by airplane as well, and most of it clears in the Shanghai Gold Exchange and that market has been at a premium to London for the last several weeks, and I think that shows that there's very strong local demand for gold, even as Western investors were taking some profits and liquidating some holdings over the last month or so since they're on conflicts started.
Why is the Bank of China buying gold.
I think it's part of a long term, medium term trend of de dollarization, reserve diversification and really using gold old as as a hedge against potential US sanctions policy and geopolitical fragmentation, a trend I expect to continue over the medium term.
So it's not so much an investment for them, but it has maybe geopolitical bearings to it as well.
Sure gold can't be sanctioned if it's held in physical form. It doesn't actually have any credit risk. It's a bearer asset.
Tom.
If we go back to bearer bonds and from the nineteen eighties, you could.
Just go.
There's three thousand people, look at your next I'm the only one that clip Cooper.
So what's the call here as to the fundamentals of gold? How do we think about golden? I know it's a commodity, but is it expensive? Is it not expensive? Should I?
Is there value?
How did gold investors think about that?
The SMP five hundred was at levels we were a year ago in April of twenty twenty five, then I would.
Say gold is relatively rich.
But at seven thousand, as INP five hundred, I think gold at forty five hundred still provides you that left tail, low volatility reserve asset feel From that standpoint, what's been a headwind into quarter end of one Q has been higher real yields.
This war impact has.
Changed fed pricing. If you look right before the war started at the end of February, we were looking at fifty eight basis points of cumulative easing for twenty twenty six. At one point in March, the third week of March. I think we were looking at the fifty to fifty potential of a hike. Now we're at a FED that's on hold for longer. I think the key for gold here is the FED can be on hold so long as they're going to cut, gold will do okay. Remember last year in twenty twenty five, FED was on hold
for nine months, gold returned forty three percent. So it's a little bit of a push and pull friction what's happening right now. Arguably, I think the war enhances the case long term for gold because it's adding to debt and deficits. The war spending higher yields will add to interest costs for governments around the world. And then I think on the geopolitical fragmentation point, this can increase the risk that emerging market central banks will further want to diversify reserves with.
What does the cultural overlay of the Eastern Mediterranean and down to the Middle East of gold given conflict, given war.
It tends to be quite strong In the East. Gold is seen as a store of wealth, it's not just a risk off asset. So if GDP is rising, if wealth is rising, if consumers are and demographic shifts are occurring that are positive. That tends to be positive for gold demand. It's not just a risk off story out in the East.
What's your interpretation, I mean, I know gold' you're remat, but what's your interpretation of the distillate markets? Are we getting visible and clear pricing on all the different oil derivatives?
You know, that is something that has to be closely monitored because as high as oil prices have been, product prices have scorched even higher. I think we're in a risky regime where twenty twenty six is looking analogous to twenty twenty two. I'm surprised equity markets have been this strong so far. And how the evolution of oil prices go, we'll have a transmission mechanism to other asset markets, particularly gold as well through the Fed and dollar channel.
Real needed this a custos. You thank you so much for State Street Investment Management. They're on gold again. Is note is absolutely brilliant, Really terse. Look for that from State Street Investment Management as we protect their copyright. Stay with us. More from Bloomberg Surveillance coming up after this.
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Suzanne Maloney absolutely definitive at Workings Institute and Foreign Affairs Magazine of piecing together where we are in this war? Suzanne, what is your uncertainty this morning? And your uncertainty after a presidential tweet at four am that frankly could have been out of Mad magazine from my childhood.
Well, you know, I think we're in a very unpredictable situation right now. The President and the Iranians appear to be in a standoff around who can last longer under severe economic pressure. The President is determined to maintain the blockade on Iran, preventing them from exporting and earning revenues from their oil production, which is the primary source of support for the regime and for the country as a whole.
The Uans are determined to maintain their choke hold on the straight of hormones, which we'll have catastrophic implications over time. Nowers for oil price, but for the larger global economy.
Susan, your heritage, I'm going to editorialize is realist foreign policy of Robert Gates. It's a big new Brazinski and others. Do we have a theory right now a foreign policy? Are we realist? Are we something else? I don't know? Are we just making it up by tweet?
Well?
I think the America First ideology has morphed over time under President Trump's first and second terms. At this point, it is highly militaristic. It is very much forced first as a means of asserting American interests around the world, and it is very disinterested in the traditional reliance on allies and partners that has been the key to the extension of American influence, as well as the broader prosperity and piece that we've had in the post World War two era Susanne.
Do we actually know who is running Iran right now? And whoever that is, is that a group that can really negotiate on behalf of the country.
I think we have a decent sense of the most important figures within the regime. They're largely drawn from the Revolutionary Guard, but of course we believe that Mosch Tabahameny, the son of the late Supreme Leader who was killed on the first day of the war and then elevated to his father's position, is still alive and is still helping to shape decision making. This is very much a system now that is driven by hardliners who have been at the forefront of Iran's most damaging and violent policies
over the course of the past forty seven years. And they're not individuals who are particularly prone to compromise or to reconciliation with the United States or Israel.
So President Trump portrays the leadership in Iran is in flux failing. Maybe is that accurate?
Do you think? Again?
It just kind of goes to the question of ken the United States negotiate in good faith with whomever is there.
Look, Iran has always had a kind of diversity of factions within a system and really bociferous debates about both its foreign policy and its domestic policy. That isn't new, and it's not surprising that in the aftermath of the elimination of the senior echelons of the clergy as well as the security of bureaucracy, that we're seeing at least some questions about how decisions are being made in different positions. I don't think that that is fundamentally, it makes it
impossible for us to negotiate with Iran. It has always been complicated, It has always required a high degree of focus and patients from the international community to achieve any clear outcomes with Iran. I think the challenge that we face is not the internal politics, but the sense within the regime that they have the upper hand and the time is on their side.
Suzanne Maloney with US Folks a definitive on this study of the Eastern Mediterranean and Levon. She's a Brookings Institution and of course writing for foreign policy as well as foreign Affairs, I should say, which I can't say enough about Suzanne. Long ago and far away, you were actually in Tehran. Did you ever take a bus like the four hour bus south from Tehran to Istefan? Did you do that as a kid?
I visited Isbahan several times when I was studying in Iran in the late nineteen nineties. I actually flew with the flights were very inexpensive at that time and very convenient. Isfahan is a phenomenally beautiful historic city, but it is obviously proximate to some of the most important nuclear lights in the system.
What's the number one thing we get wrong in our perception of the road from Tehran to Istefan.
I think the fundamental issue that we have is recognizing that this is a regime that has staked its existence on maintaining some kind of a nuclear infrastructure. They have fought for that. They have suffered enormous trillions of dollars of damage and sanctions and lost opportunities as a result of their determination to maintain that. The President walked away
from the nuclear deal in twenty eighteen. There were lots of critics of that deal, but it is very hard to reconstitute any kind of an agreement given all that has happened in the in the interim. So this is a challenge. The US wants a quick fix, a quick deal, a quick end to the closure of the Strait of Hormuz. The Iranians are going to try to continue to maintain their choke hold and assert this leverage even after this conflict ends.
Suzanne, what do we know about the people of Iran? What do they want? How supportive of the are they of this government? Because boy, not just the sanctions, as you mentioned, but now the blockade I'm sure is wreaking tremendous hardship on the people of Iran. What do we know about them?
Well, the Iranian people have been the biggest losers in all of these conflicts between their regime and the international community. They have suffered immensely, and of course we know that thousands went to the streets all around the country on multiple occasions, but most recently back in January, demanding regime change, a different government. They do not want the theocratic regime that imposes so many constraints on their interaction with the world,
on their own opportunities. They were slaughtered in very large numbers. We've documented, credible organizations have documented seven thousand deaths. Is probably two or three times that number at least were killed by the regime in order to maintain its hold on power. And I think that gives you a sense of how determined they are.
This is the time that we've got I got eight ways to go here. Let me start with you know how I learned about shuttle diploma. We already Kissinger's diplomacy covered a cover and then he reinvented it by getting on airplanes. How do you perceive as a diplomac and someone who believes in international relations, the idea that a real estate developer from New York and a family member get on a plane to go negotiate like this, or
the Vice president for that matter. Do we have a diplomatic industry now negotiating with they we're on in this war?
Well, I believe that the team that was sent to Islamabad and was prepared to return did in fact include a number of technical experts who would be supporting the Leeds Steve Woodcoff, Jared Kushner and Vice President Vance in the initial outcome. But truthfully, you know, we are operating in very unprecedented times in terms of how we have tried to manage these negotiations, and I think we see the result of that.
My answer is my deep readier pop is a blockade? Is Russell Kroll on a boat in the Napoleonic Wars. It makes for hell of a good movie. If you read Patrick O'Brien, What does Suzan Maloney think about the simple word blockade? When we mentioned the Persian Gulf and around the South.
It will certainly hurt Around's economy, But I think most experts on Iranian politics and on the regime believe that they're prepared to pay the price, and that they have over the past forty seven years learned to adapt. Their entire economy is based on evading US sanctions and mitigating the impact of American economic pressure, and they will look for workarounds and they will probably succeed longer than we would like them to.
Given that backdrop, Suzanne, and given what we know now eight weeks into this, what is a reasonable solution here and what is a reasonable timeframe?
I think it's critical to reopen the straight up horomos to something resembling pre war traffic. It will take some time before we get there, and so the sooner we actually agree on some kind of reopening, the closer we are to addressing the really big tsunami of economic pain that is coming as a result of this closure.
Suzan, let's end with this. Paul had the correct question, like who are It's like Cassidy. I know, Suzanne Maloney saw Butch Cassidy. You know you're looking out and you're going, who are these guys? Your essay the Third Islamic Republic? Are we speaking to the leaders of the Third Islamic Republic?
We are speaking to the leaders of the Third Islamic Republic they're still trying to make up their minds. But I do think that the only way that we can come to an end here is through some kind of a diplomatic negotiation. And the more that we invest in seriance diplomacy, the closer will be to a solution.
Susan, thank you so much. Just thrilled to have you in today. Suzanne Maloney with us and I will get it out on the LinkedIn and Twitter folks. Her essay Foreign Affairs, a third Islamic Republic is just absolutely definitive. Award's unintended consequences for Oran, the Middle East and a global order. Suzanne Maloney, thank you so much.
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