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Unfortunately he's been driving this salweek. Richard claiit with us now his work at Columbia University definitive on fancy economics called dynamic stochastic general equilibrium theory holding court at the FEDS Vice Chairman, I'm not going to mince words in frankly a professor Claret, are you still at Columbia?
I am?
You get a piece of chalk out every See. The problem is Xavier Sally Martin wouldn't allow Ai in the class. You would allow Ai in a freshman class to make the kids smarter.
Right, I don't teach a freshman anymore.
But would you let Ai in the class?
Well, not in the classroom, but when I teach, I assume the students are making reference to it, which is why I've actually put a focus on having.
In class presentations.
There you go, there you gold fashion Socratic dialogue.
I'm going to cut to the Chase Socratic Dialogue. You saved Jerome Pale, Folks. I'm not going to mince words about it. It's called a dual engine leadership mode model. And it was Clarida's vice chairman and a guy from Wall Street's chairman. And when he came in you allowed him to relax and grow with your prodigious academic abilities. Does Chairman worsh need a clarity?
Well, that that'll be his decision. I enjoyed my four years, That's that's for sure. But there are a lot of good people at the FAT and I think that's a decision he'll he'll make. He's got a very good advice chair right now and Phil Phil Jefferson. But at some point there will be a vice chair vacancy.
Is that something that the committee when he goes in front of these tough guys in the Hill, they can demand you have a vice chair of the academic skills.
Well, it's not clear that that's what would be on their wish list, but.
Possibility, I suppose. I mean they could request that.
Certainly, Kevin Warrish has called for a new accord with the Treasury Department. Yeah, what does you mean by that?
Well, you know, this is one of those things where this is what they call in DC very big tent language. It means different things to different people. The one accord that we do know about, which is the one that was struck in nineteen fifty one between the Treasury and the FED, was a signal moment and Fed independence because they got the FED out of the business of essentially camping treasure yels. In fact is I'd like to teach
my students. We all know that World War Two ended in nineteen forty five, but the FED didn't get the memo till nineteen fifty one because the Truman administry from pressure to the FED to keep a cap on rates, the FED declare independence in the accord. I think now if there is a Treasury Fed accord, it would not be so much focused on that. It would be focused on for example, should the FED a whole two trillion
dollars in mortgage backed securities? Should the FED the composition of the Fed' portfolio really be tilted toward tea bills unless from holding ten and thirty year treasury So I think there are a lot of conversations to have, and even during my time on the FED there were discussions before the pandemic about rethinking the Fed' portfolio composition, So I think that's entirely appropriate. But I think we're a long way away from any formal accord.
So what do you expect this Federal Reserve to do in County your twenty six?
Well, first we have to get the chair confirmed. He that's not a foregone conclusion, right.
I think once he has a hearing, he will get confirmed because he's very well qualified, but it may be maybe a while before he.
Has a hearing.
I think it's important to note that the pal FED in December when they release those dots, those famous or infamous dots, the pal FED, or at least a majority of the FED in December, thought at least one rate cut this year would be appropriate, and I think eight folks thought maybe.
Two rate cuts would be appropriate.
So I do think that when Warsh gets in, if the economic data play out the way that I and others expect, I think he'll be able to persuade the committee to continue to cut rates down.
Describe around three percent?
Okay, Richard Claarterer with this, folks, the former vice chairman of the FED, hugely visible does a great job helping us on the FED day. The FED decides, thrilled he could be in studio with us for you across the nation and around the world. Thank you for your attendance. On YouTube, subscribe to bloomberg A podcasts. I look at all this, I look at the parlor game, and just what it comes down to is staggering from me from meeting when mister Wartz joins, do we have a theory
of monetary policy? Or is it every president and governor for themselves?
Tom fantastic question, because I do think that based upon what Kevin has said with his very voluminous paper trail over the last fifteen years, will I think that will be a discussion. I think Kevin has expressed some skepticism for reliance on what he believes are flawed models, too much of a backward looking approach.
What I would point out, at least during my.
Four years is the palfed and certainly declared device chair. It was not handcuffed to the models, even though I developed many of them.
I give you great credit, Paul can I Editorial, I give you great credit for this. You are the one person who could have said we'd go for the models.
Well, and in fact my first speech in October of twenty eighteen, I basically made the case that the economy appeared to have stronger growth potential and a potential for lower unemployment than the FED models thought, and that the Powerfed should be willing if the labor market was continuing to blossom and inflation didn't appear.
To allow that to happen.
In fact, I think I said, you know, monetary policy is not a problem if too many people are working, right, And indeed the Powerfed cut rates in twenty nineteen with an unemployment rate out of fifty year low. So I think the FED has probably been less handcuffed to models than Kevin's remarks might suggest. But I certainly think based upon that there will be a discussion of the best way to incorporate modeling into FED analysis.
What happens to j Powell when he does step down from FIT? Does he stay on at the FED? Does he leave? Typically they ride off into the sunset?
Right they do.
In fact, there's only one example in FED history of a chair that did not write off into the sunset, and a very important FED chair gentleman named marinell Eckles, so important as.
A building angles form.
There you go, and Eccles was an FDR appointee and when Harry Truman came in, Harry Truman wanted a different FED share, but Eckles stayed on for four years as governor and actually turned out to be a real thorn and Harry Truman's side.
But fast forward to Pal.
You know j pal'sman asked many times and including at the most recent press conference, what his intentions are when his term is chair is up, and he's really not commented. So there's the possibility he could stay on. I myself think that it's unlikely that he stays on for the remainder of his term, which goes through twenty twenty eight.
Richard clarieda with this. So we did a Bloomberg function. It was great Michael when Key organized it. It was all these worthies in the audience. Catherine Maine comes up and gives me a hug to Queen of Descent over at.
The Bank of England, what's wrong with us being like the Bank of England?
And they come out like a Supreme Court decision.
Oh no, it's a FED meeting five to four and the chairman voted against the majority.
Is that a bad thing. I don't think it's a bad thing.
I think the back of England really beginning under Mervyn King's tangents actually viewed it as a feature, not a bug, to have close votes encourage thoughtful dissent. And as I recall, the governor has been on losing sight on some votes. There unusual in FED history. In fact, I did prepare
for your show. I went back and looked. Saint Louis FED has a great database on this, and you'd have to go back to nineteen thirty nineteen thirty nine the last time a chair actually lost an FMC vote, and that was Mariner Eccles.
But Jane William Miller and Paul Volker lost votes on discount rate adjustments. But again we're going back forty to fifty years.
Did you hear?
What do you prepare for the show?
Are you kidding me? You'd be the only one, Richard?
What's the FED focusing on now? Is it the labor market? Is it inflation? Where's the balance?
These days?
They've been pretty consistent for a while that inflation is too high. It's been above target for five years, it'll probably be above target this year.
For six years.
But the FAT has a dual mandate, and the unemployment rate is basically right now at a point that they think is consistent with a healthy labor market. But they are noticing that payroll employment gains have been very modest. Indeed, when we get the revisions later this week, it actually may show negative payroll gains in the second half of the year. And so I do think that I take them at their word when they say they would not welcome any additional rise in the unemployment rate, and I
think they would react to that. But so long as the economy sort of turns along as people expect, I think they are trying to balance that against their concerns about elevated inflation.
Paul Sweeney with Richard Clarita right now, can I ask, can we go NERD right now?
Monday freezing money? Okay? Did you recruit Woodford to Columbia?
Was that you're trying?
I was not sure when Mike was recruited that. I certainly was enthusiastic and worked hard on getting him to Columbia, which was a huge appointment for Columbia.
Now twenty two years ago, I.
Told you, Michael Woodford, folks, it's a thousand page book. Everybody owns it, Martin Felt saying once said Tom, no one's.
Ever read it cover to cover. Clarida had, Yeah.
But the bottom line, and I'm bringing this up, folks, because we had an Ezra Prosade the other day from Cornell with his wonderful important books out Doom the Doom Look really important book. And the bottom line is we assume Woodford like Oiler equations, they come down to a point of stability, and within the system there's stability. The result is stability. And Professor Presada is saying, no, it's not they're going to go out on the X axis and be unstable.
Discuss well, okay, I think at a thirty thousand foot level in thirty seconds, all macro models, or almost all macro models, really your best thought of as approximations typically linear in a neighborhood of where you want to be, and the real world can be a lot messier and very nonlinear, a term that I know pomps up on this show, and I think, what I'm just beginning to read his book but he's been highlighting is we could be in a prolonged period of very nonlinear market and
economic development.
And geopolitical development. Yeah, so if you're halfway through the book. He sold the movie, right, ye, DiCaprio is playing. I mean it's a gloomy book. It's shockingly gloomy.
Yeah.
Yeah, again, I have not I've not I've not worked through it, but I certainly must read for me, So I'll wait till I finish it.
Before I wait, Hey, Richard worked.
We're thirteen months into this whole tariff thing. I'm going to look back on and say, boy, this was nothing. It didn't seem to be that big of an isi you. And that's not when I heard it. Early on. I heard a lot of folks saying, boy, this is going to be inflationary and so on and so forth. We just haven't seen it. So with a little bit of hindsight, yeah, yeah, what's happened.
So let me reinforce what you said when we eventually, when we get the data for twenty twenty five, it may show GDP growth the same as it was in twenty twenty four, maybe down to tenth. It will likely show inflation unchanged from twenty twenty four, And so a future historian may well say what you just said, which is what was the big deal GDP.
Growth didn't move, inflation didn't move. I think a couple of things.
One is that the ultimate tariffs put in place were a lot lower than the Liberation Day levels, and his best and has emphasized that was part of the negotiating strategy. Secondly, you know, there's a saying in baseball sometimes you'd rather
be lucky than good. I think the other thing that happened is whatever headwind there might have been from tariff's counterfactually was offset by the buoyant capax spending, especially by the tech companies, and the fact that the stock market is very optimistic on this story, so that generates a
wealth effect and an investment effect. And then thirdly, US companies absorbed more of the tariff hit in somewhat reduced margins, and you know, in the area they did have that room profit margins have been very healthy, and they didn't pass it through to the consumer. And again, of course, we have the IEPA decision the Supreme Court is about
to release, and that may further lead to LOWERJUS. Put it this way, I think if you calculate the actually the tariff revenue we're collecting divided by imports, it's coming in in about ten percent, and Liberation Day was like thirty five percent.
So that's sort of the order of magnitude.
I got eight other questions.
I got to squeeze us in to be responsible or zeg and pose and creating a firestorm with an idea of resilient higher rate or even driving higher rates somewhat due to the surprise of higher wages. Right, it's up at the Peterson Institute. Do you and PIMCO worry about price down yield up?
Well, you know, we get paid to worry about it.
What we do observe, at least in the treasure rate market is the fact which is really since the last FED rate hike, which was two and a half years ago, ten your treasure yields have been in a pretty tight range four and three quarters at the high end, three
and three quarters at the low end. Now that also you also need to note that underlying real rates, which we can see from the inflation index bond market, are much higher than they were in twenty nineteen, and so we're going to have a steeper yield curve than we did pre pandemic, which is a good thing. I think we're going to probably have elevated somewhat elevated volatility relative to the decade before the pandemic, in which rate volatility was suppressed through.
A zero negative humor. At one point, I think in Europe there was.
Like eighteen trillion dollars of negative yielding sovereign DUTs. So we do pay attention to it, but we think a lot of the repricing that needed to happen because of the fiscal outlook has basically already happened and is in the price.
I am begging when you get through the doom loop, When I get through the doomop, I would be honored to have you and Prisadon in the same studio together. Would be like a service to a lot of people thinking about this. His public service to the nation at the Federal Reserve System.
Richard Clarday.
He is Global Economic Advisor at pimcof.
Stay with us more from Bloomberg Surveillance coming up after this.
You're listening to the Bloomberg Surveillance podcast. Catch us Live weekday afternoons from seven to ten am. E's durn Listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch US Live on YouTube a.
I am hate because it's bringing back all my quant nightmares. I actually study this like I look at Kurtosis and it's like E equals x minus ux squared and.
The y item is well, lots of mew in there.
Yes, it's very MEWI as well, joining us out of the Queen of Greek letters.
Amy wou Silverman had a derivative strategy at RBC Capital Markets. If you take your world and it's goussy and like a bell curve like our high school the height of our high school class, and then you transfer it over to the oddities of log normal or even to ta lab in place saus. You can't use that material now, can you, Because the dispersion is stupid.
Right.
The duck is quacking tom so you know, I know we've beaten this analogy to death of this duck. On the surface of the lake, it looks calm, I mean, a little choppier now, but those little duck feet are even more violent underneath when we think aboutsion. So just the difference between average single stock volatility and index level volatility. You know, there's a reason why VIX even though it's eighteen,
it's still sub twenty that's kind of crazy. But then go over to something like VXN your nastac vall that spreads through the roof, because we got a little zigging, but we got a lot of zagging. They tend to cancel each other out. But that average single stock move has been mindful.
Where's the opportunity then? Right now Monday morning, it's nuts.
We had that huge up Friday, right Paul room Jemmy, that was like a thousand points up fifty thousand. Now Amy was silber, and where's the opportunity now given wacko dispersion?
So I think the big question right now is we're at a crossroads. Does this dispersion continue? I can tell you everyone's piled into the dispersion trade, But the question is do we at some point just get a lift of correlation. Everything all goes risk off at the same time, you know, and then that duck's falling off a waterfall or something. That's the big question that hasn't happened a long time. I think there's more nervousness could occur.
Last week, last ten days when we saw the selloff in the tech names generally software in particular, it felt panicky to me. It felt like something unusual. Did you see that in the options markets, in the derivatives markets?
Yeah, And one big question I get now is what is IGV volatile? They kind of telling you since then, so I can tell you that pickup and skews that that demand for hedges has faded. So it's not like people are betting that we're going to see further downside there. You're actually seeing a decent amount of dispersion just within IGV. But the question is, you know, how frequently will we continue to have retail save the day? That's what happened again, that's your playbook?
Is that what happened since April?
Second? Yeah, overall, you know you saw that Friday, and to be fair, they won the last few rounds. And the question is that does that like at the stool continue or does something.
Just abou ETF phenomena. Is it more pronounced today than it was in the past because ETFs have so much money that retail maybe has a bigger play in the market.
It's a great question. I think there's just overall democratization. There's there's ease in how you trade. You can trade a fractional option, you can go on your iPhone or smartphone and do it. But you know, we're seeing a lot of flows. I spoke with our ETF team into something like Voo, which is tends to be more retail heavy. ETF just historic and flows there. And then you see them again saying like we believe in the AI theme. We're going to go back at it. We won that
liberation day round. There's no reason we don't believe by the DIP continues to work.
And it was.
Silverman with this head of derivative strategy at RBC, a quant template over the equity market. How can people in boring four oh one ks use your work? You talk to fancy people with fancy Greek letters, but mere mortals like I'm in a tutel one cage because I'm triple leveraged all cash fun John Tucker, are you in a five oh one k like because you loaned the boat on Nvidia.
No, No, it's you know, it's done remarkably well.
Yeah, exactly.
No, that doesn't mean I'm retiring.
Don't panic, but there might be a work don't appear.
I'm thinking, yeah, could be nice, sat tied up to the Atlantic Highlands work there amy.
How can people with their mere mortals use your work.
Yeah, I can tell you they they already are. So the growth in income funds, for instance, where your your long and index or your long stocks, and then your your your favorite word time you're harvesting volatility, you're selling yield to collect a little bit more yield. You know, those are some of the biggest strategies that are growing.
Folks like it, and they tend to like it even in years like twenty twenty two where the market drew down twenty percent, and they like it in years where the market is something they give up the.
Game if they're harvesting a hedge to.
Get so obviously, yeah, so obviously there's that risk of your limiting upside. I think for a lot of people it's more about that yield collection is attractive. Depending on where they are in their time horizon, that might make more sense, and they're okay with that, especially if they think we're getting kind of heady in terms of evaluations.
Well, I would think your desk is writing a lot of business because boy, if I were a salesperson, I could do the one if here, what if here the AI trade is ending and so on and so forth. You can't be out of this market, be writing options all over the place.
It's been you know, I will tell you the volume and options has been really busy. I think last last week in XLP so the staples we saw more than a million trade on the put side. I mean, just stunning. And what you would arguably say is a boring defensive industry. It's very active. And the other thing is, you know, there's also the Trump tweeter risk. That's my bad joke of you know, Twitter risk from Trump at any moment
can just shift the game geopolitical risk. It's one reason we still think geldv All makes sense on the upside.
Okay, very importantly, Amy was San Folks is our surveillance. Taylor ts correspondent here. Should Taylor do the super Bowl?
I think she's busy planning. Sure, yeah, yes, she's She's transcended the Supervislin, my husband's nursing is Patriots loss. So you know it hasn't been great for us.
Amy or Silverman, thank you so much, really really appreciate it.
With RBC Capital Markets, stay with us. More from Bloomberg surveillance coming up after this.
You're listening to the Bloomberg surveillance podcast. Catch US live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch US live on YouTube.
This is the best research real estate note i've seen. Thank you, John Tucker Richel with this global had of real estate strategy.
Your note is a brand fresh air because it's not a monolithic note.
There's all sorts of nuance in that.
For an investor right now, is a general statement, I need to acquire reach shares.
Does that make sense now? Given the cacophony of your note, So it doesn't.
It doesn't.
So let me explain what I mean by that. Reads have been out of favor for the past several years, and I get it right. We've been a high growth environment, we've been a rising interest rate environment, and that's not conducer for reads.
But you were talking about.
A rotation that we're seeing previously, and reads are participating in that rotation. They're now up five percent year to date to the sixth best sector of the S and P five hundred, after being the worst sector last year. But commercial real estate is not a singular asset class. It's actually eighteen different subsectors. That do something very differently at different points in time. And I think that's our key view here. This is not a single sector beta
trade that we're seeing for commercial real estate. We think this is a cycle for dispersion, where we're seeing significant dispersion and returns across property types, markets, and even fun vehicles. We think that's a market that's right for alpha. But no, this is not a market where you're supposed to be just buying everything.
That was my mistake commercial real estate. I used to think that was just office. Now I know better, it's you know, it's retail, it's you know, it's all these other places, data centers and all that kind of stuff. Where is the value today in commercial real estate? Where are the opportunities? Where are you guys allocating capital to say?
Sure?
Well, we like to say themes still matter, but they require hyper focus. So one of the things that we're talking about, I always like to start with the housing market, because the housing market is everyone's favorite sector. Right now, You've heard this statistic thrown out all the time that the US is under house five million, seven million, eight million homes. That's mathematically true, but it's actually the wrong discussion. It's the wrong debate. We think we have a housing
mismatch in the United States. We've built too many homes of certain types in some markets and not enough homes and other of types and other markets. So we actually might have a convince class a multi family over supply problem in the United States. But we haven't built enough affordable housing in the United States. We haven't built enough middle class housing in the United States. And you can't move a house from a high growth market in Texas
to someplace in the Midwest. By the way, Chicago, Illinois the number one apartment market in the United States right now.
So how do we get to a place where we are? We do have this lack of housing here. My contention is if I'm Toll Brothers or whomever, I'm building a million dollar McMansion because I've got a nice fat margin on that, I don't have the same margin building a two or three or four hundred thousand dollars starter home or something like that. But that's just the economics of the marketplace. How do you change that?
Yeah, so you're absolutely right, it doesn't cost really anything less or more to do a conventional class a versus affordable housing.
All you're talking about is the difference than the amenities.
So as a result, people only built it by new pretty building commercial real state properties and homes. It is very hard to buy to build affordable housing without government subsidies of some sort. But I think the market's changing where we're going to do this with lower cost price points like manufactured housing insense.
Richel, with his principal asset management glob I, had a real estate as strategy with a really really nuanced note about what to do what not to do as well. So off your note. I looked at hotels. We all know in this room hotel prices are nuts. You go around the world, it's absolutely nuts. I look at host HST, which is I guess a fancy hotel property read and it's not given me the returns that I'm seeing in those price per nights in those luxury hotels.
Why is that?
Yeah?
Sure, So we think there is a case shaped recovery occurring in the US economy right now.
What that basically means is high.
Endcome earners are doing really well, middle income earners are not doing as well, and low income owners are really struggling right now. You can see that in autodelinquency rates, student student student delinquency rate, credit card delinquency rates. The high income portion of hotels are doing really well and some other portions of hotels are not doing so well.
So there's this real interesting mismatch going on where RevPAR so rooms per night, where the highest income cohort is accelerating while everything else is flapped slightly down.
So what are we doing here in commercial real estate? Is it all data centers? Is that where I'm putting my money? Because it seems like a data center read there's got to be an ECF for a reader or something there.
There are data center rates see, and they've been around for almost a decade now, but we think data centers are becoming a really nuanced asset class.
So maybe ten years ago everyone was bullishly.
Optimistic about them.
Now people have maybe turned.
A little bit too bearishly to barish on them.
But there's three types of data centers.
There's cloud data centers, there's AI and FEMS data centers, and there's general AI. Cloud is really attractive because we're using cloud right now. Cloud's been around for or it's not going away. We actually like AI in ferns because when we go on chat g GPT that uses cloud.
In ferns or AI in fernce. Excuse me.
Generative AI is when you're training models for future unknown AI demand.
That's where a lot of the.
Supplies coming, and that's where a lot of the spec buildings coming.
We're cautious on those, but we like these segments here. We don't like these segments here.
The market's evolving.
Away from principal asset management. With what you've done Conen Steers and all over the year you work at Georgetown years ago, when you're at a super Bowl party and somebody says to you, Rich, what do you do about the housing crisis in America? Our kids can't afford it. The average the average first time home buyer now is what John seventy two, seventy three.
Yeah, No, that's just about how do.
You answer this national question we have.
The first question is you have to acknowledge it. It's very real.
Housing pressure for a lot of people across the United States is very, very high.
What do I think you have to do?
Well?
The easy answer to say government, public private partnerships. That's probably easier said than done. I think what we need to do is take a queue from the manufactured housing market. So that's markets that's firmly known as mobile homes, where you're building really nice homes with relatively cheap or inexpensive products.
I think if we can find a way to use manufactured homes technology for a lack of better term, and go vertical with it, that would be a long way to solve that affordable housing crisis in the United States.
Office real estate, New York City. Where are we today?
Yeah, So I like to tell people that the leading indicator for a rebound in the office market is what is happening in the debt markets.
The commercial mortgage backed.
Security market so cnbs boomed for New York City office in twenty twenty five, and it's often a pretty good start.
In twenty twenty.
Six, commercial mortgage lending was back to historical averages for office. The market likes gateway coastal markets like New York City and San Francisco. Right now, we actually might have already missed the bottom in San Francisco, it's back that much.
So this is a market of have and have nots. We don't have an office problem in the United States. We have a Class B and C office problem.
That's too many office buildings built in the nineteen seventies and nineteen eighties that didn't put any capecks into them over the past several decades.
No one wants those buildings new properties. They're great challenges.
We have ninety percent of office vacancy focused on thirty five percent.
We got to go, do you bulldoze those properties?
You do?
Because it's actually it's actually just as expensive to rebuild as it is.
Are you based in New York? I don't even know.
Yeah, I work just a couple walks down.
You don't want to say that because we'll call you everything. I am always having to be come up. Oh time. It's such a drive. It was so hard to get. This is fabulous. Richell.
Don't be as stranger with principal asset manager Richell Global had a real estate strategy.
Stay with us.
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I'm going to go somewhere where I'm curious and I really don't think it's front center. But Lindsay Newman's going to brief us here, absolutely phenomenal geopolitical risk expert at G zero Media at King's College, London, Iran doctor Newman. I guess there's this idea of X number of our fleet in the vicinity of Iran. How do you interpret the movement reports of US military assets in the Middle East?
K job warning, Yes, well, we how we interpret this is to say that no surprise here, the Trump administration is pulling all levers simultaneously. So just at the end of last week, of course, there were these indirect bilot talks between the US Iran. We also sell simultaneously. Not well reported that the administration issued a new executive order assessing the threat of Iran and extending the national emergency that Iran poses to America in order to open the
door for more secondary tariffs. So this is the key economic leverage piece that we expect that the administration will pursue. And then, of course this time around the second from administration, it's also all about force and force posturing. So we know, as you've said, that the administration has moved a massive amount of kit into the area. It includes a strike
carrier wars. It also includes naval destroyers, some other aircraft, as well as anti aircraft defense systems, which will be critical in the event that the US decides to pursue some military action in Iran and Iran decides, of course, to retaliate against US assets in the region or more adventurism.
In the region, Doctor Newman, what type of agreement is the US pushing for?
Yeah, I mean, the big question, this is the question Paul, right, because last week we saw that talks were scheduled to go ahead in Turkey and they were going to be multilateral, and then the talks were called off, and then they were rescued in to be relocated in Oman, and they were indirect bilateral talks, as they said. And the sort of back and forth even on the location shows that
these two sides are not in alignment. They're not alignment about where they're willing to talk, who they're willing to have in the room, and they're certainly not in alignment about what they're even talking about. Iran has been very clear that the conversation is only about its nuclear capabilities. It's not even about enrichment. It's only about reassurances that
their nuclear capabilities are for non military purposes. But the US has been very clear and this was again stated last week by Secretary of State Rubio also in the Executive Order, to say that the conversation the US is intending to have is about all nuclear capabilities there cannot be in nuclear ron. It's also about ballistic missiles. It's also about Iran's regional proxy support, and even a bit
more about what's going on at home in Iran. The two sides do not have the same level of items on the table, and that means that any so called deal that can be reached feels very sort of out of rain.
What is the current nuclear capabilities of Iran right now?
I mean, you know, I think it's anyone's guest, Paul. I mean, we know that over the last several years, there was an Operation Midnight Hammer, where the US pursued strike action against three nuclear facilities in Iran. Following you, Israeli also action against the facilities. But we know that sort of inspectors have not been allowed in of late. Estimates are that those strikes last year definitely degraded some enrichment capabilities, but you know it's really a sort of black box issue.
Ludcy Newman with this geopolitical risk expert at G zero Media, with all of the abilities of King's College, London, they have been definitive on the study of conflict and or lindsay, I'm absolutely fair, and I say this with a mens respect. Did you watch the Super Bowl or the be beginning of the Super Bowl from London?
Doctor Newman, you know I didn't watch the beginning, but I will tell you that my sons insisted on watching it this morning, so we watched it at six am. In the replay. I didn't get a chance to watch the halftime show. I'm very intrigued to watch it, but my day has not allowed yet for me to watch the halftime show. I did see it was resplendent and people seem excited about it.
We expect to report.
From jeezuro Media on bad BENETI and doctor Newman all kidding aside, Doctor Newman, we have a method in America of showing the flag, showing the military. We have a Budweiser commercial with an eagle coming off the back of the horse and it's obligatory that at these big events six or seven fancy military aircraft fly over in that. Okay, well that's fine, but we have to deploy our resources to the Pacific, deploy our resources to the Middle East.
A pro like you, how do you respond to America considered comfortable about five airplanes flying over football stadium?
But are we ready to offense and defense in the Middle East?
Yeah?
Tom, I mean, we know the polling shows that seventy percent of Americans are not in support of this idea of seeing the US engaged in military action in Iran, whether it's in support of the protesters that you know, the thousands have died and not those still left in Iran, or if it's even about Iran's nuclear capabilities. Those are stark numbers, right. So only thirty percent, less than a third of Americans really want to see the US engaged
in military action. And that's because we know there's a long history of getting involved in forever wars. You know, as you raised with me the last time. Laurence Freedman has talked about this recently. You know, this idea of the fallacy of a short war, that there could be some you know, ambition that it would be surgical and focused but you can't control with the other side once you take any sort of action. So Americans have been clear that you don't really want to see the US
involved in ongoing conflicts like that. But the Trump administration has been clear that it's going to apply all forms of pressure.
What do you think Iran wants at this point in these negotiations.
Well, Iran wants to see some sort of negotiation to negotiate continue. We know last year there were five runs of negotiations that then the administration in the US said well, this isn't we're not reaching a deal, so we're going to pursue force. Aaran just wants to see de escalation and punt this whole latest blip in the escalatory cycle down down, down the road, because it hopes that it can sort of lead to just an ongoing, more permanent de escalation. I think that that's a hard scenario to
imagine happening. I think that the US has been pretty clear in saying, you know, if you're a US citizen in Iran, get out or otherwise stockpile. That's a very stark indicator to watch for. But Iran is certainly hoping that it can convince the US administration to just keep talking.
Lindsey, Thanks so much. Lindsey Newman with US Today, Geopolitical Risks Expert G zero Media at King's College in London.
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