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Joining us now, someone who is a foundation of Bloomberg Surveillance and all we've done for decades. Ghen writing definitive at bear Stearns years ago preing capital Right now, let John thank you so much for coming in. The clear message I received on the trip to Phoenix among people that are optimistic about American GDP are innovation or manufacturing, is why in God's name are we talking about cutting interest rates? What's the case now for cutting rates?
I don't think there is one. I think there's a case for racing rates. If you look at the ism reports that we had on Monday for manufacturing and yesterday for services, and you put them together, you have a clear, very strong uptrend. You've an economy growing above potential. The administration itself says the economy is doing well so and inflation's above the fetch target, and we still have the tariff feedthrough to fully work through and the oil price
shot of an unknown magnitude. I think there is no economic case non whatsoever for cutting rates.
Your definitive take is it your service to the Bank of England, your England, your United Kingdom, and also your service to the Federal Reserve. Are the bankers listening to the PhDs, the analysts that you know, the kids that you used to be.
Well, I think we all know that there's a voice just outside the room that's louder than all those voices, and that makes monetary policy difficult to carry out.
In fact, makes fundamental economics.
Difficult to carry out in policy circles, I think, but there are very good people at the FED. There are very good researchers at the FED. I think Raphael Bostik, for example, will be greatly missed because he listened to his researchers and then made his policy decisions and thoughts based on what his researchers were telling him. That's why he was the first person to call out transitory. He came up with a swear jar.
In twenty twenty two. So I think there are those people there.
The Cleveland FED has an excellent inflation center, and I think that that information is getting worked through. But I think under this palle fed we don't know how long this powerfited's gonna last. It depends how long it takes Kevin to get through hearings. I don't think as much chance for great unless something real significantly changes. And the one wildcard that can do that would be a many nineteen seventies rerun with a short moved higher and oil not the kind of move we've had.
This is, this is contained.
But if we use.
Fundamental economics, I know you love that time we go back to Alfred Marshall invented the concept of the price elasticity at demand. The price elasticity a demand for oil is very low. Estimates are about minus point one, which means.
Okay, I dear Paul wants to jump in here, but this is incredible. We're not reliving the nineteen seventies oil show.
No, no, no, no, we're not.
I mean if we What that elis system means is that if you had a one percent reduction in global oil supplies on a semi permanent base for the new term, you'd expect to see about a ten percent.
Increase in prices.
So if we really have a disruption, and you mentioned the strength of the Strait of Home moves. Twenty percent of the world's oil goes through there, So if you have a serious interruption there, then you're looking at a potentially very big move in the price soil. I'm not forecasting it. I just think we need economics to frame the magnitude of what we're seeing and history to frame the magnitude of what we're seeing. And what we're seeing is very contained right now.
Reporting that just in the last week the price of gasoline at the pumps up a little over twenty cents per barrel. When does that start becoming an inflation risk for this economy or does it become a risk just to the consumer out there, who probably doesn't need another bat of inflation to deal with.
Well, there's a number of elements.
First, let me say one of the reasons this isn't the nineteen seventies because the US is now self sufficient in oil. So in the nineteen seventies, the oil price shot transferred income from the US to OPEC countries. Now it reshuffles income within the US, but it does shuffle income away from the consumer and to producers and owners of oil companies. And I think we have to see
a bigger move. But what it does do for the consumer, I believe long time and research has begin to support that view that it's the frequent purchases that consumers make that.
Impact their expectations.
It is going to the shop during the pandemic, things like toilet paper and something that weren't having prize that I didn't understand why that influencerer expectations. So groceries gasoline that has a big impact. Twenty thirty cents a gallon isn't a game changer for the consumer. But you know, another favorite letter of people want to talk about in the economy, the K shape, that it will hurt those at the bottom of the K.
Economic growth, as you mentioned, continues to be solid, I mean kind of across the board.
Here we had some good ism data points here.
What is the risk to this US economy to the GDP call out there?
Do you think, well, I think it's one a potential and just say a potential, not forecasting for a real big oil price shop that would definitely have an impact in terms of the costs of non oil companies, who are the non oil producing companies are the primary employers in the economy. Old companies are much small and more
contained in size. So I think that's one. And I just think the general uncertainty and we've had if you think of what this economy is absorbed increases and interest rates, you know, all the way up to five and a quarter to five and a half percent from effectively zero. We didn't the US didn't go into recession. That surprised me. I was wrong on that call.
The tariff shock, which.
I thought would have pushed the economy potentially over the edge, that has been absorbed. And the thing that has done that is productivity growth. Now we get productivity in numbers at eight thirty this morning. That is the We are fortunate in the US in having the potential for this big, secular and long running story on productivity at the game. It's disruptive on people when they look at history, look at statistics, don't look at the people who were disrupted.
And my hat's off to Governor Barr, who gave a terrific speech a couple of weeks ago on AI on what monitor policy can do, and cont.
John writings, who starts wrong? Today? We continue from bringing capital. We say good morning to all of you worldwide on YouTube. A big message I learned in Phoenix Serious XM yep, huge good morning on Serious XM channel one twenty one, and this thing building on YouTube every day. Paul and I are really unsure of what to do with that. The February numbers were gratifying, to say the least. Lots
of good talk here again we're focused on oil. Eighty three sixty nine of two dollars twenty nine really buck used up against at eighty four level. John, I really want to talk about this productivity issue. Is the better productivity now from AI? I don't think so? Or is it from something different? Where's this two thous twenty five twenty six productivity coming from.
It's coming from capital spending. I think AI is beginning to have an impact. But again, give another shout out to a form of fact governor Governor Larry Meyer, he cave one of the best speeches I've ever heard from
a Fed governor back in two thousand and one. I think it was whatever happened to the new economy, and he documented these historical periods of productivity growth going back to eighteen eighty and you had twenty five year phases on average in productivity growth, high productivity growth and low productivity growth. Now we were in a very low productivity growth in the middle of the last decade and we
started to come out of it. I think that COVID was a huge shakeup, and to be honest, I actually think that the work from home has enabled people to tap more effectively into the workforce.
That those people who don't need.
To go into the office are tired by an hour as commute. An hour's commute home, there are inevitable destructs in the house, but I think that may have been a factor.
But the thing is, whatever.
The cause is, these swings in productivity tend to last for at least ten years and on average for twenty five years, and so we could be looking at a three percent productivity growth number or higher for the next decade. And that kind of productivity has enabled companies to absorb the tarreft shop.
I mean, Paul, you're in cyclopedic gun as you've been to Arizona forty seven times. North Phoenix is something we don't understand on the East coast. Taiwan's semiconductors coming in with manufacturing sites and the real secret is tens or hundreds of small suppliers to supply that, and that's that capital investment and productivity that we're just missing on a landstarved East coast. Yeah.
Absolutely, and there's lots of places where that money is going. John talked to us about just the labor market in general. Obviously, that's the other part of the Fed's remit here seems to be hanging in there more than hanging in there. But are there some concerns underneath the surface for.
You, Well, there's definitely concerns. We had very very slow, barely.
Noticeable job growth last year, but it happened, and I don't want to get too political, at a time when the US was contracting its labor force due to its policies on immigration, and so we didn't really see it show up in the numbers. Apart from the November you know, during the shutdown, household released within a plumb rate pup to four point six percent. We're now at four point three percent, but within the labor market, and this is a bit worrying to me for the US. The US
labor market has been very dynamic historically. We've got a very sclerotic internals to this labor market. We have very low hiring and very low firing. And I think the uncertainty about tariff's now maybe obviously too certain of impact any of the numbers, certainly about oil. That thing sas companies like sitting on the sidelines and trying to work through and tapping into productivity growth.
But here's the thing.
There was the Stanford University paper. There's been other papers come out that have said, you know, AI is allowing companies not to hire that entry level person in a bunch of industries, and that is a problem because you need to get those people on board and you need to train them. So they moved from being AI competitive to AI complementary, if you want to think of it that way, and that that is something that monetary policy cannot address.
Okay, so a side caught me up. He says, we got to talk to writing about soccer. You forget about Preston North End in your commitment there there and off your Coventry city maybe or pop up into the Premier League over this thing called relegation. Can you imagine the Colorado Rockies, the Chicago White Sox and Nathan Hager's Washington Nationals out of the Major League Baseball and replaced by the Jacksonville Jumbo Shrimp to Scranton Wilkespeare rail Riders and
the Lehi Valley Iron Pigs. Tottenham relegated, John, That's never happened in your lifetime, right, I.
Think Tottenham has been not in the not in what would then called the First Division in my lifetime. But you know, it's just tremendously fluid. It's very difficult running the economics of a team. I know people who owners and managers, and it is it is difficult. But then look at Wrexham, right, give a shout out to Ryan Reynolds here.
Look at Wrexham, which.
In the Championship and will be playing got the email yesterday at Yankee Stadium against Liverpool in an exhibition game over the summer.
We should go to that.
Should be surveillance road trip. See that. I just so much wish that American sports had this relegation.
Though, Oh boy, can you.
Imagine Colorado Rockies worried about the Jacksonville some Exactly, it's all.
About protecting the economics. In the US, they're franchises. The teams well, I mean they are teams, but the franchises, and you know, with the franchise, you get perverse rights like the most exciting games at the end of the season could be the team between and fourth.
From the bottom.
Email me, she says, what are we going to do with the tots? John Riding? What does Tottenham have to do? They've got that palace of a stadium, They've blown up the team over four years. What do they need to do?
I don't know, I don't I don't pay too much attention to the internals of Tottenham.
But you know, it's all about managing the resources you have.
And you look at a team like United you're doing terribly and to change managers and now they're doing Verry Sodleik much better work.
So it is about managing the resources you have.
Side says that was a good stager, John writing, thank you so much for coming in. We need to get you way more offend. Stay with us. More from Bloomberg Surveillance coming up after this.
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Fiona Greg joins US Global had a policy and research at Vanguard, who owns a high ground on this with a few other select worthies. We could go two hours here. Puss screwed up is our four to oh one K experiment coming out of ARISA of nineteen seventy four.
Well, I would actually beg to differ. I actually think we're seeing some strength in terms of the design of our four oh and k plans. More and more plans are actually auto and rolling people in those plans. We're seeing more people get auto and rolled into slightly higher rates. And the other big experiment that has been successful is getting people auto enrolled into target date funds, which is
a professionally managed allocation that makes sense for retirement. Now, there is a sort of dark side of the cloud, which is that if we think about the overall Vanguard retirement outlook of our baby boomers on track for retirement, well we see about two and five are. That means three and five are not, So we still have wood to chop on this system.
Paul and I argue about this, and I'm in the camp that we screwed up so bad that our children are saving earlier in bigger than we did when we are in our twenties and thirties, are you seeing.
That at Vanguard actually are seeing some strengthening of that savement, that saving journey. So younger employees are more likely to be on track for retirement, and that is impartly because they are benefiting from this stronger plan design and retirement plans for more of their careers. Right, So those in their fifties and sixties might not have been auto enrolled, whereas the typical twenty year old is definitely going to be auto enrolled into their plans, so they will be saving.
Here's some primary research from the Sweeney household. Here were my three working folks in late twenties and thirty. They are Maxanta, four oh and Ka because I told them to. But b they don't.
Believe they're going to be able to own a home and.
Have that asset is part of their portfolio like prior generations.
They think they're foreing ky. That's it, and that.
Is I can second that my kids.
I just tell you that the three of us dealing with this day to day, the basic blather, not Vanguard, but the bladder that we hear, the certitude that we hear is way off the mark. The kids, Sweeney's kids are petrifig.
Well, you know, it is definitely the case that the younger generation is feeling more of a pinch in certain ways. Right, So millennials gen Z they have two x the amount of non housing debts that Baby Boomers had at their same age. So although there are tailwinds in their favor like stronger plan design and retirement savings, et cetera, there are also headwinds that they are facing, like student loan debt, you know, things of that nature that are putting pressure on their pocketbooks.
My First Wall Street bonus, blew it all. Second Wall Street bonus, I paid off all my student loans.
That's how we rule. But they don't have that opportunity for the most part.
So what are some of the trends here in just the four oh one k business? Are people taking more of risk with it? Are they changing their allocations or are they saying, oh, I need to maybe take put more into alternatives investments and things like that, because mine is just I just thought it all onto you know, kid, just a little onto stock funds. You know that will down off a you know, fidelity manager for me.
Yeah, well, because of qualified default investment alternatives. A person enrolling in a four oh one K plan today would automatically have that dollar invested in the target date fund. So what we're seeing actually among younger generations is that they actually have textbook allocations. They have high equity allocations, they have very little cash and that is appropriate for
their age. If you compare them to you know, older generations at their same age, they would have had more extreme portfolios that might not have been as professionally managed. So that is one really positive trend.
Tomorrow's Jobs Day, we know that Vanguard launched a new job market. You have some new data there tell us about that and what it's.
Telling you absolutely, So we're actually using these retirement plan data to understand labor market conditions. Why, because we can see hiring, we can see separations, we can see income growth among people in those retirement plans. You know, seventy percent of American workers have access to a defined contribution plan, and in Vanguard plans are roughly more than eighty percent of them actually participate. So through this we actually have
a pretty good window into the employment picture. What we're seeing is that you know, we're actually seeing a pretty quietly resilient labor market. So we are in a low higher environment, and normally that would be quite concerning because the first thing affirms does in an economic downturn is they stop hiring new workers. But at the same time, we're also seeing very few separations. So it's a low higher, low fire environment, less movement than normal.
Odd I agree with us. I hear this morning folks with Vanguard Investment Strategy Group, and we continue, Good morning all of you. Can I go academic nerd time now? Sure, folks, darken the door. It's Stanford. This is like the land of Michael McFall and of course all of the Hoover Institute. Did you have the privilege of the author of the End of History? In the last man? Were you in the classroom?
Chase? You're asking me to rewind my life. So I'm going to say, I have no idea, no idea.
But the huge thing you're going back to nineteen ninety two in the End of History is the basic idea with President Trump is at the end of the democracy experiment worldwide as well. What are your thoughts on the testing of this After President Trump? Do we revert to some form of traditional democracy?
Look, I mean what we're seeing is our institutions being tested, and we're seeing resilience in some of those institutions. So, you know, I think we can look to the midterms to see what's going to happen exactly.
These midterms are not normal midterms, are they?
They're consequential, But every midterm is consequential for any Do.
You know anyone who's staying in San Jose or Palo Alto, or is everyone leaving the state.
I think some Californians are calling themselves Californians.
Now, yeah, I tell you the rent I'm paying for my number four off spring out there in Santa Clara. It's like New York and could get home, you know, you could even get home. Yeah, they lost the plane. So what are we doing here with this AI? How's a AI factoring into your work on the data the labor market? Because it seems like the no hire, no fire in one of the reasons. Maybe the no hires because AI is taking some of those entry level jobs.
We do we know that for sure.
Well, you know, in any month we do see you know, separations or firing, and in any month there are companies laying people off. I think those are actually in February, we're seeing a slight downtick in those in terms of the overall arching aggregate trends, I wouldn't say there's cause for huge alarm, were and to pating maybe more adjustments
in twenty twenty seven. The other thing I would point to, though, is income growth, because the four to win K data actually allow us to track what's happening to people's income year over year, and there we're seeing considerable growth, actually above inflation, and in particular for younger workers who tend to change jobs a lot there, you know, and see
productivity gains. And I mentioned this income growth just because you know, AI is a productivity booster and workers may be reaping the benefits of that through increased income.
Fiona, if we get I mean, if I'm elected, free beer, so I'm going to give one thousand dollars to everybody for investment or retirement. I don't know what the president is doing runs a one thousand or three thousands. It sounds almost cute, isn't the Only way that's effective is that people are forced to give it the some form a four to win K provider.
Well, actually, what you just described sounds a lot like Trump accounts. And you know, at Vanguard, we're actually pretty bullish on these accounts. Why because they give people an early start to saving and investing. We think that people should be out there making sure that they get access to this free money, that they sign up for the account and get the free money that their qualifying kid might be available, might be able to get.
Are those actually happening. Are they in the marketplace?
Not yet in the marketplace, although you can sign up for the account via the tax form, so you can indicate that you want the account, but they go live July fourth.
July fourth, Paul, Yeah, I got for those who you tube. We have the Fiona greg HP twelve C on our phone, one thousand dollars, sixty years of six zero in an equity eleven percent per year being don't give me your legal compliance time. You got to go at seven percent? Are you ready? Yeah, five hundred twenty four thousand dollars. President Trump would say, giving you a half a million dollars, shut up, yep, yep, that's what I'll say. Yeah, after a million dollars.
Yeah. And one of the benefits of this account is that it is going to be invested in a low cost equity fund. So that's a great place for a baby to start investing, right, low cost index once half.
A million dollars over sixty years, power of component, that's yeah.
But you might have a grandson or a granddaughter or who would Yeah.
All right, very good.
So we appreciate if Fiona Greg appreciate you having us here on a Greg Global head of.
Policy and Research at Vanguard.
Stay with us. More from Bloomberg Surveillance coming up after this.
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Joining us now in well timed Wendy Schiller, Professor of political science at Brown University. Her writings are definitive and what I'll call civis one oh one across America. Wendy, I just think it's so important, and particularly with a very brave navy in an ocean, with the first sinking by a US submarine of a threat a Navy ship
here since World War Two in nineteen forty two. We declared war in nineteen seventy three things forever changed with the War Powers Resolution, Can Congress have anything to do with guiding our military in twenty twenty six?
Well, yes, I mean the Warhouse Resolution gives the executive branch some time, you know, so sixty days essentially, and then you know, the president can ask for an extra thirty day extension ninety days three months to see, you know, where it's going, how it's going, and what the needs are.
And then if it becomes clear that the United States needs to stay engaged in what is considerable military action, the president technically needs an authorization from Congress for a use of force to spend the money on the military. So it's really the power of the purse as much as it's the War Powers Resolution that gives Congress power.
Here, when will we see that?
We won't see it. We won't see it until. I mean, the timing is really kind of extraordinary. It's March April. May you know, most but not all of this, the Republican primaries will be over by the time you get to June. There are a couple of ones in July and August, but generally speaking, Trump's biggest leverage is obviously
the primaries. So if he wants to continue this and get that authorization for Basically, once you give as we know, once you give the president a congressional authorization for use of force, as we saw with the Rock, you can be there ten years, fifteen years, twenty years. It's you know, you've relinquished all of your power essentially. So it's really going to be an interesting political situation for the Republicans once this time clock expires.
You know, what do they worry about?
Do they worry about?
They don't have to worry about Trump intervening in their partners anymore, most of them, and so I'm not sure how that goes once we get to June.
So politically, Wendy, what potentially could be the ramifications for this Republican party. We did have the vote yesterday along party lines to support the president's actions, but what are the political ramifications potentially?
You know, it's a tricky situation for both parties.
I think there's two things.
Loss of life, which we hope stays quite low.
And gas prices.
I mean, Americans are pretty predictable in elections over the last fifty years. You know, if gas prices are high in the summer before the election, even if they come down in the fall doing a lot of traveling over the summer, voters remember that. So if the Democrats can successfully link that to this effort in Iran, then they
are going to score points to the voters. The problem is, if we have tragically more casualties of our service people, then the Democrats are capitalizing on that, and that becomes politically much more difficult. So it's not an easy path for either party, particularly the Democrats, to attack the Republicans because if this gets messy, then you're attacking the service people who die. So that's a problem for them. But
gas prices, gas prices, gas prices. This is the sole domestic political impact of this conflict at the moment, and if they are high in the summer, then I think the Republicans go in possibly weaker than they look like they're going in.
Now, when did we had some midterm elections in Texas and North Carolina?
What did we learn there?
Well, you know, North Carolina looks like Roy Cooper is going to be quite a strong candidate to flip that seat. But you know Wattley is a very well connected Republican, so we think that's going to be quite tight and both parties spend a lot of money. But you know, Texas, the Democrats the pipe dream of winning statewide, which hasn't happened in more than thirty years. But now we have Tall Rico, who you know, avoided a runoff, which makes
him potentially quite strong going into the election. It's really up to Donald Trump. But even if Donald Trump endorses Cornyn, you saw a lot of Latino voters get out the door of the Democrat primary in Texas and vote for Tall Rico, and that was really the strength for the Republicans in Texas.
So that's that's a really.
Wild car any ways to go here, But let me just go to the simple one. Money. Somebody told me one of the races was forty million dollars plus was spent. Did the Democrats have the money to take on what I presume is the Trump money juggernaut.
Well, so this is an interesting thing.
So you're right, it's forty million on one side. I believe it's almost ninety more than ninety million spent on the Republican side on that front in that primary. So far, Quarnyon's an incumbent, and you know, the incumbents have advantages quite a few advantages.
About eighty seven percent of Senate.
Incumbents get re elected and ninety four percent of House members get re elected when they choose to run as incumbents.
But you can't do a lot with your.
Reputation as an incumbent that you haven't already done. It is baked in what Texas thinks of John Cornyan. So they're going to have to smear tall Rico. And tall Rico's had a lot of national press so far, and I think that's going to be a problem for the Republicans. You know, someone young, someone fresh, someone who's avowed Christian faith should appeal to a lot of voters in Texas. But Cornyan can't do that much with who he is.
He's already done what he's done.
But tall Ico has an opportunity to shape his own reputation. And if they go after toal Rico really vehemently, you know, that could backfire on them. So I think money here matters, But with an incumbent serving as long as he has, I think intra party it doesn't quite matter as much as it does within the Republican Party.
Wendy, what do we what's the expectation for the influence that President Trump can have on these midterm elections. Does he still have this sway over his party that he's enjoyed for these so many years.
Certainly, I think the Republicans in Congress believe that absolutely. And getting back to money, that's the interesting thing. If Trump ends this runoff in Texas by endorsing Cordon and essentially trying to push Baxton out, then they save a tremendous amount of money that they can use in other
races around the country. So money may not matter as much in the Texas race, but it's going to matter, for example, in North Carolina where there isn't an incumbent senator who's running again, and it's going to matter a lot in Michigan.
Where there's an open seat.
So I think that's where the money equation comes in, and that's where Trump comes in.
But remember Trump is underwater.
He's underwater in his general approval rating, he's underwater on key issues of the economy and immigration that isn't changing with the Iran war. So it's really important to remember that he could still be quite underwater in the summer, and so then does he become a liability after the primaries are over.
I'm just trying to imagine spending ninety million out of primary race in Rhode Island. What would ninety million dollars do to the Rhode Island economy?
Wendy Well Charles Brighton, who was a who was a colonel ran Nelson Alders's campaigns. Nelson Aldreds was the de factor Republican leader in the eighteen nineties and the early nineteen hundreds in the Senate, and he paid every voter between five dollars and ten dollars for their vote in Rhode Island.
So money could go.
A long way if you paid people to vote.
Professor, thank you so much for the brief, particularly there on the Texas primaries, which are fascinating to say least. Joe Matthew and Kately lines with that earlier a Professor Schuller at Brown University. Stay with us more from Bloomberg Surveillance coming up after this.
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Wayne Sanders joined us now to say he's senior defense analyst at Bloomberg Intelligence barely describes his service to the nation. Colonel Sanders with the important information engineering information systems engineering degree from West Point, Colonel Sanders, thank you so much for joining Bloomberg. If you go through the Thayer Gate at the bottom of West Point and there's the iconic Theyer Hotel, there is a magisterial new building CEAC at
West Point where the technological magic is made. Describe what's going on in that building with the young officers and enlisted people in the Mideast.
Oh, great, thank you so much for having me on. No, they do a great job from an innovation integration perspective at this point in time, tied into military professionalism, so they are actually spending quite a bit.
Of their time.
This is a great learning opportunity for the cadets at West Point right now as they're going forward to to be able to build what it is saying, these are the lesson learned. What are we actually finding out about this? What does the future of modern warfare it look like? When I was a lieutenant, I didn't have AI, I didn't have you know, a lot of the technical advancements that are going on now so even as an intel officer earlier on, I had to rely a lot.
On you know, single source reporting as they come in.
So these lieutenants that are coming out of at West Point Naval Academy and others, they all have to be prepared for a battlefield unlike anything I had ever seen.
What's the single thing in the American media coverage that we get wrong tick by tick on this new war?
I think probably the biggest one right now is the stockpile of munitions, right. I mean think one of the biggest things right now is the United States military does a great job of what they call contingency. They do con plans and they put it together and say, in case of a scenario like X or Y, when you put those together, saying okay, I have kill chain analysis, I've run the war game thousands of times and during that timeframe, we think it would take this amount of time.
We think these are the number of targets. These are also the types of munitions that we would need. And so they look at this from a two front war perspective. They look at it as sustained operations, and they know what type of missile stockpiles they need now that's not to say that there isn't running the risk of the higher, higher end missiles like your Tomahawks and your jasms near el rasms that are being used right now. But it's not that there's not a worry about them actually running out.
I think at this point in time, it's how much operational and strategic risk you want to take for a potential China contingency In twenty twenty seven in the Iran conflict.
Wayne, I guess one of the questions that a lot of observers have, a lot of folks in the market have is duration. President Trump suggested four to five weeks was the initial outlook, but they can do pretty much any They're pretty wide open here in your experience. Do you have any sense of the duration of this conflict given some of the goals that have been discussed by this administration.
Yeah, you know, it's a difficult, wicked problem, as they say, because when you look at it from a military perspective, you can take out most of the military targets and all that probably by the by mid next week, I would say by Wednesday next week would be that for those.
Original operational targets.
The problem is that the enemy has a vote and they start being able to move around different things around the battlefield. What I took is a very positive transition. As part of this was the move away from standoff weapons. As you heard Secretary of Hex Seth say yesterday, is that move away from standoff weapons to more of the precision guided munitions and the air superiority means that you can ramp up the targets that you're trying to hit
with cheaper munitions. So moving from the Lockheed Martin, Jazz and Nell rasins that run around one one and a half million dollars RTX is Tomahawks, which is about one and a half to two million dollars, and now you're bringing in munitions that are twenty five thousand to forty thousand dollars and we have a lot more of them.
So from an.
Inventory perspective, even on your jadams for Boeing. Boeing is another good one because they have small diameter bombs and the joint direct attack munitions. Those ones right there, they've been in production for a very long time. We have
hundreds of thousands that have been produced. Now you have to take some of that and say, okay, where have they been expended to this point, and obviously we don't get a good good say of that right now because they keep those numbers as operational risk and operational security, they keep those close to the best.
Wayne.
One of the challenges I think we've all come to know as we over the years, you thought about a RAN and its nuclear program is well, a lot of the real critical parts of their nuclear program are very deep, deep underground, really hard to get to. Is that something you think the military will try to attack this go round.
I think it definitely can.
It really ends up being where it is on a valid military target platform. If you're looking at it and saying, okay, we have enough reason to believe that this does exist, credible intelligence that says that the fistle material is still there, we want to decimate that nuclear program. I absolutely think
it's going to be a target. It wasn't a target necessarily right up front, because they were going after leadership and high value targets, air defenses, missilestock files, things that could return fire.
If you will.
But as long as this goes a little bit longer, I think those strategic level targets and those strategic level objectives becomes more important better question is whether or not they're able to verify without boots on the ground, how well can you verify whether or not those strikes were successful.
We continue with Wayne Sanders, senior Defense analyst Bloomberg Intelligence, Colonel Sanders with his service to the nation and expertise and information systems. Colonel Sanders, I remember the clearest memory of a rock and standing in the Bloomberg Television studios at three am and I opened up the you know, Paul, the atlas we had as kids, that big national geographic outlasts. Yep, I know, yeah, Wait a minute, the geography, Colonel Sanders.
When you open up the National Geographic Atlas of Iran and you look at the geography, how do you respond to American boots on the ground.
It's always been a it has been a tough area to be able to go into, especially with the you know, the vehicles that we have in tanks and beyond. I don't see that being even on the geopolitical side of the house. I don't see that being something that President Trump would want. The administration would not want to see this lagged out, not only for military readiness for contingencies, but also to our stockpiles.
Uh, it ends up being more difficult.
The air campaign works in this region based off of the terrain because it's not it's not the same as Afghanistan, where you know, you're looking into uh, you know, deep inside of caves and you're not exactly sure where where folks are.
But it still creates a problem the further east you go.
So you present General Kine when the chairman, when he actually showed where those strikes took place. You notice there on the western side, we need to get east as well.
Wayne.
I think what we've all kind of learned throughout history is airpower, while impressive and devastating, has its limits, and can airpower alone achieve the goals.
That have been laid out by this administration.
Do you think you know there's actually case studies on both sides. You know, people bring up you know, Libya versus Iraq in terms of you know, limited success from there. I think really it does come down to the Iranian people. It comes down to the other instruments of excuse me, of national power, instruments and national power, diplomatic, information, military and economic and being able to put those pieces on there.
If the military piece can only be done through air power, and you're not going to be put boots on the ground. You really have to rely on those other mechanisms to carry the weight and where that strategic objectives are.
I think the intelligencemmunity plays a.
Big part inner this because at that point in time, I think it could actually be some level of you know, peer to peer if you will, across the line obviously, but peer to peer communications across the intelligence apparatus that could potentially carry these as well as maybe some of the diplomatic pieces.
The big piece is the resolve.
If you can continue to go after the IRGC commanders, if you can continue to dismantle anybody who would be left for command and control, you're taking out systematically any type of infrastructure that they have. So now it's really about who are the leaders kind of like Ali Larjhani,
you know, are you know? Obviously the US doesn't want Larjanni to be the one who would be next in succession, So it's really a question is to can they remove the right individuals and work with the other right individuals that could bring about peace.
Colonel Sanders, we hope to call upon your expertise again, he writes for Bloomberg. Intelligence or senior defense analyst Dwayne Sanders.
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