Surveillance: Rocket Hit in Poland

dot Com and of course on the Bloomberg terminal. It is such an honor, and this is before the news of yesterday on a missile, and this is south of Belarus, on the Polish border with Ukraine, that you get to turn Paul Sweeney as I have this morning to Elliott Ackerman of the Marine Corps, and now James Travitas of the U. S. Naval Academy and his service to the nation as Supreme Commander of NATO as well. Almost Tavidis,

thank you so much for joining us this morning. There is in her book two thousand thirty four, my book of this summer a few years ago, folks. I can't say enough about about it. On the first page of the South China Sea. How many times over her career has she stood as she did now on the bridge of a ship, observing this miracle of stillness. There was a stillness in Poland yesterday. That appears to be violated

by chance. How afraid should we be of exhaustion a war that goes on and a war that goes on to the winter where chance overtakes us. We gotta wake up call yesterday. And it turned out as well as it possibly could have. Tom, Um, let's face it, that could have been a deliberate attack by Russia. It would be crazy for Putin to start a war with NATO, particularly by firing missiles into a field in Poland, but

could have been deliberate. It could have been in a Russian offensive missile that went extremely stupid, and we've seen several instances of that. Turns out apparently it's it's a Ukrainian air defense missile, entirely justified in its use. But here's the point, Tom. Wars sometimes start on incidents that people overreact to move too quickly. I think, Tom, you and I are old enough to remember the Tonkin Gulf incident kind of preciprocated Vietnam or the assassination of an

archduke that starts World War One. I wasn't there for that, than you are you sure? In any event, Um, we gotta wake up call about how dangerous this situation is, and we are to pay attention. And you are expert in this. Paul Sweeney wants to jump in here, but very quickly, Admiral, our solution in America is our modern technocracy are technocratic engineering. We've got the toys, we got the radar, we've got the planes. But that doesn't work in a ward, does it. You gotta have the technology.

But I would argue, we got people, We know what we're doing. We have been in a lot of combat operations. Our opponents Russia looking like they're flailing badly here. China hasn't been in a sustained war since the nineteen fifties. Um, we have a strong advantage in our people. We are to be confident in that, and we are to understand

that hopefully that creates real deterrence against these other powers. Admiral, So, given what we kind of feared yesterday, which might have been an escalation of some sort against what appears to be a brutal winter coming up and who knows how to play out, should we be thinking about ways to give Mr putin Away out of this thing, Because from his perspective, he's got to recognize that this is at best just a stalemate. He should be awakening. But I think, uh, Paul,

he wants to play a couple of cards. Yet he wants to wait and see how the winter comes out. You know, as the Europeans struggle with high energy costs and a cold winner is it a warm winner. He wants to see if there's impact there. And he is also waiting to see how divisive are politics here are in the United States. I think the mid terms probably gave him some pause. That was not a good outcome for him, and I think as the winner goes on, um,

I think the Europeans are gonna stand pretty strong. So point being, yes, this thing will end up in a negotiation. I think it probably head stored negotiation after the winter, when both sides are facing real exhaustion. Putin because he runs out of resources, Zelinsky because the patients the resources of the West become harder to obtain. I think that drives both parties potentially to negotiation early next marine. Let's hope so Emial Stevids. Thank you so much again, Elliott

Ackerman and James Travidas. The book is two thousand thirty four. It has my highest highest recommend dation. Elliott Ackerman joins us to say he's former White House fellow US Marine Corps veteran, is to miss the point of my book of the Summer a number of summers ago. The book is two thousand thirty four, a novel of the next World, except the next world is coming ever closer. Eliott Ackerman,

thank you so much for joining us today. Let me start with the basic reconninance, reconnaissance issues of a missile attack. Do we have, as the West, or as America, or as NATO, do we have intelligence systems from space or from ground that know where various and sundry missiles move? We do. Generally speaking. What we have is what's called counter battery radar. So you can uh with with basic math, figure out the trajectory of these missiles, the direction of impact,

and where they have come from. So, I mean, that's basically how we've seen NATO very quickly figure out that this missile that landed in Poland was in fact launched from Ukraine. The dystopian nature of your book two thousand thirty four, without giving the plot away, is that when adversaries come together, the biggest problem is mistakes. The biggest problem is risks as you perceive Ukraine and Russia into the winter. Is that the problem. They're worn out, Their

exhausted systems are failing. They're just close. So like your book, things fall apart rapidly. Well, exactly, you hit the nail right on the head that you know, wars are escalatory by nature, and once you enter uh this escalatory cycle, Uh, it's us picks up and picks up, and each incident

becomes increasingly dangerous. You know. That's why we see the Secretary General of NATO caution, caution in calm, because all sides don't want to see the war in Ukraine spill outside of the borders of Ukraine, which would be disastrous, and that calm wasn't there yesterday The Foreign Minister of Ukraine put this tweet out fourteen hours ago. I want

to read it at because I think it's important. He said, Russia now promotes a conspiracy theory that it was allegedly a missile of Ukrainian air defense that found on the Polish territory, which is not true. Now we should by Russian propaganda or amplify its message. Hasn't that just been totally contradicted by the NATO Secretary General just moments ago.

Well it has and it's you know, it's an important reminder that, you know, although Russia is waging an illegal war in Ukraine, and although the Western nator are supporting the Ukrainian people, it obviously has to be well within a rational context. We can't go fly off handle each time that there is an incident or the war spills over in unfortunate ways. So I think NATO is doing

the right thing. Um, you know, I don't necessarily, I wouldn't necessarily say the Ukrainians are are doing the wrong thing, but I think you can expect, you know, they are in a crisis situation that they reality they've been living in since February, an existential war fought on their land, uh, and we need to be good partners and helping them manage that war and hopefully bring it to a successful conclusion.

Does it Botherly, the Elliott that perhaps Russia has a bit more leverage because they're backed into a corner and it's Vladimir Putin's pride and he could act in a more rash way because he doesn't really care what the West does to him at this point, because of just simply their reluctance to engage in a conflict. Sure, I think that you know that is obviously uh a point that that we need to weigh. You know, Russia is backed into a corner prutent, it would see, doesn't have

that much left to lose. Um, if you want to look at the nation that really has nothing left to lose, it's I mean it's Ukraine. I mean, Ukraine is fighting for its very existence, it's very life. The thing that concerns me the most is that I think we, by we, I mean sort of a collective West, have in the last decade or two of warfare, gotten into a psychology where wars are very long. They're photos of five ten as we sign up against an even twenty year periods.

The war in Ukraine is a different type of war. It's a bit of a throwback. When I've been there to cover the war, I mean, their air raids are running down to bomb shelters. It feels like a twentieth century war. And it's a ward that needs to be resolved really in the next year or two. And if the war bleeds over into three, four or five ten years, that only advantages the Russians. And the wonderful to hear from you, as always said at him in that I

can stay unequivocally on the island of Manhattan. There is no one steeped Inness and Dana Telsey CEO, Chief Research Officer, Telsey Advisory Group kind of get Bear Stearns years ago. And Dana, I want you to fifty seven and fifth Avenue, give us one little window into your childhood at Bergdorf Bergdorf Goodman. Give us just one little moment there in

your childhood. I think the moment at Bergdorf Goodman comes from my grandmother working at Bergdorf Goodman and going in and seeing that on the house wears floor, seeing all the different Christmas trees and holiday decorations they have. It changes every year, and it's a wow. Every year. We're coming off a pandemic that your grandparents never could have imagined it was over in nineteen No, it was not.

What does the holiday season look like this year? I think the holiday season, for the most part, is going to be about gathering. I think people want to be together more than they ever have in the past. But I think it's still a challenge holiday season economically. Yes, three tail sales figures came out, but you have a real bifurcation between the high end and the low end. The high end still spending, but the growth rate of that high end spend is moderating from what it had

been in the past. And what we need. You need new product and who's delivering new product. You and I talked about the Trunk's exhibition at Louis Vuitton on Madison Avenue. That's new. You look at Deckers and they have new Uggs platform shoes that are taking off on running. If you don't have the waffle soul, that is pretty good too. But that's the luxury sector. This is the people who have discretionary spending. We just saw from the targets of the world. Maybe that's not the case for the vast

majority of other people. What is your takeaway in terms of the discretionary spending ability in mass from the Target and Walmart earnings, It's cautious when you think about the inflation hairy headwinds that they have. They don't have the same spending power that they did before, especially when food is going up as as much as it did. You look where the value is. Everyone's competing on promotion today, which is different than three hundred and sixty five day

years ago. But you look at t J access numbers today which are better than expected, and frankly, even the guidance, it was nice to see how they're setting up. They're getting better brands at more value prices, and so is there some share shifts that's going on and is off

price returning. It's a great point, especially because we saw, for example, Walmart gain share in the grocery store sector, which actually buffered a lot of their sales right because people are still buying food and you're seeing that, where do you expect to see the big share shifts? How much do you see consolidation among the strongest players and the loser is really losing even bigger. I think overall, when we're thinking about the changes that are going on,

who has the assortment and who has value? I think one of the surprises tomorrow could be Macy's and I think they've been more innovative than they have been in the past, and I think we're gonna see some improvement there. I think overall we're seeing on the specialty apparel side, there's newness there. You look at a Ritzia who's been taking share and I think the issues at the gap continue to remain headwinds. I think they are shared donors,

not share gainers in the in the near term. And I think when we do have all of the changes that are happening, you take a look at urban outfitters with anthropology and free people, where I think that a little bit higher income and women are buying. I think there's a benefit there. The teen retailers are having issues because they don't have the discretionary spend, so it's a it's a share shift. And let's not forget inventory levels.

We have too much inventory. No one is getting rid of it as fast as they would like, and that's going to mean a bargain for the consumer. So where's the value in equity here? I want to go back to the central statement, which, as we talk about and Lisa needs a pair of statement sunglasses, very important UH to have in a recession. Do you go long luxury which is already richly priced, or do you find value in troubled big box or something else. I don't know.

One of the things I'm seeing with so many of my stocks at fifty two week lows. I think investors are doing their homework on the names preparing for twenty three and twenty four. The tail when next year is about lower freight rates, the headwind is weird. Give me a single best buy here, you're with us or no one's watching. Come on, Andy's single best buy right now. When I think the names out there that are interesting, I mean I like t j X for what they

can continue to deliver. But I think there's other names that are interesting also when I think of names like Loi est Lauder just delivered. If you have to look at some of the value names out there and what could be a change, I think Abercrombie and Fitch. I think the newness that they're the other day and what

did you think I was kidding? Okay, I'm going to line up to go in an A and F. You don't have to line up, you can walk in and you're gonna get you say ladder, But tom Ford and that's what we're talking about, the biggest purchase in its history. I am wondering there is this theory out there put forward by the likes of Morgan Stanley, that at some point there'll be a tipping point next year and these will be the names that will benefit the most is

there going to be a roll up in between? Will there be some sort of consolidation or bankruptcies that have not yet been experienced. I think you'll continue to see some of the acquisitions take place in consolidation, but I think you're also going to see the vestures some of the companies that maybe not having had performed as well and want to focus on brands that are working. You look at a Wolverine Worldwide, for example, where the maryl business is their strength. They may not need all the

other brands in their portfolio. So I think you're gonna see both. And I also think you may see a change up in terms of the physical locations becoming more important. I think stores are the new gathering spots and pandemic did is they basically brought together that people want to socialize, and frankly, you look at as the pandemic hopefully goes into the rear view that yes, you are seeing people shop at stores. It's one of the changes for Holiday

China to the rescue. That's a big theme that's out there, isn't it doesn't work, not yet. I'm still seeing China being being a tough place for a lot of my brands. I think it's not until twenty three. Bring Joe Pelman next time. Dana Telson where Advisory Group AMY with SILVERMA joined just now, I Couity, Derivative Strategistic obviously Capital Markets Amy. Can we kill this amount up the last week? And what do you make of this Runnie we've seen from the nast act to the SMP. Yeah, I think melt

up is an accurate way to describe it. Look, it feels like a lifetime ago, but you know one week ago is when we got that CPI number, and options were you know, somewhat of a culprit outside of fundamental information. About one third of all SMP options that traded that day were for that expiration on that Wednesday, and that

certainly exacerbates some of the moves you see. Now we've gotten to a point, John, in terms of positioning where you know, essentially investors are are selling calls and and basically just watching a grind up. So you know, they were very worried about participating in that upside. But we haven't seen reinitiation of even new levels from here, so I think from the options perspective, they kind of think, again,

it's a melt up, but not a rip up. I mean, I'm gonna go to your research note where you mentioned bitcoin and your study of the bitcoin moves and all the uproar that's ensued, and I want to go to quantitative finance and this concept of drift of moving tick by tick in a time series. Does bitcoin trade like apple? Does bitcoin trade in a time series like a given bond or a given foreign exchange pair? What does the

drift look like for bitcoin? Yeah, you know, look for for something like bitcoin and crypto in general does so there's obviously not as long a time series as there are for other assets. But the way it trades when you look at it historically and you look at realized correlations is it's just another risk asset. And certainly given the information that came out of FTX and everything that's going on, you know, people want to know what direction

it's going. And I will say similar to all other risk assets, Tom, you know, on the downside, it tends to be more correlated. So we're seeing decently strong correlations, you know, as the market had sold off and it still remains strong, but it doesn't you know, on the upside, it actually tends to diverge more than downside. All things tend to go to one when things are you know,

selling off very hard. And we've been talking about how incredible the swoon and bitcoin has been, but you point to the other side of things that actually it's been quite resilient, just the crypto space in general. Given the entire collapse overnight of an entire firm, I wonder if there's a broader message about the markets and just how resilient and how invested a lot of institutions are, not in the crypto space, but more broadly, and the reluctance

to really retrench in a meaningful way. Yeah, it's a great question. And look a few months ago we we spoke with both Sam Bank and Fried and Brett Harrison, who was the president of FTS at the time. And I think one thing that's underappreciated Lisa about what they were doing was was not only on the crypto side, but there were huge implications for just market structure, for

just normal markets, for futures, for derivatives. And the other thing I would say is, you know, like given where the CFTC proposals likely and now it's probably not going to pass, or at least regulators are going to look at things differently. But the resilience to me seemed to speak of kind of the institutional adoption that did happen because there was a lot of interest at the time,

and you know, we'll see how that changes. But institutions, and this has been a theme that they talked about a lot, was institutions continue adopt, continue to investigate, and continue to have heads of digital and I don't know that that would change even with where FDS is now. I'm a wonderful a half from you, brilliant and so whites Amy with Silverman that MC capitol, mar This is

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