Surveillance: U.S. Oil Release with Hochstein

and of course on the Bloomberg Terminal. We need to look at that six dollar gallon of gas in Mammoth Mountain, California, and yacht's cheaper other places, but it is front and center for President Biden joining us a gentleman hugely qualified on this strange word energy security. Amos Hockstein is Senior Adviser of Energy Security at the Department of State and joins us today. The thing here, Amos, every time around is whip inflation now. And every president has a different path,

like Jerry Ford to whip inflation now. And you're reading a history is the same as mine. This is a tough task. What is the first order of business for Joe Biden? Well, I think, first of all, good morning

and thank you for having me on the show. As you said before, energy is energy security is a critical issue, and I think the President took strong steps yesterday UH to address the fallout in the energy markets as a result a direct result of the Ukraine War and the invasion, the unjust invasion and brutal war that that Putin is waging in Ukraine, and that has consequences, as the President said yesterday here at home, with rising costs of energy,

rising costs of oil, which of course translates, as you said, into rising costs of gasoline for Americans. So President Biden took a strong step yesterday announcing the largest UH SPR released these strategic petroleum reserves a million barrels a day for the next six months. H and that we've already seen prices come down as a result of that announcement. That's going to have a major impact in the oil markets, and the energy markets are at large. Okay, but Amos,

what's important here, and this is pizza's security. John. This filters down into every product, including a slice of pizza at Famiglia in New York. It is up, up, up. You're very delicate about the slice of pizza in New York Times. I think it's as important as a girl

on the gas. I agree, it's important. There's another measure, Amos, that you've announced yesterday, you called on Congress to do something to make companies pay fees on wows from their leases that they haven't used in years, and on acres of public lands that they are hoarding without producing. As from the statement from the White House release yesterday, the

Administration keeps talking about these nine thousand leases, Amos. I don't think if you wrote this, you would have written that, because if I asked you the following question, I want a direct answer to a direct question of those nine thousand leases, how many of those sit on productive land? So I will answer you a direct answer, but let me just say on a slice of pizza price, I agree, the prices are going up everywhere. Part of that is.

Part of that is as a result of these skyrockety energy prices where we're not a farm to table economy, we're a farm to truck to table. So everything that we consume has to go on as a result, has resulted in a gallon of gasoline or a gallon diesel trucks coming criss crossing the country for for delivering whether it's ingredients for pizza or if it's for other commodities. So there's a direct result, and that's why it's not just uh, the gallon gasoline is not a political issue.

This is a real economic issue that we need to we need to address and that is a result of a foreign war that we have to be cognizant of. As far as the leases look, we these are these

are in public lands. And your point is right. If some of these leases are on uh, nonproductive acreage, then the companies that are holding these leases for several years sometimes UH and are not doing any seismic, not doing the kind of work that needs to be done on those on that acreage because there they think it's non productive.

Then you have two choices. Either you can return the lease or give it up, or you can simply pay the higher fees because you want to hold onto that lease for a little longer um so that you can develop it later. Uh. And I think that so that is I would have written that any less, you know why they might want to sit on it and develop it later. It could be on third rate land that requires a higher crude price. You know how this works.

The way this is being framed by the administration is that these land leases are being hoarded that were sitting on productive land and it's not being produced because these companies agreedy. I mean, I'll read the line out from the President his words, companies have an obligation that goes beyond just the shareholders, to their customers, their communities in their country. No American company should take advantage of a pandemic or putin to enrich themselves at the expense of

American families. What evidence is that that they're holding those releases? Why, I'll finished, then you can go, and I'll give you all the time you need. What evidence is that that they're holding those leases because they're being greedy to profit from what's happening in Ukraine. So so let's disagregate there.

There are a number of issues here, and the President actually recognized the companies, the oil companies that are responding to this price environment, that are responding to this world supply shortage that we're in and have announced extraordinary increases in capex uh and in reinvestment in the United States in bringing on additional production. And he's recognized him and said that was a that is progress and he and

he praised them for doing that. But there are other companies, and you know that, Jonathan, that are saying, look, I have the ability to increase production with prices at prices were at a hundred and twenty and a hundred and thirty just just a week ago, and said I'm not

gonna do it. And he called out some of those who have said, even at two it or three barrel, I'm not going to increase production because a variety of reasons, and some of them are saying, my, my, the funds that back me or that owned my that my my shareholders or my uh my holders of my debt are saying, don't do that. Give us increased dividends during this time. There is no well that is not profitable at a

d and twenty a hundred and thirty. And if you're making a decision at prolonged period of time of above eighty five dollars, which we've now been in for for a few months, that you can't make more investment to bring on production than I think the President is right to call them out, especially when other companies are saying, no, this is the kind of exactly the kind of environment that we're that we are going to increase production. And look,

we did two things. One the President announced that we're going to release a million barrels a day in order to increase the certainty of liquidity in the in the energy markets and to make sure there's enough oil on the market to support the U S economy as all as the global coming number two. He has said that we're going to replenish the reserve at a time when we finished dispersing and releasing the oil and when prices come down, So we're gonna sell the oil now at

high prices buy it back later. That gives incentive to the oil companies to say, look, I know that even though the US is going to release these reserves, I'm going to have a buyer in the US government later on. So it continues that incentive to increase production. And I think that this is what we needed. We needed to put something into the system where we can bridge The oil companies have said, you look at Exxon and Chevron,

Conoco Oxy have said they're going to increase production. We're going to increase nine thousand to a million barrels a day this year, and that means but it's only gonna come on in the middle of the third quarter to the end of the year, So we have a gap between now and that period of time. So what the

President did yesterday. This historic move is to say, I'm gonna the US government is going to fill that gap between now and there and put that same million barrels a day of production that we were hoping to get at the end that we're going to get at the end of the year, and put that out now so that we're not replacing the private sector, We're incentivizing it and letting the American consumer benefit from lower prices between

now and there. They likes the Goldmen, Sex disagree. Jeff Curry says this the U S policy, use of an SPR release, a potential deal with Iran, extreme price volatility, and the growing risk of a recession next year are all exacerbating the uncertainty face by producers, reducing their incentive

to invest more. And What's the reason I bring this stuff up is that I want to avoid this really kind of simplistic conversation that something untoward is happening in the oil patch when you know that what happens in the oil industry is incredibly complex. Now you've said something else over the last few years as well, over the last twelve months. I'll bring up another thing. This was November. President Biden urged the FTC Commission share to investigate oil

and gas companies retail prices, blaming industry leaders. As gas prices continue to saw, it's become this talking point the oil majors are hoarding these leases, even though you admit, we don't know what's on that acreage. We don't know what's on that acorage. Then there's this other talking point that somehow these companies are price couching and in the President's words, taking advantage of a pandemic or putin to

enrich themselves at the expense of American families. I'm just asking what evidences they're off that you wanted to start this probe. What have you found, What evidence is that what companies are price couching right now? And if you can identify them and the name them, what are you doing about it? Well, first, I think, as we said yesterday, I don't believe person all to Mr Curry's comments. Uh.

I've i in my colleagues and the US government. We've been in close contact with the energy industry, and most companies have actually said that they believe what we did yesterday was exactly the right thing to do, uh, and that they feel that it hasn't in sentive because it is for six months before their production comes online, and because we're going to spend the next couple of years replenishing the reserve, that means that they are incentivized to

continue to spend the capex that they've announced to increase production. So with respect to Golden Saxon, I take a lot of issue with some of the other things that he said in that I have no tag you too. But another question you'd be asked as well, Amoss, is who would make who would make a decision like this to boost capex on front month? Brent Futures, who would do that? W c I Futures front month? Who would do that? You know what the rest of the curve looks like.

Why would they make a decision based on where the front month is? Well, don't I'll tell you they are making that decision. Uh. They have announced that they're going to several of the majors who are the largest holders and rulers in in the Permian UH and in other shale basins, have said that they are increasing cap x. I think they're going to increase production. Total US production is going to grow by about ten percent by that ninod to a million barrels. It's just that these things

don't happen overnight. You know that the decision to spend money billions of dollars to bring up production doesn't mean production comes on the next day. But I want to address the point that you said, because I think the President was very clear there are two We're not taking

a broad swipe of the whole industry, he said. I wanted that he wanted to acknowledge the fact that part of the industry has done exactly what it needs to do and to see HI old prices incentivizing them to bring about more production other companies, and we can't ignore this done some companies have said, and the quote that he used in his speech that even at two hundred dollars of barrel, I will not increase production because of uh so called fiscal discipline, that is not I'm not

making that up there to be fair to you, just let me jump in to be fair to you. That was a comment on this network. I heard it, I talked about it, I repeated it. It's something I've said before. Another thing I've highlighted as well was a Wall Street Journal report that came out in the last few weeks, the administration is trying to make a call to the Saudiast and read trying to arrange a call with the Crown Prince Mohammad have been Salman and they won't take

the call. Now, I spoke to a member of OPEC, and you can respond to that in a moment. I spoke to a member of OPEC this week, and I thought it was utterly embarrassing for them that they had a meeting earlier this month that lasted thirteen minutes, and one just yesterday there was one minute shorter. Now, I wonder if it's more embarrassing for us that they're laughing in our faces and doing this. Now you speak to the Saudiast, talk to me about it. A. Is that false?

Did the administration trying to arrange a call with Crown Prince Mohammad been some man and the President of the United States? And B why are their meetings last thing thirteen minutes if we're in a massive energy crisis. So one, there was a call that was going to be arranged between the President and King's onmone and that called did

take place. Nobody that those reports I'm seeing constantly reports of Saudi snubbing the US or I think there's an interest in in certain quarters UH to to bring about this kind of narrative that is completely false. I was inside. I've been to Saudi Arabia on a number of occasions over the last several weeks, on a couple of months, on a couple of occasions, I was told what the Saudis told me on the front pages of the news of a US newspaper about three hours before the meeting started, UH,

and I showed this out. He's the headline, so that we can jointly comment about the the hyperbole of the press on this. So I would really relax. I don't think there's any relationship between the United States and Saudi is strategic. We have a lot of issues that we need to work on together. UH. There are complexities in that relationship that we are working on. We have a lot of issues that UH that are of common interest fighting terrorism UH that Saudi has had to suffer through

over the last several weeks, specifically from the houthies. We are a lot of strategic interests elsewhere in the region and as well on energy, and I'll tell you that we're having very good discussions there the press and reality on this one are are really far apart. On OPEC. Look, I was asked before the OPEC meeting if we had a message to OPEC, and my answer was, I have no message for ROPE. But these are folks that know the industry, they know the market, they know the supply

and demand. I must have a h difference of opinion. Uh, we believe that, not just believe, but I can see the physical evidence that the market is short about two million barrels a day if not more from Russian supplies into the global market. That is that is clear to me.

We can see that. Obviously, some perhaps an OPEC, don't see the shortage of supply, but I can understand that it's a complex issue for them with the OPEC versus OPEC plus I think that that's uh, they're gonna have to take some time and perhaps if you're not going to discuss the issues very seriously, UM, perhaps eleven or twelve minutes is all you need. But at the end of the day, they've they've done what they needed to do, and UH they've increased production by announced that they're going

to continue the increases of production. We don't think that's right. The President is not asking other people to do the work that we should do. He took action yesterday by himself on behalf of the US government for the American public of releasing a million barrels a day. I believe, by the way, Jonathan, that we're going to have additional

capacity coming online from our allies. Uh, and we the President coordinated this release, as he has all other measures against President putin with our allies when he was in meetings at the G seven and the NATO summit last week. He's discussed it with leaders even earlier this week. We've I've had conversation with my counterparts and uh, there's a meeting that is going on right now of the i e A, the International Energy Agency to look at additional

releases from the international markets. So we won't just have coming on the market United States would rather have well coming online to the market in Asia and as well as Europe over the next several months. Unless you're a professional, you've given us tons of time and that's valuable to me. You know that. Thank you very much. I appreciate it.

Amos hostein there of the US administration on the situation right now here are the Secretary of Labor, Our John Pharaoh, you want to us now on Bloomberg TV and on Bloomberg Radio, US Labor Secretary Moddy Welsh Secretary Welsh, what a jobs report? Just fantastic. Most people have come on the program this morning with Tom and myself and Lisa on Bloomberg Surveymance and on the open of all said, it looks great. What are you most infused by looking

at this? Well, I think one of the things that that that I like is we we saw at increase in labor participation rate. So one thing we spoke about this morning. You know, a good you know, unemployment number low, a good strong report, good last three months report, actually a good US eleven months report, over four hundred fifty jobs. And we think about moving forward into two you know, one point six million people still need to return back to the workforce. How do we get them those folks

back to work? How do we make sure that that labor participation number goes up? Certainly there's still jobs open the United States. That's one of the things I'm not taking away from the report. I'm very excited about the report, but but I think we're thinking about here, how do we move forward. The second thing is we're also looking at,

you know, what what can be done by Congress. We have the Bipodisan Innovation Act other known as the CHIPS Bill, that allows us opportunity for supply chain issues moving forward. We have some COVID relief money still being talked about it at up a Capitol Hill. They need to pass that because we need to. We're watching I'm seeing what's going on in China and parts of Europe with another variant going up. We want to make sure that we're

prepared for that here in the United States. Uh And then obviously inflation we're working to the President is is very lazy focus on bringing the cost down. Lots of challenges there. You were just talking about global challenges there that we have in other markets. You know, we have to you know, continue to work very closely on that. You know, the Fed Reserve they're gonna they're gonna take

their action. I can't really comment on that, but we have to we have to make sure that in the short term we do I mean we can and reduce those prices, but also long term that it doesn't happen again. A lot of what we're seeing in inflation is due to the pandemic obviously what we're seeing with with Putin and what he's doing with Ukraine. But but we also have to think long term, how do we prepare the

country that we don't go through us again it. Secondly, Welsh, I've only got a few more minutes with you because I know you've got to do a range of interviews. You're a busy man this morning, so I went through a couple of other issues. There is a labor contract covering about twenty two thousand West Coast dock workers at sites including l A and Long Beach Ports that expires until life. F onest I know you're aware of that.

I want you to help me understand what's the difference between those unions, those individuals behind those groups to represent them, using their leverage to secure better terms and exploiting the country's dependence on those ports. What's the difference. I don't

think they'll do that. I mean I was out in Seattle and Tacoma in Portland last week specifically to talk to the come penny in companies about about the negotiation, a little bit about how they feel about it in the unions and express the both sides the importance of what we've gone through as a nation over the last eighteen months with supply chain and challenges and still having ships out in the ocean. They all understand the importance

of that, and I think that I don't. I don't see either side exploiting the situation we're living in for better wages. The contract will begin negotiation at some point in the next month or so. I believe that's when it'll start. They have to do some notification piece. But I'm going to monitor the situation very closely. Obviously, UM I want to make sure that that we we don't

stop our ports. I mean that the last thing we need in this country right now or in this world, quite honestly, is shutting down other supply chain and creating other supply chain issues. Are you going to step in if I need to? I will, I saw, I said the both sides. I mean, I don't think I have to step in at this point. If I did, I'd be having a very different conversation with you. But I think, you know, I feel good where the conversation is with the with the sides right now. I think that they

all understand the magnitude of this particular moment. This is on like any other moment they've ever had when it comes to negotiations. Uh, still in coming out of a pandemic, and you know, moving forward all these issues around this. So I think they acknowledge very seriously the situation this country is in, and quite honestly, I supply chain is in. You've been to those ports. You travel a lot. I believe it's sixty cities in thirty states during the first year.

You know where I'm going with this. You've also been really criticized because you've spent a hundred and sixty two days in Boston out of your first two eight four days in office. Second be well, So you know this comes up often when you and I talk, keeps coming up, People keep talking to me about it. Yeah, I think I think it's a ridiculous argument and ridiculous point that's being made. In the very beginning of me being Secretary of Labor, we at just a department Labor where I'm

standing in front of right now. Nobody was in the office. We were shut down because of COVID nineteen and I was doing my job. I travel around the country. Some of those numbers, some of those numbers that are reported, I go home every weekend to Boston. I'm going to continue to go home to Boston every weekend because I have a mother that's there, and I have a family that's there, and I've made it very there from the

very beginning. So I think when when when that article was written and that report to put those facts in, she's incorporating the weekends into that. And if she took those out and actually did an accurate account of what happened, that would tell a very different start. Secondy, Walsh, I've got a mother in London. I've got to be in New York. That's what happens. Sometimes people are basically asking why you haven't chosen to live in Washington, d C. I do live in Washington, I live in Now You've

got a permanent residence there in d C? Now, just yes or not? I'm living out of a hotel. Okay. Secondly, Wealsh, We're gonna make you that thank you for being with a set our friend on John's Day, Jeffrey Rosenberg joins his portfolio manager Systemic Multi Strategy funded black Rock Jeff Frozenberg. We went curb and version off of this now negative one basis points let's go back to Karnie Mellon and talk to me about the nuances and disaggregation of curve inversion.

There's zero, there's a little bit in verse. Did maybe there's more inversion. What is that nuance within this boom economy. Well, Tom, this this report is just reaffirming what the markets were expecting and the trend that you were talking about in terms of the bond market, of of yield curve inversion. You know, no surprises in this report. As Jonathan just mentioned, the headline report, the headline number MS is really minor.

It's the strength in the labor markets that's that's being seen here again and that's the challenge for the FED. For the markets as we're seeing a little bit this morning, a little bit more curve flattening. It is really much more about UH. As Mike McKee was kind of highlighting, you know, this is good news, but it's a little bit too much of good news, and this is an economy and the labor markets that's overheating. The FED has

to accelerate. Lots of expectations talked about at the top of the show, some historic bond market and really financial market UH losses in the first quarter. This is the markets readjusting to a much faster pace of FED normalization, and today's report only will reaffirm that view. And that's what we're seeing with that little bit of flattening continuing

in the market that you're talking about, Jeff. For you, is this good or bad news when it comes to investing to investing, you know, I think it's just a reaffirmation of our expectations, not good news or bad news, but just this is what we expected and what we expect is this is a very difficult environment for investing because of the challenges of the dual aspects were about to go into we're talking about from the May f O m C, you know, the shrinking of the balance sheet,

and you know markets are pricing in a move towards a fifty basis point hiking cycle. This is a very very dramatic turn about. That's why you had such a negative price performance across fixed income in the first quarter, because we're waking up to the idea is a FED that wants to get out in front of the curve, and that means a very accelerated pace of heightening. That's a challenging environment for investing. As we just saw in

the in the first quarter. When we get to the back side of it and to some higher rates of real interest rates eventually and higher levels of yield, this will be an attractive environment. But the transition it's very difficult environment for investors, as we saw in the first quarter. Do you think that it's basically a lock that we'll get to we'll have one percentage point increase in the FED funds rate by June. You know, I wouldn't say it's it's a lock. It's definitely uh, well, it's about

ninety percent priced in terms of the market. You know, you can't say it's a lot because obviously some things can happen in the geopolitical side that we're all focused on. If that were to take a more dramatic turn that you saw in terms of risk off environment, confidence shock, you know, the shocks can be important, and financial conditions tightening, which to date has been accelerated but is still on

the longer view, very accommodative markets. If you had financial markets kind of get really are ahead of where the FED wanted to go, you could certainly slow that pace. So I wouldn't say it's a lock. But given what we know today and the fundamentals of the economy we see out of this labor market report. I think the odds are very high that we're gonna have two fifties back to back in in the May and June reports.

Jeff Frozenberg I went lord rhythmic on you. I've got to do that when you're on And the answer is the bloomberg Us Total Return aggregate index is not a bear market. But negative eight percent is negative eight percent? Are we in a bear market? Or is that what oasis in the bond market? Q two? You know, the good news on the fixed income markets there, Mark, the good news is that we very quickly reprice the expectations and and and term premium and inflation expectations. So the

repricing is the painful part. That's the negative eight percent. But fixed income, you recall, the key to returns is the level of income. And so why you had such negative returns was you were starting at very very low levels of starting income. So as we fast forward and you're at higher levels of income, it really gives you a lot more cushion to subsequent increases and interest rates in that pace of negative returns is much harder to repeat.

So then what do you do on a strategic standpoint, I mean, if you're if you're systematic, did you shift from full faith to a creditor move? What? What do you go to loans? I mean, what do you do here within a strategy of down six seven? Yeah, you know a couple of things here. First, in terms of kind of the directional part of our strategies. You know, the front end of shorter maturities have certainly looked much

more attractive coming out of this environment. The repricing, that curve flattening that you talked about, Well, that's really about restoring the cushion to fixed income investing. And where do you see that strongest across the fixed income landscape. It's really in those shorter maturity So that's an aspect of our investing that we think is an opportunity going forward where there's more cushion from further increases in interest rates.

And then in our investing, you know, our tool kid is both the kind of directional view that I just described, but also looking at things that take out direction and look in the cross section of investing and there what you're seeing is is a lot more opportunities to invest in dispersion. Both we invest in both the equity side and the fixed income side, and they're you're really seeing

more alpha opportunities. So it's shifting your mix, your weight in your portfolio of where you're getting your returns from a little bit less out of directionality. Because directionalities you highlighted the beginning of the shows. Is impossible to forecast where we're going, but the dispersion in the cross section is actually increased. It increases the opportunity to alpha investing. Jeff blank Rop, Jeff great to get you to react to what looks like a really stung pay roast report.

We digress at this moment, and we do so with my book of the Summer or a couple of Summers ago two thousand thirty four, a novel of the next world. When Elliott Ackerman wrote this with James Travitas, they have no idea the overlay of their book of the South China Sea and how it would turn to Ukraine. The former marine joins us this morning, Elliott Ackerman, you have

legit military duty. You're work in Afghanistan. H your your work was c i A. At the end of the tour you're The Atlantic article of you speaking to a modern marine was stunning about the reality on the ground in Kiev and in Ukraine. What was the distinction of

your conversation with the marine in your Atlantic essay. Well, yeah, you know, as you might know, that there's been a you know, large number of foreign fighters, Americans, Brits, uh, individuals from Balkan states who have come to Ukraine to fight UH. And so I had a conversation with a former marine who served in some of the similar infantry units I had served in, and he had been fighting in the trenches around Kiev for the first UH about

month of the war. And you know, the most sailient point he was making to me was that the anti tank weapons that we've deployed to Ukraine, we're making a huge difference in that fight and allowing two or three well armed Ukrainians to stop entire Russian armored columns. Um. So, you know, that was one of the most sailing points he made, as well as really just the intensity of the fighting that he had witnessed, which he said exceeded

anything that he had participated in in Afghanistan. Take us beyond the media reports of brave journalists in Ukraine, those covering it day by day. How did the Russians adapt to a difficult march. Well, it's yet to be seeing whether or not they're going to be able to adapt. Um. You know, in the Russian way of warfare is different

than the American or Western way of warfare. And one of the most critical ways that that difference manifests is, you know, the Russians have a very difficult time adapt because they have extremely centralized decision making structures. So you know, all the decisions are made by a group of colonels or generals, uh and those decisions are disseminated down as subordinates who aren't supposed to ask questions or show individual initiative.

In Western militaries, we fight with something we called mission tactics, which means even the lowest, you know, twenty one year old corporal understands the mission in the intent behind the mission, because the expectation is always that the plan is not gonna work, that the enemy has to say, and that that everyone's going to have to adapt. So our Western militaries are very adaptable, and the Ukrainians since two thousand fourteen have undergone a series of reforms to make them

more like a Western military. So we're really seeing the con test between a Western military stylid fighting and a classic Sylviet or Russian style of fighting in Ukraine, and the result has been a lack of Russian adaptability. There's been a lot of times where the West has perhaps miscast other nations that follow a different set of rules in a way that tries to reflect their own. Are we overstating or understating the hit to morale that so

many people talk about among Russian troops. I think that we are underestimating it, and I think we've continually underestimated not only the hit to the morale for the Russians, but we've been habitually overestimating Russian capability and underestimating Ukrainian capability, as though we for some reason seemed unwilling to conceive the idea that the Ukrainians could win this war. In fact, are winning this war right now. You know, it's important

to note there's historical precedent for this. During the Second World War, Russia, which defeated Germany in the Second World War, invaded Finland, you know, a small all nation but very nationalistic, and the Finns defeated the Soviets um, so there's precedent

for this. The Ukrainians are winning, I think I think, having spent time there, that we should back a winner usually that's a pretty good strategy and continue to support the Ukrainians in this taking to Russia, Elliott Ackerman, we've taken great pride in our interviews with the military in

this war. You may be aware there's another division of the U. S military called the Army, and we met with their General Kimmitt, of course with a substantial infantry experience in Germany and in the Persian Gulf, and General Kimmitt was heated that the Russians were unprepared for the urban battles to come in the war. Is that what we've observed this month? And what do those new urban

battles look like for the Russians? Now? What we're seeing the Russians, I mean make you know, some gains in a few select Ukrainian cities, but they've had to completely destroy those cities to to win in places like Marie Opal. But the much larger story is in places like Kiev, you know, cities that are real centers of gravity politically, and the Russians haven't even got into Kiev. They've been stopped in the suburbs. Kiev is a city before the

war of four million people. You know, the Russians just simply do not have the what we call the troops to task, meaning that the you know, the troops they would need to accomplish the mission, uh to take a city like Kiev, let alone to take the entire country. I mean, Ukraine is the a nation of over forty million people. The Russians have an invasion force of two hundred thousand, and it's a nation that has been completely mobilized unlike anything I've ever seen in my lifetime, and

this is the fourth war I've been around. How much people are mobilized, from you know, twenty year olds up to two kids who are helping do work like nick camouflage nets, to two grandmothers. Uh. It's gonna be very, very difficult for the Russians to achieve anything more than potentially some limited territorial game means. And even at that, I don't know if the Ukrainians would allow President Zelinski to give any territory because, and rightly so, they perceive

themselves to be winning. So their view is, why should we be seating anything. We're winning this war, and that complicates the talks all over again. Elliott a clinic and education always learned something. Ellie Ackaman, the the author and former US Marie. 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 and this is Bloomberg