Surveillance: Rate Hikes with Fed's Bostic (Podcast)

at this moment. Very happy to say. Sitting alongside Olympex, Mike mccag and morn to Mike, good morning to you John. You guys are really depressing today. So maybe we'll ask Rafael to use his psychiatric degree to try and cheer you up or something. Rafael Bostic, President of the Atlanta Fat thank you for joining us this morning. Wall Street also depressed, as you heard there with the numbers that

they were just giving us. The question of two questions, and everybody on Wall Street wants to know is how far how fast? Uh? And so let me start with that. Get the good stuff out of the way here. Um is seventy basis points really off the table is fifty fifty and maybe another fifty going to be good enough? And then how high do you think you end up going. First of all, good to see you, Mike. It's good to have you here at our conference. It's it's always

a great time to be together. And when I think about our policy, the first thing that is on my mind is that inflation is too high and we need to act definitively and purposefully to to try to get that under control. And I think if you look at what we've what we've done so far in the last two meetings, we've really started that process. For me, fifty basis points from over the last twenty years, you know, as already pretty aggressive move I don't think we need

to be be moving even more aggressively. I think we can stay at this, at this pace and as cadence and really see how the markets evolve. My expectation and hope really is that as we move closer to our neutral levels UH and far away from our accommodative stands, that we're gonna start to see a lot of the tightness and the tension the economy start to moderate, which can then give us options and choices as to sort of what we do after that point. How far do

you go? Where do you think you'll be by say, the end of the year, by the end of Well, you know, that's a very good question. I really think we need to be getting somewhere into the neutral range. And as you know, um, different people have different ideas about what that looks like. For me, I'm looking at somewhere between two and two and a half percent as our neutral range. Uh. And then then let's just wait

and see what's happening. Um. You know, in the in the intro to the segment, a lot of discussions about uncertainty or seth Carpenter reference reference. He's going to be here. I'm really excited about that, uh saying it, there's a lot of volatili a lot of stuff that's gonna play out. So once we get to that neutral level, I think that'll be fine. Um, we're gonna from my view, we're gonna move a couple of times, maybe two, maybe three times.

See what happens, see how the economy responds, see if inflation continues to move closer to our two percent target, and then we can really take a pause, I think and look at how things are going, well, take a pause. What does that mean not move at a meeting or would just be just a rolling decision as you go along. So for me, I think all options are on the table at every meeting. So depending on how the economy is responding. It could be that the economy responding strongly,

so we don't need to do anything. It could be that the economy is responding, uh, maybe a little less strong, so we might move to twenty five basis points, or we may stay at fifty. So I'm really going to keep my mind open. I'm going to observe what happens in the economy and then adapt my idea about what appropriate policy looks like based on a knowledge A lot of economists and many of your colleagues have said, you're going to have to go beyond neutral, uh, to restrictive.

If you had a four percent inflation rate and a three pent Fed funds rate, you've still got a negative real Fed funds rate. Uh. Why don't you think that you're going to have to do that? Well, my hope is that a lot of the things that are really out of our control, things like supply chain disruptions and the like, are going to start to get to a better place. We're gonna see how the labor market responds. There's uh, there was a story just last week about

retirees coming back into the workplace. Those are things that might relieve some of the tension that we're seeing in labor markets and allow producers to start to increase the supply there's supply of products that then reduces the imbalance between demanded supply, because all of this inflation is about an imbalance between the high demand and the low supply.

This out there. So if we can start to see movement on the supply side, um, that means we'll have to push less on demand and so that inflation I'm hoping will come down. Now how fast we'll have to see, and that will really determine whether we have to get into restrictive territory, and if we do, how far. But I'm totally open to that. But you know, I'll just say, we've been doing surveys throughout the entire pandemic. Everyone has come with predictions that have turned out not to be

the case. So I'm gonna trying to be as humble as I can be, really just true to being in the moment and trying not to anticipate too many steps out in advance because there's just a lot of stuff that's gonna happen. You heard the markets at the top of the show. Does it worry you that we're seeing such a rapid sell off and that market rates are going up so quickly? So those are two different things.

So one, I think the moving market rates is actually quite interesting because we've not moved very far in terms of our policy rate, but the markets have responded extremely fast, and uh, that I think is uh, that's really positive from my view in the sense that they're taking on board the policies that we've signaled and now we've just got to deliver on that, and I think we're going to do that. In terms of the volatility and equity markets,

you know. Uh, the one one of the things that I found to be very interesting is as I talked to a number of people, the range of forecasts about what's going to happen over the next six months and next twelve months has just really broadened considerably and that will translate into I think higher volatility, and I think some of what we're seeing right now has to do with that. What would it take for you to have to rescue the markets. A lot of people say, let's

just say the economy, not the markets. That you get to two thousand twenty three, you might start cutting rates again. Well, look, there's a lot of momentum in the economy right now. We just had a job of support over four hundred thousand jobs in the month. That kind of performance, uh and the before times would have been a reason for for celebration. So I think we can ride out a lot of that more momentum even as we are raising rates.

And my hope is that we'll get to a place where where we don't start to see breakdowns in labor markets or other parts of the economy, so that we won't have to worry about that. But just to be clear, look, we are we are paying and I am paying attention, and if necessary, we'll do whatever it takes to make sure the economy stays on a solid path. Well, I know, if I ask you about the recession probability, your job is to say, no, I don't think that's going to

happen because you're at the Federal Reserve. But a lot of your former colleagues, including Bill Dudley, UM and uh Don Cone have said you cannot do this without inducing a recession. Well, you know, I was interviewing Roger Ferguson just last night and he said the same thing. So so yes, I am hearing all of that, and I understand that. I actually think that the thing we have to just be mindful of is that this is it.

This context is nothing like we've ever seen in our in my lifetime, in my my policy space, the pandemic driven disruptions, we of a warren Ukraine. There are a lot of things that are intersecting in ways that I think make it really hard to know with any kind of certainty where the economy is likely to go. So I'm keeping my mind open. I'm I'm an optimist, but a worried optimist. I worry all the time. And uh, and so I'm just gonna pay attention to see where

things go. One last very quick question, and that is it's an election year. Uh, there's a lot going on. Do you feel any political pressure. I'm not feeling any pressure. Look, we we have a clear job to do and that's that's meet our dual mandate today. And the labor market is doing fine. Inflation is where we really have a challenge, and so we just need to do whatever it takes

to get that inflation under control. Raphael Bustick, thank you very much for joining us this morning from the Financial Markets Conference at Amelia Island, Florida, where everybody is back together for the first time in a couple of years. John and I hate it's beautiful to Mike, which is why you're so happy and not so clue me because you don't have to follow this market aid. Mike McKay,

Thank you, buddy. Right now we will migrate to Washington. Well, yeah, did Emma joins us US Deputy Secretary of the Treasury and far more someone who knows the minutia of sanctus. Well, I want to cut to the chase, and not the broader, bigger picture, but the details of the Office of Foreign Assets Control. This goes back to Albert Gallatin the War of eighteen twelve, and we drag it forward to some

two employees in the Office of Foreign Assets Control. What are what does that office doing in Treasury to defeat Mr Prutin, Well, thank you for asking about the career civil servants who work in the Office of Foreign Assing Control and today what they're doing is they're working to

target the Russian military industrialized complex. They've taken a number of steps all ready to go after the Russian financial system and we've seen their economy is contract contracting by more than ten percent and due to that, and now we're focused on making sure that any money that remains in Russia can't be used to further build out their military industrialized complex and be able to fight the war in Ukraine today because the actions the Office of the

Foretnance of Control has taken, the two top tank makers in Russia aren't functioning because they can't get access to the goods and the services they need to do the work that they're doing. And yesterday we sanctioned some of their top military companies as well. Well, what's so important here is we you know, the media is there's a yacht, it's Mr Prutin's yacht, or it's somebody else's yacht, and we've got all the silliness about boats flowing floating around

in that office. Did they call up, say a manufacturer in Poland and say, wait, you can't do that, or are they just domiciled in America? So what we've done is that not only have we taken actions by talking directly to the financial system and making sure that they're aware that they can't provide services to the people who helped build those yachts or help fuel those But we've done this action in collaboration coordination with our allies and partners.

So not only can you not domassile your yacht in the United States, but across the G seven, across thirty countries have taken these actions. And what we've also said is that if you happen to get your off to another country and in that country, you're able to find a company that will provide you with services. If that company provides you with material support, we're also going to

sanction them as well. Well. We we're at a time we're we're dealing with the idea of sanctions on Russia, but also the idea of incredible inflation and possibly removing certain Trump era tariffs on China in order to reduce those inflationary pressures. How actively is the Treasury Department discussing some of those types of removals at a time when people are wondering about the U. S. China relationship in

light of what's happening with Russia. So our goal is always to make sure that we're making trade policy in a manner that's consistent with our overarching goals. And what we're doing is working closely with the U. S. Trade Representative and the rest of the President's Cabinet to make sure that we have an approach with China that um puts front and center of America's interest and not just

America's interest. When you look at the issues we have with China, there issues that other countries have as well. So working closely, as the President said, with our allies and partners, as we think about our China strategy going forward, what do you think is going to be uh the next step with respect to additional pressure put on Russia, especially given some of the inflation that we're seeing, the reality is the one you think about what Russia is

doing in Ukraine. It is a key contributor to some of the price increases that we're seeing both in energy and in food. Today, Russia and ships are blocking the ability of food to get out of Ukraine because of Russia's actions. You've seen energy prices rise because the geopolitical uncertainty. So what we're trying to do with our sanctions is to end that invasion as quickly as possible. And what we're gonna go next is we're going to continue to

put pressure on their financial system. We're gonna go after their military industrialized complex so that Russia doesn't have the arms they need to continue the war in Ukraine, but also so they can't project power into the future and continue to destabilize the region in the world. We've got reports on the Bloomberg terminal wally that Russia is seeing at twelve contraction. Do you have any idea or can you model out what form of contraction you visualize? Can

it be negative eighteen percent? Can we get there? So what we know today based on what the IMATH and what others have told us, is that Russia has lost about fifth the last fifteen years of economic growth due to the sanctions we've imposed on them today. And that's not even talking about the inflation that is going through

their economy. The truth is that Russia now has to make choices, and that's exactly what we want them to do, to have to choose between using their resources to prop up their economy or to fight their war in Ukraine, and we want to continue to make that choice even harder by continuing to level sanctions until the invasion ends from you as always come back soon. Well at Yama Dad, the U S Deputy Secretary of the tracery. Right now, what we're gonna do here is look at what is

in Michael Rosenberg's absolutely classic textbook Currency Forecasting. If you'd like to buy it, it's two hardcover edition, if you can find a copy out on Amazon, out on eBay. George, Sarah Ellis knows Michael Rosenberg is one of the founding heroes of current currency forecasting, and Sarah Ellis goes all Rosenberg, George, I'm absolutely thunderstruck by your behavioral analysis right now, and

now it folds into FX. Explain the behavior you're studying that gets you to a call on euro, that gets you to a call on dollar. So I think, Tom, we just need to start from the global growth environment, and that's really what's been driving the market over the last few weeks. And you have a perfect storm of weakening global growth in all regions. So in the U S you have this huge idiosyncratic tightening off my for conditions.

In Europe we have the war, and I think what broke um the straw that broke the camel's back, so to speak, was the China COVID lockdowns Shanghai UM now potentially in Beijing. So you have all of the three world's biggest economies suffering from these shocks at the same time,

and the market's bringing down growth expectations. And that's really what's what's driving things at the moment, including the US dollar, because you have the situation of lower global growth, but at the same time US real rate arising very significantly, and that's what's been supporting the stronger dollar over the

last few weeks. If we're thinking about what would change that, we need to see an inflection in either of those three dynamics, So either China, Europe or the US to change the current market environment and narrative, George, if you change the eurodolloical at the moment, I'm actually still keeping my optimistic euro forecast because I think John, the market is too pessimistic on Europe looking out through the next three to six months. If you take a look at

and there's a number of things the market's underestimating. The first one is fiscal policy. Everyone's talking about this big income shock in Europe which is bringing incomes down, but if you crunch the numbers, more than half of the income shock is being offset because Europe is easing fiscal um and that's not what's going on in the rest of the world, and it will continue to do so through next year. Then you've got the reopening dynamic. Europe

never reopened after the omicron wave. The services sector never reopened, and that's exactly why. If you look at the services p MZ, they're holding up much better than expected. And then finally you've got the labor market. Um. The European labor market is actually stronger than the US, the unemployment rates that record lows, So we think the ECB goes in July. I think the market has become too pessimistic

and growth expectations. If you look at equity earnings globally over the last few weeks, Europe has actually got the best forward earnings guidance out there, much better than the US, much better than e m UM. So I think that euro will end up rebounding by the end of the year in the second half. What's the catalyst, George, Given it all of what you're saying is already known, So I think it's interesting because if you look at price action, you are starting to see the Euro turn across a

number of other currencies. So for example, it's a risk of environment, but euro Swiss is now up on the year. You're a sterling is starting to turn, so you are under the hood, so to speak, starting to see euro out performance. I think you need a couple of catalysts to get that translated into the dollar. Firstly, the ECB coming interview, actually starting to high rate UM. The market has been responding with lags to Montree policy re pricings.

So if you think about the dollar strength, we've known the Fed is titening with known defects doing QT for quite a while, but it's really now that the dollars responded, and I think you can see some of that lack of response in Europe. So the ECB coming interview, UM, and partectually just some easing in all these shot downward shifts to growth expectations that are supporting the dollar. George,

this has been a really tough trade. I really appreciate if we could catch up again in the next couple of weeks, just to reset ahead of the e CP in about a month's time, because this one has been really difficult for a lot of people. George Santa velis there of Deutsche Bank. In Shepherdson passes the American economy like No One's chief economists of Pantheon macro Economics and

enjoins us for a recalibration this morning. Ian, we just spoke to Raphael Bostic, who gave us the FED line from Atlanta of the good news out there were in control, we have options. How much in control are our central bankers? Well,

maybe a bit more than markets think. Actually, of course, you know, they would always say they're in control because if there's anything else and all, and the last few months have been the last thing must have been very difficult for them, you know, inflation hitting some really big spikes. But we're probably hit the peak. And my guess is when we get CPI numbers later this week, they're going to look significantly better year of a year, maybe month to month as well, and then the next few months

that good news should continue. So I think they're going to be able to tell a story later in the summer of hey, you know what we've done is working. Of course, what's actually happening is a very favorable base effects are kicking in and that will bring inflation down.

Then I think they're hoping that the downshift that we seem to be getting in the wage numbers in the last few months will persist and that will help them through the end of the year with some some genuine downshifting services inflation still some big question marks there, but the last few months data i'm guessing have been better than they expected. How important to the late summer into

the end of the year view is escaping the Chinese lockdown? Well, you know that's that's a big deal for some small sectors. You know, the the U s c p I is primarily as domestic service price index with a few goods in it. Now quite a lot of those goods are China sensitive, so things like clothing, footwear, furniture, appliances, household electronics. But you add those things together and you're still looking

at less than a tenth of the index. So if we're getting some meaningful disinflation in in some of those other components that I think will offset the supply disruption story. Plus we've got some extremely favorable based effects in the in the vehicle component, which will be pretty much a done deal to be a big downward shove to the year of a year numbers. So actually the China thing is not helpful, But I don't think it's a game changer as long as it doesn't get completely out of control.

And we're teasing out your view here. Let's really highlight it. A lot of people that can census for you, because FED chair Jpal basically clarified it fifty at the next meeting, fifty after that. Have you got any doubt around that second fifty and if you have, can you explain it? Yeah? I mean the first fifty in June I think is have done. You're borrowing some sort of sky falling in moment. But July, you know, by July will have had three CPI reports, all of which will show inflation dropping by

about half a point per month. We'll have also seen three more months of housing data. And this is where I have a really big gripe with the media narrative that the US housing market is still booming, because it isn't. Mortgage demand is absolutely cratering. I mean rates have gone from three to five and a quarter. There's no way the market could take that. And every week we get mortgage applications numbers and they're terrible. I mean, applications fell

in April alone, no sign of a bottom. There's still haven't fully responded to the peak in rates yet. And my guess is over the next few months of springing into the summer, we're going to see people some really startlingly weak numbers on home sales, suggesting that the market has really roll them over. I just wonder in July whether the Fed will have the stomach after three good inflation reports as well to do another fifty, and whether the market will want them to do another fifty against

that backdrop. So there's a lot to play for over the next few months. But but I do think that two of those very important things, inflation and housing, are going to be telling the FED. Maybe you know, you can switch back the twenty a bit sooner. Are you questioning the journey to to to fifty? Are you questioning the ultimate destination of getting to to to fifty? Here? Ian, No, I'm not. I mean my beef with markets, as they've got far too aggressive on the speed that the FED

needs to go. I'm not certainly, I'm not arguing at all with the idea that race need to be significantly higher. And I actually think they'll be raising rates again in twenty three and twenty four because the neutral rate will be rising on the back of stronger productivity. And that's a different story to raising rates because you've got behind and inflation is rampant and everyone's panicking. That's that's this

year's story. But next year story, you know, I could see rates going significantly higher really across the whole curve. So my my beef with markets has been maybe too aggressive for the short term and not thinking enough about what might happen next year as well, a different glide path. But but nonetheless, you know, a rising rate environment, a normalization if you like, after such a long period new decades of falling rates are real rates across the whole curve,

Maybe we're moving back to something recognizable normal. And I'm wrapping my head around the scenario that you're portraying. We're basically wages start decelerating, and that is actually one of the key drivers in addition to housing that causes a deceleration in inflation. Is this a good thing? Does this lead to something that is positive for the foot or something that sounds stagflationary because we still have the base effects of what's going on with supply supply chain disruptions. Yeah.

I mean, from the first perspective, the wage numbers that we saw last summer, when they were running annualized above six percent, that was not sustainable. That's scared the pants off them, you know. Chap how said that very clearly. Where we are now in the last few months, it looks as so tentatively, wedge growth could be settling down at something like four or maybe the high threes. Now, that is faster than we saw at any point in the last cycle, but that was a very unusual cycle.

Wage growth at that pace would be normal for previous cycles and would be consistent with the inflation target if productivity growth just picks up a little bit. So it's kind of a sweet spot if we can engineer it against this drop of chaos from China and all the

other stuff that's going on as well. But if I were at the FED thinking about inflation, you know, one to two years down the line, I would be thinking, if wage growth settles at three and a half to four percent, I'd be really pretty happy, because it's not what I was imagining three months ago. I was thinking of five plus, and that's a much more scary place to be. So it's it's it's a plausible, applausible end point,

but it's not yet certain. I apologize to Harp on this, But is it the absolute number or is it real wages? This idea? I hear Tom laughing, But this to me, it's sort of a relative kind of equation here in terms of wage gains versus the cost of goods. Because if you're only getting a three percent wage increase but the cost of goods are surging at ten percent, this isn't looking very good for the American public, and it

doesn't necessarily look good in terms of consumer dynamism. Well, you gotta remember that the US household sector is sitting on three and a half trillion dollars of cash that it accumulated during COVID, which is about fourteen percent of GDP cash. That's not taking account of the rising home prices or the rising in other asset prices like stocks

and everything else. That's a gigantic cushion when you set against you know, having to spend a couple of hundred billion dollars a year more on on food and energy. So the overall the household sector is in pretty great shape. There are some questions of distribution, who has this money, who doesn't have it, But overall the household sectors in

really good shape. And of course, remember if the CPI numbers are going to moderate too to core prints a point two or point three over the next few months, then real way to growth stops falling more or less immediately. I mean, for example, this week the CPI is going to be a point more or a point two at the headline level well wage growth this month there's going to be a point three or a point four. So

we're past the worst of it. It's not great, and the year of year it's down, a real income growth is down, but we're moving into i think, a better position. And we do have this gigantic cushion of accumulated savings and the transfers of the federal government made under COVID, and that makes this income squeeze from food and energy prices very different to previous experience when that cushion just wasn't there. And take your optimism and this has been

hugely beneficial within the loom. Chake your optimism over an export in import dynamics for America, well, we've seen some insane import numbers over the last few months, which was a big drag on growth in the first quarter. But but I'm I'm I'm guessing, and looking at the data, it seems pretty clear that this is substantially because domestic retailers, domestic wholesales are rebuilding inventry after really struggling during the peak good spending frenzy of COVID. So this won't last

for much longer. I mean, we've seen record trade deficits in the last few months. That's completely unsustainable, and my guess is that the trade numbers will be a lot quieter over the next few months. That's on the import side. On the export side, we're going to struggle for the foreseeable future because the dollar has shot to the moon, Europe teetering on the edge of recession, China's in chaos. Yes,

it's not a great environment to be an exporter. But again, remember the U S economy overall is primarily a domestic services economy that applies to growth just as much as it applies to inflation. You know, I'd like to see strong exports, but it's not the end of the world if they don't happen, And certainly for the next few months. It's going to be difficult. And we did this whole interview with that talking about Newcastle United. We did. Wasn't that a beautiful thing? Tom? I think he owes us

for that. Did you watch that game t K yesterday? That was special fancy Not so much for Newcastle United. Special summer maybe coming up in the transfer market. And we'll leave it there. We'll catch up soon in Shepherds and there of pantheons economies. Now from the College of the Holy Cross, Cynthia Whoper joins Director of Russian and European Studies with some terrific work out of the Harvard

Princeton Combine on Russia and on over the years. Cynthia, this from the great leader today, you're defending what our fathers, grandfathers and great grandfathers fought for. The bottom line is there is a conflation here rhetorically of the Nazis and a special military operation. What is next in this resurrection

of the Nazis of World War Two? Well, watching UM Russia's Victory Day celebrations earlier this morning, as I'm in Germany right now, UM, I was just struck by Putin's speech to the troops because of some astonishing things that he said that maybe American audiences wouldn't pick up on immediately, but certainly are very clear to Russian domestic audiences and

to Europeans. Um. Above all, Putin actually drew an implicit comparison between UH, the Nazi regime under the Third Reich in their ideology of racial superiority, and the United States after with what Putin claimed was its ideology of political and economic exceptionality. And Putin acts actually said that the United States has been humiliating the rest of the world and even its own European allies who have to lap

up this rhetoric of superiority and um and. Putin also went on to um assure his domestic audience that Russia in nineteen forty five and again today is acting only in self defense. He said that UH that actually Russia had approached the United States wanted to talk about global security. Ben rejected, and that Russian intelligence had discovered that the United States was planning an invasion, so Russia had no

choice but to invade the heritage of Holy Cross. Besides giving us dr fauci is to put put religion within the calculus of our international relations. We've talked very little Dr Hooper about this idea of the Greek Orthodox Church, the Eastern Church, if you will, the Church of Kiev, in the Church of Moscow. How does religion fold into

the framework that Mr Putin has in his mind. Well, if you talked to the Ukrainian Church, they would stress that there's actually a significan can schism between Ukrainian and Russian Orthodoxy. But again, Putin his speech today listed a whole number of cities that he started courageously resisted the Nazis, and these cities are located in what today are Russia,

Ukraine and Belarussia. And Putin referred to a spiritual unity that binds these places together, which he implied is much stronger than any kinds of contemporary ideas of national sovereignty. In the meantime, what we see some sort of spiritual unity at least when it comes to trade between Russia and China. How does that nexus fit into what you're talking about? Well, um Putin is emphasizing actually that Russia is right now standing for UH together with the majority

of the world's population in resisting United States domination. And so he talks a lot about um UH, China, but also India and Africa not supporting say actions against Russia. He stresses that that is where the majority of the world's population lives. And he also emphasizes, just as he did in two thousand fourteen um when Russia first occupied the Crimea, that if Europe is going to um uh cut Russia off with sanctions, Russia doesn't need to worry

about that. Russia can make new alliances with developing nations the brick countries and particularly look used for towards China. Do you have a sense of what the popular opinion is at a time when there is a growing sense that people are trying to get news through VPNs and not necessarily through the traditional mainstream of the Kremlin controlled media in Russia. Yeah, great question. It's very hard to

gauge popular support for Putin right now. The current polls do show his popularity rising when most recent number was eighty one point five percent, but there's reason to be skeptical about such figures. And also um Western analytics say that fully one heard of Russia's Internet users have downloaded at least one VPN, which allows them to, you know, act as if they're logging in from another country and

thus evade Russian um government restrictions on internet usage. UM. Also, according to whatever statistics you look at, somewhere between three hundred thousand to one million Russians have left the country because they don't want to be accused of collaborating with

the Putin regime, and these are college educated professionals. Um. At the same time, I think that many many Russians who are left in the country, all the ones that I know that remain in the country, which is a decreasing number, they're kind of doing what a lot of Germans did during the days of the Hitler regime before World War Two. Actually um uh started. They're retreating into

the private sphere. One thing that you didn't see on Russian TV during these Victory Day celebrations, where a lot of pictures of huge crowds outside Red Square, and all the people I know have actually taken the last two weekends or long weekends in Russia, the May holidays, as a chance to go to their dodges. They're honkering down. They're trying to plant on small land plots any kind of vegetables they can UM, trying to anticipate rising food

prices h winter. That could be hard if this war goes on and Russia continues to be the target of sanctions and they're trying to sort of figure out how they and their family can hunker down and survive and try to remove themselves from the regime. Well perhaps not uh openly resisting it. Cynthia valuable insight and perspective this morning. Thank you, Cynthia Hoopo as the College of the Hotty Cross.

This is the Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays from seven to ten am Eastern on Bloomberg Radio and on Bloomberg Television each day from six to nine am for insight from the best in economics, finance, investment, and international relations. And subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com, and of course on the terminal. I'm Tom keene In. This is Bloomberg h